The United States of America is the single richest country in the world, outpacing and (quite literally) outgunning its nearest opponent (China) by a few thousand billion dollars. The names occurring in the Forbes’ Richest 400 list are household names across most of the English-speaking world. The economic upheaval of the past few years however have not left the ultra-rich in the country untouched. For the first time since quite a while, great wealth did not manage to attract greater wealth this year. Upheavals in the tech industry, the industry most responsible for creating much of the high net worth individuals in the country, was responsible for the greater portion of the wealth lost to the economic downturn.
As a group, the Forbes 400 for 2022 saw their cumulative wealth receding by $500 billion USD and with the publication yet to issue the updated list for 2023, it remains to be seen whether this was a once in a lifetime event or the beginning of a trend. Despite the hit to the heaviest wallets in the world, the total value of last year’s Forbes 400 was calculated to be an eye watering $4 trillion US dollars. The hardest hit, as already mentioned, were the tech billionaires in the country, mostly due to falling stock values and subsequent decrease in equity funding. Despite being the wealthiest in the wealthiest country in the world, Forbes also found that the individuals with the highest net worths were also not very likely to be generous with their money.
According to their findings, more than half of the individuals who made the list have given away less than 5% of their fortune, while only nine individuals from the list have donated 20%. This more than anything else, makes it very difficult to feel any sort of sympathy for billionaires who for the most part, are less than likely to feel the impact of a few billions lost in their day to day lives.
How much is a billion dollars?
There are 756 billionaires to a population that numbers a little over 334 million in the US. It is easy to conclude therefore that the Forbes 400 list consists entirely of billionaires. But how much is a billion? The number of zeros in any figure amounting in the billions make the number difficult for most people to conceptualise. Here’s an easy explanation.
If the 756 billionaires in the country only had one billion dollars each, and in a sudden spirit of generosity decided to divide their wealth among the entire population in the nation, every single individual would be awarded roughly two thousand dollars each. But the combined wealth of just the top four hundred in the country own four trillion dollars, which simply appears to be beyond human imagination. It is, however, not beyond the scope of simple mathematics: 4 trillion dollars divided among a population of 335 million strong would amount to close to twelve thousand dollars each.
There are of course other, far more popular approaches to explaining just how large a number a billion is, although it’s a far more interesting exercise to speculate on why the above example is not as widely circulated. The most popular method is arguably the comparison of one million seconds to one billion seconds: one million seconds is equal to eleven days, and one billion seconds works out roughly into 31.5 years. A million dollars spent one thousand a day takes three years to burn through while one billion dollars spent one thousand a day would take 2,740 years. A billion dollars therefore can be quite accurately described as entirely too much for one person to spend.
Free market economics and the ethics of a billion dollars
The free market we live in dictates that no one has the right to criticise how anyone who earned their money through legitimate methods spends their money. It is also not the responsibility of individuals to alleviate the suffering of the less fortunate. However, it is also important to remember that the suffering of those affected by adverse circumstances or just plain ol’ poverty may not be ‘less fortunate’ so much as they are affected by the practices of wealthy individuals optimising their profitability. One perfect example is the donations made by Meta to alleviate the housing crisis in Silicon Valley each year – a housing crisis they played no mean part in helping to create.
Facebook creates housing crisis for people of colour
In 2011, Facebook announced its decision to move its headquarters in Silicon Valley from Palo Alto to Menlo Park. By the time it finally did so in 2015, the announcement had been sufficient to increase property prices in the area by almost half a million dollars. Housing prices in East Palo Alto had nearly doubled. Unfortunately, East Palo Alto was also a historically black and Latino community, those who were already traditionally disenfranchised from participating equally in the economy in the US. Facebook’s move found many receiving eviction notices as rent soared.
Facebook is not alone in creating such a crisis – tech companies such as Google, and others in Los Angeles have had the same effect. But is it really Mark Zuckerburg’s fault that these things happen? Isn’t such a crisis to be expected in big business?
The fact of the matter is, such a crisis is just a reality normalised by those who seek to maximise on their profit even at the expense of any social inequality they help create. The reason Silicon Valley exists is largely in part because it is cheaper for tech companies to operate from. Both the public and private infrastructure is already in place to facilitate their growth and it’s far easier and cheaper to move to ‘the Valley’ than provide for those outside of it, thereby spreading the social cost of hosting a large company ‘thinner’ on the ground.
Elon Musk and Tesla: who cleans up after the ‘clean’ companies?
It is perhaps one of the greatest ironies of mankind that Nikola Tesla’s name is now most known for its adoption by Elon Musk’s ‘clean energy’ motor car company. Tesla’s commitment to sustainability in scientific development was once a legacy that promised to change the world. However Musk’s commitment to the same cause of ‘clean energy’ falls drastically short of Nikola’s original concept. Musk himself has gone on record for urging other would-be entrepreneurs to jump on the lithium bandwagon to make easy money; lithium being of key importance in producing batteries, especially the batteries installed in Tesla cars.
A small caveat however: lithium mining is yet to benefit from sustainability practices, as presently mining for one tonne of lithium costs the environment of 500,000 gallons of drinkable water. While raising awareness on and lobbying for the sustainable extraction of lithium would appear to be a complementary approach to both his business and his personal cause, Musk instead speculates on privatising lithium mining entirely to drive down Tesla’s operational costs. Tesla (Inc.,) is of course also notorious for unceremoniously firing its own workers to prevent any form of unionisation that might be then incentivised to speak for the rights of the workers in the company.
But rich people pay more taxes, and taxes help make the world a better place
…or maybe it doesn’t, because they don’t.
Billionaire-hood comes at the expense of maximising the efficiency of human labour (exploitation), human capital (intellectual exploitation and theft), optimising on extracting the economic value of natural resources (stripping the planet and depriving flora and fauna of its natural habitats) and plucky entrepreneurship (being privileged enough to maximise on opportunities that come your way). In theory at least, the profits that these approaches generate should at least contribute in greater part to the state’s tax revenue to provide for what they take away from communities.
The reality is, however, that higher incomes are taxed considerably less, to better facilitate ‘economic development’, an outdated approach that appears to be based on trickle-down economics, a theory economists found to be a myth quite a while ago. According to the White House, the 400 richest families in the US contributed an average of 8% to federal tax in the period between 2010 and 2018. The average household paid 13.3%, on incomes that are mere shadows of the billions that their peers possessed. Between systems that shelter billions and individuals who shelter behind their billions, it is difficult to know exactly whom to point the finger at, but if there’s one thing that is clear beyond all doubt, it’s that it’s time to stop talking about eating the rich and start eating into their riches.
(Theruni Liyanage)