The world’s richest became $1 trillion wealthier in 2017 and here’s why that should worry us

The more that the wealthiest few control the majority of a country’s income, the more the general population becomes stressed, angry and worried

Josie Co
Wednesday 27 December 2017 13:51
Jeff Bezos became the world’s richest person in 2017
Jeff Bezos became the world’s richest person in 2017

Many of us will be familiar with that post-Christmas feeling of deflation: the anaemic state of our bank accounts, coupled with an expanding waistline, and perhaps an element of guilt or frustration stemming from that unresolved family row. The season to be jolly has clearly run its course.

So headlines announcing that the world’s richest individuals increased their wealth by a weighty $1 trillion, or about £750bn, in 2017 – as most of us here in the UK battled stagnant wages, rising shop prices and that nauseating refrain of Brexit uncertainty – won’t necessarily be met by raucous applause.

In fact, the figures are quite startling. Bloomberg’s Billionaire Index, which measures the wealth of the world’s top 500 people, shows that the richest of the rich controlled a total of $5.3 trillion in 2017, up from an already staggering $4.4 trillion at the same point in 2016. For context, the United States of America – the world’s largest economy – has a gross domestic product of somewhere around $19 trillion.

Top of the pack was Jeff Bezos, the e-commerce tsar who founded Amazon back in the 1990s and still leads the behemoth today. Spurred by an increase of more than 50 per cent in the share price of Amazon to well over $1,000 in the last 12 months, the bald entrepreneur from Albuquerque, New Mexico, saw his personal riches mushroom by $34.2bn to just under $100bn. That increase alone is roughly equivalent to the GDP of Bolivia.

Other big gainers of the year include veteran financier Warren Buffett, who grew his riches by almost $12bn, Microsoft co-founder Bill Gates, who – despite losing the top spot in the overall ranking to Mr Bezos in October – grew his wealth by almost $9bn, and Facebook daddy Mark Zuckerberg, with an almost $23bn surge.

So all in all, not a bad year to be a billionaire. But what does it mean for the rest of us? Well if you’re already disheartened by the prospect of the fattest felines getting even chunkier as we mere mortals wistfully channel pathetic pennies into our hungry ISAs, then you might want to stop reading round about now.

Back in 2016, a working paper published by a group of academics from such esteemed institutions as the University of Oxford, London School of Economics and Cornell University found that as the rich get richer the rest of us get grumpier.

“Some theories suggest that, overall, inequality can be a good thing: individuals are motivated by seeing others accumulate more wealth, as they believe that they can do the same,” Jan-Emmanuel De Neve of Oxford’s Saïd Business School and one of the authors of the paper, said at the time.

“While this may happen to a certain extent in some transitional or emerging economies, our research shows that, worldwide, income inequality at the very top makes us all less happy with our lives, even if we’re relatively well-off,” he added.

De Neve and his colleagues measured the share of taxable income held by the top 1 per cent in each country over time, and charted that against reported levels of life satisfaction and positive or negative emotional wellbeing across the population.

The findings were quite clear: in societies where the richest control the majority of the country’s income, the population as a whole is more likely to report feeling “stressed”, “worried” or “angry”.

“We started our research by asking if income inequality at the very top really matters to the life evaluation of the average person,” said De Neve’s co-author Nattavudh Powdthavee of the LSE. “The results have shown conclusively that it does.”

The logic behind their theory is not complicated. As the rich get richer, they are responsible for pricing certain goods and services out of the reach of the rest of the population – think top schools, the best hospitals and property in particularly desirable locations.

Trump praises 'tremendous reform' after tax bill passes giving cuts to America's richest

And then there’s also a crucial psychological factor that may play a part: seeing the most prosperous becoming even more affluent might make you feel like your chances of moving up the ladder are fluttering away – like $100 notes in the breeze. And I can’t blame you.

If you’re still reading, then let me reward you with a small consoling factoid to conclude. We in the UK might actually not have it as bad as our peers in other western nations. Bloomberg’s index of the 500 super rich currently includes only 14 individuals from the UK, of which only one – the youthful 7th Duke of Westminster – just about squeezes into the top 100 by taking 99th spot with an estimated wealth of a whisker under $13bn. The US is represented by over 150 individuals in the list of 500 and dominates the upper echelons by taking six of the first 10 positions.

So yes, there are better ways of recovering from that post-Christmas slump than by being reminded of just how poor we all really are, and of the precipitous rise in global inequality. But we might be a lot grumpier if we lived elsewhere.

And if you needed yet another reason not to move to America in 2018, well now you might just have one.

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