Thu, Mar 18, 2010 - Page 9 News List

Be horrified by the existence of billionaires

It’s just accepted that more billionaires of any hue is a sign of economic vitality. Wrong.

By Will Hutton  /  THE GUARDIAN , LONDON

Last week offered a chance to collectively gawp at the super-wealthy. Mexico’s Carlos Slim and the US’ Bill Gates were in a run-off to be the world’s richest billionaire in the Forbes list of the 1,011 people with personal wealth in excess of a billion dollars. In the event Slim’s US$53.5 billion just pipped Gates’ US$53 billion. It was a moment of symbolism, opined the global commentariat. The economic baton was passing from the US to countries in Asia and Latin America. And we all could relax; the numbers of billionaires was growing again — proof positive that the global economic machine was picking up.

It is the ultimate degeneracy of the age. There is little critical appraisal of billionairedom. It is just accepted that loadsamoney, capitalism, jobs and economic progress are indissolubly linked. More billionaires of any hue is a sign of economic vitality. Lucky Mexico for coming up with the winner. But wealth is not connected to economic progress in a linear way. Wealth can come from productive or unproductive entrepreneurship. Society wants the former and deplores the latter.

If you want to be seriously wealthy the message from the Forbes list is clear. One way or another you need to have played the system, played the financial markets, been born to the right class or manipulated the government to have become rich. This is a list of expropriated wealth on a grand scale. Marx will be grimly smiling in his grave.

Too few of the world’s billionaires can claim to be honest-to-God productive entrepreneurs who have enlarged the economic pie by dint of hard work, imagination, risk taking and innovation — although thankfully a useful proportion do populate the list. But a depressingly large number constitute a ragbag of monopolists, oligarchs gifted assets and profits by the state, mega-financial engineers or just family plutocrats. And once on the list you tend to stay there; there is little churn. The arteries of capitalism are hardening.

Sixty-two of the 1,011 are Russian oligarchs. Twenty eight are Turkish oligarchs. Even Carlos Slim made his fortune from being the monopolist who controls 90 percent of Mexico’s telephone landlines and 80 percent of its mobile phone subscribers. The Organization for Economic Cooperation and Development (OECD) notes that he charges among the highest usage fees in the world. But hey! He is a billionaire and what matters today are his riches — not the manner in which the money is made. He may have started out as a productive entrepreneur. Today he is using his power to expropriate wealth on a grand scale.

The contrast with his rival Gates could hardly be greater. Microsoft may have had its head-to-head confrontation with the EU Commission over anti-competitive practices, but Gates built his company by innovating around one of the great historic general purpose technologies. Information and communication technology is like the railway, internal combustion engine or air travel — a technology with massive spill-overs and implications for society. It is a classic example of productive entrepreneurship.

Gates may not deserve US$53 billion, he was lucky to be in the right place at the right time with a great university system around him, but he undoubtedly deserves to be rich. Both Gates and Slim are exploiting their market position to get above average profits, but one is more overtly political than the other. Put another way, Gates has grown the economic pie. Slim represents a tax on it.

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