Wealth II

Oxfam is rightly concerned that by 2016, one percent of the world’s population will share some fifty percent of the world’s wealth. By ‘wealth’, they are probably talking about money, which is an indicator but other forms of wealth are arguably, resources, land and health.

Stats can be boring for non-statisticians, but to back up Oxfam’s claims, some are necessary.

50% of the world’s population have an income of less than USD2.50 per day.

80% of the world’s population have an income of less than USD10.00 per day.

The richest 20% earn 75% of the world income.

76.6% of the world’s consumption is by 20% of the population.

There was a time when a country’s wealth was measured by its gold reserves – but how was that value quantified? Perhaps it was a global market where countries could buy and sell gold depending on need.

The system would work like this: A bridge is needed, so gold is somehow converted to cash and the bridge is built. A toll is introduced for the use of the bridge and when enough is collected, the gold is replace into the reserve.

Or, the county’s gold reserves allow a specific amount of cash to circulate so funds for the bridge are raised through taxation.

The other option was to borrow the money from another country and pay it back – sometime with interest.

Perhaps the gold standard was an impediment to growth so it was abandoned. Banks found another way: create money from fresh air.

I have a dollar in the bank, can I look at it? What does it actually equate to? What is it based on?

I have a house I bought for $100 000 five years ago and I sell it for $200 000 today. All very nice but where did the extra $100 000 came from? Inflation and demand. Those two things can’t be held nor can they be sold so actually I made $100 000 over five years by doing nothing.

Some countries have a capital gains tax, so they take (or rob) a proportion of this made-up new wealth of mine.

The people elect governments whose employees are called ‘public servants’, but they make rules and charges that enslave the people – how do they get away with that?

Governments have been running the country(s) for ages and one would think all the laws are in place, but they keep adding to them and making errors that need more modifications. The Commandments only had ten laws and they are plain and understandable, not like this lot.

Councils are perhaps worse than central governments, gradually increasing their sphere of influence with resource consents adding to the cost of any project and employing extra people to do the checks, which somehow is not totally ‘user pays’, but adds to the rates bill.

Councils also engage in activities outside their core responsibilities by sponsoring events, which increases the rate bill (local taxes). This transfers wealth from stakeholders, people, to corporate entities who again are supposed to be public servants but who in fact crack the whip.

Past governments have used taxpayer money and natural resources to set up businesses. Water, power, forests, airports. When the books don’t balance, they sell the business off! But who owns those businesses? The government or the people? And where does the wealth go?

You go to a lawyer to source funds for a mortgage on your property, so the lawyer holds your title deeds ‘as security’. But then the lawyer uses your property documents as security against other loans that they take out.

This is a thing called securitization and banks are rather good at it. It is a complicated thing but any borrowing you do, especially if there is a security like a home or a car, to them is an asset – sure money to come in. So as an asset, they can further borrow using your debt as security.

The money you borrowed in the first place wasn’t even real money just some electronic accountancy that banks and the families that control them have generated - every transaction making them more powerful.

It is unwise to meddle with the status quo, any action could result in an unpredictable domino effect. For example if we raise the wealth of the middle 20% of the population, what impact would it have on the globe’s resources?

However the status quo is not reckoned to be sustainable and something, sometime but will cause a shift in wealth.

It is likely the old guard will shake itself and start again.

One last stat: 33% of the food produced globally is wasted!

Does this means you are paying 33% too much for your groceries? Or rubbish disposal can be reduced by >33%. Or, could more people be fed?