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Getting The Rise Of The Billionaires Wrong



Much ink is spilled these days on the iniquitous rise of the number of billionaires. Some of this is just silly, With 2% inflation every year then we’d expect 2% more people – roughly enough you understand – to pass through any nominal marker each year. Equally, with an economy growing at some 3 to 5% a year – which is about the global real rate over time – then we’d also expect some rising number to pass through any real wealth level.

That is, the number of billionaires should be rising. Just as the number of people on $2 a day is falling, that’s just how it works.

Some of the spilled ink is vile. In that all those calculations of how much billionaires made during covid start at the low point of the market – March 18 2020? – and fail to include the 30% hit they took to fortunes in the three months before that.

You know, propagandistic lying.

But there’s another and different error being made here:

To pinpoint the most and least bloated national billionaire elites, I calculate billionaire wealth as a share of GDP.

Ah, no, that doesn’t work. Much of what is being said is nicely perceptive. The US doesn’t have the worst – worst in this definition – concentration. Sweden is highly unequal in wealth distribution. Much of American wealth is newly created not inherited, the same point Paul Graham was making recently.

But to compare the wealth of an individual to the income of the country they live in, no, that’s not right. Wealth to GDP, well, that’s allowable, as long as we continue to make the difference clear between stocks and flows. But why should we be measuring wealth to domestic economy?

Well, sometimes we should. That thug that rules Equatorial Guinea is the only billionaire there. All the oil money goes to him and no one else gets a sniff of it. Well, the family, but that’s a function of his distribution decisions. His wealth is, largely enough, the net present value of the GDP of the country given that outside oil there’s 3 acres of yams up in the hills.

Many to most Chinese or Russian billionaires are making their money out of their domestic economies. Comparing wealth to the domestic economy is reasonable.

But comparing Bezos to the US economy is insane. He’s built a company that serves half the rich world. His wealth needs to be compared to that GDP of half the rich world, not to the US that he happens to reside in. The same is going to be true of most of the tech founders on the list.

It’s simply a conceptually wrong comparison.



in British English
expunct (ɪkˈspʌŋkt)
VERB (transitive)
1. to delete or erase; blot out; obliterate
2. to wipe out or destroy

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