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Wealth

I have taken some data from Wikipedia which in turn is based on Credit Suisse’s Global wealth databook 2019. I have not looked at how the wealth per individual is calculated; but, it is recognized that the data will be skewed by things like the age of the population, buying power and no doubt other things.

So below we have on the left hand side the top twenty countries sorted by mean (average) individual wealth. On the right hand side, the top twenty countries sorted by median wealth. In the middle the ratio is the mean divided by median wealth. This is an easy measure of skewness of the country’s individual wealth. Anything above a ratio of 1, means that fewer people hold disproportionately more wealth. Larger the ratio the more the wealth distribution is skewed.

Based on Wikpedia’s data

Note, that the average ratio for the 171 countries was 3.0. In reality the number has to be skewed, in that an individual a person’s wealth is not bound by an upper limit and someone’s wealth can’t be below zero, at least not for long.

Looking at the list of the top twenty in terms of mean wealth, we have pretty much the usual suspects. Reordering the countries by median wealth, most of the countries juggle a few spots in the ranking. But a few new ones sneak in, Malta, Taiwan, South Korea and Spain. So, who dropped out top twenty? Not surprisingly it is the ones with the high skewness ratios.

  • Netherlands drops from 12th to 34th (median 31 507 $),
  • And Sweden from 17th to 29th (median 41 582 $),
  • Denmark to from 10th to 23rd (median 57 584 $),
  • And finally the United States from 3rd to 22nd (median 65 904 $)

The question becomes if you want to be in the middle of the pack wealth-wise, which country would you choose? Another unanswered question is how are the countries’ wealth skewed so much, especially as three of them are seen as being socialistic?

Below is a plot of change in ranking versus the median/mean wealth ratio. A number below zero means the country’s rank increased. It is expected that lower the ratio the greater the increase in rank. The plot is just a simple way of showing the data.

As noted above, the Netherlands has the most skewed wealth distribution, followed by Russia. Looking at the data for:

  • Russia, it becomes apparent, it is a surprisingly poor country. Its median wealth is 3,683 $. Four dollars better off than Vietnam. If the One Percenters had a beef with any country, it should be with Russia.
  • Ukraine likely has a similar problem with the growth of the exceptionally rich with the fall of the Iron Curtain.
  • Thailand’s median wealth is comparable to Russia’s. It would be interesting to know the causes for their disparity in wealth.
  • One wonders why there is a relatively large disparity in wealth in Germany and Sweden. In Germany’s case it could be left over from the amalgamation of East and West Germany?
  • Brazil, its median wealth is higher than that of Russia, ~5000 $, in the great scheme of things not too bad.
  • I have included Latvia just for the hell of it. I wanted to blame this on the fall of communism for the disparity, but its neighbours, Estonia and Lithuania are ensconced in the middle of the back with a mean wealth about double that of the median wealth.
  • And of course we have the United States. To be fair if I wanted to be a median Joe, the US is not a bad place to be with 65000$ as the median wealth. But luckily I live in Canada.

I’m not sure what to make of all this, other than it would be nice if some of the disparity in wealth within countries could be reduced. There is a fundamental question is there anything fundamentally wrong with a disparity? I know this is wishy-washy. But if all the data for the world is pooled, the median wealth would be just over 7000 $ and the mean to median ratio about 10. And bear in mind the disparity in wealth between countries and people boils down to luck. Remember Bill Gates’ story. Having said that, would we volunteer to reduce and share our wealth to 7000 $, assuming we have 7000 $.

Something to think about.

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Published by rom

One thought on “Wealth”

  1. Dear Rom,

    Thank you for your contributions to the discussion on mean and median wealths.

    Social and economic polarizations can further exacerbate the issues of wealth, and such polarizations are increasing for the following reason: The USA is very much plagued in varying degrees by misinformation, disinformation, post-truth politics, demagoguery, plutocracy, oligarchy, ochlocracy, kleptocracy, narcissistic leadership, neoliberalism and globalization.

    Let’s just take one of them under the microscope. Whilst Pluto has been demoted to a dwarf planet, the planet of America has already ascended to plutocracy.

    According to Wikipedia:

    Plutocracy (Greek: πλοῦτος, ploutos, ‘wealth’ + κράτος, kratos, ‘rule’) or plutarchy, is a form of oligarchy and defines a society ruled or controlled by the small minority of the wealthiest citizens. The first known use of the term was in 1631. Unlike systems such as democracy, capitalism, socialism or anarchism, plutocracy is not rooted in an established political philosophy. The concept of plutocracy may be advocated by the wealthy classes of a society in an indirect or surreptitious fashion, though the term itself is almost always used in a pejorative sense.

    Usage
    The term plutocracy is generally used as a pejorative to describe or warn against an undesirable condition. Throughout history, political thinkers such as Winston Churchill, 19th-century French sociologist and historian Alexis de Tocqueville, 19th-century Spanish monarchist Juan Donoso Cortés and today Noam Chomsky have condemned plutocrats for ignoring their social responsibilities, using their power to serve their own purposes and thereby increasing poverty and nurturing class conflict, corrupting societies with greed and hedonism.

    Examples
    Historic examples of plutocracies include the Roman Empire, some city-states in Ancient Greece, the civilization of Carthage, the Italian city-states/merchant republics of Venice, Florence and Genoa, and the pre-World War II Empire of Japan (the zaibatsu). According to Noam Chomsky and Jimmy Carter, the modern day United States resembles a plutocracy, though with democratic forms.

    More from Wikipedia:

    Effects on democracy and society
    Economists Jared Bernstein and Paul Krugman have attacked the concentration of income as variously “unsustainable” and “incompatible” with real democracy. American political scientists Jacob S. Hacker and Paul Pierson quote a warning by Greek-Roman historian Plutarch: “An imbalance between rich and poor is the oldest and most fatal ailment of all republics.” Some academic researchers have written that the US political system risks drifting towards a form of oligarchy, through the influence of corporations, the wealthy, and other special interest groups.

    Also from Wikipedia:

    United States
    Further information: Income inequality in the United States § Effects on democracy and society
    See also: American upper class and Wealth inequality in the United States

    Some modern historians, politicians, and economists argue that the United States was effectively plutocratic for at least part of the Gilded Age and Progressive Era periods between the end of the Civil War until the beginning of the Great Depression. President Theodore Roosevelt became known as the “trust-buster” for his aggressive use of United States antitrust law, through which he managed to break up such major combinations as the largest railroad and Standard Oil, the largest oil company. According to historian David Burton, “When it came to domestic political concerns, TR’s Bete Noire was the plutocracy.” In his autobiographical account of taking on monopolistic corporations as president, TR recounted

    …we had come to the stage where for our people what was needed was a real democracy; and of all forms of tyranny the least attractive and the most vulgar is the tyranny of mere wealth, the tyranny of a plutocracy.

    Enough from me for the moment. Happy November to you and your family!

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