I have a question I’m rather fond of: over time, does the world get better or worse?
You might argue that there’s never been a better time to be poor; that poor people today are just so much better off than their impoverished forbears! There is more of pretty much everything: schools, fridges, phones, you name it. Thanks to Kiwisaver, some of the richest poor are even accumulating capital. Given the choice between poor today and poor a hundred years ago – well, comparisons are odious, aren’t they?
If we judge a society by the way it treats its most vulnerable, and we find that our most vulnerable are better off than ever, does that mean things are getting better? To say yes, you’d have to willingly ignore what’s happening to the rich. You’d also have to fudge your definition of wealth.
According the Global Wealth Report recently published by the Research Institute of Credit Suisse, two things are happening to the rich: they’re getting richer, and they’re getting fewer. Now, 1% of the world’s population controls 50% of the world’s wealth. In addition:
“The United States continued adding to global wealth at an impressive rate, with solid growth also evident in China. Elsewhere, local currency wealth gains were offset by depreciation against the US dollar, so that world wealth declined by USD 12.4 trillion.”
USD 12.4 trillion. As one infographic put it, “if you spent a million dollars a day since Jesus was born, you still would not have spend a trillion dollars.” Still, I’ve already chastised myself over easy comparisons, so back to the story.
Lots of otherwise pleasant countries suffered losses in their market capitalisation: France, Germany and the UK averaged 8% losses, Canada and Italy hit double figures and Russia is down in the weeds at a 35% loss. Meanwhile, China gazumped everyone with a 150% increase in market capitalisation.
But it doesn’t mean much, because most Chinese people don’t own any stock. Sound familiar? Still, someone must have benefited from it. But it doesn’t matter:
“Equity and house price movements have been dwarfed by exchange rate changes … Overall, [US] dollar appreciation against other currencies reduced global wealth by roughly 10%, eliminating more than half the rise in wealth per adult since the end of the financial crisis.”
Good grief. Here was me thinking we were all coming right.
Elsewhere, good news: we’re rich! On the basis of average net worth per adult, New Zealand gets on the podium at second place, behind Switzerland (by a considerable margin of about USD160K a head). Thanks to the housing market (“revised substantially upwards”), the average Kiwi sits atop a pile of 400,800 American dollars. When Credit Suisse revise the calculation with median net worth per adult (rather than average), then Aotearoa tops the list at $182,600 per Kiwi, shoving Australia off the top spot.
Well, if you believe all that, you’ll believe anything. Our median house price is about USD 320k. Does that mean the average Kiwi has USD80k in other assets (plus the house)? Or that the average wealth per Kiwi is hauled ever-so-slightly northward, thanks to a small number of extremely rich people?
What else does it say about New Zealand?
- From 2000 – 2005 we had the 8th highest “real annual wealth growth rate”: 9.1%.
- Since 2005, we don’t make the top 10
- The number of Kiwi adults worth more than a million bucks dropped 26% from 386,000 to 282,000 since 2014 (it doesn’t say anything about kids in that bracket)
- 50% of New Zealanders are “middle class”
Credit Suisse define “middle class” loosely. They start with an upper bound of USD 500k: the amount which an American needs at retirement age to purchase an annuity of the average wage. Their lower bound is USD 50K, roughly two years of median income earnings. I’m not sure that all adds up. But they admit, it’s a sketchy equation. They adjust the figures for regions, so the lower bound in India is just USD 13k. Still, even with that reduction, hardly any Indians are middle class. They kept the 10x multiplier in all regions.
Anyway, 14% of the global population fits this definition of middle class, and that group has about 32% of the world’s wealth. Then there’s another 2% of the global population that’s richer than middle class. As a whole, that 16% owns 92% of the world’s wealth.
The middle class (aside from the riches 2%) is growing, but its influence is shrinking.
North America has by far the largest middle class, but is also the only region in which
“the middle class as a group have less than average wealth. In fact, the average wealth of middle class adults in North America is barely half the average for all adults.”
No wonder Obama’s pushing the TPP, TTIP and TISA so hard. Talk about first world problems! By contrast, middle class Europeans enjoy 130% of average person’s wealth, and middle class Chinese: about 300%. Most of that clout was accumulated before the GFC.
So, if anyone can explain how this network of deals can reverse any of these dismal statistics, please elaborate.
Until recently, I’d held out some hope for Obama. I liked what he stood for, and I thought his health reforms were an important progression. But until now, the so-called leaders of the free world have confined their anti-humanitarian agenda to countries far away, most of whom I will never see. Now, it feels like they’re turning their arsenal towards us. Towards me.
It’s not that I’m opposed to trade. I like trade. I like fair trade. But free trade? Anyone who ever owned a market – from Cook Street to Victoria Street to Wall Street – knows there’s no such thing. These deals are being managed in the same way that gangs “manage” new members: sure, you can opt out. Go right ahead. Knock yourself out.
Still, there’s hope. Fuck all. But a bit. Nothing’s been signed yet. All that’s happened is the various countries have agreed on the trade-offs. Now they’re “scrubbing the text”. Once the text is locked, Obama needs 90 days to get it past congress. Nothing’s going to happen until at least February.
The media have been poor on this. It wasn’t until I was lucky enough to find myself in conversation with Jane Kelsey that I twigged: endless shots of high-fiving negotiators do not a deal make.
So in the meantime I fully intend to take myself and anyone else who needs a lift for a walk down Queen Street, on Saturday 14 November, to make my opinion known to the government: I don’t want this deal.