Introduction
Money is a ubiquitous concept in the world, one that affects every aspect of our lives. It defines our social status, determines our access to resources, and shapes our worldview. The scale and impact of money are therefore crucial to understand, particularly in light of the vast inequalities it produces. In this article, we provide a comprehensive review of the scale of wealth in the world, the impact of global wealth disparity, the environmental cost of our money-driven world, the psychology of wealth, and the links between wealth and political influence. Through this exploration, we aim to highlight the importance of understanding how much money there is in the world and its wider implications for society.
The Astonishing Scale of Wealth in the World: A Comprehensive Review
The concept of global wealth is difficult to grasp, and yet it is crucial to understand for anyone interested in issues of social justice and economic inequality. The global Gross Domestic Product (GDP), which represents the total value of goods and services produced by all countries in the world, was estimated at approximately $87 trillion in 2019 according to the International Monetary Fund (IMF). This means that the average GDP per capita is around $11,300. However, this number does not accurately represent the distribution of wealth amongst individuals, as it takes into account everyone in a country, regardless of their income level.
To get a better sense of the scale of global wealth, we can look at the net worth of billionaires, which are individuals who possess a wealth exceeding one billion US dollars. According to Forbes’ 2021 Billionaires list, the cumulative wealth of the 2,755 billionaires worldwide is approximately $13.1 trillion, or 15% of the world’s GDP. This means that the top 0.00003% of the global population owns a significant portion of the world’s wealth.
In addition to the fortunes held by billionaires, billions of dollars are also stored in offshore tax havens, where they are hidden from public scrutiny and shielded from taxes. The Tax Justice Network, a UK-based advocacy group, estimated that up to $32 trillion are held in offshore financial centers in 2020, which is equivalent to around 10% of the world’s financial assets. Such large amounts of money hidden away obscure what is really happening with wealth in the world, undermines proper democratic processes, and jeopardizes the financial stability of countries.
The scale of wealth in the world has varied over time, with significant differences between historical periods and regions. For example, during the industrial revolution in the 19th century, there were large accumulations of private wealth amongst the owners of factories and machines in Europe and North America. At other times and places, wealth was gained from natural resources or exploitation of other countries. More recently, the rise of technology and globalisation has created large riches in certain industries, such as real estate, entertainment, and finance.
How to Grasp the Enormity of Global Wealth Disparity
Despite the overall increase in wealth in the world, vast disparities between the world’s richest and poorest people remain. According to the World Inequality Database, the top 1% of the world’s population earns more than twice as much as the bottom 50%, and the top 10% own around 82% of the total wealth. These gaps are widening, with the coronavirus pandemic exacerbating economic inequality. For example, while wealth in the United States has grown 60% over the past decade, the majority of the gains have gone to those in the top 20% of the income distribution.
The impact of this wealth disparity on society is significant, creating a range of social, economic, and political problems. Research indicates that income inequality is linked to higher rates of mental and physical health problems, social unrest, and political instability. Furthermore, economic inequality can reduce economic growth by limiting access to education and innovation and making it harder for lower-income households to invest in themselves.
There are many solutions and recommendations offered to address this issue of inequality, but few are implemented fully, mainly due to political or economic reasons. One suggested solution is developing education and retraining programs to help lower-income individuals improve their skills and increase their earning potential; another is designing tax systems with more progressive rates and increasing access to public goods such as health care and education.
The Environmental Cost of Our Money-Driven World
The accumulation of wealth and its associated consumerism, as we know it, comes at an environmental cost. One of the biggest challenges the world faces today is climate change, which has its roots in the unchecked consumption of resources and the extraction of finite natural resources. The wealthier the individual or the country, the more resources are used, and therefore the larger their environmental footprint. According to the Global Footprint Network, we are using 1.7 times more resources than the earth can replenish each year, leading to land-use change, deforestation, and ocean acidification.
Individuals and corporations can do their part by adopting more sustainable behaviours and practices, but it is also crucial for governments to establish policies that regulate resource-use and promote renewable energy technologies. Such regulations are met with political resistance, as many wealthy companies place profits above social and environmental concerns.
The Psychology of Wealth: Understanding How Money Shapes Our Lives
Money also plays a notable role in shaping our psychology and our society, influencing our values, beliefs, and relationships. For example, a famous study by Nobel laureates Daniel Kahneman and Angus Deaton found that emotional well-being increases as income increases, but only up to a point, after which additional wealth does not offer much increased happiness. Such findings suggest that once our basic needs are met, the pursuit of wealth can lead to diminishing returns.
As people accumulate more wealth, their attitudes toward it change, and this shift can have consequences for their lives and society as a whole. Psychologists and behavioural economists have identified the “wealth effect”, which describes how individuals tend to increase their spending when the value of their assets, such as homes or investments, rises. This effect can lead to economic instability, as seen in the 2008 financial crisis when individuals with highly valued assets rapidly reduced their spending when their assets decreased in value.
By better understanding the role of money in our lives, we can make more informed decisions about its use and impact on society. One approach is creating opportunities to learn about financial skills, including budgeting and financial planning, to help people make rational financial decisions while better appreciating how money influences our lives.
Money and Power: Exploring the Links between Wealth and Political Influence
Money and power are intimately connected, with wealth often providing those who possess it with greater influence in political systems. In the United States, for example, individuals and corporations are permitted to spend unlimited sums of money on political campaigns, leading to concerns about the equity and transparency of democratic processes. Political donations are linked to political outcomes, including tax cuts and deregulation, that favour the wealthy individuals and corporations. As a consequence, politicians felt accountable to those funders, not the public interest, thereby undermining democracy.
One recommendation to lessen the impact of money on political systems is commonly heard in limiting and regulating political donations and election spending. Other methods include publicly financing political campaigns, supporting political reform organizations, and increasing transparency in lobbying and political decision-making.
Conclusion
Money is a powerful force that shapes our lives and society in countless ways. Understanding the scale of wealth and its impact on the environment, society, and political systems require us to grapple with its contradictory and complex nature. Our review attempted to provide an overview of the main points that contribute to understanding the enigma of wealth in our world. By working together, it is possible to mitigate its negative effects while harnessing its potential for positive change. We hope this article lays a blueprint for a more comprehensive review in the future that can bring about the collective action to make such changes.
