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8 Billionaires = 3.6 Billion Poor
By Shlomo Maital
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?
The Truth About Wall Street from Warren Buffett
By Shlomo Maital
Each year, legendary investor Warren Buffett, CEO of Berkshire Hathaway, writes a letter to shareholders, the mostly widely read document of its kind, as it has many pearls of wisdom – and of course, Buffett’s incredible track record gives him credibility. You can easily download and read the whole thing. I recommend it. Here are some snippets, drawn from Andrew Ross Sirkin’s New York Times column on March 4:
On Investment Bankers: “…constantly urge acquirers (of companies) to pay 20 to 50 per cent premiums over market price….they tell the buyers the premium is justified for ‘control value’ …a few years later bankers – bearing straight faces – again appear and just as earnestly urge spinning off the earlier acquisition in order to ‘unlock shareholder value’.” Sorkin comments “there are countless example of the build-it-up-and-tear-it-down phenomenon, like Hewlett Packard.” Of course, investment bankers charge huge fees for this brilliant manipulation.
Any true redeeming social value in all this? Buffett sees none and neither do I.
On Wall St. in general: “Money-shufflers don’t come cheap”. Money shuffling. Any true redeeming social value in this? You won’t find it with an electron microscope.
On private equity: “Equity is a dirty word for many private equity buyers; what they love is debt. And because debt is currently so inexpensive these buyers can frequently pay top dollar. Later the business will be resold, often to another leveraged buyer. In effect, the business becomes a piece of merchandise.”
Sorkin quotes Buffett’s comparison of Berkshire Hathaway (which buys share and companies, and holds them, often forever) and other investment funds: “You can sell it to Berkshire and we’ll put it in the Metropolitan Museum…by itself, it’ll be there forever. Or you can sell it to some porn shop operator, he’ll stick it up in the window and some other guy will come along in a raincoat and he’ll buy it.”
And yes, Buffett believes in real companies that make real stuff, like Heinz ketchup.
An enormous industry is thriving on the cheap money that American and European central banks are printing. That money was supposed to finance real capital formation. Instead it is financing speculative money-shuffling, making big profits for the very people who crashed the world’s economy in 2008.
If you don’t believe me, ask Warren Buffett. Or read his letter.
Build Your Dream: Helping London’s Pollution
By Shlomo Maital
Build Your Dream (BYD) is a Chinese electric-car company, which I’ve written about before. It was founded by a genius Chinese scientist Wang Chuanfu, who invented a revolutionary lithium ion battery, then decided to build cars around it.
BYD just announced (Financial Times, Feb. 10) that it will launch London’s first ever all-electric taxi fleet today (Tuesday). It thus beats London Mayor Boris Johnson’s deadline for all London’s taxis to be zero-emission by 2018.
BYD has thus won the race against Nissan, and London Taxi Company (LTC, which makes the iconic black London cabs). LTC is now owned by the Chinese carmaker Geely.
The BYD cabs can be ordered by smartphone apps (like Hailo and Uber); they have a range of 186 miles and will use a network of battery chargers installed by British Gas across London.
BYD currently runs fleets of all-electric taxis across China, in Colombia, Hong Kong, and soon in Singapore.
Warren Buffett’s Berkshire Hathaway owns a 10 per cent stake in BYD. Earlier BYD supplied London’s first-ever fully-electric buses.
Mayor Johnson’s office says taxis create a third of all the exhaust emissions in London.