Author: Deborah Hardoon, Senior Researcher, Oxfam Link to paper http://policy-practice.oxfam.org.uk/publications/wealth-having-it-all-an d-wanting-more-338125 OXFAM RESEARCH: Methodology and data sources January 2015
Author: Deborah Hardoon, Senior Researcher, Oxfam
Link to paperhttp://policy-practice.oxfam.org.uk/publications/wealth-having-it-all-and-wanting-more-338125
OXFAM RESEARCH: Methodology and data sources January 2015
There were two main external data sources used for this analysis:
1 Credit Suisse Global Wealth Databook 2014https://www.credit-suisse.com/uk/en/news-and-expertise/research/credit-suisse-research-institute/publications.html
Data was extracted from the 2014 report and a STATA file which included revised calculations for global wealth and wealth shares dating back to 2000.
2 Forbes billionaires 2002–2014http://www.forbes.com/billionaires/
Data was extracted from the Forbes billionaires list as of March each year, from 2002 to 2014.
• By 2016, the top 1% of people in the world will have more wealth than the bottom 99%.
• 80 people now have the same wealth as the bottom half of the world’s population, down from 388 in 2010.
• 20% of the Forbes billionaires are listed as having interests or activities relating to the financial and insurance sectors.
• Billionaires with interests and activities in the pharmaceutical sector saw the largest percentage increase in their wealth 2013–2014
• During 2013, companies from the financial and insurance sectors spent $550m on lobbying policy makers in Washington and Brussels alone.
• The most prolific lobbying activities in the US are on budget and tax issues
BY 2016 THE TOP 1% WILL HAVE MORE WEALTH THAN THE REST OF THE WORLD COMBINED
The concept: We know that the top 1% have a huge amount of wealth, but is this amount increasing, and what does this suggest for the future?
Data sources: Credit Suisse Global Wealth Databook (2000–2014)
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% S
ha
re g
lob
al w
ea
lth
Share of global wealth of the top 1% and bottom 99% respectively
Bottom 99%
Top 1%
BY 2016 THE TOP 1% WILL HAVE MORE WEALTH THAN THE REST OF US COMBINED
The results:
40
42
44
46
48
50
52
54
56
58
% S
ha
re g
lob
al w
ea
lth
Share of global wealth of the top 1% and bottom 99% respectively; dashed line projects the 2010–2014 trend
Top 1%
Bottom 99%
BY 2016 THE TOP 1% WILL HAVE MORE WEALTH THAN THE REST OF THE WORLD COMBINED
What does this tell us?
• The last few years have set us on a worrying trend.
• Since the end of the financial crisis, many people have struggled to regain jobs and to manage under austerity packages. In contrast, the richest appear to be increasing their wealth during this period, capitalizing on the increase in asset values that only they have access to.
• There is an urgent need to halt and reverse this trend. There are already extremely high levels of wealth inequality; let’s not let it get any worse.
BY 2016 THE TOP 1% WILL HAVE MORE WEALTH THAN THE REST OF US COMBINED
The critique: ‘Why extrapolate only from 2010? Wealth inequality was higher in 2000.’
• The wealth share of the 1% has been extremely high for the last decade: worryingly high levels in their own right.
• 2008/2009 marks a clear inflection point, following a real economic shock to the global economy. After this point, we can identify a clear upward tick; our projection warns what will happen in the next few years, if the trend continues.
40424446485052545658
% S
ha
re g
lob
al w
ea
lth
Share of global wealth of the top 1% and bottom 99% respectively
Bottom 99%
Top 1%
80 PEOPLE NOW HAVE THE SAME WEALTH AS THE BOTTOM 50%
The concept: In 2014 in Davos, Oxfam’s paper ‘Working for the Few’ and the famous 85 stat went viral. Now let’s look at extreme wealth inequality over time ...
Data sources:• Credit Suisse Global Wealth Databook (2000–2014)• Forbes list of billionaires (2000–2014)
Calculation:
1 (%)
2 (%)
3 (%)
4 (%)
5 (%)
Bottom 50%
Total global wealth
Wealth of bottom 50%
2014 -0.3 0.1 0.1 0.3 0.5 0.7% $263 tr $1.8 tr
80 PEOPLE NOW HAVE THE SAME WEALTH AS THE BOTTOM 50%
Calculations:
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1000
1500
2000
2500
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Wealth of the 80 richest people has doubled in nominal terms 2009-2014, while the wealth of the bottom 50% is lower in 2014 than it was in 2009
Wealth of bottom 50% ($bn)
Wealth of richest 80 people (From Forbes, $bn)
80 PEOPLE NOW HAVE THE SAME WEALTH AS THE BOTTOM 50%
The results:
388
177159
9280
0
50
100
150
200
250
300
350
400
450
2010 2011 2012 2013 2014
Nu
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of
bill
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# Billionaires who have the same amount of wealth as the poorest half of world's population
80 PEOPLE NOW HAVE THE SAME WEALTH AS THE BOTTOM 50%
What does this tell us?
• A completely absurd distribution of the world’s wealth; inefficient and unjust
• A minority of people have more wealth than they could possibly know what to do with, and it keeps growing
• Half of the population have negative, zero or small financial and non-financial assets. This leaves them vulnerable to shocks; unable to own property or assets that can support their livelihoods
80 PEOPLE NOW HAVE THE SAME WEALTH AS THE BOTTOM 50%The critique: ‘7% of the poorest 10% of people on the planet live in the US’
Regional composition of global wealth distribution 2014Source: Credit Suisse, Global Wealth Databook 2014, https
://publications.credit-suisse.com/tasks/render/file/?fileID=5521F296-D460-2B88-081889DB12817E02
SS
80 PEOPLE NOW HAVE THE SAME WEALTH AS THE BOTTOM 50%
The critique: ‘The bottom 10% have negative wealth; people with negative wealth are not necessarily the poorest.’
• This is an analysis of net wealth: complex and hard to measure, but for which we have the most reliable data from a credible source. Negative wealth is an important part of the wealth picture.
• We compare the very top of the distribution with the bottom 50%; 3.5 billion people, 90% of whom live in developing countries.
• The negative wealth of the bottom 10% is a quarter of 1% of global wealth. The top 10% have 87% of global wealth; the gross disparity of wealth distribution is clear.
1 (%)
2 (%)
3 (%)
4 (%)
5 (%)
Bottom 50%
Total global Wealth
Wealth of bottom 50%
2014 -0.3 0.1 0.1 0.3 0.5 0.7% $263 tr $1.8 tr
20% OF BILLIONAIRES HAVE INTRESTS AND/OR ACTIVITIES IN THE FINACE/INSURANCE SECTOR
The concept: Wealth comes from somewhere, we want to unpack where the wealthiest have made their money.
Data: Forbes billionaires 2013 and 2014
Calculations:
Billionaires
Wealth 2013 ($mil)
Wealth 2014 ($mil)
Sector code (Oxfam coding)
Origin of wealth (Forbes) Country
Bill Gates 67000 76000 Tech Microsoft United StatesCarlos Slim Helu & family 73000 72000 Telecoms telecom MexicoAmancio Ortega 57000 64000 Retail Zara SpainWarren Buffett 53500 58200 Finance Berkshire Hathaway United StatesLarry Ellison 43000 48000 Tech Oracle United StatesCharles Koch 34000 40000 Diversified diversified United StatesDavid Koch 34000 40000 Diversified diversified United StatesSheldon Adelson 26500 38000 Entertainment casinos United StatesChristy Walton & family 28200 36700 Retail Wal-Mart United StatesJim Walton 26700 34700 Retail Wal-Mart United States
20% OF BILLIONAIRES HAVE INTRESTS AND/OR ACTIVITIES IN THE FINACE/INSURANCE SECTOR
Results:
Sector
Count of billionaires in 2013 and 2014
Sum of wealth 2013 ($m)
Sum of wealth 2014 ($m)
Increase in wealth ($m)
Increase in wealth %
Grand total 1761 5432610 6447190 1014580 19%Finance 326 998200 1147500 149300 15%Real estate 160 391650 413050 21400 5%Retail 155 657100 787050 129950 20%Tech 131 446000 627440 181440 41%Extractives 118 453100 437150 -15950 -4%Product 110 225500 327400 101900 45%Pharma 95 170050 249950 79900 47%Diversified 95 377650 395050 17400 5%
Entertainment 67 170900 248300 77400 45%
20% OF BILLIONAIRES HAVE INTRESTS AND/OR ACTIVITIES IN THE FINANCE/INSURANCE SECTOR
Results:
BillionaireWealth in 2013 $bn
Wealth in 2014 $bn
Increase in wealth
Source of wealth Nationality Gender
Warren Buffett 53.5 58.2 9%Berkshire Hathaway United States M
Michael Bloomberg 27.0 33.0 22% Bloomberg LP United States M
Carl Icahn 20.0 24.5 23%Leveraged buyouts United States M
Prince Alwaleed Bin Talal Alsaud 20.0 20.4 2% Investments Saudi Arabia M
George Soros 19.2 23.0 20% Hedge funds United States M
Joseph Safra 15.9 16.0 1% Banking Brazil M
Luis Carlos Sarmiento 13.9 14.2 2% Banking Colombia MMikhail Prokhorov 13.0 10.9 -16% Investments Russia M
Alexey Mordashov 12.8 10.5 -18%
Steel, investments Russia M
Abigail Johnson 12.7 17.3 36%Money management United States F
BILLIONAIRES WITH INTRESTS/ACTIVITIES IN THE PHARMACEUTICAL/HEALTHCARE SECTOR SAW THE LARGEST % INCREASE IN WEALTH 2013–2014Results:
BillionaireWealth in 2013 $bn
Wealth in 2014 $bn
Increase in wealth
Source of wealth Nationality Gender
Ernesto Bertarelli & family
11.0 12.0 9% Biotech, investments Switzerland M
Dilip Shanghvi 9.4 12.8 36% Pharmaceuticals India M
Hansjoerg Wyss 8.7 10.5 21% Medical devices Switzerland M
Patrick Soon-Shiong 8.0 10.0 25% Pharmaceuticals United
States M
Ludwig Merckle 7.1 8.6 21% Pharmaceuticals Germany M
Stefano Pessina 6.4 10.4 63% Drugstores Italy M
Thomas Frist Jr & family 4.8 6.1 27% Healthcare United
States M
Gayle Cook 4.0 5.8 45% Medical devices United States F
Curt Engelhorn 4.0 4.0 0% Pharmaceuticals Germany M
Cyrus Poonawalla 3.9 4.9 26% Biotech/vaccines India M
20% OF BILLIONAIRES HAVE INTRESTS AND/OR ACTIVITIES IN THE FINANCE/INSURANCE SECTOR
What does this tell us?
• The financial sector is highly lucrative to individuals with activities and interests in this sector, a sector that is widely thought to have contributed to the global economic crisis, which has cost many ordinary people their homes and jobs.
• This raises the question of whether the accumulation of wealth by a few is paid for elsewhere in the economy. Indeed research from the IMF finds that the US subsidizes their ‘too big to fail’ banks to the tune of $83bn annually.
• Billionaires from the pharmaceutical sector have increased their wealth by $80bn in a single year. Meanwhile drugs continue to be prohibitively expensive for many in need. This is a clear indication that corporate profit and extreme wealth accumulation are prioritized over access to healthcare and medicines.
$550m WAS SPENT BY FINANCE/INSURANCE SECTOR LOBBYISTS IN BRUSSELS AND WASHINGTON IN 2013
The concept:
‘Working for the Few’ found evidence to suggest that wealth is also associated with political influence. Lobbying is one of the mechanisms that individuals, companies and other organizations use to influence policy makers directly.
Data sources: • Washington: Centre for Responsive Politics (opensecrets.org)• Brussels: Corporate Europe Observatory
Calculations:
$400m in Washington
$150m in Brussels
$550m WAS SPENT BY FINANCE/INSURANCE SECTOR LOBBYISTS IN BRUSSELS AND WASHINGTON IN 2013Results:
Annual lobbying on finance/insurance/real estateSource: https://www.opensecrets.org/lobby/indus.php?id=F&year=2014
$550m WAS SPENT BY FINANCE/INSURANCE SECTOR LOBBYISTS IN BRUSSELS AND WASHINGTON IN 2013
What does this tell us?
• This is just the tip of the iceberg. Lobbying can take place at all levels of government in all countries. And this is just one channel that people and companies in positions of power and wealth can use to exercise their influence.
• For profit-oriented companies, one can only assume that there will be a financial return from this investment that will accrue through policies favourable to their interests. It seems to be working, if you associate this with the accumulation of wealth at the top.
• Ordinary people do not have the same access to policy influencing.
THE MOST PROLIFIC LOBBYING ACTIVITIES IN THE US ARE ON BUDGET AND TAX ISSUES
Results:
Number of lobbying cases filed against each issue in the US in 2013
Source: https://www.opensecrets.org/lobby/top.php?showYear=2013&indexType=u
Issue Number of clients
Federal budget and appropriations 3219
Tax 1951
Health issues 1898
Transportation 1371
Defence 1297
Energy and nuclear power 1238
THE MOST PROLIFIC LOBBYING ACTIVITIES IN THE US ARE ON BUDGET AND TAX ISSUES
What does this tell us?
• Companies are lobbying on the issues that affect the public; issues directly associated with how the government spends its money and how it raises its taxes
• Spending money lobbying on tax suggests that these companies with a profit incentive would hope to be able to reduce their tax burden, which means less money available for public services or more taxes raised from elsewhere in the economy.
• Voices and influence on these fundamentally public issues must be more balanced.
© Oxfam International January 2015 www.oxfam.org