What’s stopping the rich from solving… everything?
Why billionaires cannot solve the world’s problems| The perspective of a high school student
Growing up, we have always been told that hard work pays off. More and more, I have begun to doubt the truthfulness of that statement. I believe that the holes in that statement provide insight into why billionaires cannot solve the world’s problems.
According to this Forbes article, the three richest individuals in America are Jeff Bezos, Elon Musk, and Bill Gates. Before we answer our question, we must first understand what made them so rich. Let’s first look at how the rich got so rich.
Bezos founded Amazon in 1994. It started as a modest company selling books before it grew into the behemoth it is today. It grew to become a company valued at about $1.5 trillion that provided cloud computing and digital streaming services, and a massive platform for e-commerce.
Musk has led several companies that impacted millions of people. He is best known as the CEO of Tesla, the face of electrical vehicles and leading the industry. SpaceX pushes the development of reusable rockets and has started the privatization of the space industry. Paypal is an app that allows its users to conveniently transfer money and has nearly 300 million users.
Gates co-founded Microsoft in 1975. Now, its operating systems are in about 80% of all personal computers. It also provides server products and cloud services to its customers. Its popular Office suite is the industry standard and is used by more than a billion people.
Do billionaires deserve their money?
People argue that it is unfair how the CEOs of a company make so much more than its workers (300x). In Amazon, we watch factory workers and delivery truck drivers toil long hours with very low pay. We wonder why these people who are trying so hard still struggle to stay out of poverty.
In our capitalistic society, rather than weighing the efforts people input, we must weigh the value for society that they output. Are individuals providing more value by monitoring machinery and driving trucks, or organizing more than a million workers and having them function together efficiently?
It is impossible to say exactly how much money they deserve, but to answer this question of whether they deserve their money, I find myself leaning more to the “yes” side. Not only do these three work exceptionally hard, but they also know how to maximize their contribution to society with their limited resources.
What would happen if billionaires were forced to give up their money?
There is a reason why all America is always the country on the frontier. America has the newest tech, the biggest companies, the highest GDP per capita (out of countries with non-minuscule populations), etc.
The country was designed to incentivize contributions to society. People who make contributions to society will be rewarded. The contributions of Gates, Musk, and Bezos have given them massive wealth.
However, in a true laissez-faire economy, inherently, the inverse of this statement is also true. People who do not contribute to society will be not be rewarded. But no country operates like this; the government exists to help the people who do not or cannot make contributions to society.
The primary method of doing this would be through various forms of taxes. Taxes take more from higher-income individuals and less from lower-income individuals.
This is why we have a progressive income tax, welfare programs, and proposals such as a universal basic income. Most agree that policies to decrease economic inequality should exist, but debate exists over to what degree policies should control it.
Some may argue that our taxation system is flawed, citing how Warren Buffet pays less income tax than his secretary. (Read more about why this does not work for the richest of the rich.) However, this is only the case for the richest of the rich.
Some argue that the rich are taxed too much, while others think the opposite. In 2018, the top 1% (earning more than $420,000 a year) paid 37% of all taxes, while the bottom 50% paid 2% of taxes. That means that the top 50%, earning about $70,000 or more, paid 98% of taxes.
This data helps us understand how much money is actually being taken from the wealthy. Citizens making under $70,000 are paying very minimal taxes. With so much money already taken from the rich, how much more can the government take before disincentivizing what made America so great?
Why can’t billionaires spend all their money?
When you Google “_______ net worth”, you will see huge numbers with some more than $100 billion. However, this does not mean that they have that much money in their bank account to spend. The majority of their net worth is tied up in assets.
In addition to cash, this includes various asset classes such as stocks, real estate, and commodities. In order to spend this money, it must be sold and exchanged for cash. During this process, there may be some technical difficulties.
With such large sums of money in the billions of dollars, the market will work against them. For many CEOs, they store their net worth in ownership of their companies. When insiders (people within the company) sell shares, they must announce their trades beforehand, and there are many rules and regulations.
You can imagine what happens when a CEO or another executive announces that they are selling shares of their company. This example is an outlier, but if Elon Musk were to announce that he was liquidating all his ownership in Tesla, the company would lose more than half of its value before he even sold.
Another factor that makes it tougher to spend money is that the assets they own are very illiquid. For example, it may be challenging to sell a mansion or mega-yacht. There are few buyers in the market for these expensive assets.
All these technical difficulties mean that spending their entire net worth may prove to be problematic. After much of their wealth is diminished in an attempt to liquidate it, they will be left with only a fraction of that insanely large number that you Googled.
Can society’s problems be solved by individuals?
The United States, being such a massive country, has many complex issues that plague society. These include poverty, homelessness, civil rights, immigration, etc. As billionaires saw their wealth grow during the COVID-19 pandemic, more and more people began to feel as if the system was rigged against them.
Billionaires began receiving mounting pressure from the public to take more action with their massive amounts of money. Even so, should a country’s problems be solved by individuals? To answer this question, let’s compare their wealth to government spending.
As of 2020, the total net worth of America’s 400 richest is $3.2 trillion. Although this may seem like an enormous sum of money, it shrinks when you compare it to the amount of money the U.S. government spends. The government spending budget for FY 2021 is $4.829 trillion.
So, if we were able to magically liquidate the money from these 400 people without losing any value or destroying hundreds of valuable businesses, we could run the country for (3.2/4.829*12=7.952) a little less than 8 months.
Remember, this is if we could take all the money from those 400 people without breaking the entire system. We are assuming that the millions of jobs they provide will not be lost; the products and services their companies provide will still exist.
As you can see, the biggest changes will come from state legislation and changes in spending, not individuals. When the government throws a few trillion here and there, it really begins to add up.
In addition to the insane amount of money the government spends, solving societal problems should be the role of the government. Pressure to solve social issues should be put on our country’s leaders, not individuals.
What does this mean for you?
The United States is the home to the largest companies and the wealthiest in the world, but also families stuck in a vicious cycle of poverty. Hundreds of thousands of homeless fall asleep next to dirty streets and underneath bridges.
There are countless problems in society, but what can you do to stay afloat? Mentally, you should not think of yourself as the victim. When you think of yourself as the victim, you will become the victim.
Whether or not you are the victim, you should take responsibility and ownership for your actions. Whether it is true or not, if you believe that your future lies in the hands of a puppeteer, the belief will come true.
Additionally, you should recognize the success of others and not despise them. If you are successful, there will always be people that will try to tear you down. Whether it be financial success, career success, or relationship success, do not be extremely envious, but rather feel happy for them and aspire to become successful in your own way.
These are the reasons why I believe that billionaires cannot or should not be solving the world’s problems. It was billionaires’ contributions to society that made them rich in the first place. Billionaires do not have as much spendable money as people think. And these types of problems are the responsibilities of the government.
Regardless, we will all have our attempt at playing the system. Some will play it with more altruism than others, and others will play it more selfishly. Nonetheless, altruism and compassion should be a choice.