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article imageOp-Ed: Excess Personal Wealth: Australia and Canada Second and Third?

By Robert G Cope     Jul 12, 2011 in World
The Pacific Basin – including China and Japan -- maintains a commanding presence among wealthy individuals/nations with Australia and Canada, following the United States, having the highest proportions of 'high-net-worth-individuals.'
No surprise. As I pass through an airport on the Arabian Peninsula, while waiting for my flight to Australia, I find a copy of Arabian Business. Browsing, I see a feature article on the Kingdom of Arabia's thirty richest families and individuals. I note the world's richest Arab, Prince Alwaleed Bin Talal Al Saud, tops the list at something over 20 billion in assets from real estate to his jewelery collection.
Reading further, I see the rich list of top-30 dwindles to five Arabs whose fortunes are less then three billion each. I am surprised to note most of these nouveau riche (top to bottom) hold, not oil but, assets in banking, transport, construction – even hospitality. None of this wealth is a surprise as, for example, an undisclosed Arab recently bought the world's most expensive car – an Italian, custom-made Bugatti estimated to cost US$ 2.4 million.
Buried among the profiles of the thirty richest Arabs is an article from the 15th annual report on wealth distribution across regions of the world – Europe, North America, Asia.... See notes 1-4 below.
Wealth Follows Trade. Predictable – as thirty years ago US trade across the Pacific began to exceed trade with Western Europe – the big story for 2011 is the Asia-Pacific region now has more wealthy individuals than Europe. Within a recent year, Japan became the number three (from number two) industrialized nation when China became number two. Still no surprises as in the 21st Century the three largest industrial nations are all positioned on the Pacific Basin.
Like an archaeologist, digging further, numbers of the most wealthy individuals appear among 71 countries. Now I am surprised.
Where are the Wealthy Individuals? As I live in Australia, I noted Australia replaced Italy becoming the nation with the 9th greatest number of High Net Worth Individuals (HNWI): about 190,000. That places Australia ninth (after Switzerland), following the (1) USA, (2) Japan, (3) Germany, (4) China, (5) United Kingdom, (6) France, (7) Canada, (8) Switzerland, then (9) Australia, with Italy, Brazil and India rounding out the top-dozen.
However, simply dividing -- no-one-else appears to have done this -- the population of each nation by the number of HNW individuals, Australia, with its small population, becomes third in the world (after Switzerland and the USA) in the proportion of wealthy in its relatively small population of about twenty-two and a half million, or one HNWI per approximately 117,000 of population.
Rich Club Membership. No surprise at all, the largest number of HNW individuals is below the southern border of Canada -- over three million Rich Club members. The United States, however, with a population of over 300 million, has about only one wealthy club member (as defined – see note 4) per about 100,000 non-members. China, ranked fourth highest in HNWI -- about a half million in their Rich Club. With over 1.3 billion people, however, China has only one excess-wealth member per about 2.5 million. In my calculations, China ranks 11th of twelve nations (ahead of India) in the proportion of wealthy in their populations.
With populations considered, the rank-ordering is Switzerland (see note 2), followed by USA, Australia, Canada, United Kingdom, France, Italy, Japan, Germany, Brazil, and China.
Missing the Important Story. In October of 2010, the Australian Trade Commission (a government agency), released this Data Alert: "Australia has the Third Largest HNWI Population in the Asia-Pacific Region."
The Trade Commission missed the more important story: Australia has the Third Largest Proportion of HNWIs in the World. Depending on the correctness of Switzerland's data, perhaps even second.
If Switzerland's population of 'resident' HNWI is over-stated, the Pacific Basin now has a clear and commanding presence among the world's wealthy: USA, Australia, Canada, China and Japan.
Notes: (1) These figures come from a June 2011 release of a world-wealth-report from Merrill Lynch-Capgemini. This reporter did the re-calculations to come up with a ratio of wealthy individuals in national populations. I rounded at 1000s and use “about” and “approximately” liberally as Merrill Lynch-Capgemini offers this disclaimer: “The information contained herein was obtained from various sources ... [we] do not guarantee accuracy....”
(2) This Digital Journal reporter found it impossible to know from the published documents how – over the past fifteen years -- the lists of the individual wealthy are compiled. Seventy-one nations are mentioned but nowhere did the published reporting list all seventy-one. Thus, wealth-to-population data could not be determined for such entities as Hong Kong, Singapore or the oil-rich Arabian sovereign states. Also given the unusual banking attraction of Switzerland (or Cayman Islands) to the world's wealthy, perhaps that country's number of wealthy is substantially over-stated; if so, then Australia might be second in the world ranking and Canada third. Also, given the developments in the Russian Federation, with so many new billionaires created when the previous Soviet Union's capital assets were acquired cheaply, the place of Russia might have been included.
(3) The most complete alternative source of roughly comparable data (published in December 2006 on 2000 data), is from the United Nations: The World Distribution of Household Wealth. Even that report, while it included individual wealth measures, roughly comparable to the Merrill Lynch-Capgemini reporting, did not publish HNW data relative to a nation's population.
(4) Merrill Lynch-Capgemini, for its purposes, defined High Net Worth Individuals (HNWI) as those with at least a million US dollars beyond their home/homes. Thus, having millions or billions to purchase other assets such as real estate, stocks and bonds, or to make alternative investments, as well as to buy race horses, yachts, exotic cars, scarce wines and art – matters of personal passion.
Acknowledgment: Alan Howard, retired business and statistics professor, suggested the 'utility' of proportion-calculations as the results 'predict' the liklihood of a person in that country becoming a HNWI.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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