by Oliver Waters: In last month’s column I criticized the ‘degrowth’ movement, which essentially proposes that we should produce and consume less stuff. This notion has some merit of course – we should always strive to ‘do more with less’ – if that simply means making our technologies more efficient. But the degrowth ideology also tends to be motivated by the following claim: ‘Rich countries already have enough resources to secure good lives for everyone.’
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The idea here is that if all the wealth in a rich country, like the US, was divided equally, everyone could live comfortable, dignified lives. This is a highly intuitive claim, given the visceral displays of opulence by billionaires. Nonetheless, it is both false and harmful if taken too seriously.
To unpack why, we need to first clarify what we mean by the term ‘wealth’. It’s a strange word, since it seems to apply to radically different kinds of things. Jewellery, real estate, intellectual property – these all obviously count as wealth. But what do an idea and a townhouse have in common?
Wealth is best conceived as a property of people, rather than of physical objects themselves. In his book The Beginning of Infinity (2011), physicist David Deutsch defines a person’s wealth as ‘the repertoire of physical transformations one is capable of causing’. Owning a car contributes to your wealth, for example, as it enables you to transform petrol into useful motion. Owning a great new idea, on the other hand, allows you to transform the world in previously unimagined ways, and perhaps make yourself rich in the process.
How much total economic wealth is there in the world? In their 2023 Global Wealth Report, Credit Suisse estimates the figure at around $454.4 trillion USD. The United States holds the greatest share of around 31% ($140 trillion). The US has the second-highest mean (average) wealth per adult ($551,350) after Switzerland, but only the 13th highest median wealth ($107,740). This is because the US has a relatively large number of very rich people, which skews its mean wealth upwards.
This makes the US a prime candidate country for having more than ‘enough’ resources to share around. After all, if all its wealth were to be distributed equally, every adult could have $551,350 in their bank accounts, right? Every couple would end up with just over a million dollars. Since half of people own less than $107,740 of wealth, wouldn’t such a radical redistribution benefit the majority of people? Seems like an easy electoral promise! But let’s look a bit closer at the practicalities of this scenario, starting by noting the difference between wealth and money.
Wealth is heterogenous – there are many different types of it – and most kinds of wealth cannot be arbitrarily divided without being destroyed. This goes especially for ordinary physical objects: you can’t distribute a nice gold watch among 50 people by cutting it into 50 equal parts. Money is that small subset of wealth that is defined as a useful medium of exchange, store of value, and unit of account. To serve these functions, money must be divisible while retaining its value, and fungible in the sense that every dollar is equivalent to every other dollar. This is why if you borrow a $10 note from a friend, you can give him back ten $1 notes the following week. Whereas if you borrow your friend’s $5 million mansion for a week, you can’t give her back 5 random properties each worth $1 million.
One theoretical way to redistribute all the wealth in the US would be for everyone in the US to trade all their wealth to the rest of the world in exchange for money. This money could then be redistributed equally within the US, and people could then buy back what they wanted from the rest of the world. As you’ve probably already realized though, this scenario couldn’t work because there is not nearly enough currency in existence for the rest of the world to buy all the wealth in the US. This means the only viable way to divide up all wealth in the US would be to literally divide up its wealth. So let’s examine two of the main types of wealth which also appear to be far more ‘redistributable’ than objects like mega-yachts: corporate stock and real estate.
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