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Need more inequality!
June 30th, 2020
⏰ 1 minute read
⏰ 1 minute read
More inequality leads to more wealth & opportunity for everyone
Famous financiers say
We’ve written about this before, but I’ve seen many people talking about it recently including famous financiers, so I thought it’s a good time to repeat. What the famous financiers have been writing about is their concerns over growing inequality at this time. But inequality is not bad at all, in fact it’s essential & we need more of it.
These 2 stockmarkets
You don’t need an MBA in finance or a PhD in economics to work this out, you can do it simply with a few searches on the internet. For our study we will use 2 stock markets. One is our own Indonesian stock market which is now worth $407bn & the world’s largest which is the US, worth about $33tn.
2 largest companies
The Indonesian sock market has 691 listed companies which means the average company would be about $580m. The US stock market if we use the largest Russell 3000 index has 3,000 stocks which would be an average of over $10bn. In Indonesia the largest stock is BBCA which is worth about $50bn. In the US the largest is Apple, $1.56tn!
More inequality
That means here, our largest stock is worth about 86x the average ($50,000m/$580m). That sounds like it’s quite a large inequality. But in the US, Apple is almost twice as unequal as it’s worth 156x more than the average company ($1,560bn/$10bn). So it’s true the US is way more unequal than we are. ‘Inequality, how terrible!’ say the famous financiers.
Opportunity for all
But here, BBCA is 12% of the whole market while Apple is only 4.9%. The US stock market & the assets of all its shareholders is worth 80x what our market is worth. There is also much more opportunity with more than 4x more listed companies worth on average 18x more! You can see just how great inequality really is.
We’ve written about this before, but I’ve seen many people talking about it recently including famous financiers, so I thought it’s a good time to repeat. What the famous financiers have been writing about is their concerns over growing inequality at this time. But inequality is not bad at all, in fact it’s essential & we need more of it.
These 2 stockmarkets
You don’t need an MBA in finance or a PhD in economics to work this out, you can do it simply with a few searches on the internet. For our study we will use 2 stock markets. One is our own Indonesian stock market which is now worth $407bn & the world’s largest which is the US, worth about $33tn.
2 largest companies
The Indonesian sock market has 691 listed companies which means the average company would be about $580m. The US stock market if we use the largest Russell 3000 index has 3,000 stocks which would be an average of over $10bn. In Indonesia the largest stock is BBCA which is worth about $50bn. In the US the largest is Apple, $1.56tn!
More inequality
That means here, our largest stock is worth about 86x the average ($50,000m/$580m). That sounds like it’s quite a large inequality. But in the US, Apple is almost twice as unequal as it’s worth 156x more than the average company ($1,560bn/$10bn). So it’s true the US is way more unequal than we are. ‘Inequality, how terrible!’ say the famous financiers.
Opportunity for all
But here, BBCA is 12% of the whole market while Apple is only 4.9%. The US stock market & the assets of all its shareholders is worth 80x what our market is worth. There is also much more opportunity with more than 4x more listed companies worth on average 18x more! You can see just how great inequality really is.
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