0732 GMT October 19, 2018
It covers only the 500 richest people, and it proudly announces that they have increased their wealth by $1 trillion in just one year. Their fortunes went up by 23 percent to top comfortable $5 trillion (to put this in perspective, the US budget is now at 3.7 trillion), IPS wrote.
That obviously means an equivalent reduction for the rest of the population, which lost those trillion dollars. What is not widely known is that the amount of the circulation of money stays the same; no new money is printed to accommodate the 500 richest billionaires!
In fact, Forbes, the magazine for the rich, states that there are over 2.000 billionaires in the world, and this number is going to increase and increase fast. China has now overtaken the US, by having 594 billionaires as compared to the US’s 535 — and every three days a new millionaire is born. There is even an exclusive club of billionaires, the China Entrepreneur Club, which admits members only by the unanimity of its 64 members at present. Together they have $300 billion, the 4.5 percent of the Chinese GNP. As a norm, the Chinese wealth is a family affair, which means that in 10 years they will leave a heritage of $1 trillion, most probably to their sons; and the amount of inherited wealth is going to rise to three trillion dollars in 20 years.
We know from a large study by the French economist Thomas Piketty covering 65 countries during modern times, that the bulk of wealth comes from inherited money. That because, as we all know, money begets money. And Reagan started his campaign: “Misery brings misery, wealth brings wealth”: therefore, we must tax rich people less than poor people. But Trump’s tax law just adopted in the US, cuts taxes to companies, increasing the US deficit by 1.7 trillion dollars over ten years. Nobody is noticing that the US deficit is already at $18.96 trillion or about 104 percent of the previous 12 months of the Gross Domestic.
This tax reform will have a deep impact on Europe, by shifting there many of the costs of the reform, through balance of payments and trade. The five most important ministers of finance of Europe, UK included, have written a letter of protest, obviously much to the glee of President Trump, who perceives only the US as winner, and all others as losers.
All this staggering amount of money in a few hands (eight people have the same wealth as 2.3 billion people), brings us to three relevant considerations:
a) what is happening with the world debt
b) how are governments helping the rich to avoid taxes;
c) the relation between injustice and democracy.
None of those perspectives gives space for hope, and least of all trust in our political class.
Let us start with the world’s debt. I do not remember to have seen a single article on that in the closing year. Yet the International Monetary Fund has alerted: gross debt of the non-financial sector has doubled in nominal terms; since the end of the century to $152 trillion. This is a record 225 percent of the world GDP. Two thirds come from the private sector, and one third from the public sector. But this increased from below 70 percent of the GDP last year now to 85 percent, a dramatic rise in such a short time.