Tuesday 29 November 2016

Do rich need the poor to remain rich?

37.9 per cent of the global top (richest) 1 per cent are from the US. Japan comes next, with a 9.7 per cent share of the global richest 1 per cent list,shows Credit Suisse’s global wealth report.

The US, Japan and the UK account for more than half of the people in the global top 1%. And this top 1 per cent own half the world’s wealth.

As we can all see, the wealthiest are still getting wealthier, and definitely at the cost of the poorest of the poor.


So, while the numbers from Credit Suisse show that the top 1% of the global population own half the world’s wealth, and more than half of this top 1% are from the US, UK and Japan; what about the fate of the poorest in the world?

One-fourth of the bottom 20% of the global population are Indians. Please note that the bottom 20% of the global population own -0.4% of the world’s assets—the figure is negative because these people have more debt than assets and so their net worth is negative.

Do rich need the poor to remain rich?

Logically yes... as in order for someone to be 'rich' there must be a person who is understood as 'less rich' or 'poor'.  

We all should know that wealth is generated through a combination of labor (manual, symbolic, creative) and capital (money, factories, technology, materials).  However, once wealth is generated, that wealth is not shared  so evenly.  Say for instance, the people who make cars have a smaller share of the wealth generated (in the form of wages) than the people who own the factory (in the form of profits). Thus, people who supply the capital (money, factories, technology, materials) is rich, and the worker (who provides the labour) is poor. 

Now, in order for someone to remain rich, the process of unequal wealth distribution has to continue. Profits typically increase when wages are lowered or workers are laid off without a loss of productivity (i.e. the workers are worked harder).

However, one may wonder, how can there be so much misery and insecurity in the midst of such abundance? If we look at the question sociologically, one of the first things we see is that poverty doesn’t exist all by itself. It is simply one end of an overall distribution of income and wealth in society as a whole. As such, poverty is both a structural aspect of the system and an ongoing consequence of how the system is organized and the paths of least resistance that shape how people participate in it.

The system we have for producing and distributing wealth is capitalist. It is organized in ways that allow a small elite to control most of the capital – factories, machinery, tools – used to produce wealth. This encourages the accumulation of wealth and income by the elite and regularly makes heroes of those who are most successful at it – such as Dhirubhai Ambani.

The capitalist system also leaves a relatively small portion of the total of income and wealth to be divided among the rest of the population - which incidentally is a majority of the people.

In any case, we live on a planet that has limited resources and a fragile ecosystem. If everyone could be rich and have access to as much resources as they want they would waste a lot. If everyone on the planet was allowed to consume as much as rich north Americans currently do, the strain on the planet would make it unlivable in terms of greenhouse gas effect, pollution, smog. 


The other way, it seems, therefore to distribute wealth in a fair and safe way would be a form of socialism where the state would own everything and give everyone their fair share while making sure to use renewable resources in a safe and ecological way. 

But would socialism work - given that it tends to have a negative impact on individual freedom, and also because humans are greedy?



Disclaimer / Caveat: Whatever I have stated is publicly available information and does not represent the view of the firm I work for.