I have no issue with the rich, however I'm guessing 'most' of the super-rich have achieved this through acute business acumen.
However 'acute business acumen' can translate into squeezing maximum profits out of a business. Justification for this practice can be found everywhere. Particular "legal requirement" to maximise profits for shareholders.
The problem starts when "acute business acumen" involves active participation in political processes in order to gain special advantages or avoid duties which are placed on other members of society. In spite of being a Norwegian, I agree with the capitalistic premise that economic inequality isn't in itself a symptom of a problem. But when the richest minority avoids taxes thanks to legal loopholes, lobbies with politicians to get useful laws enacted or gains special contracts with the government to the detriment of others, there is a very big problem.
In fact, this is corruption, which is in many of these cases endemic. We like to believe that the educated world has a level playing field, but this is far from the case. The tech world isn't representative for the world at large when it comes to being fair in this respect. (And even the tech world is far from innocent in this regard - e.g. Google et.al.'s smart dodging of taxation by keeping assets overseas. This practice is legal, but it is exactly the kind of problem where the richest are given an unfair advantage due to their wealth).
I guess you've probably missed Bill Gates and Warren Buffet talking about the sperm lottery? If they were born in the slums of Brazil, for example, they probably would not be successful.
There are 7 billion people on the planet and the article cherry picks the poorest 3.5 billion. I imagine that there is little opportunity at that level. I doubt if anyone in the United States is on that list.
Of course many Americans number in the 3.5 billion most poor people on earth. A lot of the homeless people I see everyday have about zero wealth. Hopefully many of them have something but I don't know what it would be.
Also, many middle class people, such as myself, have negative total assets due to debt. Because 'wealth' can refer to not only money but general capital (including human capital, which is what I have invested in) I would not say that my total wealth is less than zero, and I definitely have a lot of opportunity, privilege, and comfort. But if I was writing an article for the Guardian in order to rile people up about inequality, I think I could not incorrectly state that I have negative wealth, and by net $$ standards far less money than many of the world's destitute.
Of course many Americans number in the 3.5 billion most poor people on earth.
Source?
The actual data on this appears likely to refute your claim:
Yes, that’s right: America’s poorest are, as a group, about as rich as India’s richest. [1]
That's at least the better part of a billion right there America's poor are wealthier than in India. According to the graph in the article, America's poorest are also wealthier than nearly all of China (1.3 billion officially, 1.5 billion unofficially), and 2/3 of Brazil. Not including the rest of Asia, Africa, Latin America, and Eastern Europe.
I wouldn't be so sure about that. Have you seen poor people in other countries? Many are much skinnier than your average homeless American. I've seen homeless people charging their cell phones in public areas in the US.
And I'm not sure what to say about your negative wealth debate. First world problems?
> I guess you've probably missed Bill Gates and Warren Buffet talking about the sperm lottery? If they were born in the slums of Brazil, for example, they probably would not be successful.
They probably wouldn't have been billionaires, but they would have had a good chance at becoming middle-class in Brazil.
No one becomes super wealthy because of acute business acumen. They become super wealthy because they are lucky that their products/services/investments pan out properly.
Bill Gates, who I have a lot of respect for, didn't become super wealthy because of his business skills (although they obviously had a lot to do with it) but because the industry he happened to be in exploded.
Thats all fine and good. I have no issue with that. But it does point to what I would consider a flaw in the way wealth is distributed. But what that flaw is I am still not sure of.
Even Buffet claims (and knows) that he was VERY lucky to be in the places he was, with the connections he had, at the times he was. The formula for success requires a great deal of luck. There is a really interesting section of Thinking, Fast and Slow — By Daniel Kahneman which addresses this in great detail.
We can go on and on about how they were lucky and it would all be true. The fact that they were born where and when they were, the connections that fell in to place, etc. are all opportunities they were afforded. But you still can't have the success that Warren Buffet and Bill Gates had without also being incredibly talented and hard working. You could then go on to say that they were born with higher than normal ability (another form of luck). However, it all just sounds so cyclical. So I'll leave you with one of my favorite quotes which I think boils it down very simply:
“Luck Is What Happens When Preparation Meets Opportunity" -Lucius Seneca (Roman Stoic Philosopher)
What is being argued is that they where lucky to be born in a society where their skills could make them millions.
I.e. they didn't create all those money in isolation, they made them in a system that made it possible.
Thats the point. Not that they aren't brilliant at what they do. Just that no one in that end of the wealth scale is that brilliant that they created purely based on their own skills.
Even more to the point, you can be incredibly hard working and intelligent, but without a good deal of luck (outside of being born into our society) you may not make it. Luck is a HUGE factor on many different levels when talking about wealth/success.
Again, not taking anything away from Buffett, just pointing out that luck is a really big deal that doesn't get much air time.
I was talking about money. I read a few years ago that Buffet was able to raise a huge amount of fund (equivalent to about 1million in today's money) when he was very young from a few of his dad's friends. Cann't recall the source at this moment.
The truth is that nobody took young Buffett seriously and he had a tough time raising money but once word got around in a couple of years that the "kid" knows what he is doing that is when he started getting big money.
Warren Buffet strikes me as the exception that proves the rule that most wealth is inherited or gained through illicit means. He's brought up so often as a model for the American dream, but he's typically the only one.
Amancio Ortega Gaona allegedly profits from child and "slave" labour across the world. High street fashion is commonly manufactured in factories that have particularly awful welfare standards. e.g. http://fashion.telegraph.co.uk/news-features/TMG9970846/Zara...
I can't believe I'm about to do this, but here's me sticking up for sweatshops...
I'm not sure what to make of the allegations of them keeping workers captive. But assuming the work is voluntary, sweatshops are not all bad. In fact, they're the fastest way we have to bootstrap an industrial economy in a developing nation.
Yes, these factories have terrible work conditions by modern, western standards. But compared to other local job opportunities, the factories are an abundant source of relatively well paying employment.
I say 'relatively well paying' because, despite how poor the pay is, the alternatives in the local economy are worse. Often, a so-called 'sweatshop' pays at least 2-3x the average local pay. It's almost axiomatic that a person would not work in a sweatshop if they didn't think the pay was worth it. So if they have workers in their factories, then it must be worthwhile to them. (That's assuming, of course, the work is voluntary.)
Once enough factories have appeared so that they have absorbed the excess labour capacity of the local population, the wages start to rise as the factories need to compete for the available labour. They also compete on non-monetary terms, through better working conditions.
Wages will stop rising when it becomes economical for foreign companies to move production to a cheaper place (after expenses related to building an entirely new supply chain there). If that starts to happen, then excess production capacity appears, which gets absorbed by local companies. At that point, the bootstrapping is complete and you have a self-sustaining industrial economy.
Over the past 60-70 years we've seen goods (clothes being a good example because it's labour intensive and not particularly capital intensive) being produced in a succession of countries. In no particular order, China, Hong Kong, South Korea, Taiwan, Singapore and Vietnam have all had their day as the primary producer of garments. Currently, they're made in places like Bangladesh and Sri Lanka.
So I don't consider sweatshops to be a bad thing in and of themselves. But they are breeding grounds for all sorts of abuse (including but by no means not limited to confining workers to the factories), which is a problem. So we should be pressuring corporations to ensure safe and non-abusive work conditions in their factories. We should not be discouraging them from operating factories in low-cost-of-living locations, or trying to artificially increase wages.
Well he did inherit a great deal of influential connections, education, benefits, and (not as much) money. Given that his Father was a successful politician.
Not to say he didn't also work his ass off and have a great deal of luck. Buffett doesn't seem like a bad guy at all. Seems like a very 'grandfatherly' type.
Buffet isn't a bad guy per se, but it's worth noting that a lot of the businesses Berkshire Hathaway owns are benefiting from inequality. Wikipedia mentions jewelery and uniform manufacture as two industries they're involved in, neither of which has a squeaky clean record. Does anyone know if his companies are involved in any activism?
I think it's both, by the way. I'm not too impressed by the pg's and billg's of this world as thinkers but I think they know how to aggressively pursue opportunity.
However, if we want a system based on something other than free enterprise, you're heading either toward Communism or royalism. The former scares most of us half to death, if we've been attentive to history.
Why does it always have to be one extreme or the other? Why can't inequality be curbed, instead of getting worse, without nightmares of "everybody being made the same", or Stalinist Russia? I've been in situations where everybody shared, it wasn't scary at all.
Because Communism is bad mmmkay? Remember what happened to Russia? Remember what they forced McCarthy to do to our own people? /s
The gray scale between political extremes is really so often ignored that it is almost scary. The real issue comes down to concentration of power in one subsection of the population. Be it a communist/facist/what have you dictator, plutocracy, or even entrenched political elite backed by corporate lobbying.
"The real issue comes down to concentration of power in one subsection of the population."
Yeah... that sounds really good in conversation. But let's pick it apart.
Any political system is going to concentrate power because otherwise any act will require buy-in by vast numbers of people. Imagine a committee of 300 million and you'll see why democracy delegates power.
The problem then is more that these groups are the wrong people (selected badly) or that there's not a clear communication to them as to what they should be doing. I'd say both of these are huge problems in our society.
"Everybody sharing" is one thing. I already give the bulk of my paycheck (which already has nearly half my income confiscated before I see it) to 3 other no-income people. "Curb income inequality" doesn't recognize the sharing already occurring, but instead promises to put a gun to my head if I don't "share" more, which I do indeed find very scary.
Before taking from "the rich" while on this income-redistribution crusade, find out how many others they're already supporting, by contract or charity or responsibility.
> "Curb income inequality" doesn't recognize the sharing already occurring, but instead promises to put a gun to my head
Even not riding a train without a ticket is ultimately enforced with a gun pointed to someone's head, as is paying taxes.
I'd be in favour of taxation that works like air friction does, the faster you move, the more friction increases, reaching a hard limit at some point. Instead of the opposite, the super rich and corporations effectively buying loopholes.
Corruption/bribery is always a problem in politics. The US Constitution was written to grant the government limited powers; over time, explicit limits have been worn down to corrupt plain meaning of key terms ("interstate commerce", "general welfare", etc) and normalize the very perversion they were intended to prevent.
The ultimate solution to such problems remains intact: vote. Lobbying and voter persuasion is quite effective, so vote out those who create/preserve such loopholes and vote in those who close them. For all the whining consternation people exude about such problems, very few actually direct that energy toward meaningful solutions; the super rich and corporations have learned to direct such energy and exploit it accordingly.
Wait, I tought we were talking about what we would think would be a desirable state of things -- how to achieve that is an entirely different subject.
Not that I disagree with that part, though of course one problem is what a politician promises before election, and what they do afterwards, is often not correlated at all.
The simple answer is that political systems aren't as varied as you might think. There's egalitarianism, which is either unsubsidized (libertarian) or subsidized (socialism). Then there's those who think that some order should come before the individual, and those are either royalist, paleoconservative, "social conservative" or some form of meso-conservative (incl. neoconservatives).
But, as you might guess, there's a catch. Any political system picks up inertia like a ball rolling downhill. Thus whatever direction you go in, you keep going in... and so unsubsidized egalitarianism usually becomes subsidized (as in the 1960s in USA and Europe) and moderate conservatism eventually gets more conservative as it did under Reagan. The reason for this is that, believe it or not, political systems aim at visions of society. The more power they get, the closer they get toward realizing that vision, which is actually what the people who believe in them want.
Conservatives and liberals, by the way, have radically different visions for what they want out of society:
"become super wealthy because of his business skills"
Bill Gates saw the potential in the industry before it exploded, which is why he is considered skilled in business. This is pretty much the same with most super-successful business people.
I really don't like this attitude that success is mainly due to the luck of the draw. Sure there is luck, but it's the same luck involved in pretty much everything you do in life (you're lucky you didn't get hit by a car when you crossed the street), which makes it a moot point.
Its not a moot point at all, you are just simplifying it and thus end up creating a strawman no one ever argued.
It's luck in the way that BG happened to be at the right time at the right place as an entire industry exploded.
That does not mean he wasn't skilled, it doesn't mean that anyone could do it. It just means that the success it ended up becoming was not because of Bill Gates but because he happened to sell a product at the right time.
Hadn't he done it, someone else had.
So no its not a moot point unless you make a moot strawman.
I think the problem with the concept of having "acute business acumen" is that it is basically orthogonal to moral concerns, but there seem to be plenty of people who consider making money using one's business smarts morally good an sich, no matter how ruthless and unethical the means. King Leopold II can certainly be said to have had "acute business acumen"...
By the way; this isn't snark towards Russia but snark against the notion that the threat of violence doesn't play a significant part in the distribution of wealth anymore.
Much as I personally dislike Paris Hilton and the related series of celebrities (the Kardashians come to mind), I have to respect the business acumen.
A lot of people have made sex tapes, some of them professionally, but very few have made that much money from it. Partially that's because they were rich already, and maybe they just had a good manager/marketer/whatever, but they still managed to make a lot of money from something that is not typically well compensated.
There is nothing wrong with squeezing maximum profits out of business, assuming it doesn't create negative externalities. Justification of this practice is found in the fundamental welfare theorems of economics, which state that an algorithm for maximizing total wellbeing is to let the free market work, and only intervene by redistributing income (under a more realistic set of assumptions, the government should also provided many services).
I consider the responsibility of maximizing shareholder value to be a moral one primarily. If people invested their money in a company, it's not for the management to decide that actually they investors don't need that much return on their investment.
I guess you're all missing the MSFT grew so big b/c for a good portion of its existence it was an illegal monopoly. So, yes, business acumen, but also being very effective at keeping the long arm of the long at bay.
I find the opposite, that the most adult and mature folks I know are interested in fulfilling their social responsibility.
They may not be interested in the straw-man version you've proposed, but your definition is not the end-all, be-all of what "social responsibility" is.
We need a clear definition of "social responsibility", as many use the term to mean "collective responsibility", which really means 'foisting the costs on the politically powerless".
I see "social responsibility" as personal, which means that you are personally responsible for the society you live in; this is difficult when the government crowds out charities, and gives many people reason to free-ride.
However 'acute business acumen' can translate into squeezing maximum profits out of a business. Justification for this practice can be found everywhere. Particular "legal requirement" to maximise profits for shareholders.
No value is put on social responsibility.