The Rich may soon own the world

According to a recent study by Oxfam the richest 1% of the world would soon own more than half of the world’s population. The rich have gone from owning 44% of the world’s wealth in 2009 to 48% last year. If this continues, by the end of 2015 they would own more than 50% of the total money.

If that scares you, hang on, there’s more. The 85 richest people on the face of the Earth have the same money as the poorest 50%. That means 85 well-offs have the same money as 3.5 billion destitutes. This income inequality is going to become even starker very soon – the 80 richest people would be worth the same as the poorest 50%.

What about the rest of the dough?
52% of global wealth that’s not owned by the richest 1% is owned by the richest 20%. The remaining population accounts for a mere 5.5% of global wealth.

But everyone can’t earn the same, duh!
While no one is arguing for perfect equality, the combined trends of income inequality and decreased mobility pose a fundamental threat to the world as we know it.

It’s a defining challenge of our time.

Why should I care?
Income inequality can actually hinder overall economic growth. Also, the poor are hurt twice by soaring inequality. It means they earn little and there is lesser money going around. The result – they grow poorer.

They can always take a loan!
People with lower incomes are increasingly encouraged to take bigger loans to sustain their aspirations.

If these loans aren’t repaid on time (which is often the case), the economy can swing from boom to bust like the 2009 Credit Crunch.

But…but HOW exactly can the poor help the economy?
The poor tend to spend more. That means their expenditure is more as a percentage of their income.

So if they get more money to blow, there is more liquidity in the market, and the overall economic growth tends to be faster. It’s a win-win for the country.

Image credit: Indiatimes