A new article by the Financial Times indicates that the truly rich are weathering the current financial crisis just fine, thank you.
The ranks of the world’s rich swelled to 8m during 2007 as the wealthy proved immune to the strains across global economies in the latter half of the year.
There was a 4.5 per cent increase last year in so-called “high net worth individuals”, those with assets of more than $1m, according to the 2008 wealth report compiled by Citi Private Bank and Knight Frank, published on Monday.
There was particularly strong growth of wealthy populations in the emerging economies of China and India, as well as those countries that have access to natural resources such as Kazakhstan.
Countries such as Brazil, Canada, Australia and Russia also each added more than 8,500 wealthy residents in 2007 on the back of the commodity boom.
The report says that the rate of growth of high net worth individuals has outpaced growth in both gross domestic product, and GDP per head, which it believes indicates that the rich are getting richer relative to their respective countries.
“This is not a perfect measure of relative wealth growth across income levels,” it says, “but there is an indication here that the plutonomy model retained its strength through 2007 and is in rude health.”
The US is still home to most of the world’s truly rich. High net worth individuals make up 1 per cent of the US population, with 3.1m people claiming to be dollar millionaires, and 460 to be billionaires.
Japan claims the next highest population of the wealthy, with 765,000 dollar millionaires, and then the UK, where there are 557,000.
The UK has seen the biggest increase in billionaires, however. Numbers rose by 40 per cent in 2007, from 35 to 49. China’s high net worth population grew by 14 per cent in 2007, and now number 373,000, almost as many as in Germany.
The report says there was little change in the investment activity of the very rich during the credit crunch in 2007, other than a shift away from structured finance. It says the very wealthy are “weathering the crunch” much better than institutional investors, owing to the diversity of their portfolios.
More than 50 per cent invest in property, which has fuelled a rapid growth in luxury house prices across the world.
I'm not sure what the surprise is here, if any, but it does lend further (albeit circumstantial) evidence to the idea that the neoliberal economic regime will keep the world's weathly wealthy no matter what? Why? Well, if the economic system is tilted towards you
and you pull most of the levers, why would capital flows reverse direction? Or, to put it differently, why would those in power do anything to put their wealth at risk?
The Bear Stearns example is pertinent. Rather than let the markets decide, the elite class used its power to subvert the market and pay off weathly stakeholders. Rather than fix the system, they protect themselves.
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