As stock markets boom, it’s alarmingly clear we’re not all invited to the party

Wall Street shares are at record highs. Across Europe, investors are toasting stellar stock prices, while gold and bitcoin were also trading at their highest ever levels this week. But the latest market surge generating huge wealth for a super-rich elite is being questioned more than ever.

Where did all this money come from? People who don’t own any of these assets and are finding it more difficult to make ends meet are asking the same questions. Examples of super-rich excess abound. From $9,000 (€8,270) Loro Piana jumpers sold in Silicon Valley stores to the billions that Elon Musk has thrown away on the vanity project of acquiring Twitter. A billionaire family in India recently spent an estimated $150m on a pre-wedding party.

The super-rich have always been with us. But the system is beginning to feel more rigged in favour of the asset-owning classes than it has for a very long time. To understand it all in an Irish context, you have to visit two Irish cliches on a St Patrick’s weekend – pints of Guinness and having a bit of land.

A person on the average weekly wage 17 years ago could have bought 196 pints of Guinness with their salary (if they chose to do so). Today, the average weekly wage would secure them 32 fewer pints, according to Raisin Bank’s stout-towage ratio.

More job opportunities and even higher wages are not creating the same buying power for many people, who cannot afford to buy a house or get to a point where they own any of these assets that are accumulating in value.

The wealthiest 10pc of households in Ireland own almost as much as all of the other households in the country combined. Apart from the top 10pc, housing represents three-quarters of all wealth. So, not having an opportunity to ever own a house cuts people off from that “asset-owning class” which is truly raking it in right now.

Ireland has one of the biggest gaps in homeownership between younger and older people in western Europe, where nearly 80pc of over40s own their home, yet barely a third of adults here under the age of 40 are homeowners.

This is a rapid change that will cost us as a society in the long run. Affluent millennials will inherit vast amounts of wealth in the coming years, which could perpetuate inequality and stifle opportunity for many.

Inequality has always been baked into the system and the best way to counter it is through improving people’s ability to have some stability in their lives when their earnings are low, while also boosting the chances of social mobility.

In the US, the American dream of moving up the economic ladder is dying. A wealthy elite is closing off opportunities to others through access to education, cornering inherited wealth and paying as little tax as possible, which is running the state’s coffers deeper into deficit and debt.

Senior executives at 35 major US companies, including Tesla and T-Mobile, received more remuneration between 2018 and 2022 than their companies paid in federal US taxes, a study by Americans For Tax Fairness found.

In the US in 1940, middle-income earners had a 93pc chance of earning more than their parents. By 1980 that had collapsed to just 45pc. Some of this inequality has been fuelled, even in recent years, by government interventions. Former London commodities trader Gary Stevenson questions in his book, The Trading Game, where much of the Covid state stimulus money has ended up.

He believes hundreds of billions of pounds, euro and dollars went to individuals and companies who didn’t actually need it, which is one of the reasons asset prices are so high and will continue to be. Covid stimulus delivered an unprecedented injection of cash into the system. It was money borrowed by states that will be paid for by everyone in future generations.

The US government spent $5trn on Covid aid and stimulus. This included $1.8trn paid directly to individuals and families, many of whom probably didn’t need it. A further $1.7trn went to businesses through the likes of the Paycheque Protection Program.

A recent study of the scheme found that every $1 in wages that would have been lost without the Paycheque Protection Program cost $4.13 in relief money. It wasn’t narrowly targeted and virtually every small business in the country was eligible.

In the UK, supports amounted to £360bn, while in Ireland we spent €24bn – or around 12.2pc of our real annual output.

Much of that money is still washing around the world’s financial system and making its way into asset prices, as the rich buy and sell stuff to each other. In the US in particular, the game looks increasingly rigged. Genuine economic investment is lacking. The average age of America’s industrial, power and highway infrastructure is near its highest since records began in 1925.

Yet, large corporations play a short-term game of using excess profit to buy back their own shares, which helps deliver on bonus targets for executives.

This year in the US, S&P 500 firms are expected to repurchase $885bn of their own stock, after splurging out $1.2trn in 2022. Until Ronald Reagan changed the law in 1982, share buybacks weren’t even legal in the US because they were seen as market manipulation.

Inequality within rich countries, with tensions over housing and access to resources such as education, will continue. Inequality between rich and poor countries is also widening after 20 years of narrowing, according to a UN index. Can these challenges be fixed? Inequality isn’t going to be wiped out. Greed won’t suddenly disappear. Replacing the global capitalist system, as some would urge, won’t work.

But some of these things can be improved through ongoing considered interventions. But first, they have to be recognised as problems.

Massive change is coming anyway. Western governments must find ways to put the brakes on surging inequality.

If not, the deep threats from climate change, AI and a culture of misinformation will threaten the stability that has been enjoyed by so many of us for many decades.

‘Not having opportunity to ever own a house cuts people off from that asset-owning class which is truly raking it in now’

Biden made it sound like Israel had only crossed the line after killing 30,000

US president Joe Biden attempted to increase pressure on Israeli prime minister Benjamin Netanyahu when he stated there are “red lines”.

Clarifying the point, he added: “They cannot have 30,000 more Palestinians dead.”

This talk of red lines by Mr Biden is confusing. Were the first 30,000 deaths, including those of roughly 12,000 children, acceptable to the US administration? And who does Mr Biden think is supplying the munitions that would be used by Israel to massacre a further 30,000 people? Fintan Lane

Lucan, Co Dublin

Locals’ wrath should have been directed at those in power, not at refugees

What an interesting night it was earlier this week. While the country was flooded with rain, the Muslim Sisters of Eire were feeding over 400 hungry people outside the GPO in Dublin.

Meanwhile, in Roscommon, 150 Christians met to complain about refugees getting accommodation. To compound the hypocrisy, it was addressed by a Fianna Fáil senator who declared it was time to “call a spade a spade” (‘Senator says locals are right to refuse arrivals to their town’, Irish Independent, March 15).

The senator rightly pointed out that all local services and infrastructure either no longer existed or were at breaking point. I hope the people of Roscommon can discover which political parties brought this destitute state of affairs on us all.

Glyn Carragher

Co Roscommon

Inequality in cancer care is an outrageous reality that must be tackled now

A leading cancer specialist has warned that Ireland has a two-tier cancer system (‘Cancer patients in west endure poor facilities, says specialist’, Irish Independent, March 8).

Professor Michael Kerin said Galway University Hospital is outdated and has inadequate facilities for cancer patients. He further stated that the west and north-west suffer from economic deprivation.

The EU recognises this part of our country as a “lagging region” that needs much investment.

There are sick people travelling from Donegal to Galway on the ‘cancer bus’. They endure a 10-hour journey there and back for life-saving treatments at an inadequate, crowded hospital. If this happened anywhere else, there would be outrage. Tom Towey Cloonacool, Co Sligo