- Income inequality is taking a toll on economies around the world.
- The wealth gap contributes to larger societal issues.
- Accessible investing tools can help close the wealth gaps.
Income disparity impacts both developing and developed countries across all corners of the globe, including the United States. And the gap is only widening, even despite the COVID-19 crisis.
According to Oxfam research, from March 18, around the start of the pandemic, to the end of 2020, worldwide billionaire wealth ticked up by a cool $3.9 trillion. Meanwhile, according to the International Labor Organization, global workers’ earnings dropped by the trillions. An unprecedented population of people were—and largely still are—left unemployed, struggling to make ends meet.
In fact, the Credit Suisse Global Wealth Report shows that the world’s richest one percent (who have more than $1 million), hold 43.4 percent of all the wealth in the world. On the other hand, adults with under $10,000 make up more than half the population (53.6 percent), but own just 1.4 percent of global wealth.
While wealth gaps may not take an obvious toll on the privileged population’s personal lives, the effects of income inequality are manifold and, ultimately, hurt humanity at large. A burgeoning body of research supports that major income disparities lead to higher rates of public health concerns and social issues, as well as lower rates of satisfaction and, ultimately, economic growth.
Here are three countries with major wealth gaps—and how investing, when made accessible, can help close them.
1. The United States
The wealth gap has been increasingly widening in the United States for decades, leaving millions of Americans plagued by poverty. Specifically, there were 37.2 million people in poverty in 2020, which is up by about 3.3 million from 2019, according to the United States Census Bureau. The poverty rate was 11.4 percent in 2020, which marks the first increase after five consecutive years of decline.
In 2019, the New York Times published a piece titled, “The United States is the richest country in the world, and it has the biggest wealth gap.” While the United States fluctuates in its position amongst the countries with the worst wealth gaps, there’s no denying that income inequality exists and persists.
2. The Netherlands
According to the Gini index (which refers to a measure of statistical dispersion that represents income or wealth inequality), the Netherlands also struggled with a wealth gap this year.
Despite the country’s rather positive progressive policies that have landed it tenth on the social progress index and eight on the human development index, it has one of the worst wealth inequality problems in the world with a Gini Coefficient of 0.902. In other words: The top 10 percent holds 60 percent of the Dutch’s net wealth across the country.
The top 20 percent of earners in the Netherlands make a whopping four times the income that the bottom 20 percent earn, according to a “Make Europe Sustainable for All” report by the European Environmental Bureau.
Russia scores a Gini Coefficient of 0.879, ranking among the worst wealth gap countries in the world. In Russia, the top one percent earn a total combined income that is 20 to 25 percent of the national income.
“Technological change, increased integration in the global economy and the capitalization of rent streams,” are partially responsible for the worsening wealth gap in Russia, according to research, “Russian Economic Inequality in Comparative Perspective,” published in JSTOR. According to the researchers: “Financialization and dependence on natural resource extraction contribute strongly to both cross-sectional and cross-regional inequality in Russia. The absence of institutions for aggregating broad competing social interests—whether corporatist or partisan—restricts the capacity of the political system to set agreed rules governing the distribution of the burdens and benefits of economic growth.”
However, more research, published in the The Chinese Journal of Sociology, suggests that “Russians are concerned not so much about income inequality per se (they even consider it to be necessary to a certain degree) as about the unfairness of its causes and non-monetary aspects in modern Russia.” In other words: There’s demand for equal opportunities more so than there’s demand for a “‘leveling out’ of income.”
How investing can help close the wealth gaps
One surefire way to offer more equal opportunities that, in turn, help to close the global wealth gap, is by democratizing investing for everyone. Q.ai, for example, serves as a pocket-sized hedge fund that’s working hard to make investing simple and accessible across the board.
Q.ai is triggering a personal wealth movement that empowers all people, regardless of their income or economic background, with the ability to tap into the world’s top-performing private investment strategies… by quite literally tapping a button. In doing so, you have the opportunity to build wealth, regardless of how much income you have to start with.
Getting started with what you have, where you are, is a step in the right direction. Investing typically sees annual returns of about 10 percent, which means that your money can make more money without ever lifting a finger.
And Q.ai makes it even easier by leveraging the power of AI to crunch the numbers for you, smartly allocating and automatically rebalancing your investments.
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