Global Wealth Disparities

I've had a discussion with someone about the state of the global economic affairs and had to pull some data illustrating why the young people are getting increasingly disengaged, frustrated, and quiet quitting from the traditional work patterns and business models. It's not that they don't want to work, it's rather that they've cracked the code: No matter how hard you work and how dedicated you are, your life situation will be improving only incrementally, if at all, when you hold a traditional job.

The youngest generation currently entering the US workforce - Gen Z - often cites these economic realities:

(1) because higher education business model is out of control, they are the first generation to burden with student loans not only themselves and their parents but also their grandparents;

(2) they are the first generation that does not even put the American dream goal - owning a house - on their personal horizon because housing is ridiculously expensive and they will never be able to afford it;

(3) they will be getting married and starting a family not in their early 30s like Millennials did but probably in their late 30s-early 40s, and not only because people are living longer in general due to better healthcare but also because it takes a lot longer now to earn financial stability with traditional jobs;

(4) they will be probably the first generation that will get literally nothing out of the Social Security safety net because it will all be spent on Gen X/Millennials and reduced by the conservatives when they come to power;

(5) they will be the first generation to be drastically affected by AI technologies, in both good and bad ways;

(6) they will not be able to solve global warming because we've been kicking the can down the road for so long that climate change is now completely out of control and irreversible;

(7) they are the first generation to seriously debate if they should even bring kids into this troubled expensive world: it is estimated that on average it costs 200-300K to raise and educate a child in the US these days.

At the same time, they are incredibly empathetic and understand injustice and unfairness of the modern global economy. Here are some facts that are raising concerns about global inequality:

(1) The cumulative wealth of the richest 1,000 people in the world is estimated to be around $15.5 trillion (!!!) as of 2024. That is only $2.5 trillion shy of the entire China's GDP in 2023 (the second largest economy in the word, with the US staying at #1 with $27 trillion and Japan at #3 with $4.2 trillion). The global billionaires' wealth shows substantial increases despite economic fluctuations, pandemics, and market changes (and in some cases, thanks to them, such as the case of Amazon's expansion and Bezos' personal wealth growth during the recent pandemic). This extraordinary accumulation of wealth by a small number of individuals highlights significant global wealth inequality.

For example, the combined wealth of the top 10 richest individuals alone is approximately $1.44 trillion. The richest among them include Bernard Arnault, Elon Musk, Jeff Bezos, and Mark Zuckerberg, with individual net worths ranging from $176 billion to over $226 billion​​.

(2) At the same time, in 2024, approximately 700 million people worldwide are living in extreme poverty, defined as living on less than $2 per day. This population is primarily concentrated in developing regions, particularly in Sub-Saharan Africa and South Asia, where around 90% of the extremely poor reside. Additionally, about 1.3 billion people, or 26% of the global population, live in moderate poverty, which is defined as living on between $2 and $3.20 per day. The COVID-19 pandemic and other global shocks have significantly impacted poverty reduction efforts, causing an increase in the number of people living in extreme poverty by 23 million from 2019 to 2022. That is, the total number of people in the world living in extreme or moderate poverty today is 2 billion.

(3) With the middle class eroding even in the developed countries, it is estimated that about 2 more billion people in today's world live in the lower middle class bracket (on average income of $5/day). Together with the poverty bracket, this accounts for half of the world's 8B population. The cumulative wealth of all these 4 billion people is estimated to be $7.3 trillion.

Here is the most staggering statistic: the wealth of the world's richest 1,000 people (not even a million, but one thousand individuals, which is 0.0000125%, or a little over one hundred-thousandth of a percent, of the 8-billion global population) is more than twice the cumulative annual income of 50% of all people living on earth today! A simple bar chart to illustrate this:

Can anything be done about it? Absolutely. But there needs to be enough political will to reform the systems of taxation, education, and upward mobility for all people. As the largest economy in the world, the US can set an example of decreasing extreme inequality and creating more equitable opportunities for everyone, especially for the young people. Here is an extensive and very hopeful resource from a retired college professor that provides deeper context, policies and shifts around inequality in the United States: