'Wealth' is a relative term in my opinion, and so is 'poverty.' For the majority of us there are people who are 'wealthier' than we are, and others who are 'poorer.' I have, in common I suspect with a lot of others, often wished I could have a little more 'wealth' so I could buy some luxury without having to save up, or help out a member of the family without having to cut into my own, often tight, budget. Studying a bit of history suggests that there is, in fact, some sort of balance in that the major portion of 'wealth' in the world is actually controlled by a rather small number of people, though it is spread, at least in the west, rather more widely than we suppose.
Listening to the current media led storm about 'Captitalist' greed one could be excused for thinking that it was a new phenomenon they were railing against, but it is, in fact, merely the latest manifestation of a 'wealth distribution' that goes all the way back, I suspect, to the dawn of civilisation. As the Bible says, and other religious writings confirm the same patter, "the poor we have always with us." But how do you, in any given society, measure 'wealth' or 'poverty?'
I am often infuriated by the current trend among Fabianist left-leaning charities to impose such measurements as the possession of a range of over-priced 'name brand' toys and luxuries. It tends to reinforce the expectation that the better off somehow are 'stealing' these luxuries from the poor. Or, at the very least, depriving them of something they have a 'right' to possess. Moving outside of the 'western' democracies we would have to adjust this view and drop the expectations down the Maslow Hierarchy and the measure of 'poverty' would have to be whether or not the individual had food to eat and shelter. For the vast majority of the world's population I would suggest that is the real test of whether an individual is 'poor' or 'wealthy.'
Capitalism has been around a long time. So long, in fact, I'd venture top suggest that it is the 'natural' form of economics. Wealth is directly linked to productivity. The value of coinage is no longer linked to the value or rarity of a precious metal, though many still think of it that way. In fact the British Bank notes still bear the legend "I promise to pay the bearer on demand, the sum of ..." whatever the face value of the note is. In fact, very few coins these days actually have a metal value equal to their "face" value. The "wealth" of a nation these days is determined by a balance between its commercial activity, productivity in manufacturing and agriculture and the numbers of people productively employed (and therefore taxable) and the government's borrowing levels to cover the gap between tax income and government spending. It's quite a basket of things to balance, but it wasn't always this way.
Ever wonder why the British £ was called 'Sterling?' It goes back to the Saxon Kingdoms, when it was a pound weight of sterling silver. You could strike 240 silver pennies from a single pound of silver, which became the the basis of a "£ Sterling" with 12 'pennies' to a shilling, again, originally 12 'pennyweight' of silver. and twenty such shillings, made up a pound. That held good for centuries, but gradually it became necessary to debase the silver, and that began the slide into 'inflation.' But, this still only represents a small proportion of the 'real' wealth of the world. It does not represent the value of fixed assets such as mineral resources, property holdings or the ability of the people of any given area or land to convert these into things which can be traded for 'money' or accumulated as 'wealth.' This is why the sometimes niavely expressed desire to 'redistribute wealth' is a pipedream.
That said, those who control industry and commerce also know that their activities are extremely portable. It matters not at all to a banker where his activities are based, what matters to him (or her) is access to the financial markets and the restrictions they may have placed upon their activities. Once, this was relatively easy to manage, the trade was largely physical, in coin or ingots and the local authority knew where the merchant banker was and where he kept the goods. Gradually this changed, coin and ingots were replaced by Bills of Exchange and Banker's Notes. So far so good, but now fraud, always a possibility even with precious metals and gemstones (think of Archimedes solution to checking whether or not the king's crown was pure gold, necessary because debasing the gold meant a bigger profit for someone), but once 'paper' transfers came into play, fraudsters could really come into their own.
In the 18th Century the government's of Europe were compelled to adopt a new form of financing for their operations. In previous centuries, they'd taxed and spent and when the tax take didn't cover the costs, they either raised new taxes or borrowed 'treasure' from someone like the Templars. Of course, occassionally, they borrowed too much, a problem the French King Philip IV faced in 1307. He accused the Templars of 'heresy' and seized their assets. Problem solved, his books balanced and the 'banker' wasn't in a position to argue, but it did create a problem elsewhere in Europe. Henry VIII of England had the same problem, he'd borrowed heavily from the monasteries in England and had reached the point of defaulting on his repayments. Simple solution? Link it to the argument over his divorce, and grab the assets of the monasteries. This option didn't exist in the reign of Queen Anne, so her successors had to find a new way to do it. Enter the concept of Government Bonds and 'Deficit Budgeting.'
The idea of buying and selling stocks and shares in various commercial activities was already in place, so this was simply extended by government to 'trade' promissary notes to raise money to support their spending. Initially these 'Bonds' where balanced against expected tax income. As long as the money advanced didn't exceed income, there was no problem. Inevitably though, the borrowing soon exceeded incomes, not just in England, but right across Europe the same problem was developing. It reached a climax in the 20th Century. It should be no surprise to anyone, to learn that Britain was as good as bankrupt in 1945. Nor was she alone, but now there was no single lender who could be accused of something heinous and the debts cancelled. So the next step was to set up an 'international' fund as a 'bankers banker' and lender of first resort to governments.
The balancing of the books in this manner has been facilitated, of course, by the explosion of technology in the latter half of the century. But now a further factor entered the lists. Hugely expensive social security programmes entered into in many countries post 1945 meant that tax incomes had to be supplemented in some way. This meant borrowing more money ...
It has become fashionable to blame the bankers for taking advantage of the deregulation of their industry, and for the fraud which has brought the entire western economic system to its knees. Ironically those who believe the 'wealth' of the world can be 'redistributed' through punitive taxes, social security schemes and aid programmes to 'developing nations' now want confiscation and punitive restrictions on the banks - but the problem lies in a much wider arc and includes the governments who persist in promising programmes they can't afford without impoverishing the very people they depend upon for their income. As history shows, once a government becomes too demanding or too restrictive, the nation's 'wealth' departs rather swiftly.
The truth is that now, with modern systems, it can be gone in nano-seconds. What is perhaps worse, is, as a recent scam set up by a pair of teenagers in Britain has showed, is it has never been easier for a single rogue trader to destroy a national economy, strip people of their savings, their pension funds, their jobs and their homes. Much is made of the supposed 1% of the world population who are wealthy, but this is a misleading number and it takes no account of the real distribution of the assets of 'wealth.' The 'West' has dominated the economic agenda for centuries, but there have always been others of vast wealth who are not in the western economic zone. It is in the West that the wealth distribution curve is widest - but most of us wouldn't consider ourselves 'wealthy.'
Perhaps that's where the real irony lies ...
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