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Opinion

Do you feel rich?

Do you feel rich?
July 30, 2014
Do you feel rich?

Credit Suisse's World Wealth Report (it makes sound commercial sense for a private banker to monitor this) estimates that over the past decade money and assets held globally have increased by 68 per cent to a record high of $241 trillion (£158 trillion) - of which the US remains in pole position and accounts for almost three-quarters of the increase (driven by house prices and equity indices). And as no doubt you are probably aware, the richest 1 per cent of the population own almost half of all global assets (and are not terribly popular at the moment), while 10 per cent own 86 per cent of all assets. The Swiss lead the per capita pack, worth $513,000 apiece, then Australia, Norway and Luxembourg on $315,000; rich nations are considered those with more than $100,000 on this basis.

At the other end of the scale it is sobering to realise that two-thirds of all the adults in the world have less than $10,000, accounting for just 3 per cent of global wealth. Pew Research Centre estimates that 71 per cent of the world's population is below the US poverty line. Eye-popping too is the fact that US median real disposable income has increased by less than 20 per cent since 1980 while Norwegians since then have over twice as much to spend, Spaniards and the British come off next best with three-quarters more money in their pockets.

The middle class today is smaller and poorer than thought - and is shrinking in some countries, most notably the US. Based on a family of four, Pew reckons that to maintain a middle class lifestyle you need at least $14,600 and up to $73,000 a year, a surprisingly wide band; above that one is upper class. Meanwhile, data from the US Social Security Administration show that 38 per cent of working Americans earn less than $20,000 a year and 51 per cent less than $30,000 (the exchange rate is roughly $1.55 per £1).

 

UK average earnings

 

This year's survey from New World Wealth ranks the UK as the world's fifth richest country (after the US, China, Japan and Germany) as measured by property, equities and business interests, with an average per capita sum of $147,600. Each German owns just $114,400 because of their propensity to rent their homes.

 

UK house prices

 

A more interesting study is carried out annually by the Legatum Institute and it measures not only economic wealth but also entrepreneurial opportunity, governance, education, health and safety, plus personal freedom and something they call social capital, which tries to capture social cohesion and family/community networks. On these measures, once again Norway and Switzerland are at the top for 2015, Scandinavian and Antipodean ones close behind, US in 11th place (let down by safety and security), and Britain up one slot to 15th place (education, health and safety the weaker metrics). Bottom of the pile of the 142 countries assessed are most African ones, plus Iraq, Pakistan and Syria.

 

US average earnings

  

US house prices