Millions or Billions - Why Care

Lakshmi Mittal has been ranked as India's wealthiest person for a fourth year by Forbes Asia magazine. It put Mr Mittal's fortune at $51 billion (£25 billion), double last year's level.

Mukesh Ambani of Reliance Industries is snapping at Mr Mittal's heels in second place. His net worth grew at a faster pace than Mr Mittal's last year to a total of $49 billion. Mukesh Ambani is building a 27-storey house in Mumbai for his family and this month gave his wife an Airbus 319 as a birthday gift .
"It matters little to me whether my personal fortunes are measured in billions or millions.'' he has said

Ambani's brother, Anil, ranks third, with his net worth rising by $30.2billion to $45billion.

Kushal Pal Singh is fourth on list with a net worth of $35 billion, making him the world's richest real-estate developer. Mr Singh's wealth has more than tripled from the $10billion he had last year after his company, DLF, listed on the stock market in June this year and its stock surged 60% in value.

Fifth position is Azim Premji, the head of technology giant Wipro who is currently valued at $14.8 billion


The net worth of India's 40 richest people now totals $351 billion, with the top three alone worth more than China's top 40, who have a net worth of $120 billion.
India now has 54 billionaires, 18 more than last year . The stock market has roared 53% higher in the past year, and a rupee has appreciated 12% during the same period

We have previous reported the flip side here and here .

But , in case there is a need of reminding half of the nation's 1.1 billion people live on less than $2 a day. The country has among the world's highest prevalence of underweight children at 47 percent, according to the United Nations Children's Fund. About 22 percent of the country's 193.6 million households don't have safe drinking water.
India’s ranking on the basis of the global hunger index (GHI), compiled by the Washington-based International Food Policy Research Institute (IFPRI), is No. 96 among 119 developing countries . The rich get richer but the IFPRI survey shows no progress on hunger alleviation between 1997 and 2003 at the same time .Yet , the fact was that the country was net surplus in food, and also a net exporter of food during that period . The economic access of the poor to food has not improved. Even schemes like Antyodaya , aimed at supplying highly subsidised foodgrain to the poorest of the poor, do not seem to have produced the desired results.

The State of America

Some extracts from Wage Stagnation, Growing Insecurity, and the Future of the U.S. Working Class by William K. Tabb which was in Monthly Review .

Over the three decades from 1972 to 2001:-

The wages and salaries of Americans at the 90th percentile (those doing better than 90% of their fellow citizens) experienced income gains of only 1 % a year on average.

Those at the 99.9th percentile saw their income rise by 181 % over these years (to an income averaging almost $1.7 million).

Those at the 99.99th percentile had income growth of 497%

Between 1997 and 2001:-

The top 10 % of U.S. earners received 49 % of the growth in real wages and salaries;

The top 1% got 24 % of the total ;

While the bottom half of workers received less than 13 %.

This trend is of longer duration. Based on a somewhat different calculation the share of income going to the top .1 % quadrupled between 1970 and 1998

By the mid-1990s CEO pay was about 5 percent of corporate profits. In 2003 their share was 10 percent of all profits

In the 2006 holiday season the top Wall Street firms together paid out an estimated $36 to $44 billion to their employees.

From 2000 to 2006, all 93 million American workers—all production and non-supervisory workers as defined by the government—had real earnings increases of less than half of the combined bonuses awarded by the top Wall Street firms for just one year.

Edward Wolff has documented that the top 10 % of wealth holders own 85% of the value of taxable stocks and mutual funds, the top 1 % own about half.

Thomas Piketty and Emmanuel Saez have demonstrated that the share of pretax income going to the top 1 % of Americans doubled between 1980 and 2004. (The last time the top 1 % had such a large share of the total was in 1937.)

Between 2001 and the spring of 2006 worker hourly productivity rose by 24 %

Men with less than a high school education saw their wages fall in the 1980s in real terms by 20%.

From 1979 to 1992 real yearly wages for male high school dropouts fell by over 23 %

High school graduates with no additional education experienced a fall in real wages of 17 %.

During that 1980s decade, 13 % of Americans between 40 and 50 years of age spent at least one year living in poverty,

But by the 1990s, 36 % did.

In 2004, 1.6 million people filed for personal bankruptcy, twice the number of a decade earlier, and half of those filed after a major medical expenditure. Other prominent causes of debt were divorce and job loss.

The American Dream

Two-thirds of Americans in a 2002 poll believe that success depends on forces within their own control—double the percent who respond this way in Italy or Germany and triple those who respond this way in Turkey or India.

Another 2002 poll found that 81 percent thought they would be richer than their parents.

Three-quarters of poor Republicans, who as a group make up some 10% of the electorate believe that people can make it on their own through hard work and good character.

One poll taken in 2000 found that a quarter of teenagers in the United States believed they would be millionaires by the time they were forty. At the time the poll was taken there were 150,000 millionaires in the country. If the teenagers were right about their future, nine and a half million people would have to jump to this status.

And of course there is always just luck

By the start of the 2000s , Americans were spending more on gambling than on theme parks, video games, spectator sports, and movie tickets.

Data from the late 1990s shows households with incomes under $10,000 a year spend three times as much on lottery tickets as those with incomes of more than $50,000.

The article describes the state of America in these terms

"The most important promises used to justify capitalism are that your children will have a better life than you do, and in President Kennedy’s famous words, “a rising tide lifts all boats,” meaning everyone benefits from the accumulation of capital. These promises ring hollow...

...No longer does economic growth mean increases in the real earnings for the working class as their productivity rises...

... For working people the issues are not simply the stagnation of real wages and growing inequality but the worsening insecurity that permeates many aspects of their lives as labor market conditions change and government abrogates more and more elements of the social contract...

...The U.S. economy is always creating and destroying jobs [Every three months 7 % of all jobs are destroyed and roughly the same number are created. ] . The question is how much trouble do the unemployed have in finding work? What kind of jobs are available? What do they pay? What is the work like? What are the benefit packages, if any? If they are laid off how much pain do workers endure when they are involuntarily separated from employment? How long does the period last? What sort of job did they lose, did they get, and again at what pay and with what benefits?...The true cost of job loss must be measured not just in money as economists do in their limited calculations. For many people there is a spiral pattern in which layoffs lead to not only financial insecurity but to feelings of powerlessness and hopelessness, depression, sleepless nights, headaches, chronic stomach aches, and fatigue that cause lasting harm...Even after getting work some people have trouble talking to the boss and dealing with job demands. The damage done by job loss, even the threat of job loss, along with the worries about how people will live after they are no longer able to work, or if they have a serious illness how they can pay for the doctor and a hospital stay, produce anxieties that permeate working-class existence. There is a rise in escapist pursuits as the economy produces greater uncertainty...

...On the whole, life grows ever more insecure for working people...

...Americans are frustrated that their incomes are not keeping up with the cost of living and that they are being squeezed. They are critical of corporate greed and dishonesty. They want the government to call these corporations, especially pharmaceutical and oil companies, to account. They are worried that things will not get better. But they are not, in great numbers, hostile to the system. They express faith in the American Dream and continue to believe that individuals can overcome obstacles. A majority envy the rich and famous...

...The unspoken assumption underlying the liberal approach is that everyone else is doing just fine. The poor are viewed as a separate group excluded from the benefits of a system that is working for everyone else. This was not a true picture in the 1960s. It is certainly not the case today. The poor are numerous and in need of help, but it is the class nature of society that produces and replenishes the reserve army, that forces some to work full time year round and still be poor, while it excludes others from even this prospect. This makes all workers insecure about the future and fearful of losing what they have...

...The penchant for people to see the basic unfairness of the capitalist system and at the same time accept it and to believe that they can do well against the odds is a difficult reality for Marxists... Why does the working class refuse to take on its historical obligations and instead seek individualistic or escapist alternatives? While the progressive segments of the middle class and some working-class militants are willing to struggle for meaningful change, most working people are not...

Plenty of questions , damn few answers .

Move over Gates

The Times reports , Mexican telecoms tycoon has toppled Bill Gates, the Microsoft co-founder, as the world’s richest man after amassing a $67.8 billion (£33.6 billion) fortune. Sentido Común, a Mexican financial website, has calculated that Carlos Slim Helú, is worth $8.6 billion more than Mr Gates

The rocketing share price of América Móvil, one of Mr Slim’s telecoms companies, helped to push him into first place, according to Sentido Comun’s founder Eduardo Garcia. Shares in América Móvil, Latin America’s biggest telecoms company, rose more than 26 per cent in the three months to June 30. Telmex, another of the tycoon’s telecoms companies, rose 11 per cent and Grupo Financiero Inbursa, his bank, jumped by more than 20 per cent. Microsoft stock went up almost 6 per cent.

The businessman overtook Warren Buffett, as the world’s second-richest man in April, according to Forbes magazine. Buffett, who is worth an estimated $52 billion (£26 billion) , has said that he was taxed at 17.7 per cent on the $46 million he made last year, while his secretary, who earned $60,000, was taxed at 30 per cent.

Telmex operates 90 per cent of the telephone lines in Mexico. Another Slim business, Telcel, supplies almost 80 per cent of the country’s mobile phones. Mr Slim acquired Telmex for $1.8 billion in 1990. Mr Slim also owns Grupo Carso, an industrial company, with interests in shops and restaurants, most of which he bought during the economic crisis that hit Latin America in the 1980s.

Money goes to money

The Wall St Journal reports that World-wide, the number of wealthy individuals climbed to 9.5 million in 2006, an 8.3% increase from 2005 .

The number of ultra-high-net-worth individuals -- those with at least $30 million in investible assets -- increased by 11.3% to 94,970 .

The combined wealth of high-net-worth individuals world-wide increased to $37.2 trillion, up 11.4% from 2005.

In 2006, the U.S. population of high-net-worth individuals -- those with at least $1 million in investible assets, excluding their primary residences -- rose 9.4% to 2.92 million.

The population of high net-worth individuals in Europe increased by 6.4% in 2006

The high-net-worth population in Canada, rose by 6.9% in 2006

China's population of high-net - worth individuals rose by 7.8%

Russia's increased 15.5%

The highest growth in high-net-worth populations took place in Singapore and India, where the increases over 2005 were 21.2% and 20.5%, respectively.

How was the money all made ? Hard work and toil ?

Robert McCann, president of Merrill Lynch Global Private Client Group attributed the increased pace of wealth generation to gains in economic output and continued growth in the world's stock markets . More money went to real estate at the expense of alternative investments, such as hedge funds and foreign currencies, says Mr. McCann.

The report also found that high-net-worth individuals' passion for luxury is growing. Using data from Forbes's Cost of Living Extremely Well Index, it found that the cost of luxury goods and services rose nearly twice as fast in 2006 as the cost of everyday consumer products, signaling that demand for luxury goods is outpacing demand for everyday consumer items. Among "investments of passion," high net-worth individuals allocated the most money to luxury collectibles, including automobiles, boats and airplanes. They allocated 26% of their "investments of passion" dollars to luxury collectibles in 2006, 20% to art and 18% to jewelry, the report said.

Rich get Richer , Poor get Poorer

The New York Times is reporting that the rich are getting richer and the poor getting poorer . So whats new .

Income inequality grew significantly in 2005, with the top 1 percent of Americans — those with incomes that year of more than $348,000 — receiving their largest share of national income since 1928 . The top 10 percent, roughly those earning more than $100,000, also reached a level of income share not seen since before the Depression .

Total reported income in the United States increased almost 9 percent in 2005 but average incomes for those in the bottom 90 percent dipped slightly compared with the year before, dropping $172, or 0.6 percent. The gains went largely to the top 1 percent, whose incomes rose to an average of more than $1.1 million each, an increase of more than $139,000, or about 14 percent.

The new data also shows that the top 300,000 Americans collectively enjoyed almost as much income as the bottom 150 million Americans. Per person, the top group received 440 times as much as the average person in the bottom half earned, nearly doubling the gap from 1980.

The top 10 percent of Americans collected 48.5 percent of all reported income in 2005.

The top 1 percent received 21.8 percent of all reported income in 2005 .

The top tenth of a percent and top one-hundredth of a percent recorded even bigger gains in 2005 over the previous year. Their incomes soared by about a fifth in one year . The top tenth of a percent reported an average income of $5.6 million . The top one-hundredth of a percent had an average income of $25.7 million.