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Monday, 19 January 2015

Half of the World's Wealth

Today's media are making much of the 'analysis' by Oxfam that the richest 1% of the human population will own more in personal assets than the other 99% by sometime next year. Put another way, this means that more than half of all the personal assets in the whole world that are taken into account will belong to that 1% of the population.

This is taken to epitomise 'inequality'. It is Thomas Piketty's reason for proposing a global wealth tax, and the basis for the Vice Cable idea [now adopted by the Labour Party] of a 'mansion tax'. Robbing the rich to help the poor has been the ages-old method for defusing peasants' revolts; yet within a few years following any redistribution the wealth of the rich is again consolidated so that disparities are greater than before.

No existing textbook of 'advanced' Economic Theory explains how disparities of wealth arise, or how they could be reduced, if the political will existed to attempt some forced equalisation. Indeed, Economics has no explanation of inequality, because it does not explain what wealth is, or how it is generated. The time has now come when a majority of educated citizens may be willing to recognise the fact that Economics is an anachronism: and a hindrance to understanding how the system really works.

Of course, there are quibbles to be enjoyed about what the data mean. Much wealth is held by collective private-sector organisations like pension funds, most of which is allocated to providing future benefit to individuals, but it is impossible to allocate their shares to persons at the present time. Much wealth is also held by governments, effectively in trust for their people. When Mrs Thatcher became Prime Minister the British people collectively owned a huge coal-mining industry, gas and electricity, telephones, water supply, airlines, railways and ports, Rolls-Royce and a host of other ancillaries and industries. They also owned a massive acreage of land and all public buildings. Most of this huge asset base was shut down or sold cheaply; and it has now passed to foreign ownership. Instead of being asset-rich, the British people must pay toll and tribute to the alien owners in perpetuity: and there are still people who hail Thatcherism - and privatisation, in particular - as a triumph from which future generations will benefit.

The future is bleak: hence I am in the process of publishing BLEAKONOMICS: my explanation of how the economy came to be as it is, and how an economy really is structured. I hope that it may do much to explain the disparities of wealth that have grown so massively in an era when Democracy and 'fairness' have supposedly prevailed. That publication is the main call on my time at present; once it is 'out' I will be available for discussion via this blog.

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