What Does Inequality Cost the Average American? About $150k
Americans pay a steep price for not spreading their wealth around as well as other developed countries.
Belgian waffles. Belgian beers. Americans love ’em.
But what Americans really need from Belgium has nothing to do with beer or breakfast treats. We need Belgium’s much more egalitarian distribution of wealth.
The English philosopher Francis Bacon once long ago compared wealth to manure. Both only do good, Bacon quipped, if you spread them around. Belgium is spreading about as well as any nation on Earth, according to the Swiss bank Credit Suisse’s latest annual global wealth report.
Why should Americans care about what’s happening in Belgium?
The new Credit Suisse report at first doesn’t make that clear. On average, the Credit Suisse numbers show, Belgian adults hold less wealth than Americans. Belgians average a bit over $313,000 in net worth. The average American holds nearly $404,000.
That $404,000 figure sound about right to you? Probably not. Most Americans hold personal fortunes nowhere near that level.
America’s average wealth per adult looks so good only because America’s rich are doing so fabulously well. The United States currently boasts some 1,144 individuals worth over $500 million in net worth. Their enormous fortunes are pumping up — and distorting — America’s adult wealth average.
How big a distortion? The new Credit Suisse report points us to the answer.
Credit Suisse researchers have computed, for each nation, how much wealth typical adults are holding. In the United States, the most typical — or median — American adult holds just $61,667 in wealth, far below the nation’s average wealth of $403,974.
In Belgium, a nation with only 16 adults worth over $500 million, the typical adult has a net worth of $163,429 — over $100,000 more than the typical American.
Credit Suisse puts America’s total wealth at $98.2 trillion. If we divvied up that wealth as equally as Belgium does, the typical American would have a net worth of $210,900 — more than triple the $61,667 the typical American actually has.
In other words, Americans are paying an inequality penalty of almost $150,000.
Some might dismiss the significance of this comparison between Belgium and the United States. Belgium, after all, has only 8.9 million adults. The United States has 243 million.
Fine. Let’s compare the deeply unequal United States to a much more equal nation closer to America’s size. Let’s try Japan.
Like Belgium, Japan also has a lower average wealth per adult than the United States. In fact, the U.S. average wealth — $403,974 — nearly doubles the $227,235 average in Japan.
But Japan, also like Belgium, has far fewer super rich than the United States. Japan hosts only 71 individuals worth over $500 million. To reach the U.S. total of $500-million fortunes, Japan would have to double its super-rich population, double it again, and then quadruple it.
Japan’s modest number of grand personal fortunes means more wealth for typical Japanese adults. The typical Japanese adult now holds $103,861 in net worth, well above the typical American’s $61,667.
And what would the typical American be worth if the United States had as equal a distribution of wealth as Japan? A robust $184,642, over $120,000 more than the typical America’s current net worth.
More waffles — or sushi — anyone?