The Ownership Economy is coming and is here to stay. It is the key to reversing one of the most problematic and existential issues facing our generation and future generations to come - Wealth Inequality. Income redistribution and equal opportunity are a few ways that we are fighting back but these methods do not materialize as fast as the problem they are trying to solve. In other words, we are losing the race to reverse the trend of the widening wealth inequality gap. Wealth creation is outpacing wealth redistribution incrementally over time. We need a radically different view of the wealth creation that aligns free market capitalism with social benefit. We need an Ownership Economy.
No this is not a pitch for Web3 or Web4 or any other buzzword where the concept of Ownership Economy is conflated. The Ownership Economy is not a technology or platform. It is a political & financial economy that creates wealth in the form of shared equity between consumers and the economy they participate in.
The next 10 years will be a momentous decade for the will of the people to unite and overcome wealth inequality and financial inequity. The wealth inequality gap means the world’s richest 1% have more than twice as much wealth as 6.9 Billion people, while half of humanity is living on less than $5.50 a day. And inequality is sexist too.
The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men, whose fortune and power grow exponentially. With less income and fewer assets than men, women make up the greatest proportion of the world’s poorest households, and that proportion is growing.
And it is not getting any better — Up to 80% of the global population under the age of 34 do not own any long term wealth, which is the only path to retirement and financial security over time. In the next decade, as much as $12 trillion in financial and non financial assets will shift from investors born in the 1920s and 1930s to boomers born between 1946 and 1964.
At the same time, an additional $30 trillion in financial and non-financial assets will pass from boomers to their heirs, and between 2013 and 2045, 10% of total wealth in the US alone will change hands every 5 years. It shouldn’t sound counterintuitive, but younger generations need to be investors more than the old. And we are falling behind — as a ratio of income to wealth.
Since 1989, people under the age of 40 have seen their share of the nation’s wealth plummet from 19% to 9%. For the first time in U.S. history, young people are no longer better off (economically) than their parents were at the same age. And, the distribution of this shrinking wealth remains unequal across race and gender.
Even 2021 was a peak in wealth inequality particularly in the United States. The wealthiest 10% of American households now own 89% of all U.S. stocks, a record high that highlights the stock market’s role in increasing wealth inequality. The top 1% gained over $6.5 trillion in corporate equities and mutual fund wealth during the pandemic, according to the latest data from the Federal Reserve while the bottom 90% of Americans held about 11% of stocks, and added $1.2 trillion in wealth during the Covid-19 pandemic. And its not just stocks…
The advertised decentralization of power out of the hands of a few has, in fact, been a re-centralization of power into the hands of fewer. The top 9% of accounts hold 80% of the $41B market value of NFTs on the Ethereum blockchain. The practice of “whitelisting” keeps the bulk of NFT profits within a tight circle of insiders. Bitcoin is even more centralized: The top 2% of accounts own 95% of the $800 billion supply of Bitcoin, and 0.1% of Bitcoin miners are responsible for half of all mining output. If it were a country, Bitcoin would have the greatest inequality in the world.
Addressing this extreme gap, however, is not just a political choice. There is a need for a paradigm shift in the way equity and wealth is redistributed, a shift away from government as the main intermediary of redistribution to a focus on the economic relationship between customers and corporations. Of course public private partnerships have a role to play but the initiative must be driven by the market. Think about this, only 4 cents in every dollar of tax revenue comes from taxes on wealth while the ultra wealthy avoid as much as 30% of their tax liability. A better mechanism to create and redistribute wealth that aligns the incentives of corporations and their customers is the Ownership Economy on a global scale.
It’s time to build a community of consumers and corporations kept together not by demand and supply, but by shared ownership in the future we all share. Kept together not by discounts and products, but by ownership in the future of our global economy and the role it plays in our posterity.
But what exactly is wealth inequality and why exactly is it an existential problem? Stay tuned…