Inequalities rising

A new study by Deloitte describe clearly how the inequalities are rising and the wealth amassed by millionaire households is set to increase by more than 100% over the next 9 years.
The key findings of the Deliotte study:

• According to our analysis, the total wealth of millionaire households in the 25 economies included in this study is forecast to grow from $92 trillion in 2011 to $202 trillion in 2020.
• Our study suggests that the rebalancing of global wealth is expected to accelerate over the next decade. Emerging market (EM) economies are likely to prove to be more dynamic in terms of growth rates, creating significant opportunities for wealth managers seeking to gain a share of these potentially lucrative markets. Among emerging markets, China may continue to be the driving force in the growth of millionaire wealth, followed by Brazil and Russia. Of the 25 economies examined in this study, China and South Korea are likely to join the top10 in terms of the total number of millionaires by 2020.
• However, there is a paradox at the heart of this story. According to our study, in spite of the rapid growth of wealth in the EM economies, U.S. and Europe will remain the global centers of wealth over the next decade, in terms of both the amount of wealth held and the number of millionaire households. Our analysis indicates that aggregate wealth of millionaire households in the U.S. in 2020 will likely reach $87 trillion, from $39 trillion in 2011.
• Our forecasts suggest that, in 2020, 43% of the world’s wealth among millionaire households will be in the U.S. Opportunities for growth potentially exist via greater U.S. state penetration. In the U.S., California will likely have the most number of wealthy households, while New Jersey may continue to have the greatest density. The East Coast is likely to see the highest growth rates —New York and Florida together may add 1.5 million new millionaire households by 2020.
• Our forecasts suggest that total wealth among millionaire households will increase from $92 trillion in 2011 to $202 trillion by 2020, a growth of 119%. In emerging markets, the growth over the next decade is potentially quite impressive (260%), significantly outpacing the growth (107%) in developed markets.

According to our study, the total wealth among millionaire households of the 25 economies in this study generally exhibit little change in their ranking over the next decade. Emerging market economies will likely see some upward movement in rank (e.g., China).

In terms of the total number of millionaire households, emerging markets are likely to see an upward movement in rank, with some economies rising meaningfully (South Korea, Mexico) and others dropping slightly (Taiwan, Turkey).

The proportion of the ultra-wealthy in relation to total households in 2020 is likely to be the highest in Singapore.

Social spending and inequality

Here some interesting trends in the Organization for Economic Cooperation and Development’s latest “Society at a Glance Report.”
Check this very interesting chart:


Here’s how to read this chart. The horizontal axis shows public social spending as a percent of net national income. The vertical axis shows the Gini coefficient, which is a measure of income inequality. A low Gini coefficient means a country has more equal income distribution, while a high Gini coefficient shows more unequal distribution.
The interesting part about Italy is the amount of social spending and the results in terms of social improvement this spending brings to the people.
We are the only major industrial country with a very high social and income inequality.
Despite spending almost 30% of our national net income the results are discomforting. The only developed country faring worst is United States which is spending only 18%, almost half of Italy spending and with slightly worst results. Everyone else regardless of the spending is faring astronomically better than Italy.
This is telling us something about how the spending is done in Italy. Spending is not finalized to real social improvement but it becomes capital flushed in the public sector with little or none oversight which is routinely looted by corrupt officials and politicians and distributed to their cronies, affiliates and families. This capital which should be targeting the reduction of inequalities is becoming in first instance the source and engine of the growing inequality gap.
It would be nice at least once to see the Italian media reporting these news in order to start a debate on what kind of society is Italy devolving into.
Unfortunately there is little hope of this in a country whose media are muzzled and tamed by the Prime Minister and the people is either band-wagoning on the looting parade or silently living in denial and apathy.