Thu, Dec 07, 2006 - Page 1 News List

Richest 1% own 40% of world's wealth: survey

`GROTESQUE INEQUALITY' The largest study yet of wealth distribution by the UN paints a stark picture, revealing that half the globe's population own almost nothing

THE GUARDIAN , LONDON

The richest 1 percent of adults in the world own 40 percent of the planet's wealth, the largest study yet of wealth distribution shows. The report also found that those in financial services and the Internet sectors predominate among the super rich.

Europe, the US and some Asia-Pacific nations account for most of the extremely wealthy. More than a third of these individuals live in the US. Japan accounts for 27 percent of the total, the UK for 6 percent and France for 5 percent.

The UK is also third on the list in terms of per capita wealth. UK residents are found to have on average US$127,000 each in assets, with Japanese and US citizens having, respectively, US$181,000 and US$144,000. All data relate to the year 2000.

The global study -- from the World Institute for Development Economics Research of the UN -- is the first to chart wealth distribution in every country as opposed to just income, for which more comprehensive data is available. It included all the most significant components of household wealth, including financial assets and debts, land, buildings and other tangible property. Together, these total US$125 trillion globally.

Anthony Shorrocks, director of the research institute at the UN University in New York, led the study. He affirmed that the existence of a nest egg provided an insurance policy that helped people cope with unforeseen events such as ill health or a lost job. Capital allowed people to drag themselves out of poverty, he added.

"In some ways, wealth is more important to people in poorer countries than in richer countries," he said.

But he added that it was more difficult in developing countries to set up a business because it was harder to borrow start-up funds.

His team used detailed data from 38 countries but had to rely on incomplete information from the rest.

The report found the richest 10 percent of adults accounted for 85 percent of the world total of global assets. Half the world's adult population, however, owned barely 1 percent of global wealth. Near the bottom of the list were India, with per capita wealth of US$1,100, and Indonesia, with assets per head of US$1,400.

Many African countries as well as North Korea and the poorer Asia Pacific states were places where the worst off lived.

"These levels of inequality are grotesque," said Duncan Green, head of research at Oxfam. "It is impossible to justify such vast wealth when 800 million people go to bed hungry every night. The good news is that redistribution would only have to be relatively small. Such are the vast assets of the rich that giving up a small part of their wealth could transform the lives of millions."

Madsen Pirie, director of the Adam Smith Institute, a free-market think tank, disagreed that distribution of global wealth was unfair.

"The implicit assumption behind this is that there is a supply of wealth in the world and some people have too much of that supply. In fact wealth is a dynamic, it is constantly created. We should not be asking who in the past has created wealth and how can we get it off them," he said.

He added that instead the question should be how more and more people could create their own wealth.

Ruth Lea, director of the UK-based Center for Policy Studies, a think thank set up by Margaret Thatcher, said that although she supported the goal of making poverty history, she did not think that increasing aid to poorer countries was the answer.

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