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8 Billionaires = 3.6 Billion Poor

By Shlomo Maital  

 8-billionaires

   Oxfam is a British-based philanthropic organization that provides support for the poor world-wide. It is politically identified with the Left.   From time to time Oxfam generates reports showing the extreme inequality of world wealth distribution. The latest report claims that only 8 billionaires, the richest people in the world, hold wealth equal to the entire holdings of wealth of the poorest 3.6 billion people, or half the world’s population.

   Not long ago, this annual report claimed that 62 billionaires = half the world’s population.   So the rich have grown richer, the poor have grown poorer. Indeed, half the world has little or no wealth at all, per capita.   Oxfam uses Forbes Billionaire List data, and publishes its report to coincide with the Davos World Economic Forum, where the world’s makers and shakers meet.

            Here are the eight super-billionaires.

1.Bill Gates, the founder of Microsoft, led the list with a net worth of $75 billion. He is scheduled to speak at the forum in Davos this year. 2. Amancio Ortega Gaona, the Spanish founder of the fashion company Inditex, best known for its oldest and biggest brand, Zara, has a net worth of $67 billion.   3. Warren E. Buffett, the chairman of Berkshire Hathaway, $60.8 billion. 4. Carlos Slim Helú, the Mexican telecommunications magnate, $50 billion. 5. Jeff Bezos, the founder of Amazon, $45.2 billion. 6. Mark Zuckerberg, Facebook’s creator, $44.6 billion. 7. Lawrence J. Ellison, the founder of Oracle, $43.6 billion. 8. Michael R. Bloomberg, the former mayor of New York and founder of the media and financial-data giant Bloomberg L.L.P., $40 billion.

What can we learn from the Oxfam report, even if it is partly inaccurate?

* None involve inherited wealth. All did it on mainly their own.   * Gates and Buffett are committed to giving away all their wealth and their foundations are well on the way to doing this. * Bloomberg became a highly effective mayor of New York, and was close to running for President. * A majority built wealth in the world of high-tech. * Some have created a lot of jobs:   Zara, a retailer, and even Amazon, which is now hiring.

     With a billionaire now President of the United States, it is time to ponder these questions:   Is it healthy for society that individuals can accumulate vast fortunes? Do they use tax avoidance to build wealth, and is their philanthropy to some degree part of tax avoidance? Should there be a strong inheritance tax, so the playing field is levelled at least once a generation?  

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2013: Tough Year for Workers, Great Year for Billionaires

By Shlomo  Maital

Gates

       Last year, 2013, was not too great for the working people of the world. Unemployment remains high in most countries, especially the U.S. and Europe,  and is highest among the youth.  Economic growth is stagnant in the U.S. and EU.

   But guess what.  It was a GREAT great year for billionaires.  According to Forbes magazine, which carefully documents (and generally worships) the super-rich,  there are 1,645 dollar billionaires in the world —  268 more than the previous year, an increase of 17 per cent.  The world’s billionaires owned wealth totaling $6.4 trillion, up from $5.4 trillion a year ago, a 19 per cent rise!

   The total wealth held by only 1,645 persons, $6.4 trillion, is bigger than the GDP of any country, except the U.S. and China. 

    Who tops the list?  Well, it’s Bill Gates again, with personal wealth of $76 b. (mainly through Microsoft stock).  And here’s the point.  Bill Gates isn’t TRYING to make money any more. In fact, he’s working very hard, with his wife Melinda, to GIVE AWAY his money effectively and impactfully. 

     So, to those, like Financial Times’ Chris Giles, who want to refute Thomas Piketty’s findings —   answer this.  How can you deny, that great wealth perpetuates itself, and grows itself, at huge rates of increase, even when the owners of that wealth aren’t even trying to add to it? 

    America has the most billionaires, 492 of them;  China is a surprising second, with 152, and Russia, third, with 111.   America has   1.55 billionaires per million people;  China has  0.11  billionaires per million; and Russia has  0.77 billionaires per million. Most of Russia’s billionaires stole the assets that rightly belong to the Russian people. 

   So – dear Bill Gates:   It certainly is true that if you’re born poor, it’s not your mistake, or your fault.  And the way the world is, chances are very high, you are born poor.  But Bill,  if you die poor, which is what happens to most poor people, it definitely DEFINITELY is not your mistake.  Because the world is enormously tilted toward those who already HAVE money.    Fact.  And your wealth is proof.

    If you die poor, it is because those who control $6.4 trillion of the world’s wealth,  which they accumulated on the backs of hard-working people, are using it to generate more and more and more wealth, and hang onto it,  instead of using it to help others without money get more of it.  Bill Gates and Warren Buffett are exceptions that prove the rule.

     And Chris Giles?   What else would you expect from the Financial Times?

Piketty Is Alive & Well – in London:

Why the Billionaires Worry Me

By Shlomo  Maital

Usmanov 

Alisher Usmanov

  Chances are, you’ve never heard of a man named Alisher Usmanov.  He is an Uzbekistan-born Russian billionaire who lives in London.  His fortune is estimated at $18.6 b.  He built it through metal and mining operations and investments.  He owns, among other things, two football clubs, Arsenal and Dynamo Moscow.  Usmanov is Muslim, and is married to Irina, who is Jewish.  And despite his wealth, he is only London’s second richest billionaire (the richest are the Hinduja brothers, Sri and Gopa, who have interests in oil, banking, cars, property and media). 

   Why London?  Because London is home to more sterling (pound) billionaires than any other city in the world – 72 of them, in fact, ahead of Moscow, which has ‘only’ 48.    Why?  Because British tax laws are highly favorable to the super-rich, and because London, in many ways the world’s financial capital (huge forex trading volumes, for instance), attracts money like a magnet.  Prime Minister Cameron fails to loudly, clearly condemn Putin’s Crimea grab?  Two guesses why – Russian billionaires with piles of cash in London. 

    Thomas Piketty’s book (see my recent blog) has drawn attention to the enormous and growing gap between rich and poor.  London, and Britain, are an extreme case. According to the London think-tank NIESR  Britain’s per capita GDP is still well below its 2008 peak and won’t return to it before 2017.  Yet Britain’s 104 sterling billionaires now have a total wealth of ₤ 301 billion  (US $500 billion); last year there were only 88 British billionaires, and their combined wealth was ₤55 b. less.  The billionaires grow richer; the poor get poorer. Piketty explained why. Billionaires double their money every decade. The poor fall behind every decade.

     A British food bank network reports that nearly a million people approached it for emergency food aid in the year ending in March, more than double last year’s tally. 

    Why don’t the poor (whom, as the saying, God loves very much, because he made so many of them) rise up and take back their country politically, democratically, from the billionaires? 

     Here is why.    A new study by   scholars Martin Gilens (Princeton) and Benjamin Page (Northwestern) shows:  * 

   “…. rich people and organizations representing business interests have a powerful grip on U.S. government policy. After examining differences in public opinion across income groups on a wide variety of issues [1,779 cases, from 1982 through 2001] , the political scientists  Gilens  and   Page   found that the preferences of rich people had a much bigger impact on subsequent policy decisions than the views of middle-income and poor Americans. Indeed, the opinions of lower-income groups, and the interest groups that represent them, appear to have little or no independent impact on policy.”

     LITTLE OR NO INDEPENDENT IMPACT ON POLICY!   In America.   And doubtless, in Britain, too, and anywhere that billionaires park their yachts. 

     The rich are growing richer. And they are using their wealth to tilt policies in their favor, including tax breaks.   

      That is why the billionaires worry me.   Because they are taking control of our democratic system.   Perhaps it is too late – perhaps we no longer have true democracy anywhere. 

       Never has Edmund Burke’s dictum, “for evil to triumph, it is enough for good people to do nothing”  been more poignant.   We ordinary people have to take action.  

     But how?

     Readers —  ideas!    Action!   This is intolerable.

* See John Cassidy’s excellent New Yorker post,  “Is America an Oligarchy?”, April 18, 2014

Piketty: The Super-Rich Will Own Us

By Shlomo  Maital

Piketty

Thomas Piketty’s new book Capital in the 21st C. (Harvard/Belknap) should get him the Nobel Prize. It won’t because it is basically just carefully-built data.  But the data are shocking. And it took a French economist to do it; except for Paul Krugman it seems that the collective brains of the American economic establishment have shut down for good. 

  Piketty’s book is 700 pages long. Few will actually read it.  But the fierce and growing inequality he documents has already drawn huge media attention, and even the IMF is in on the act, with Christiane Lagarde (IMF Director-General) announcing that the IMF believes inequality is bad for growth, and pro-equality policies can actually stimulate economic growth.

    I will save my readers the time and effort of reading this huge book, by summarizing it.  Piketty says, there is “an oligarchic type of divergence, in which the rich countries would come to be owned by their own billionaires…or in which ALL countries would come to be owned by the planet’s multi-millionaires and billionaires…. All the ingredients are in place for the top centile and thousandth of the global wealth distribution to pull farther and farther ahead of the rest.”

    This has already happened, to a large degree.  Oligarchs run Russia.  They own the media in my country, Israel. They are powerful in America.  They are powerful in China.

     Why is this happening? Simple.  If you have great wealth, you can earn on average 6.8 per cent annual return (above inflation).  This doubles your wealth every decade, without your having to really do anything.  And you can keep the profits, because the wealthy easily find tax havens.  If you have little wealth, you earn maybe 1 per cent, and then you get taxed.    When the wealthy double their wealth every decade, in 30 years it is 8 times what it was at the start.  Great wealth confers huge political power. You can buy the media, you can buy lobbyists, and you can, yes, you can buy politicians. 

     Karl Marx got one thing right, and one thing wrong. He said that wealth would become more and more concentrated, under capitalism.  Right.  He said that the people (the government) should confiscate national assets and run them.  Wrong. Governments can’t run businesses.  

  Piketty’s solution is very French – perfect, optimal and utterly impractical. Impose a global wealth tax.  What are the chances this will happen, when the oligarchs already wield immense political power?  If one country does it, the money will flee to another, happy to welcome it by offering tax havens. 

   Either there will be enormous social upheaval, to bring the oligarchic wealth back to where it belongs, and decades of suffering and instability,  or we the people will find some clever way to deal with this ‘doom loop’, which is leading us to destruction.    The current situation cannot continue.  And Occupy Wall Street was largely ineffective, like the Arab Spring, because it brought passionate protest, it brought attention to a critical problem – but offered no creative solutions. 

     The solution?   To be presented in a future blog.  

     

Blog entries written by Prof. Shlomo Maital

Shlomo Maital
November 2017
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