One important point to bear in mind is that while the United States remains the fourth-highest country for wealth per adult (after Switzerland, Iceland, and Australia) at $344,692, its median wealth per adult has fallen to 27th in the world, down to $44,977. As I have pointed out before, the reason for this is much higher inequality in the U.S. In fact, the U.S. ratio of mean to median wealth per adult is 7.66:1, the highest of all rich countries by a long shot.
The tables below illustrate this. First, I will present the 29 countries with median wealth per adult over $40,000 per year, from largest to smallest. The second table also includes mean wealth per adult and the mean/median ratio, sorted by the inequality ratio.
1. Switzerland | $244,002 |
2. Iceland | $188,088 |
3. Australia | $162,815 |
4. Belgium | $154,815 |
5. New Zealand | $135,755 |
6. Norway | $135,012 |
7. Luxembourg | $125,452 |
8. Japan | $120,493 |
9. United Kingdom | $107,865 |
10. Italy | $104,105 |
11. Singapore | $101,386 |
12. France | $ 99,923 |
13. Canada | $ 96,664 |
14. Netherlands | $ 81,118 |
15. Ireland | $ 80,668 |
16. Qatar | $ 74,820 |
17. Korea | $ 64,686 |
18. Taiwan | $ 63,134 |
19. United Arab Emirates | $ 62,332 |
20. Spain | $ 56,500 |
21. Malta | $ 54,562 |
22. Israel | $ 54,384 |
23. Greece | $ 53,266 |
24. Austria | $ 52,519 |
25. Finland | $ 52,427 |
26. Denmark | $ 52,279 |
27. United States | $ 44,977 |
28. Germany | $ 42,833 |
29. Kuwait | $ 40,803 |
Source: Credit Suisse Global Wealth Databook 2016, Table 3-1
Now that I've got your attention, let me remind you why this low level of median wealth is a BIG PROBLEM. Quite simply, we are careening towards a retirement crisis as Baby Boomers like myself find their income drop off a cliff in retirement. As I reported in 2013, 49% (!) of all private sector workers have no retirement plan at all, not even a crappy 401(k). 31% have only a 401(k), which shifts all the investment risk on to the individual, rather than pooling that risk as Social Security does. And many people had to borrow against their 401(k) during the Great Recession, including 1/3 of people in their forties. The overall savings shortfall is $6.6 trillion! If Republican leaders finally get their wish to gut Social Security, prepare to see levels of elder poverty unlike anything in generations. It will not be pretty.
Let's move now to the inequality data, where I'll present median wealth per adult, mean wealth per adult, and the mean-to-median ratio, a significant indicator of inequality. These data will be sorted by that ratio.
1. United States | $ 44,977 | $344,692 | 7.66 |
2. Denmark | $ 52,279 | $259,816 | 4.97 |
3. Germany | $ 42,833 | $185,175 | 4.32 |
4. Austria | $ 52,519 | $206,002 | 3.92 |
5. Israel | $ 54,384 | $176,263 | 3.24 |
6. Kuwait | $ 40,803 | $119,038 | 2.92 |
7. Finland | $ 52,427 | $146,733 | 2.80 |
8. Canada | $ 96,664 | $270,179 | 2.80 |
9. Taiwan | $ 63,134 | $172,847 | 2.74 |
10. Singapore | $101,386 | $276,885 | 2.73 |
11. United Kingdom | $107,865 | $288,808 | 2.68 |
12. Ireland | $ 80,668 | $214,589 | 2.66 |
13. Luxembourg | $125,452 | $316,466 | 2.52 |
14. Korea | $ 64,686 | $159,914 | 2.47 |
15. France | $ 99,923 | $244,365 | 2.45 |
16. United Arab Emirates | $ 62,332 | $151,098 | 2.42 |
17. Norway | $135,012 | $312,339 | 2.31 |
18. Australia | $162,815 | $375,573 | 2.31 |
19. Switzerland | $244,002 | $561,854 | 2.30 |
20. Netherlands | $ 81,118 | $184,378 | 2.27 |
21. New Zealand | $135,755 | $298,930 | 2.20 |
22. Iceland | $188,088 | $408,595 | 2.17 |
23. Qatar | $ 74,820 | $161,666 | 2.16 |
24. Malta | $ 54,562 | $116,185 | 2.13 |
25. Spain | $ 56,500 | $116,320 | 2.06 |
26. Greece | $ 53,266 | $103,569 | 1.94 |
27. Italy | $104,105 | $202,288 | 1.94 |
28. Japan | $120,493 | $230,946 | 1.92 |
29. Belgium | $154,815 | $270,613 | 1.75 |
Source: Author's calculations from Credit Suisse Global Wealth Databook 2016, Table 3-1
As you can see, the U.S. inequality ratio is more than 50% higher than #2 Denmark and fully three times as high as the median country on the list, France. As the title says, this is not even close.
The message couldn't be clearer: Get down to your town halls and let your Senators and Representatives know that it's time to raise Social Security benefits and forget the nonsense of cutting them.
Cross-posted to Angry Bear.
God will take care of it, it's his plan...BTW, I would have never expected Denmark to be so unequal as its Gini index is one of the lowest for OECD countries, why this paradox?
ReplyDeleteSorry Ken, you can't do it this way. From he C Suisse report:
ReplyDelete"Net worth, or “wealth”, is defined as the value of financial
assets plus real assets (principally housing) owned by
households, minus their debts. This corresponds to the
balance sheet that a household might draw up, listing the
items which are owned, and their net value if sold. Private
pension fund assets are included, but not entitlements to
state pensions"
Let's say we double SS entitlement, just as as mind experiment. We don't change your wealth numbers at all, do we? Thus we can't really use these wealth numbers to justify a doubling of SS.
We need to have the numbers after the effect of SS to be able to say something interesting about SS.
"...49% (!) of all private sector workers have no retirement plan at all, not even a crappy 401(k)." Congress could attack this problem by adopting the reform outlined in the article "Keeping America's Retirement Promise." Here's a link: http://baltimorechronicle.com/2017/170316Scorse.shtml
ReplyDeleteThe US median feels high to me. Some time ago in the wake of the house price decline it appeared from survey of consumer finances data that the lower 60% was likely zero. Unlikely they have been real state winners since then. Maybe the number includes PV public benefits.
ReplyDelete"All comments are pre-moderated. No spam, slurs, personal attacks, or foul language will be allowed."
ReplyDeleteWhy wasn't my comment posted? It didn't violate any of the rules you laid down (above). Of course it's your blog, and you can do whatever you choose; just curious.
Sorry, Gerald, I'm on a tight paper deadline. I didn't even look at my blog dashboard until just now which is why I'm just now approving the comments.
DeleteI'm surprised Tim Worstall should suggest no link between income and wealth. It's where my wealth comes from. Maybe he inherited all his, but his parents or ancestors would still have had to accumulate it at some point. Also, low income is frequently where wealth disappears to, especially for people unlucky enough to be hit by medical costs.
ReplyDeleteAnother way people prosper and accumulate wealth is by taking chances. People on restricted incomes can't do that.