What would happen if the richest families in every country gave all their wealth to the poor? It’s a far-fetched question, but one that has come up. There is even a measurement for it: the Hoover index -- commonly known as the Robin Hood index -- measures the amount of income inequality in a country by hypothetically distributing the wealth of the rich to the poor.
To see how this applies in Asian countries with significant wealth inequality, the Superrich Team applied the Robin Hood index for seven Asian countries -- South Korea, Hong Kong, Philippines, Thailand, India, Malaysia and Singapore -- and found that if the richest families gave their wealth to their poor (whose disposable income is less than half of that of the middle class), most would receive a little more than the average monthly wages of their respective countries, according to the International Labor Organization.
South Korea
Korea has considerable wealth inequality, with the top 10 percent owning 62.8 percent of the total wealth and earning 10.1 times that of the lowest 10 percent, according to the OECD’s 2013 data. Additionally, 16.4 percent of the population is in poverty, according to Statistics Korea.
The richest family in Korea is the Lee family of Samsung Group. Forbes estimated last month that Samsung Group chairman Lee Kun-hee had a total of $26.6 billion -- 944,871 times more than Koreans’ average annual income, according to the ILO.
If the Samsung family’s wealth were to go to 8.3 million of Korea’s poor who make an average of $6,226 a year, each of those people could receive $3,217, which is approximately 1.4 times the average monthly wage recorded by the ILO.
Hong Kong
Hong Kong, which runs an independent economic system from China as a Special Administrative Region, has the highest wealth inequality among the seven Asian countries: Hong Kong’s top 10 percent own 77.5 percent of the total wealth and earn 63.4 times more than the lowest 10 percent.
Lee Shau Kee, founder, chairman and managing director of real estate company Henderson Land Development, has assets of $24.1 billion, or 597,000 times an average Hong Konger’s annual wage.
If this money were to be distributed to Hong Kong’s 972,000 poor, each person would have $24,700, which is 7.38 times the average monthly wage in Hong Kong.
Philippines
The top 10 percent of the Philippines owns 76 percent of the total wealth and earns 13.4 times more than the bottom 10 percent. Nearly a quarter of the country (25.2 percent) is in poverty.
The richest family in the country is that of Henry Sy, chairman and CEO of SM Investments Corporation, SM Development Corporation and SM Prime Holdings.
If Sy’s family were to equally distribute their $12.3 billion to the poor, each person would receive $492, the amount an average Filipino worker would earn in five years and eight months.
Thailand
The top 10 percent of Thailand owns 75 percent of the nation’s wealth and earns 11 times more than the bottom 10 percent. Although the poverty rate in Thailand is only 13.2 percent, nearly 44 percent of Thai people live on $5 per day.
The Chearavanont family is the richest in Thailand, with Dhanin Chearavanont having $19.9 billion as the CEO & chairman of CP Group.
If the wealth was given to 8.9 million of Thailand’s poorest, each person would get $2,226, about six months’ wages for an average Thai worker.
India
In India, the top 10 percent holds 74 percent of all wealth. The country also has the largest number of people in poverty due to its population: according to the Reserve Bank of India in 2012, 269.7 million, or 21.9 percent of the total population, are poor.
The family of Mukesh Ambani, chairman and managing director of Reliance Industries Limited, is currently the richest in India with $21.5 billion.
Due to the high number of poor, each person would only end up with $80 if Ambani’s family gave away all their wealth, but the amount would still be higher than what 508 million people in India earn in a month ($37.50).
Malaysia
Malaysia has considerable wealth inequality despite its high gross national income ($10,760), with the top 10 percent holding 71.8 percent of all wealth and earning 20 times more than the lowest 10 percent, according to the World Bank. Additionally, 17.9 percent of the population live under $4 a day.
Quek Leng Chan is one of the richest people in Malaysia as the chairman of Hong Leong Group, which his uncle, the late Kwek Hong Png, founded in 1941.
If this family, who has $18.9 billion, donated their wealth to the poor, each person would have $3,531, which is 7.5 times higher than a Malaysian worker's average monthly wage.
Singapore
Singapore had the highest rate of poverty out of the seven countries. According to the Singapore Central Provident Fund in 2011, 26 percent of the population is in poverty, and the top 10 percent has 59.6 percent of the wealth and earns 24.9 times more than the lowest 10 percent, according to MoneySmart.
The Kuok family is the richest in Singapore. Malaysian Chinese Robert Kuok grew his businesses ranging from sugarcane plantations to mining, finance, publishing and more, expanding to nearby Asian countries. His nephew, Kuok Khoon Hong, cofounded Wilmar International and is the richest person in Singapore.
If the family assets of $10.9 billion were to go to the 1.4 million poor, each person would have $7,665, or 2.9 times that of an average worker’s monthly wage.
Although an extreme speculation, the Robin Hood index shows that distributing the money of the superrich is enough to elevate the poorest of a country into middle class. Although there are arguments that financial assistance would decrease people’s willingness to work, studies have shown that it was not the case. Abhijit Banerjee, professor and founder of the Abdul Latif Jameel Poverty Action Lab at the Massachusetts Institute of Technology, released a paper last month saying that after an analysis of cash transfer programs in six countries, there was no evidence of assistance discouraging work.
By The Korea Herald Superrich Team (sangyj@heraldcorp.com)
Hong Seung-wan, Cheon Ye-seon, Bae Ji-sook, Yoon Hyun-jong, Min Sang-seek, Kim Hyun-il, Sang Youn-joo
