While comparisons of national income between countries are commonplace, estimating the wealth of countries is a far more difficult task. Last week, Credit Suisse took a stab at the job, bringing out a report on global wealth.
The most obvious fact about the world’s wealth, of course, is that the developed economies have much more of it. How much more? The US, with 5.2% share of the world’s adult population, has grabbed 28% of the world’s assets, according to Credit Suisse estimates. Europe, with 13% of the adult population, owns even more—31.8% of global wealth.
Also Read Manas Chakravarty’s earlier columns
But wealth per adult is not the highest in the North American countries. For the US, Credit Suisse estimates it to be $236,213 for this year. That’s much lower than Switzerland’s wealth per adult of $372,692, or Norway’s $326,530. Even Australia ($320,909) and France ($255,156) have more wealth per adult than the US.
India, of course, is somewhere at the bottom of this rich list. Credit Suisse estimates that, in 2010, we have 16.19% of the world’s adult population but only 1.82% of the world’s wealth. Our wealth per adult works out to $4,910. China, with its 21.65% of the world’s adults owning 8.5% of the world’s wealth, is far richer. Its wealth per adult is $17,126. We can console ourselves by noting that we’re the richest nation in the subcontinent and by pointing out that we’re actually much richer in purchasing power, since a dollar in India would buy you about three times the goods and services that could be bought in the US.
Also See India’s Shameful Record (PDF)
Because we have so many people, India’s wealth in absolute numbers is a not-to-be-sneezed-at $3.5 trillion. By way of comparison, Brazil’s is $3.3 trillion and Spain’s is $3.7 trillion. China is a far larger market, with its wealth estimated at $16.5 trillion, higher than that of France, Germany or the UK.
The fact that gross domestic product (GDP) growth in India is much higher than the world average means, however, that we can now boast that our share of world wealth is increasing. Credit Suisse has estimated the data from the year 2000 onwards. In 2000, India’s wealth was $1.2 trillion, so wealth has grown by 192% over the last 10 years. In 2000, we had 1.03% of world wealth; in 2010 we have 1.82%.
But these aggregates carry little meaning—everything depends on how this wealth is distributed. The wealthiest 1% of the global population own 43% of global assets. The richest 10% of the world own 83% of global assets. This huge inequality reflects the stark differences in wealth between the handful of rich developed nations and the vast struggling masses of the developing world. We can probably feel a bit better by attributing the difference to imperialist exploitation.
But is the distribution of wealth any better within India? According to the Credit Suisse numbers, the top 1% of the population own 15.9% of India’s wealth, the top 5% own 38.3% and the top 10% have 52.9%, more than half the country’s wealth. In contrast, the bottom 20% own 1% of the country’s assets and the bottom 10% own just 0.2%. 0.4% of the population own assets with a value exceeding $100,000. The data are for 2002-03. China is a bit more egalitarian, with the top 10% owning 41.4% of the country’s wealth—inherited wealth is very low there, but they seem to be hell bent on correcting that unfortunate state of affairs. In the US, the top 10% own 71.5%.
To understand the impact this distribution of wealth has on families at the bottom of the pyramid, we turn to the Global Hunger Index computed by the International Food Policy Research Institute. According to the latest index, 22% of the Indian population is undernourished, while the proportion of underweight children in the age group below five years is an eye-popping 43.5%. What is worse is that between 1990-92 and 2004-06, the percentage of the undernourished has come down by a mere 2 percentage points, from 24% to 22%. And this has happened over a period in which economic growth has been far higher than earlier. What’s more, it has happened in a democracy.
Forget China, which has done much better over the period. Look at Bangladesh, whose proportion of undernourished has fallen from 36% to 26% over the same period. Or consider dirt poor Nepal, which has managed to reduce undernourishment from 21% to 16%. Or Sri Lanka, which reduced it from 27% to 21% over the period, in spite of being plagued with a civil war. None of these countries had the kind of economic growth we’ve had, none of them have had glowing tributes paid to them as an emerging engine of growth for the world economy. Yet they’ve done more to care for their people than we have.
There can be no two ways about this: The numbers are obscene and reflect both the callousness of our society and the powerlessness of the poor. They are a shameful indictment of our economic and political system.
Manas Chakravarty looks at trends and issues in the financial markets. Comment at firstname.lastname@example.org