What nation ranks as the world’s richest? A simple question to answer, right. Well, not so much, suggests the just-released tenth annual Global Wealth Report from the banking giant Credit Suisse. Everything turns out to depend on how we define “richest.”
If we mean by “richest” the nation with the most total wealth, we have a clear worldwide number one: the United States. The 245 million adults who call the United States home held, as of this past June, a combined net worth of $106 trillion. No other nation comes close to that total. China ranks a distant second, with a mere $64 trillion, Japan even farther back at $25 trillion.
But if we mean by richest the nation with the most wealth per person, top billing goes to Switzerland, not the United States. The average Swiss adult is sitting on a $565,000 personal nest-egg. Americans average $432,000, a figure only good enough for second place.
So does Switzerland merit the title of the world’s wealthiest nation? Not necessarily. The Swiss may sport the world’s highest average wealth, but that doesn’t automatically mean that their nation has the world’s richest average people.
We’re not playing word games here. We’re talking about the important distinction that statisticians draw between mean and median. To calculate a national wealth mean — a simple average — researchers just divide total wealth by number of people. The problem with this simple average? If some people have fantastically more wealth than other people, the resulting average will give a misleading picture about economic life as average people live it.
If some people have fantastically more wealth than other people, the resulting average will give a misleading picture about economic life as average people live it
Medians can paint a more realistic picture. Statisticians calculate the median wealth of a nation by identifying the amount of wealth that represents the midpoint in the nation’s wealth distribution, that point at which half the nation’s population has more wealth and half less. Medians, in other words, can give us a nation’s most typical net worth, the wealth that a nation’s most ordinary people hold.
By this median measure, Switzerland holds up as a strikingly wealthy nation. The United States does not. Typical Swiss adults turn out to hold $228,000 in net worth, the most in the world. Typical Americans hold personal fortunes worth just $66,000.
Typical Canadians, with $107,000 per adult, have more wealth than that American total. So do typical Taiwanese ($70,000), typical Brits ($97,000), and typical Australians ($181,000)
Overall, typical adults in 16 other developed nationals have more wealth than typical adults in the United States. Typical Japanese adults, for instance, hold $110,000 in personal wealth, a net worth considerably higher than the $66,000 Americans can claim.
Other nations have much more equal distributions of income and wealth than the United States
What explains how ordinary Americans can have so little wealth when they live in a nation that has so much? In a word: inequality. Other nations have much more equal distributions of income and wealth than the United States.
Japan in particular stands out here. The new Credit Suisse 2019 Global Wealth Report notes that Japan “has a more equal wealth distribution than any other major country.” Japan’s richest 10 percent hold less than half their nation’s wealth, just 48 percent. In the United States, the top 10 percent hold nearly 76 percent, over three-quarters of national wealth.
And what about the top 1 percent? America’s 1 percenters hold a national wealth share nearly double the wealth share of top 1 percenters in Japan.
How would typical Americans fare if we Americans engineered an about-face on our growing inequality and achieved a distribution of wealth as equal as Japan’s? If we succeeded at that egalitarian endeavor, the net worth of America’s most typical adults would triple, from $66,000 to $199,000.
By letting our rich grab an oversized share of the wealth all of us help create, we are taxing ourselves into economic insecurity. Other nations don’t tolerate greed grabs. Why should we?
In effect, the difference between those two totals amounts to an “inequality tax.” By letting our rich grab an oversized share of the wealth all of us help create, we are taxing ourselves into economic insecurity. Other nations don’t tolerate greed grabs. Why should we?
Sam Pizzigati co-edits Inequality.org. His latest book: The Case for a Maximum Wage. Among his other books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970 and Greed and Good: Understanding and Overcoming the Inequality that Limits Our Lives. Follow him at @Too_Much_Online.