DEBATE 65Fotos: GeorgePeters/iStock.com; privat
3/2020 Business SpotlightIt is easy to bash billionaires
these days, but they are often a
healthy sign of innovation and
wealth creation. While billion-
aires certainly enrich them-
selves, they benefit the rest
of society by generating jobs,
creating wealth for others and
paying taxes. Fairer models of
taxation are probably required,
but governments persist in using income as a crude (and easily
manipulated) basis for calculating tax.
Billionaires are often philanthropists, too, making valuable
contributions to education, culture and the arts, the environ-
ment and social services initiatives.
Recent research shows that companies run by billionaires
do better on the stock market. This is no surprise — studies
show consistently superior performance when companies are
owned by vigilant and long-term shareholders, regardless of
their wealth. Billionaires tend to fit into this category. As own-
ers with “skin in the game”, they are often more conscientious.
The real inefficiency in investment and asset allocation comes
from corporations that don’t have engaged owners. Govern-
ments can have difficulty killing misguided projects, while
widely owned corporations tend to have executive pay struc-
tures that discourage long-term investment, starve research and
prefer short-term pay-offs.
Super-rich individuals can afford to be more speculative, un-
dertaking initiatives outside the boundaries of conventional
funding. They are more often a healthy sign of creativity and
success than an example of policy failure.
Societies with more substantive and long-term ownership
also tend to preserve the value of their national industrial
treasures and pass them on more responsibly — such as in
Denmark, Japan, the Netherlands, Sweden and Switzerland.
The age of their most valuable companies often exceeds 100
years. Sweden and Switzerland are egalitarian, but still manage
to generate opportunities for exceptional wealth creation: think
of the Kamprads (IKEA). They demonstrate that the treasures
billionaires create last longer and are shared over several gen-
erations.YES
“Billionaires are often a healthy sign of
innovation and wealth creation”
R. James BreidingNO
“There’s a strong link between billionaire
wealth and cronyism or corruption”
Max LawsonPROFESSOR DOCTOR
R. JAMES BREIDING
is a fellow at Harvard
University, the founder
of Naissance Capital
and an author
(https://profilebooks.com/
r-james-breiding.html)asset allocation
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, wachsamPeriods of economic instability
tend to be accompanied by an
explosion of extreme wealth
among only a few people. To-
day’s billionaires symbolize a
failing economic system that is
unduly rewarding those at the
top. It means there’s a lot less
money to be spread around, less
demand in the economy and
money wasting away in Swiss bank accounts instead of being
spent by ordinary people on things that keep the economy going.
Any economic benefit from billionaires’ wealth assumes it
has been gainfully earned. According to Forbes, about a third of
billionaires’ wealth is from inheritance. There is a strong link
between billionaire wealth and cronyism or corruption. You
don’t become a billionaire without some level of connection to
government contracts.
Supply chains have been relentlessly under pressure in our
global economy in recent decades. In Myanmar, for example,
workers are paid $3 or $4 (about €2.80 or €3.70) a day to produce
clothes for firms like Zara. Zara is owned by Amancio Ortega,
one of the richest men in the world.
It would be difficult to find any billionaire who has not gained
their wealth either from suppression of labour, exploitation, cor-
ruption or through inheritance from their parents.
Billionaires have influenced the collapse in taxation of the
richest of corporations in the past 20 to 30 years. The super-rich
benefit the most from cuts in corporate tax. Corporations have
shareholders, and the majority of billionaire wealth is in the form
of stocks and shares. Cuts in taxation link directly to lobbying.
So, if you’re worried about democracy, you should be worried
about billionaires. Alongside promoting politics of self-interest,
some billionaires are also engaged in concentration of owner-
ship of the media and manipulation of national stories and elec-
tions. You can make a lot of money by taxing extreme wealth, but
redistribution is too big a job for the tax system. Billionaires are
going to fight hard not to be taxed. Ultimately, whatever tax can
be raised means government would have more revenue to in-
vest in things like healthcare. In any useful economy that treats
people fairly, there wouldn’t be any billionaires.MAX LAWSON
is head of inequality
policy at Oxfam
International
(https://policy-practice.
oxfam.org.uk/blog/
author/max-lawson)