1% of the World’s Population Holds 40% of the World’s Wealth
One of the reasons why anger is turned against tycoons is the disproportionate level of centralization of wealth. Currently, 1% of the world’s population holds 40% of the world’s wealth [97]. Such extreme centralization affects the stability of the financial system and economic activity throughout the market, since the dominance of the firms owned by the tycoons affects public welfare, which is subject to ties and interests of the dominant firms, their strategies, and the priorities of a ruling few.
A study [98] conducted by S. Vitali, J.B. Glattfelder, and S. Battiston of the Swiss Federal Institute of Technology tested the links of 43,000 international corporations. The study located a relatively small group of firms, primarily banks that hold a disproportionate share of the global economy. The study, “The Network of Global Corporate Control,” found 1318 companies that had ties to two or more other companies. At the core of the network, the study found, members averaged “ties to 20 other members. As a result, about 3/4 of the ownership of firms in the core remains in the hands of firms of the core itself.” [99] Through their shares, the 1318 companies collectively held the majority of production and technology companies, which represent 60% of the global income.
In recent years, the growth engines of those companies have been to acquire even more companies, resulting in perpetually growing corporations. At the head of the pyramid is a tycoon, who usually owns 20-30 companies, and whose favor is sought by banks and other financial institutions. Thus, the system supports tycoons and encourages them to keep growing.
The economics of scale that helps tycoons reduce their costs also helps them when competing with smaller businesses. By pushing smaller companies and manufacturers out of business, tycoons not only grow more, but increase their per-unit profit because now they can drive up their prices, undaunted by competition.
But can tycoons really be blamed for their behavior? In an environment of untamed and ruthless competition, their choice (if they want to play in the market) is to either be hunters or hunted. Yet, instead of blaming the system, we blame those who use it best, forgetting that their skills and resourcefulness could be used favorably if only the economic system encouraged collaboration instead of competition. When you have a person at the top of the pyramid, be it a tycoon or a president, it is easier to put the blame on them rather than mend the system that created them.
For the sake of argument, let us assume that two babies are born on the same day, one to a king, and one to the king’s gardener. Can you blame them for being born into their respective families? Each person has a different starting point in life, not only in wealth, but also in schooling, environment, and so on. How can one determine which of them is more successful? There are people who succeed because of an inheritance that they received, or who came into their fortunes on their own. Here, too, fate plays a part.
As long as one’s means of gaining wealth is within the accepted norms of that person’s society, there is no moral justification to demand that the person share his or her fortune or relinquish it. It is impossible to demand social justice by forcing the wealthy to donate more than others, provided they have paid the taxes they must pay by law. You can increase their taxes or regulate the centralization, but there is a long way between constitutional changes and regulations, and stripping the wealth from the rich.
[97] “40% of world's wealth owned by 1% of population,” CBCNews (December 5, 2006), http://www.cbc.ca/news/business/story/2006/12/05/globalwealth.html,
James Randerson, “World's richest 1% own 40% of all wealth, UN report discovers,” The Guardian (December 6, 2006), http://www.guardian.co.uk/money/2006/dec/06/business.internationalnews
[98] S. Vitali, J.B. Glattfelder, and S. Battiston, “The Network of Global Corporate Control,” Swiss Federal Institute of Technology (arXiv:1107.5728v1 [q-fin.GN], 28 Jul 2011)
[99] Ibid, p 5