For much of the last decade, wealth has been rising all over the world, from the United States and Britain to China and India, mainly because of massive gains for the very rich.
The rich are gaining faster than the poor and the middle classes. Rising wealth inequality is an increasing threat to social stability and economic growth. It is worth tracking seriously.
As the number of billionaires rises, the data are becoming more significant as a statistical sample and as a tool for identifying countries where the balance of wealth is skewing too sharply to the super-rich.
Quality: The Good versus ad Billionaires
Looking at the scale of billionaire fortunes is not enough to reveal the extent of their political vulnerabilities.
"Bad" Billionaires
New names on the billionaire list can be a favourable sign, but only if they are good billionaires, emerging outside "rent-seeing industries" such as construction, real estate, gambling, mining, steel, aluminum, oil, gas, and other commodity sectors that mainly involve digging resources out of the ground.
In these businesses, major players often spend their time extracting maximum rents from limited national resources by bribing politicians if necessary, not growing national wealth in innovative ways.
Compare the total wealth of tycoons in these corruption-prone businesses to that of all billionaires in the country. This comparison yields the share of the wealth generated by "bad billionaires." This label no doubt miscasts many honest mining and oil tycoons, but even in nations where these industries are relatively uncorrupt, they tend to make weak contributions to productivity, and to tie the economy to the volatile swings of commodity prices.
"Good" Billionaires
"Good billionaire" label is reserved for tycoons in industries that are known to make the largest contributions to growth in productivity, or that make popular consumer products like smartphones or cars. These "good" industries are the ones least likely to generate backlashes against wealth creation they include technology, manufacturing, pharmaceuticals and telecoms, as well as retail, e-commerce, and entertainment.
Real-time evidence how nations are generating wealth
Anecdotally, billionaire analysis generates real-time evidence of how nations are generating wealth. Among the largest developed economies, as of 2019, bad billionaires controlled the smallest share of billionaire wealth in Italy (7%) and France (8%) - a good sign for both countries
Conclusion
Tracking billionaire wealth can provide insight into whether an economy is creating the kind of wealth that will help it grow - or trigger revolt - in the near future.
Tracking it by scale, share of inherited wealth and share of bad billionaires ensures that none of these potential sources of political resentment will be missed.
It is a bad sign if the billionaire class controls too fat a share of national wealth, becomes an entrenched and inbred elite, and builds fortunes mainly from politically connected industries.
A healthy economy needs an evolving cast of productive industrialists, not a fixed cast of corrupt tycoons. Creative destruction drives growth in a capitalist society and because bad billionaires have everything to gain from the status quo, they are enemies of wider prosperity and lightning rods for populist revolts pushing to redistribute rather than grow the economic pie.
No comments:
Post a Comment