The rich get richer. And richer.
By Paul E. Erdman, CBS MarketWatch
Last Update: 5:48 PM ET Aug 16, 1999 More Commentary
StockWatch
SAN FRANCISCO (CBS.MW) -- During the past two centuries the income gap between the rich nations of the world and the poor ones has widened at an amazing rate.
Wave after wave of huge mergers continue to sweep through the world, accentuating the concentration of wealth in the West.
A recent United Nations report suggested that in the early 19th century this gap was around 3:1. By the early 20 century it had widened to 11:1. At present, at the close of this century, it probably exceeds 70:1. And this despite the decades-long spurt of growth in Asia, which ended two years ago.
Today, the top 40 billionaires in the capitalistic world have a net worth that is greater than the GDP of countries or regions which account for 45 percent of the world's population -- India, China, East Asia and Africa.
According to the Far Eastern Economic Review, it's almost certain that these disparities in wealth will become more acute. Wave after wave of huge mergers continue to sweep through the world, accentuating the concentration of wealth in the West.
One result is that today a single private company, Royal Dutch (RD: news, msgs), controls more of the world's oil reserves than any single country. But an even more important reason to believe that this gap will be widening at an accelerating rate in the 21st century is the knowledge revolution which is occuring in the Western world, as personified by the Internet and the interfacing of ever more powerful computers.
Already now only 10 countries, led by the United States, control 85 percent of global spending on R&D. Disparities of this type, arising out of the Industrial Revolution, were what ushered in the era of colonialism in the 19th century, an era which came to a convulsive end following World War II.
Today, instead of nations, it's the West's huge multinational corporations that are recolonizing the rest of the world -- from Citibank (C: news, msgs) to Microsoft (MSFT: news, msgs), from Novartis to Asea Brown Boveri, from Boeing (BA: news, msgs) and Airbus to Exxon (XON: news, msgs).
Only they can provide the software, the huge loans, the construction capabilities, the energy, the transportation systems, and even the pesticides that the Third World will need in order to "enjoy" rates of economic growth that will allow them to feed their hungry billions.
Such utter dependency on us is bound to lead to ever-increasing resentment, just as it did in the 19th century, a resentment that is still a powerful force today in both India, and especially China.
So how can the very rich and the very poor live together in peace? This could well be the overriding geopolitical issue of the 21st century.
Economist and author Paul E. Erdman is a columnist for CBS MarketWatch.
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