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The system favored billionaires during the pandemic.
getty
It’s the best and the worst time to be a billionaire. People love some of them. They envy and hate the rest. Why? Because there are more of them than ever. We are experiencing what may be the fastest growing private wealth in recorded history.
Ruchir Sharma reports on the phenomenon in the Financial Times, giving a statistical overview of the speed at which new billionaires were producing in this global economy. He writes: Over the past two decades. . . the world’s population of billionaires has more than quintupled and the biggest fortunes have exceeded $ 100 billion. The pandemic has boosted this trend, stagnating the incomes of the middle and working classes while enriching tech giants and big investors. Finance flourished, rewarding the already rich, as the total wealth of billionaires nearly doubled in one year to $ 13 trillion. Stopping the pandemic was not a disaster for everyone.
The number of billionaires has also increased. In China, new billionaires have arrived at the rate of one every 36 hours, for a current total of 626, just behind Americas 724. Elon Musk is a big winner. Surprisingly, his wealth has grown from $ 25 billion to over $ 150 billion in the past year. This kind of increase doesn’t seem credible, except in the Bitcoin world, but it has happened. As a result, angry progressives want to abolish the whole class. As Sharma says: They called on America to tax billionaires out of existence. The philosophy seems to be to eat the rich to feed the rest of us.
Let’s take a deep breath and examine the complexity of what is going on.
The surprising increase in the number of billionaires makes their golden age privilege unfair. Income has stagnated for most people over the past four decades. Great wealth looks more and more like theft. Yet all of this obscures how a lot of money concentrated in the hands of a single change agent can actually enable this wealthy activist to make a crucial contribution to our future if he realizes the immense responsibility that great wealth offers.
Take Elon. Most people consider him a hero. He is a visionary who wants to wean us off fossil fuels. We depend on geniuses like Musk, endowed with the wealth to innovate in ways that materially contribute to solving the most intractable problems we face, like climate change. Who knows? Maybe hell will even transport us to Mars with its rockets if we don’t manage to solve our problems there.
Farhad Manjoo recently wrote about his ambivalence with the Billionaire Boom in a witty New York Times book. He explains how superyacht Jeff Bezos needed a helipad where Jeff’s partner could land the helicopter she is piloting. Thus, Bezos has a second yacht which serves as a dedicated parking space for his personal helicopter.
Needing a yacht with a helipad seems like a lifestyle issue for a James Bond villain. And Manjoo uses this story to justify his dogged desire to ban billionaires. The wealth they enjoy is, for him, unnecessary, excessive and potentially bad. But then he realizes that billionaires can actually serve the public good. The pandemic has opened his eyes. As government incompetence became visible, billionaires began to look like our saviors, Bezos kept our homes stocked, Gates took care of public health, and Musk was building a climate-friendly future. So when billionaires got richer with billions of dollars while the world was on lockdown, hardly a criticism sounded. He’s always nauseous about the way the super-rich grow like weed and it doesn’t matter that the Gates Foundation gives money to the companies they own shares in, but he can see an argument that to focus a lot of money. wealth in a few hands has benefits for society.
I’m fine with billionaires for similar, but more complex reasons. There is something vital, crucial, about how billionaires can save the day, especially if they make being a savior part of their mission.
So that’s where we are today. But there is a huge problem with a system designed specifically to enrich a large group of people (the top quarter of wage earners in America, the shareholder class) at the expense of everyone. This is the system that is holding most of our population back from prosperity with ridiculously low incomes and substandard education. This has turned out to be wrong with corporate governance in the service of shareholder primacy. It has forced companies to maximize short-term shareholder value.
We need a better system. One that asks companies to optimize the interests of multiple stakeholders: customers, employees, shareholders, the company itself, its suppliers, communities and the planet. There is good news on this front. Dozens of companies have been operating this way for years. Among them, Costco, Home Depot, Delta, Whole Foods, Cisco, Microsoft and many more. And, most importantly, we find enlightened billionaires who have made their businesses shining examples of this extraordinary system which is attracting the interest of all vital stakeholders. These billionaires are showing us the way. Ken Langone, Marc Bertolini, the Walton family, Larry Fink, Marc Benioff and Ray Dalio are all dedicated to this new model of corporate leadership. They speak conversation and walk the march. So we’ve been fortunate to have some of these smart, compassionate billionaires helping lead this revolutionary change that American businesses must embrace.
Our country, our democracy, depends as much on fair outcomes as it does on equality of opportunity. It requires inclusive growth. We need this evolved capitalist stakeholder system to make it happen. And we’ve been fortunate to have billionaires with that kind of integrity showing us a path where everyone wins. If this becomes the new standard for the functioning of free enterprise, society and our democracy, America as a nation, can truly become the best in their class.
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