We’ve heard a lot about the one percent recently, largely because of people protesting against them. The protesters — the self-titled ninety-nine percent — are angry about the increasing inequality of wealth distribution and it’s a just cause. But there’s a good chance that many of those taking to the streets are in the one percent themselves, at least globally, if not domestically.
In America in 2009 it took $343,927 in annual earnings to join that elite group, according to statistics from the Internal Revenue Service. Figures released this year show the figure to now be $486,395 and reveal that there are 749,375 taxpayers in America within that group. The top ten percent contains a significantly larger 7.5 million taxpayers, and that group earns an annual average of $128,560.
But look at the world as a whole and, according to research from CNN Money, anyone making $34,000 a year (after tax) is part of the global one percent. And globally it’s also more interesting.
In a recent book, World Bank economist Branko Milanovic split the wealth of countries into five groups (ventiles). The breakdown showed that America’s poorest ventile are, as a group, about as wealthy as India’s richest. As Milanovic pointed out, “The entire bottom chunk of Americans, some of whom only make $6,700 may be extremely poor by American standards, but that amounts to a relatively good standard of living in India, where about a quarter of the population lives on $1 a day.”
In fact, even the poorest five percent of Americans are still richer than 68 percent of the world’s inhabitants. Of course a dollar goes a lot further in India than it does is America, but once you move from country to country the wages earned in one can help in another.
Look how this compares to somewhere like Dubai. The wages of many Indian workers are pitifully small, but only when compared to those of a Westerner. And while they may only get around $1,000 a month to work (for example) in a hotel, that’s over 33 times more than a quarter of their homeland gets. This is why in 2005, an estimated $7 billion that was earned in the UAE was sent out of the country and, according to The Hindu Business Line, “About 70 percent of the remittances from the UAE go to India, with 60 percent going to Kerala.”
We are not suggesting they have a great life in places like the Middle East or that it is a fair deal (that is a debate for another time), but rather that many of them leave India very poor and return a few years later with enough money to start a business. And it’s the same for Westerners who move abroad to enjoy elevated wages (mostly due to the taxfree packages) so they can return home with savings that they wouldn’t have accumulated doing the same job at home — at least, those who don’t blow it all on new cars and champagne brunches.
The average income worldwide is just $7,000 per year, yet only around 19 percent of the world’s population live in countries with per capita incomes at least this high. Countries with an average income near $7,000 include the likes of Mexico and Latvia and they rank about fortieth in the global income table, out of the 196 countries worldwide.
The figures so far are for yearly income, but wealth is often measured by assets and investments rather than income alone. If you look at accumulated wealth, you see the staggering statistic that the three richest people on Earth (Carlos Slim, Bill Gates, Warren Buffett) have more wealth assets than the poorest 10 percent of the population — around 700million people. And, as a UN report goes on to point out, “The top 10 percent own 71 percent of world’s wealth”.
Break the figures down, though, and it turns out that you only need wealth of $2,161 to belong to the top half of the world’s wealth distribution. To be a member of the wealthiest top 10 percent requires $61,000 in assets and savings, while membership of the top one percent requires around $500,000.
The ninety-nine percent in America are correct to be angry at the financial situation in their country, and we should be very concerned about gross inequality of wealth distribution. It’s no surprise to see protesters occupying Wall Street as nearly half of the world’s richest one per cent of people live in the United States.
But it’s not just the few at the top we need to be concerned about; it’s the many who try to survive on the one percent of wealth at the bottom — that’s the other one percent. We should remember half of the world’s adult population owns barely one percent of global wealth and it’s being spread very thinly around billions of increasingly frustrated people.
For Esquire Magazine, March 2012