So says the World Wealth Report, the noted annual study of the world’s millionaires, issued in June by RBC Wealth Management and Capgemini Financial Services. The report found that the number of people in the world with more than $1 million to invest soared to a record 12 million in 2012, a 9.2 per cent increase over 2011. The aggregate wealth of this group hit a new high, too — $46.2 trillion – a 10 per cent increase over the previous year.
And within this rich group, the ultra-rich, defined as people with investable assets of at least $30 million, surged 11 per cent. This razor thin sliver of the global population of 7.1 billion, comprising only some 111,000 people, account for 35.2 per cent of the entire wealth of all the world’s millionaires together.
Coincidentally, the 2012/13 Global Wage Report issued by the International Labor Organization, a U.N. agency, found a global trend of a shrinking workers’ share in national income. That is true even in China, where wages have been rising, but lag behind growth in gross domestic product.
Most worrying for liberal economists who look to market forces for ‘corrections’, is that labour productivity has had a reduced impact on wages. In the United States, according to the I.L.O., labour productivity in the non-farm business sector has increased about 85 per cent since 1980, while real wages have grown just 35 per cent. Even in Germany, often touted as ‘a middle class success story’, labour productivity grew by nearly a quarter over the past 20 years, but real wages remained flat.
Then there is the fact of declining social mobility. Miles Corak, a Canadian economist, shows that rising income inequality coincides with declining equality of opportunity. The 1 per cent is very adept at passing along its privilege, while those at the bottom are finding it harder to climb up.
Anyone waiting for the system to correct itself waits in vain.