Wednesday, 18 January 2017

The basic relationship between wealth, power, economic growth - globally and in Australia

It is no secret that the world is an unequal place when it comes to the distribution of wealth and the free exercise of political power.

This month Oxfam International released its Oxfam Briefing Paper January 2017, AN ECONOMY FOR THE 99%: It‟s time to build a human economy that benefits everyone, not just the privileged few.
This paper pointed out that new estimates show that just eight men own the same wealth as the poorest half of the world.
That’s eight men in a global population of over 7 billion people.
The briefing paper went on to say:
By any measure, we are living in the age of the super-rich, a second "gilded age" in which a glittering surface masks social problems and corruption. Oxfam's analysis of the super-rich includes all those individuals with a net worth of at least $1bn. The 1,810 dollar billionaires on the 2016 Forbes list, 89% of whom are men, own $6.5 trillion – as much wealth as the bottom 70% of humanity. While some billionaires owe their fortunes predominantly to hard work and talent, Oxfam's analysis of this group finds that one-third of the world’s billionaire wealth is derived from inherited wealth, while 43% can be linked to cronyism.

On 16 January 2017 BizNews reported that:

The world’s 8 richest people are, in order of net worth:
1.    Bill Gates: America founder of Microsoft (net worth $75 billion)
2.    Amancio Ortega: Spanish founder of Inditex which owns the Zara fashion chain (net worth $67 billion)
3.    Warren Buffett: American CEO and largest shareholder in Berkshire Hathaway (net worth $60.8 billion)
4.    Carlos Slim Helu: Mexican owner of Grupo Carso (net worth: $50 billion)
5.    Jeff Bezos: American founder, chairman and chief executive of Amazon (net worth: $45.2 billion)
6.    Mark Zuckerberg: American chairman, chief executive officer, and co-founder of Facebook (net worth $44.6 billion)
7.    Larry Ellison: American co-founder and CEO of Oracle  (net worth $43.6 billion)

8.    Michael Bloomberg: American founder, owner and CEO of Bloomberg LP (net worth: $40 billion)
Oxfam’s calculations are based on global wealth distribution data provided by the Credit Suisse Global Wealth Data book 2016.
The wealth of the world’s richest people was calculated using Forbes’ billionaires list last published in March 2016.
According to the Credit Suisse Research Institute in November 2016:

For financial wealth at least, direct estimates for the first quarter of 2016 were available for 27 countries: Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Japan, Korea, Latvia, Lithuania, New Zealand, Poland, Portugal, Singapore, Slovakia, Spain, Sweden, the United Kingdom and the United States. These countries account for 76% of global wealth in 2016.
Australia’s percentage share of global wealth was 2.5% in First quarter 2016, with 1.06 million individuals in a population of almost 23 million holding most of that wealth.
The wealth spread in Australia last year was calculated as:
§  20 individuals holding over US$1 billion each
§  39 individuals holding US$500 million-1 billion each
§  685 individuals holding US$100-500 million each
§  1,476 individuals holding US$50-100 million each
§  25,924 individuals holding US$10-50 million each
§  55,812 individuals holding US$5-10 million each
§  976,193 individuals holding US$1-5 million each
In Australia household gross wealth was estimated to be composed of 60.6% non-financial wealth and 39.4% financial wealth.
Forbes Media listed Australia's top eight richest people in 2016 as:

Blair Parry-Oakden - heiress to Cox Enterprises fortune ($8.8 billion)
Gina Rinehart - mining magnate ($8.5 billion)
Harry Triguboff - property developer ($6.9 billion)
Frank Lowy - co-founder Westfield Group ($5 billion)
Anthony Pratt - CEO Pratt Industries & global chair Visy Industries ($3.6 billion)
James Packer - media mogul ($3.5 billion)
John Gandel - property developer ($3.2 billion)
Lindsay Fox - trucking magnate ($2.8 billion)

On 20 August 2015 The Washington Post reported a new study (based on Does Wealth Inequality Matter for Growth? The Effect of Billionaire Wealth, Income Distribution, and Poverty, IZA DP No. 7733 November 2013 and later reworked as Billionaires and Growth by Sutirtha Bagchi and Jan Svejnar).

This study reportedly found that 65% of all billionaire wealth in Australia is based on political connections rather than on business innovation and, In sum, wealth inequality that comes from political connections is responsible for nearly all the negative effect on economic growth that we had observed from wealth inequality overall.

Or to put it another way, wealth amassed by certain billionaires world-wide, through the giving of political donations, public and private lobbying of politicians and/or the exchange of political favours, was responsible for nearly all declining economic growth this century

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