2020 AD: By Now, Half The World's Wealth Is Controlled By Millionaires

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The Boston Consulting Groups latest report on wealth tells us that by 2020 some half of the world's wealth will be controlled by millionaires. What's rather more interesting about this thought is the caveats that apply to it rather than the actual fact itself. For this isn't something showing any greater concentration of wealth than we have today. Instead, it's just showing us how wealth in general is expected to keep on rising.

My colleague Michela Tindera points of one of those caveats:

Boston Consulting Group measures private financial wealth by reviewing mutual funds, debt securities, pension entitlements, life insurance payments, cash and deposits and listed and unlisted equities. Unlike FORBES’ net worth estimates, it does not factor in major assets like a stake in a business or real estate ownership.

In the jargon this is what is known as "financial wealth" as it's not including intangibles like human capital and not including domestic residences and the like. As Tindera also notes this isn't including the great business fortunes: this is really nothing at all to do with Jeff Bezos or Bill Gates, Warren Buffett and so on. So it's not talking about that increased inequality between the 0.001% and the 1% and so on. And that really is where inequality has been increasing in recent years: thus this report isn't about rising inequality really. Just plain millionaires aren't any further ahead of us than they were 20 or 30 years back. It's just that the general level of wealth in nominal terms (and real, but more marked in nominal) has been rising. Thus more people can be described as millionaires.

The number of millionaire households in the world grew 6 percent in 2015, to 18.5 million, according to the Boston Consulting Group Global Wealth report. The increase marked a slowdown from the 11 percent millionaire growth in 2014.

Note that this is for the world and we're thus really seeing the continuation of that burst of wealth creation out east, in China and India especially.

The Global Wealth 2016 report says that "private global wealth", that is household financial assets excluding property – such as financial assets (bonds, shares, cash and deposits) and superannuation savings – climbed 5.2 per cent to $US168 trillion ($225 trillion) in 2015.

It's really not that those already millionaires are sucking up ever more of the wealth that exists. Rather, it's that more wealth is being created, thus more millionaires are. Thus the portion of wealth being held by those who are millionaires is rising.

That is, it's the caveats, the qualifications, to this wealth report from BCG which are the interesting bits explaining what is actually happening.
