Notes on the Front

Commentary on Irish Political Economy by Michael Taft, researcher for SIPTU

Our Own 1 Percent

November 25, 2011

The Dublin Council of Trades Unions’ March Against Austerity tomorrow (12 Noon from the Garden of Remembrance) is taking place against a rising European and global awareness of the power of the top 1 percent. So what about our own home-grown 1 percent? How much wealth do they own – wealth that translates into economic and political power? The Credit Suisse’s Global Wealth Data Handbook 2011 (not yet available free on-line) can give us an insight – as they estimate the concentration of wealth holdings in the top percent deciles.

Irish concentration of wealth is one of the highest in the EU-15. 28 percent of all wealth – housing and financial wealth – is owned by the top 1 percent of adults. That’s a lot wealth for a handful of people.

While Credit Suisse uses US $ in their tables, we can take their proportions to estimate how much this means in Euros and cents. They estimate that financial wealth makes up 47 percent of all wealth. Using CSO data, we therefore find the following:

The Top 1 percent is made up of approximately 36,000 adults.
This group owns approximately €130.2 billion.

€130.2 billion. Just take a moment to reflect on that.

[Pause for quiet reflection on the amount of wealth owned by 36,000 adults in Ireland]

On average, this means that every adult in the top 1 percent owns €3.8 million.

[Another pause for quiet reflection on the amount owned by each of the wealthiest in Ireland].

My gut feeling is that the VAT increases, the cuts in social protection, the cuts in public hospital wards and classrooms, and the €100 Household Charge won’t do much to dent these people’s wealth holdings or income.

This just shows that for some – a very few – wealth is a life-style choice.

This is one of many reasons why you should come out tomorrow and join the march.

After all, the 99 percent have rights too.

8 responses to “Our Own 1 Percent”

Cormac

November 25, 2011

V interesting to see Sweden’s position at the top of the table. I had always thought of the Scandinavian countries as quite egalitarian, but it seems that isn’t necessarily the cas

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Colum McCaffery

November 26, 2011

Emphasis on 1% and on wealth will keep the rich top decile of earners on side.

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Rory

November 29, 2011

If this report isn’t available, how did you get it? Can I get a copy?
And since wealth follows a power law, it’s not true to think that 36,000 people own (€130.2bil / 36,000), they wouldn’t all own the same amount. A median wealth would be more helpful (not mean).

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Michael Taft

November 30, 2011

Rory – I said the report is not available free on-line. The top 1 percent own 28. percent of the wealth. Of course, you could average that out among the adults in that 1 percent but the distribution would slide. The point is that 28.1 percent (if the report’s findings hold) of all wealth holdings will be found in the combined grouping of the top 1 percent.

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bissell steam and sweep

January 2, 2012

Are you serious? I am not so sure about the legitimacy of your facts. Seems kinda bogus.

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Dreaded_Estate

April 5, 2012

Hi Michael,
I don’t know if you post on politics.ie but there is a debate raging on some analysis you have done on the wealthy in Ireland.
A couple of questions that help resolve the issue.
1. Do you use the Credit Suisse report as the source for the proportion of wealth held by the top 1%?
2. Does this report have actual data on Ireland?
3. Are there any other sources of wealth distribution for Ireland?
4. What wealth tax rate do you feel could be applied to the assets of the wealthy?
5. Do you agree with the ULA proposal that €10bn per annum could be generated by a wealth tax?
6. How much do you personally think could be raised by a wealth tax?

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Michael Taft

April 5, 2012

Dreaded Estate – thanks for that. I was aware there was a debate on politics.ie but didn’t realise it was ‘raging’. But here are the answers to your question.
1. Yes, this post referred to the Credit Suisse Report and that was the data I used.
2. Yes. For data regarding both financial and housing wealth it refers to Central Bank, CSO and Eurostat data. I have used the data from the latter two before. The issue that is probably raging is the distribution of wealth held. Here, it gets more problematic since Seamus Coffey pointed out that the reference used doesn’t include material on Ireland. What Credit Suisse have done is tried to find the latest year that data was available and worked up (since so much of this data in Ireland and other countries is not officially collected on a decile basis). There is such work – Brian Nolan who did an analysis for Combat Poverty Agency but that is quite dated now (1991).
On a ranking from very poor to good, Ireland’s data is ranked satisfactory so there is probably a higher margin of error than those with good (UK, Germany, etc.). So the question is whether approximately 47 percent of the wealth is held by the top 5 percent. Probably, but it could vary. In any event, this is consistent with other countries so there is no reason to believe that Ireland is much different.
3. Not really. The Bank of Ireland Private banking used the UK as a benchmark for Ireland in terms of wealth distribution. Other reports have given anecdotal data (number of millionaires, etc.) but there is no systematic breakdown of this data.
4. The French wealth tax is a good benchmark. It ranges from 0.75 to 1.6 percent on wealth over €1 million. That doesn’t seem unduly penal. Maybe push it up a couple of fractions. The issue, of course, is not so much the rate but the coverage. Does it hit super-pot pensions? (n France, no. Does it hit cash? Doing that could risk a flight of deposits and make it difficult to track down even if the tax has a global net.
5/6. My own starting point would be the Finance Minister’s own estimate if a French-style wealth tax were applied here. He said it would raise between €400 and €500 million. If the Norwegian wealth tax were applied it would raise approximately €1 billion (0.7 percent of GDP). So I would expect the range between those two estimates.
It’s not a pot of gold but its a fine haul of silver.
Hope that helps.

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Dreaded_Estate

April 5, 2012

Just seen the link to your response on politics.ie amd thanks for coming back to me so quickly and succinctly.
Much appreciated keep up the good work!

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