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HomeEconomyHAMISH MCRAE: Judge a nation by its middle class

HAMISH MCRAE: Judge a nation by its middle class


Do you feel rich? Or vice versa? We’ll be hearing a lot about world wealth this week when Credit Suisse releases its annual World Wealth Report.

The bank has been calculating who has the most money, and in which countries, for the past 14 years, and it looks set to continue, despite the UBS takeover. While we don’t have the details yet, we can see a pattern from past reports, with some pretty notable results.

So which country had the most dollar millionaires at the end of 2021? The United States, of course.

Which country had, on average, the highest wealth per capita? Switzerland, unsurprisingly, as it’s great at attracting global billionaires. The United States was number two as it is pretty good at creating them.

But, in the most meaningful count of the wealth of the median person, that is, someone right in the middle of the wealth spectrum, with as many poorer people below as richer people above it, the winner was… Australia. That antipodean man or woman, right in the middle of the wealth range, had net assets of almost $275,000, or £215,000, since that’s US dollars, not Australian dollars. Next in line were Belgium, New Zealand and Hong Kong.

Central scenario: That antipodean man or woman, right in the middle of the wealth range, had net assets of almost $275,000 or £215,000

The UK came in at number nine, with the median Briton worth over $141,000, just behind the Canadians and the Dutch, and slightly ahead of the French, though easily beating other wealthy countries like Japan, Norway and Italy.

So where was that middle person in the US? Just down at number 18, worth just over $93,000. And the Germans? They didn’t even make it to the top 20.

Canada has a lower gross domestic product (GDP) per capita than the US and lower average wealth, but the man or woman in the middle is richer than the equivalent middle-class citizen living below the Parallel 49.

Why does all this matter? For many reasons. For starters, so much attention is paid to GDP growth and GDP per capita that we tend to forget that what is important to most people is whether they feel financially secure.

Wealth is security, not the only way, but a very important one. You can understand why many middle-class people in the US find things difficult. Despite the enormous and sometimes ostentatious wealth of the very rich, they have less personal wealth than their UK counterparts.

Or take Germany. It has a very prosperous economy, creates many jobs and is the largest net contributor to the European Union budget. Financially, the country is very strong, with a relatively low national debt compared to almost anywhere else.

However, you can understand the resentment when Germans realize that, on a personal level, they own fewer assets than many other EU citizens, including Italians and Spaniards. You can also understand why so many Brits, and of course others, want to emigrate to Australia, New Zealand and Canada.

It is not simply that there is no inheritance tax in those three countries, or that there are bigger houses. The person in the middle is likely to end up richer.

There are some caveats. The house is one. The reason Hong Kong is so high on the list is because it has the most expensive residential property in the world.

People are rich because of the value of their apartment, but they have to put up with very little space to live.

Germans are poor, not in their daily lives, but because the average person rents their house.

Or take the contrast between British and American. American houses are generally bigger and cheaper. So if you value living space, that middle-class Brit is worse off, whatever the numbers suggest.

Another note of caution is utilities. If a country has really good public services, that is a form of wealth. Some European countries, including Belgium, Switzerland and the Netherlands, seem capable of combining well-funded services with great personal wealth.

So do Australia and New Zealand. And Canada compares well with the US in that regard.

So what’s next? We’ll have the results in a couple of days, and there are two things I’ll keep in mind. One will be inequality. The top 1 percent own 45 percent of the world’s wealth. But before the pandemic that ratio was slowly falling. Has the decline resumed?

The other will be projections. Last time they thought the number of UK millionaires would rise rapidly in the next few years, faster than in the US, Germany or France. Do you still think that? If so, could we be doing something right?

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Merry C. Vega is a highly respected and accomplished news author. She began her career as a journalist, covering local news for a small-town newspaper. She quickly gained a reputation for her thorough reporting and ability to uncover the truth.

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