“Piketty and Plutonomy: the Revenge of Inequality” – 1
from Edward Fullbrook
Bank of America Merrill Lynch has released a report titled “Piketty and Plutonomy: the Revenge of Inequality”. Here is a bit about it from the South China Morning Post.
It is interesting but not wholly surprising to see that Hong Kong has topped another index which it may not be so proud of. It leads the rankings of an analysis which shows the wealth of the uber-rich as a proportion of an economy’s gross domestic product. According to a Bank of America Merrill Lynch report, the net worth of Hong Kong’s billionaires in 2013 represented 76.4 per cent of the city’s gross domestic product.
Sweden’s billionaires were a distant second accounting for 20.7 per cent of GDP. Next was Russia with 20.1 per cent, Malaysia 18 per cent, Israel 18 per cent, Philippines 16.5 per cent and Singapore 16.3 per cent. US billionaires accounted for 13.8 per cent of GDP, Britain’s 6.2 per cent, China’s 3.5 per cent and Japan’s 1.9 per cent.
The report, titled Piketty and Plutonomy: the Revenge of Inequality, examined Thomas Piketty’s highly successful tome, Capital in the Twenty-First Century. Analysis of plutonomy – where economic growth is powered by and largely consumed by the wealthy few – is critical, the authors say, for understanding the complexities of today’s markets, as they go on to enumerate 10 implications of plutonomy for investors.
Piketty projects that the global private wealth to national income ratio will rise from 440 per cent in 2010 to record highs of 500 per cent by 2030, levels that were last seen in 1910. Hong Kong is also highly placed in terms of income inequality when ranked in terms of relative Gini coefficient levels. Hong Kong is third after Colombia and Brazil. One of the report’s conclusions is that unless there is policy intervention, in the longer term “emerging markets are likely to become entrenched and egregious plutonomies”.
more on Bank of America’s plutonomy report soon