How Wealthy Is Everyone Who Isn't Rich?

Barry Ritholtz ponders How Wealthy Is Everyone Who Isn't Rich?.

Consider the 71 percent of the world's population that falls into the poor and low-income categories. TThis group devotes a very large share of its income to food, medicine, clothing, housing, education and energy. It therefore represents a huge market for basic goods and consumer staples.

Think of it another way. More than fourth-fifths of world's population live on less than $20 a day. TIn other words, how well this vast swath of humanity is doing will have important implications for industry, from health care and finance to agriculture and energy.

Income growth in these groups in both the developing and developed world will alter the economic and political landscape. The U.S. National Intelligence Council has called it a global megatrend.

Not to be too optimistic, but the economic state of world is getting better. As more people move into the global middle class, they are able to buy more consumer goods, save and invest. That creates a long-term self-interest in political stability and, one can hope, democratic institutions.

How well we adapt to these changes will determine how successful we in the U.S. are as investors, and as a nation.

Emphasis Mine

Of course, the implied argument of this article is that Capitalism is making the world a better place.

The efforts of governments in China, Laos, Venezuela, Vietnam, Ecuador, Cuba, and elsewhere in devoting large resources to food security, housing, literacy, medical programs to the poor is undoubtably a major part in this trend towards a better world.

Yet, we have seen in recent years the callous disregard of Capitalism towards the poor through austerity programs in Europe (especially in Greece), the destruction of nations with successful social programs such as Iraq and Libya, and the brutal supression of refugees fleeing the terror of war and poverty.

Ritholtz is naieve to believe the rising middle class is blind to what Capitalism really means. The US's role in enforcing the brutality of Capitalism will not be easily forgotten.