The rich will always be with us (2009)
June 27, 2009Posted by on
Individuals with net assets of at least $1 million, excluding their primary residence and consumables, are classified as High Net Worth Individuals (HNWI), while those HNWI with net assets of at least $30 million are classified as Ultra-High Net Worth Individuals (Ultra-HNWI). At least this is the criterion used by Merrill Lynch and Capgemini in their 13th Annual Wealth Report (pdf). It seems that the population of HNWI and their share of the worlds wealth has shrunk. The worlds High Net Worth Population is now reduced to 8.6 Million with their share of the worlds wealth dropping to only $32.8 Trillion. The net wealth of these individuals is only expected to reach $48.5 Trillion by 2013, a mere 44% growth over a three year period.
The Guardian reported in 2006 that the richest 1% of adults in the world own 40% of the planet’s wealth, Taken further, theUN report source indicates that 2% of the worlds population own 50% of the worlds wealth, while 1% of the worlds wealth is held by 50% of the worlds population. Wealth in this UN report is net worth: that is, the value of physical and financial assets less debts. Here, wealth represents the ownership of capital, which in many cases it may not be possible to realise or invest. Given the disparity of wealth distribution in the world, excluding the primary residence and consumables, has little relevance to the 50% holders of 1% of the worlds wealth. However, these exclusions do make a distinction between those who have ‘wealth’, however small, and those with the status of HNWI. This latter group make up considerably less than 1% of the worlds population and yet they have the abilty to manipulate the worlds economies through their wealth acquisitions. Their status as High Net Worth Individuals (pdf), represents an ability to ‘maintain investments in wealth creation’ through the ownership of capital that can be realised and invested.
In the UK, the Neo Liberal economics of Thatcher, Major, Blair and Brown have provided professional politicians and professional financiers, virtually unfettered access to, and control of, the economy. An economy based on the the policy that; ‘by increasing the wealth of the HNWI, this ensures wealth distribution as the increase in wealth will trickle down to be shared by all’. In pursuit of this policy, these soi-disant professionals have literally ‘played with other people’s money’, both directly and indirectly, with no personal risk to their own acquisitions of the trappings of wealth. They continue to do so, and in doing so they must inevitably be influenced by High Net Worth Individuals. So perhaps we should be grateful for the current crisis. Without it things would have become far worse before the gross ineptitude, personal greed and self aggrandisement, of these professionals was exposed. As indeed was the naiveté of those who bought into their economic policies, as HNWI or simply as wealthy individuals.
As I commented in my previous post; New Labour – The Party of Inequality, wealth distribution in Britain under New Labour is now more unequal than at any time since modern records began in the early 1960s. While many aspired to become HNWI, or simply acquire more wealth, it’s these soi-disant professionals who have succeeded in doing so above all others. That these professionals should now claim that the present crisis was not the inevitable result of a boom fuelled in part, by Ponzi schemes and Fiat money, is simply disingenuous. As would be, any claim that they have not shown a callous indifference to the consequences of their actions in their pursuit of personal wealth, coupled with their desire to sustain a self perpetuating plutocracy.
The Austrian economic school of Ludwig Von Mises have long held the view that, “The credit expansion boom is built on the sands of banknotes and deposits. It must collapse. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression“. The ultimate insult being, that these political and financial professionals, whilst fuelling the boom, have had their Net Worth, and aspirations to wealth, insured and assured by the the UK public purse. Those contributing this purse must now face up to an inequitable distribution of the ‘price of failure’.
Aldous Huxley was right when he said; “It seems to me that the nature of the ultimate revolution with which we are now faced is precisely this: That we are in process of developing a whole series of techniques which will enable the controlling oligarchy who have always existed and presumably will always exist to get people to love their servitude.”