By John Lloyd
(Reuters) - The rich are always with us, and we'll have more of them soon. A report last week from Boston Consulting Group shows that the global millionaire population is some 13.8 million. That is twice the size of Switzerland, which is, incidentally, where many of them have parked much of their wealth. More will accrue, and more individuals will pass the million-dollar mark. Global private wealth will, says Boston Consulting, grow by almost 5.0 percent per year over the next five years, reaching $171.2 trillion.
This is what we, who like precision in such matters, call "a lot." The millionaire population in the UK, the fourth-largest in the world, stands at over half a million households. This is so many that when I reminded a wealthy friend of mine, who was complaining about a personal setback, that she was a millionaire, she snapped, "Isn't everybody?" Tactless as the response seemed, the rich hobnob with the rich. After a while it becomes the prevailing wisdom.
Within rising global wealth, BCG sees a sign that Western economies are edging upward at last. Indeed, the United States seems to be set for appreciably faster growth. But Europe is stuck in recession. If there is economic growth, it's anemic and is happening outside the euro zone.
Some six million young people are unable to find work in the European Union. This is fewer than the more alarmist figures of a quarter or more of youth unemployment, but it is a vast army nonetheless, one governments hope will not do what armies do, which is stop marching and start fighting.
These doleful figures have plagued Europe for several years. But most of us assume, or are assured, that things will get better, since they have in postwar years, until now. Stephen D. King, the group chief economist of the banking giant HSBC, wrote the recently published "When the Money Runs Out: The End of Western Affluence" (Yale University Press), in which he says:
"Our societies are not geared for a world of very low growth … persistent postwar economic success has left us with little knowledge or understanding of worlds in which rising prosperity is no longer guaranteed."
Before they helped to create a world of rising prosperity, Europeans developed two powerful streams of political thought that ultimately allowed for the peaceful governance of their societies when they came into their own after World War II. One, which could date its beginning to 150 years ago in May 1863, with the founding of the German Workers Association, was social democracy. It was an ideology that in its early years swung between revolution and reform, but which, especially in its British incarnation, the Labour Party, chose the latter route of seeking to tame capitalism and improve the conditions of the poor with the weight of the popular vote.
The other route, Christian democracy, is a little over 120 years old, seeing its foundation in the encyclical Rerum Novarum, literally, "Of New Things" and in its common meaning, "Of Revolution." Pope Leo XIII, who wrote the encyclical, was alarmed both by the greed of the capitalists and by the rising discontent of the industrial proletariat. He sought to describe the mutual dependence and differing responsibilities of the worker and proprietor, the first was to work "faithfully," the second to pay "fairly." A worker who could not obtain a fair wage was, says the document, "a victim of force and injustice."
Over time the substantial claims of these two great and antagonistic ideologies came to resemble each other. Social democrats like those in the Catholic Church rarely admire capitalism, but they no longer wish to destroy it. The best-known theorist of modernized social democracy, Anthony Giddens, wrote in "Beyond Left and Right" that "the only common characteristic of socialist doctrines is their ethical content … ideas brought together by a condemnation of the evils and injustices of capitalism." It is a claim that rests on the fact that few leftist governments hew to the once-standard policies of nationalization, workers' control or the high taxation of the rich.
Both social and Christian democracies are weaker today. The Catholic Church is led by the Argentine Pope Francis, who has stressed the need for solidarity, observing tartly that "while the income of a minority is increasing exponentially, that of the majority is crumbling." Francis' power to shame the wealthy minority into renouncing their pursuit of riches will be limited, as was the futile gesture of the Socialist Party president of France, Francois Hollande, in making the actor Gerard Depardieu pay the 75 percent wealth tax last year (an action later judged unconstitutional).
In a lament for the passing of a social/Christian democracy that enjoyed widespread support through much of the Western world in the decades after the war, the late scholar and writer Tony Judt argued in one of his last public appearances that the only impetus to revive such a political economy and to escape from what he saw as the dire consequences of a steadily fragmenting and unequal world, was a "social democracy of fear." The fear, of course, would be of social disturbances that such a fragmented world would bring, as well as of the poverty it would re-impose.
The ethical energy of these two versions of democracy that have been dominant in Europe for the past six decades is diluted today. King is likely right in his view that the more we face aging societies, ascendant new nations and increasingly costly resources, the less likely it is that we will not recover the fine, careless assumption that growth is our birthright. The United States, too, faces higher health and welfare bills over the next two decades, at the end of which the federal debt is forecast to be 90 percent of gross domestic product. The "end of Western affluence" in King's title may be more than hyperbole.
We will need to find, within fear or in a change of heart (fear seems more likely), a way of identifying which economic arrangements will keep democracy on the road. The way is not easy to glimpse, but it's a central task for the coming generations of politicians.
(John Lloyd is a Reuters columnist but his opinions are his own.)
(John Lloyd co-founded the Reuters Institute for the Study of Journalism at the University of Oxford, where he is Director of Journalism. Lloyd has written several books, including "What the Media Are Doing to Our Politics" (2004). He is also a contributing editor at FT and the founder of FT Magazine.)
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