The 1%, c'est moi

I tweeted yesterday that there are more Guardian readers in the top 1% of the global rich than there are billionaires. This is because net wealth of $798,000 (£528,000) gets you into the top 1% (p99 of this pdf). This means that many people who have enjoyed 20 years of London house price inflation are in the global rich, whereas there are only 1645 billionaires.

If you want a picture of the global 1%, a bien-pensant 50-something in a house in north London might be more accurate than a billionaire hedge fund manager.

My point here, though, wasn't intended to be a cheap snark. This factoid illustrates four things.

1. The world is poorer than we think. Branko Milanovic has estimated that over half the world's population has an income of less than $5.70 a day (£1380pa). Simon's right to say that the world has made great progress away from poverty - but there's still a hell of a way to go. As Jason Isbell sings:

You should know compared
To people on a global scale
Our kind has had it relatively easy

2. People under-rate their privilege. It's the grit in the shoe that gets noticed. James Blunt gave us a nice example of this yesterday when he whined that "Every step of the way, my background has been AGAINST me succeeding in the music business." In a global context, this is of course highly concentrated horse shit; tell it to Malian musicians who are being crushed by Islamists.

This neglect of our own good fortune matters in two senses. First, it generates a sense of entitlement among people (often rich white men) who convince themselves that they are victims. Secondly, it leads to passing the buck; we convince ourselves that the rich and powerful are other people, not us.

3. Inequality is not a neoliberal conspiracy by a tiny minority. Suzanne Moore writes today that "Inequality is not inevitable, it’s engineered." (See too some of Adam Curtis's wilder imaginings). This gives elites too much credit. Many of the processes that have driven up London house prices - a global hunt for "safe assets", falling crime, financialization, low interest rates because of secular stagnation and so on - haven't been consciously engineered. Inequality is an emergent process, which has benefited not just plutocrats but also people like Suzanne. As the man said:  

Men make their own history, but they do not make it as they please; they do not make it under self-selected circumstances, but under circumstances existing already, given and transmitted from the past.

Suzanne's right to say there's nothing inevitable about inequality. We can do something about it. But doing so - especially on a global scale - might mean reducing our own privilege, not others'.

4. Luck matters. I am one of the 1%. This is not I'm hard-working or talented. It's simply because I was lucky enough to have been born in a rich country at a time when my modest abilities have been in demand. Almost all my income and wealth is due to luck. The idea that rich westerners deserve their wealth owes more to a mental disorder than it does to political philosophy.   

Comments

[Ben]

This is totally wrong. If I live in Romania and earn very little it translates in real terms into a decent house as land prices are not insane.

In London if I earn 100K I could just about afford a small 2 bed in East Finchley (zone 3, not that nice).

The problem which cuts across all your posts whether you like it or not is that land prices in the UK are totally detached from wages and the result has been to stuff many of the boomers+ mouths with gold to keep voting for the status quo.

It's about land.

[Gary]

Yes, and even the standard depiction of the UK's top 1% is distorted. It takes c.£150k pa salary to make the UK 1%. That means we are talking about Doctors, Dentists, NHS Trust Senior Management, Architects, Lawyers, Accountants and management consultants to make into the 1%. Comfortable for sure but not the white cat stroking villans of legend.

[Lord]

Oui. The other thing to keep in mind is that intangibles account for much more, we just don't have an easy way of measuring them, so things like access, education, and knowledge aren't included.

[Steve]

Under what circumstances would you claim that wealth is deserved and not luck? If having skills in an environment that rewards them does not deserve wealth, then what does? Following that logic, you would remove all pressure to excel from humanity, and reduce them to savages

[Ben]

Steve - it's luck because the UK is all about land prices for most. It's all about land.

[Rhys]

Steve a lot can be given to luck; If I take the example of Steve jobs in order for him to be successful he needed; to be born at the right time 10 years earlier or later he would have gone on another career path, he needed a lot of capital to exist already (i.e. computers) he needed to be born in the US where home computing was taking off, he needed to be able financially survive on little to pay for the company to be set up (i.e. parental help). Working hard helped but by no means was the key component of his success

[Ben]

Rhys - Steve Jobs is a terrible example. He made his own luck. The big problem is the UK is not a meritocracy as land price changes eclipse wages. Working hard gets you less money than sitting on land.

[Metatone]

It's basically very sloppy thinking (and an unfriendly reading, as they say in philosophy) to take discussions about nation inequality and then "yah boo sucks" people by bringing in global inequality.

It's also characteristic of the ignorance of economists to imagine that various things have been emergent, rather than influenced.

(Engineered is always too strong a word for a complex system.)

Fundamentally, the most broken thing about economics is it is utterly willing to believe, even in the person of a Marxist extremist (not a fanatic), that our economy is all "emergent" and "the way it is."

[Donald]

Ben - You're not really getting this.

Land price volatility may indeed increase the extent to which luck determines outcomes. But the wider point is that Chris and Steve Jobs would have been unlikely to have done so well if they'd been borne in a different time, place or circumstances.

This doesn't deny that hard work and/or talent are still necessary for their success.

If Steve Jobs had been borne into poverty in Africa he probably wouldn't have founded apple or done anything remotely similar. The same applies if he'd been borne twenty years earlier.

Based on what I understand of Chris's circumstances from this blog, he would have been unlikely to have done so well if he'd been borne at a time when education wasn't free.

[SIS]

"Following that logic, you would remove all pressure to excel from humanity, and reduce them to savages"

Why would this remotely be the case? Mere survival and the basic biological urge to reproduce give human beings all the incentive they need to 'excel,' in addition of course to simple personal desires. Do you really think people will just sit there and die because they might not become immensely wealthy? That seems a far darker and more hideous view of the human condition than anything Chris said.

Chris is merely pointing to the truth that our circumstances are central to our conditions. Whatever life you have lived would clearly be 100% different had you been born in Afghanistan or Somalia.

[Carol]

Steve Jobs made his own luck: he luckily made himself get adopted into a well-to-do family. He luckily made himself acquainted with the brilliant Wozniak. He luckily lied about his work and others luckily awarded him with bounties for lying. He luckily made a fortune off the misfortune of people overseas. Yep, he made his own luck.

[liz]

The magnitude of your wealth can be compared to the height of water above Mariana Trench.

Yes, your individual efforts may contribute to your wealth, just like tides and fluctuations in the Earth's rotation contributes to the height of water above the Mariana Trench.

This does not explain the vast depths of the Mariana Trench. The main contributor of your wealth 90% is determined by the country you grew up in.

All of you who live in the UK complaining about only being able to afford small two bedroom flats in central London - you do not know how lucky you are! You have cheap transportation, stable government and a security net (buggy as it may be) and paid holidays every year. And cheap groceries (the average UK household only spends something like <10% of their income on groceries). And free NHS (despite the complaints).

My parents grew up living eight - ten people to a room because they were so poor. They ate meat on special occasions and had new clothes once a year. They had no welfare net to speak of. They were just one of the many, how many billions of people live like that today.

[Geroge]

> If you want a picture of the global 1%, a bien-pensant 50-something in a house in north London

For many of the older readers I don't think you need to live in London or indeed even have a house to make that global 1%. A 55 year old career long teacher on a teacher's average salary would have accrued pension entitlements worth about the necessary £500K. I'm not picking on teachers, just re-enforcing the point that many of us are richer than we think.

(34 years service at 1/80th accrual per year for RPI linked pension taken at 60 on average salary of £34K is £14.5K p.a. Today's FT says an open market purchase of that has a 2.8% annuity rate, which means you'd need just over £500K.)

[An Alien Visitor]

I agree with some of the comments about land prices etc but really, the principle still holds, we in the West are very fortunate compared with others and our wealth is way above the world average, even factoring in/out land prices.

We live in a society where people are unconscious consumers, who never question their consumption or the impact it has.When faced with mountains of evidence for man made global warming and potential environmental disaster we turn to fracking so we can still consume all the useless shit the private sector throws at us. We are heading for a fall and lets face it, we deserve it.

What has worked against James Blunt is the bland, unoriginal shit he constantly comes out with. He really deserves all the crap that comes his way, I don't care what his background is.

[There is someone behind you]

"If I live in Romania and earn very little it translates in real terms into a decent house as land prices are not insane."

On the other side of the coin, do the figures take into account public services? How is wealth of that apportioned? If it isn't factored in then this underestimates the wealth of the 1%.

[ChurmRincewind]

My problem with this whole discussion is the abrogation of responsibility. Like Chris and (I imagine) most commenters above, I'm one of the 1%, and I freely accept that most my wealth is down to fortunate circumstances.

At the same time, millions of people worldwide suffer and die from the effects of poverty, through no specific fault of their own.

I can't change the world, but I could make a difference. I could save lives.

Hand-wringing about inequality is just an excuse for inaction.

[ben]

The steve jobs example is stupid. The poster on about woz, who cares? So narrow and pointless.

To posters doing a for Yorkshiremen - you could beat people daily using this utterly flawed rational. It's all about inequality.

This post and nearly all the responses are dire.

[SIS]

"This post and nearly all the responses are dire."

Being mono-maniacally focused on land ownership hardly constitutes a good response to Chris's post. Land ownership is hardly be be all, end all of either wealth or security, or a good life. It hardly even translates to Chris' point in the post either. In many horribly poor places in the world people control the land they live in - they just happen to be subsistence farmers. People in Romania are poorer than those in the UK, period, point, blank. There is a reason people migrate from Romania to the UK in droves, and not the other way around.

[Ben]

Agreed Romania is a poorer country. But to translate to USD then rank is just not worth writing about.

The first paragraph starts well with a "cheap snark" at people who have added zero value and got rich off the back of land prices. Then it goes way off into a jumble. Comparing USD values seems to be the theme for this week off the back of Oxfam.

I really also dislike the "you're lucky you weren't born in Africa" line, most oft used by the older and richer pensioners. It's just "we didn't have ipads" all over again. We have huge intergenerational inequalities borne of land prices.

The first para got this then we went off into a mess.

Oh and I just wanted to mention that the Steve Jobs example was dire :-)

[Vrot]

On the subject of Guardian readers in the top 1%. When I used to live in Walthamstow I don't remember seeing a single copy of the Guardian on my commute, it was the Sun as far as the eye could see.

Now that I get the train into town from Twickenham, Guardian readers galore!

[Donald]

Ben - you're still not getting this.

No one here denies that land prices resulted in intergenerational inequalities, or that talent/hardwork is normally required to do well

[Donald]

Ben - also, they have purchasing power parity (PPP) GDP ranking. Look it up.

[Vrot]

Awesome post by the way Chris

[Fabricius]

I can add nothing to the substance of commentary here, but I just want to say how delighted I am that one of my favorite bloggers knows one of my favorite songwriters. Isbell's wife Amanda Shires is excellent in her own right, too.