People with lots of money have lots of money. Credit, Moving Picture World, public domain

A number of newspapers are reporting, breathlessly, the news that millionaires have 50% of the world’s wealth. This is, of course, entire nonsense, nonsense to the point of being complete scrotals. It is only when we narrow it down to the specific definitions that it becomes true, but then when it does become true it’s just boringly normal.

That is, this isn’t news at all, it’s olds:

Personal wealth around the globe reached $201.9 trillion last year, a 12 per cent gain from 2016 and the strongest annual pace in the past five years, Boston Consulting Group said in a report released Thursday. Booming equity markets swelled fortunes, and investors outside the US got an exchange-rate bonus as most major currencies strengthened against the greenback.
The growing ranks of millionaires and billionaires now hold almost half of global personal wealth, up from slightly less than 45 per cent in 2012, according to the report.

We need to have a quick look at what is meant by wealth here, for it’s not what an economist would say it is. What’s being included here is property and financial wealth. Houses, buildings, land, stocks and bonds, bank balances. That’s a reasonable enough definition of what it is, financial wealth, but it’s not a good description of wealth. For example, the household financial wealth of the US might be this roughly $90 trillion:

In North America, which had $86.1 trillion of total wealth, 42 percent of investable capital is held by people with more than $5 million in assets. Investable assets include equities, investment funds, cash and bonds.

But there’s another $100 trillion and more of wealth which is either natural wealth (yes, nature has a value) or things owned by governments. That is, we’re specifically stating that the wealth of the type which is owned individually by people seems to be concentrated among those who own a lot of the type of wealth owned by individuals. Not all that surprising a finding really, is it? Millionaires are those with lots of financial capital, lots of financial capital is owned by millionaires. Well, I’m just flabberghasted myself. And any wider definition of wealth this concentration seems to dilute at least, doesn’t it?

But we can and should go further, human capital vastly outweighs any other form of capital in the world. It’s also hugely more equally distributed.

So, we’re talking about a small subset of all wealth and who owns it, noting that we use a particular word. millionaire, to describe those who have a lot of this specific type of wealth. Our finding is then that those we describe a having a lot of this type of wealth have a lot of this type of wealth extant.


And it’s also not a surprise in the least. The Saez and Zucman paper is the state of the art on wealth distribution, in which they tell us:

The bottom half of the distribution always owns close to zero wealth on net.

As they also point out, wealth distributions are very much more unequal than income ones – and both more than consumption – and there’s pretty much no wealth distribution ever where the top 10% haven’t had well over 50% of the wealth.

That is, this wealth distribution that people are complaining about is normal, boringly so. Which does make us all wonder why they are complaining so vociferously.

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  1. “Why are they complaining so vociferously?” In order to devise new rationales (or better said, new sales pitches for the one very old rationale) of seizing it from the haves on the promise of giving some to the have-nots. If wealth is too “concentrated,” then a coerced de-concentration would free up wealth where I could get some. After all, the only reason I failed is that you succeeded too brilliantly.

    There is broad-based “wealth” in people’s minds, but this is not capital that can be loaned out to those with a better plan for it. A beautiful sunset is valuable but it is not “wealth.” And “things owned by government,” such as the Wage And Hour Division, cannot be wealth because they get in the way of work and do nothing useful.

    Short of clever redefinitions of wealth, we can instead attack the basic premise and assert that you cannot strengthen the weak by weakening the strong. If Sam Walton, who made his millions by rolling out a chain of Walmart supercenters, had been stopped from “concentrating that wealth,” there is no way the rest of us would be better off for it. And stopping the next Sam Walton is the essential reason for this “study.”

  2. If you are going to have an innovate and entrepreneurial society you will have some number of successful entrepreneurs because people buy what they are selling. Some smaller portion of them will get very rich because lots of us buy a lot of what they are selling. Some people find this harmful.

  3. Wealth is a measure of assets, millionaire is a classification of income, so what they are breathlessly saying is that those with the most income have the most assets. Shock Horror! Stop the presses! In other news, those with functioning reproductive systems are those most likely to have children.

    • I think ‘millionaire’ is based on wealth, not income. From the days when having a million quid (or even dollars) of free assets really meant something, rather than simply owning a modest dwelling in SE England.

    • Most millionaires don’t have a million dollars in income though they do have at least a million in net assets. The Mexican lady who’s been cleaning my Silicon Valley house for the past 20 years owns two small houses nearby and is most certainly a millionaire, though she doesn’t earn anywhere near that.