The new Gilded Age: 2,750 people have more wealth than half the planet
The globe's 2,750 billionaires now control 3% of all wealth, up from 1% in 1995 — that makes them wealthier than half the planet, according to a new report from a group founded by economist Thomas Piketty.
The wealth gap is roughly as wide as it was more than a century ago when the Gilded Age led to massive disparities between rich and poor, the World Inequality Lab found. The study was coordinated by Piketty, an expert on inequality known for his book "Capital in the Twenty-First Century," as well as fellow inequality experts Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley.
In the U.S., the gaps in wealth between rich and poor Americans "are close to those observed at the beginning of the 20th century," the study noted. The poorest Americans are falling behind their counterparts in other nations. Although average household wealth in the U.S. is more than three times that of China, the poorest 50% of Americans possess less wealth than the poorest half of China's citizens, the researchers found.
This divide wasn't always the reality in the U.S. In the decades after World War 2, the share of income enjoyed by the top 10% tumbled as progressive taxation redistributed money. Between 1944 and 1981, the top tax rate for the highest-earning Americans averaged 81%, compared with 37% today.
Other factors, including a decline in union participation and an increase in privatization, has contributed to the wealth and income gaps Americans are experiencing, with the bottom 50% seeing their share of income drop from 19% in 1980 to 13% today, the report said.
"If there is one lesson to be learnt from the global investigation carried out in this report, it is that inequality is always political choice," said Lucas Chancel, co-director of the Paris School of Economics' World Inequality Lab and lead author of the report, in a statement.
To be sure, the World Inequality Lab isn't the first group to point out widening wealth and income disparities. But the report's global approach underscores the challenges of coping with crises such as COVID-19 and climate change in a time of extreme concentration of wealth. Indeed, governments are becoming poorer, according to the report's data.
Public wealth — or public ownership of infrastructure such as schools and hospitals as well as financial assets (minus public debt) — stood at between 15% to 30% of total wealth in the early 1980s. But that's dropped to "near 0% in most rich countries," and actually is negative in the U.S., the report noted.
"The current weak wealth position of governments has important implications for governments' ability to tackle inequality in the future, as well as key challenges of the 21st century such as facing climate change," the report said.
.000001% are biggest winners
Since 1995, the global population has increased its wealth by about 3.2% annually. But the richest 0.000001%, or the likes of Jeff Bezos and his fellow 51 wealthiest billionaires, increased their wealth by more than 9% per year during that time, the study found.
"In the U.S., the return of top wealth inequality has been particularly dramatic, with the top 1% share nearing 35% in 2020, approaching its Gilded Age level" compared with less than 25% in 1970, the report noted.
The COVID-19 pandemic has only accelerated wealth accumulation by the ultra-rich, with the report noting that 2020 marked the biggest increase in the share of global billionaire wealth ever recorded. America's billionaires have seen their total wealth jump by 70% — the equivalent of more than $2 trillion — since the start of the pandemic, according to Inequality.org. The group estimates that U.S. billionaires now have combined wealth of $5 trillion, which amounts to more than a quarter of U.S. GDP.
COVID-19 aid reduced poverty
At the same time, the pandemic sparked an unprecedented government response in many countries, with the U.S. and other nations providing fiscal support to low- and middle-class families. That helped reduce poverty in America during 2020 even as the typical household lost income due to the pandemic's impact, according to Census data released earlier this year.
"This shows that Covid-related policies were critical to countering a rise in inequality and also that persistent poverty is not inevitable: It can indeed be countered with bold social policies," the report noted.
The findings come at a time when Democratic lawmakers in the U.S. want to boost taxes on the wealthy and corporations, arguing that doing so would enable the nation to pay for social programs like preschool and child care. But the Build Back Better bill faces opposition from Republican lawmakers, and its future is as of yet unclear.
