GRAZIA TANTA: The evolution of wealth in Europe (2000/19)

quinta-feira, 6 de agosto de 2020

The evolution of wealth in Europe (2000/19)

1 - The unrestricted search for wealth is an addition

2 - Levels of wealth in Europe and the world

3 - The hierarchies in 2000, 2008 and 2019

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1 - The unrestricted search for wealth is an addition

The idea of the “invisible hand” generated by Adam Smith represents the reproduction of a religious determinism, according to which there are capricious or sadistic deities to instill in people specific ideas and practices. The invisible hand represents as a law emerged as something built up the wills of human that nothing can do to oppose in or contest in.

Then in force the rationalism, the demand for laws to interpret nature but also relations among humans, in the optimism and, even the wonder of a new social layer, the Uto confident in clear progression as the political power and ownership goods and territories; even at the expense of wars of appropriation of those, looting, piracy and slavery.

Once religious struggles were overtaken, with the dematerialized gods and bare altars, concepts emerged that deserve respect and veneration as part of a new conception of the world. The capitalist class felt the need not only to explore new lands, plants, technical and scientific knowledge but to conceptualize their activity in the sense of enrichment. Capitalists, through Republics (Netherlands and England), seized the state power, even if later they accepted the royal houses, as the top of the divine representation but with limited political power, so that they do not become one obstacle (on the contrary) to the accumulation of capital and symbolize the unity of the country to fight against the competition.

It is inserted in this architecture and became unquestionable the role of the "invisible hand", that it came to be confused with the very notion of market, physical and as a meeting place, purchasing and, sales. However, the idea of a price resulting from the free and equal encounter between buyers and sellers came to be highly subverted and gradually replaced by the intervention of multinationals, monopolies, offshores, state apparatus, corrupt mandarinates, military power, war, international agreements, groupings. countries, unregulated money creation and debt by the financial system.

Thus, the economy went from the management and organization of household goods, conceived by the Greeks, with the object of satisfying the needs of a family, to a false science based on the unrestricted and infinite creation of wealth that has as its measure something as gross as GDP[1]. Consumption, strongly encouraged, became a compulsion; it also became a compulsion the restraint and devaluation of wages by capitalists supported by political classes, bad managers apparatus of State, related to popular needs but agile as springboards for corrupt funding and projects without public utility.

Market regulation consists of aggrandizing a minority of the rich and struggling for wage earners (a designation that tends to be confused with the precarious) and the whole panoply of marginalized, in poor or rich countries, young or old, with or without high qualify actions. And, of course, none of this has to do with economic science but with political choices and decisions, determined above, by the well-known 1% of great wealthy.

The search for wealth, in an unrestricted way, corresponds to an addition. All human needs, individual or collective, have a limit. Hence it is insane that the value attributed by the market to the five largest global companies - Microsoft, Apple, Amazon, Alphabet, Facebook ($ 5.4 billion, that is, 5.4 * 10 ^ 12)[2] is higher than Germany's GDP ($ 4.0 billion) or about 22 times Portuguese GDP. If you want to personalize the five biggest personal fortunes (Bezos, Gates, Arnaud, Zuckerberg, Ellison), that is, a total of $ 414 billion, you will find a value close to two years of Portuguese GDP.

2 - Levels of wealth in Europe and the world

Our aim with this document is to carry out an assessment of the variations in average wealth per adult for European countries and some others, of great relevance - Brazil, China, USA, India - in addition to the indicator referred to the World. Wealth must be understood as the set of real estate, shares and other securities, domestic equipment, vehicles, gold and jewelry, deposits, art… Soon, we will address, specifically, the average financial wealth, per adult.

The period considered is represented by the year 2000, the emblematic year 2008 and 2019; which allows observation of the evolution of wealth per adult, in the last twenty years. All the basic elements are taken from the annual reports produced by the bank Credit Suisse under the title “Global Wealth Databook”.

Graph I - Average annual change in wealth per adult (%)

The Graph I highlights several aspects:

The highest levels of wealth growth are observed particularly in the period 2000/2008, the time before the financial crisis that started in 2007 and that dragged on in the following years; and it is this period that synthetically reproduces the essential profile for the twenty-years considered in this study.

Between 2000 and 2008, globally, recorded only three situations where wealth levels show a growth annual average lower than that recorded in 2008/ 2019 - Iceland (1.6%), USA (2.1%), India (19.6%). The first two, with the lowest values of increased wealth, among all the countries considered, reflect some anticipation in the onset of the financial crisis, normally taken as having the year 2008 as a starting point.

In fact, Iceland had its financial crisis caused by bank bubbles anchored in European and American bonds that drove the assets of the three main banks to a staggering 1000% increase in four years (3). The accounting of these speculative gains shared by each inhabitant of Iceland came to correspond to a delusional average debt of $ 330000. The delusion of many was anchored in the fraud of others so that in 2015 there were already 26 bankers and the like involved in prison sentences.[4].

In the case of the USA, the subprime crash occurred in July 2007 and its main effect occurred in the following year. The appreciation of real estate helped speculative agents to convince people of the middle and lower-middle-class to contract new debts based on the increasing value of their homes. When the bubble burst, the real estate value dropped, unemployment reached a lot but, the debts have maintained their level of demand without the debtors the could afford. This became emblematic of the chain of the financial crisis that shook the world, particularly in the USA and Europe.

There is a strong and generalized reduction in the levels of wealth growth in the period 2008/2019 compared to the previous period (2000/2008); this period, synthetically reproduces the essential of the profile for twenty years considered in this study.

In global terms, there is an average annual growth in wealth per adult, from 6.8% between 2000 and 2008 to 4.2% from 2008 to 2019. The exceptions to this profile are just three, of increases in wealth in the most recent period - Iceland (1.6 % annually in the first period pass to 8.8% in the most recent), followed by India (14.6% and 19.6% annually) and the US (2.1% to 6.9% from 2000/2008 to 2008/2019.

For the period 2008/2019, wealth per adult grew, in Europe, only 1.3%, a value that is well below the global 4.2%; Moldova and Bulgaria, two of the poorest countries in Europe, stand out on the European stage, with annual increases of over 10%.

In 2019, compared to 2008, there are some cases of reduction of the accumulated wealth per adult. And, these cases involve well-known countries during the public debt crisis. Cyprus presents an average annual decrease of wealth per adult of 1.5%; Greece -3.3%; Italy, - 0.6 % average reduction; Spain, -1.7% annual average; and Turkey with -1.9%. As it is known, Ireland absorbed a major bank bankrupt and Portugal will survive with a low level of creation (registered) wealth, low wages (5), and a high propensity for emigration (6) beyond d the omnipresent and untouchable gang supporters of corrupt, rogues or jerks; … There is still a lot of juxtaposition between these categories.

It is evident stagnation in wealth creation in Europe in general in the period 2008/2019 (1.3%), in contrast to the world average and with the big four selected countries - China (20.4%), India (19.6%) and also for USA (6.9%) and Brazil (6.3% annually). Note the stagnation seen in Japan, with 0.3% as the annual average of the increase in wealth.

If the stagnation in Europe as a whole is evident, however, it contemplates different situations. On the one hand, there are the poorest European countries in the East, with growth in wealth levels above the global average. They are Albania, Belarus, Mo ldávia, Montenegro, Russia and, Ukraine, Iceland snd Switzerland; low levels of wealth creation, among those not integrated the EU, like Norway and Serbia.

The highest levels of wealth growth are observed particularly in the period 2000/2008, the period before the financial crisis that started in 2007 and which dragged on in the following years; and it is this period, synthetically, plays the essential contribution to the profile of the twenty-year-period considered in this text.

Some countries have escaped this profile, which in the aforementioned twenty years had led to high increases in wealth - China, India, Moldova, Bulgaria. As is evident, the period 2008/2019 is not the one that is most notable for the growth of wealth, only Iceland appears in this situation, as mentioned above. It is also during this period that falls in the accumulated wealth of countries like Cyprus, Greece, Italy, Spain, Turkey are registered, as mentioned above.

3 - The hierarchies in 2000, 2008 and 2019

In summary, the hierarchy of countries is followed in terms of wealth levels based on the world parameter (100 = world average in each year) . Below we will point out some more notable facts.

Wealth per adult
Clearances and approaches to the world average
2000		2008		2019
Ukraine	2.8	India	9.5	Ukraine	12.4
Moldavia	3.1	Moldavia	11.4	Moldavia	17.3
Belarus	6.3	Ukraine	13.7	India	20.6
Serbia	6.6	Belarus	21.0	Belarus	23.4
India	6.8	Brazil	28.7	Brazil	33.2
Russia	6.9	China	37.2	Turkey	34.4
Bulgaria	12.2	Russia	39.3	Serbia	35.4
China	13.7	Bulgaria	41.4	Russia	38.6
Romania	15.7	Serbia	46.0	Albania	44.3
Montenegro	20.5	Albania	49.5	Bulgaria	60.2
Albania	21.0	Romania	63.0	Romania	60.8
Brazil	22.4	Turkey	63.8	Hungary	62.6
Latvia	26.0	Hungary	67.4	Lithuania	70.9
Estonia	30.1	Lithuania	71.1	Montenegro	75.5
Lithuania	33.8	Latvia	75.6	Poland	81.7
Czech Rep.	37.2	Czech Rep.	77.2	China	82.6
Turkey	37.5	Montenegro	78.5	Latvia	85.2
Hungary	38.4	Estonia	87.1	Croatia	88.6
Croatia	48.3	Poland	97.3	Czech Rep.	91.3
Slovakia	51.0	Croatia	117.8	Slovakia	93.4
Poland	51.8	Slovakia	119.1	Estonia	110.7
Eslové nia	117.8	Malta	211.1	Greece	135.7
Cyprus	148.1	Eslové nia	220.4	Cyprus	164.0
Portugal	167.1	Portugal	243.1	Eslové nia	172.9
Malta	167.2	Cyprus	284.9	Portugal	185.0
Greece	227.2	Finland	304.1	Malta	202.6
Finland	233.8	Greece	309.1	Finland	258.5
Sweden	246.5	Sweden	340.2	Spain	292.9
Spain	246.7	Germany	366.1	Germany	305.8
Germany	305.7	Iceland	398.0	Italy	330.5
Ireland	329.1	Great Britain	416.6	Japan	336.1
Norway	333.7	Belgium	454.6	Belgium	347.4
France	336.5	Ireland	454.9	Sweden	374.4
Austria	341.6	Japan	474.4	Norway	377.3
Denmark	351.9	Norway	498.8	Ireland	384.4
Belgium	376.7	Austria	504.8	Austria	388.0
Italy	382.0	USA	508.3	France	389.7
Netherlands	420.2	Italy	513.7	Netherlands	393.9
Luxembourg	437.4	Spain	524.1	Great Britain	395.3
Great Britain	473.8	Denmark	539.2	Denmark	400.9
Iceland	544.6	Netherlands	552.8	Luxembourg	505.3
Japan	611.1	France	565.3	Iceland	537.6
USA	670.7	Luxembourg	684.5	USA	610.3
Switzerland	736.6	Switzerland	812.6	Switzerland	797.0
Europe	198.2	Europe	279.0	Europe	217.3
WORLD	100	WORLD	100	WORLD	100
$ 31415		$ 48507		$ 70849

Several countries show clear improvements in their hierarchical position. Some are relatively poor countries and have risen in the hierarchy generated above - Bulgaria, China, Estonia, Latvia, Montenegro, Czech Republic and Romania; others, taken as rich, also improved their position - Austria, Denmark, France, Ireland (despite the financial crisis), Norway and Sweden.

The cases of retreat in the hierarchy contemplate, essentially, poorer countries - Brazil, Hungary, Lithuania, Poland, Turkey; and also Belgium.

Portugal's position does not undergo major changes; however, it surpasses Greece, crushed by the troika .

Spain shows a significant increase in wealth in 2008 but declines substantially in 2019, while the USA presents the opposite situation.

Great Britain and Iceland show strong position losses in 2008 but recovered clearly in 2019, returning to positions close to those observed in 2000 within the hierarchies highlighted above. The opposite is true for Italy, stability in 2000 and 2008 and a sharp drop in 2019.

Japan descends in its hierarchical position in 2008 and 2019 while, on the contrary , Switzerland consolidates itself as “the world safe” increasing its distances from the competition.

It cannot be said that capitalism has the same face or the same dynamic, in all latitudes or longitudes. Diversity and inequalities are the way to stay alive and active; able even to consider the pandemic as a source of business.

(to be continued)

quinta-feira, 6 de agosto de 2020

The evolution of wealth in Europe (2000/19)

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