Great Graphic: Creating Millionaires

The major economies are without a ballast. The old order, epitomized by Reagan-Thatcher and financial liberalization, has broken down.  The new order has yet to emerge.  There are parallels with period after the breakdown of Bretton Woods.  It took a little more than a decade after the conservative President Nixon instituted wage and price controls before a new order become apparent.

The disparity of wealth and income has become a more important economic and politic issue. The concentration of wealth and income may be one of the factors that suppress aggregate demand.  It has fueled the nationalist and populist movements, especially in Europe.    

If the social pie (GDP) is not growing much, then the fight over its distribution may intensify. Social mobility is difficult to sustain even under the best of circumstances, and is more difficult now. However, it can offer a type of safety valve.    These Great Graphics, created by Credit Suisse, were published in the Wall Street Journal's blog, Real Time Economics.

The first one shows the change in the number of adults with wealth over $1 mln over the past year (July 2013-July 2014).  It is a flow number in the sense that is shows the change not the absolute number. 

The US grew more millionaires that all the G7 countries combined over the past year.  It created more than 18-times more millionaires than China, with three times the population, and more than three-times the growth.  

According to the chart, Turkey, Argentina, Russia and Indonesia saw the number of millionaires fall. Norway stands out as the only high income country in the table that saw a decline in the number of millionaires.  

The second chart looks at where the super-wealthy (net worth in excess of $50 mln) live.   If the first chart was a flow, this one is a stock.   It is simply the number of super-wealthy people in a given country.  

The US easily has the most of the super-rich. It has nearly twice as many as the combined total of next eleven countries.  China is home to the most super-wealthy outside of the United States. 

The EU countries are interesting.  UK population is about 80% of Germany's and it has 85% as many super-rich.  France has a couple million more people than the UK, but has about 15% fewer extremely rich people. 

Emerging market economies also have their economic elite and super-rich.  There are many factors that influence the number of super-wealthy.  History matters, as does culture, broadly understood.  Taxes may matter too, but cannot pushed this too much.  The French government takes more than 45% of GDP and has practically an identical ratio of super-wealthy as Germany.  The link to population size seems rather weak.   Hong Kong, for example, a relatively large number of super-wealthy given its small population (7.25 mln).  The US comes close to the same "density", but not quite.  

Great Graphic: Creating Millionaires Great Graphic:  Creating Millionaires Reviewed by Marc Chandler on October 15, 2014 Rating: 5
Powered by Blogger.