How to share

One of the most striking features of wealth distribution in western countries is the consistently low share held by the bottom half of the population. The figure in the UK, currently about 9 per cent, is actually high by the standards of peer countries. In Spain, for example, the bottom half hold only around 6.5 per cent of household wealth. The share in the US and Germany is lower still: a paltry 2.5 per cent in each. And in Sweden, the wealth share of the bottom half is negative: in other words, the value of its collective debts exceeds the value of its collective assets.

One might therefore reasonably ask how it is that someone – and a Swede, no less – could come to write a book with the seemingly incongruous title of Richer and More Equal: A new history of wealth in the West. How, in other words, can one write a positive historical story about wealth in the West when it is so obviously distributed in profoundly unequal ways?

The answer has to do with perspective and with the lenses through which we examine the data. After all, to focus on the share held by the bottom 50 per cent is only one way to cut wealth distribution. Daniel Waldenström, the author of Richer and More Equal, focuses elsewhere. For him, the key metrics are the shares of the top 1, 5 and 10 per cent in any country. The author has almost nothing to say about what is going on lower down the hierarchy. His inference – a questionable one – is that if wealth is becoming less concentrated at the very top, then society more generally is perforce becoming more equal.

As for perspective, Waldenström considers the longue durée. The phrase “over the past century” peppers his study. To the extent that he offers historical com­parisons for contemporary wealth distributions, it is primarily with the distributions of 100 years or more ago.

Thus, his narrative runs broadly as follows. In the 1910s, wealth in western societies was highly concentrated, as illustrated in particular by the large wealth shares of the top 1 and 5 per cent. There then followed more than half a century of both rising wealth and substantial wealth democrat­ization, the latter delivered in the postwar era predominantly by expanding home ownership and retirement savings. Since the 1980s, overall wealth has continued to grow. Meanwhile, wealth shares at the top end have reconcentrated (especially in the US), but – and this is the point Waldenström repeatedly emphasizes – not to the levels of the 1910s.

This is all fine as far as it goes. Waldenström is essentially just putting a different gloss on a well-known story. But here is the thing: if I – a fifty-three-year-old man – go to the doctor because I am concerned at having begun to shrink over the past five years, the last thing I expect the doctor to say is, “Don’t worry, you are still a lot taller than when you were ten”.

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