‘…$13,000,000,000. If all those 000s are making your eyes go funny, I’ll spell it out: thirteen billion. That’s how much Jeff Bezos added to his net worth in one day last July after the pandemic caused Amazon’s stock price to surge….According to a report by Oxfam, the combined wealth of the world’s 10 richest men increased by $540bn since March 2020…
The world’s 10 richest people made $540bn in a year – we need a greed tax (Arwa Mahdawi, The Guardian)
About now we are facing the idea of some people entering the ‘four commas’ club, ie. Trillionaires. More wealth than we can imagine, more than Standard Oil of its day or Amazon today.
A question is raised from this: do the mega rich have a moral or societal obligation to grant their wealth away in philanthropy? Or should countries tax them personally to ensure that their accumulation of wealth manages to decrease wealth inequalities?
The Gini Coefficient as an indicator of international inequality paints a harrowing picture. While most wealth is in shares owned within companies beyond personal taxation, we have to look at the effectiveness of taxation as it stands and how often the super wealthy enter into philanthropy as a means of keeping their social standing.
Indeed with the massive profits some firms have gained from the COVID-19 pandemic the UK and Ireland have considered imposing extra ‘pandemic profits’ taxes along with the IMF. It begs the question: what is fair profit? Namely, how rich can people get without a significant onus to redistribute that wealth either through taxes or through philanthropy.
Yes, extraordinary crisis (like pandemics) create opportunities to generate extraordinary profits, though at what point do we determine it to be too much, unfair or wrong? Amazon saw a 37% increase in its profits or for the new blue chip company Zoom, over 4,000%.
Indeed there have been many great philanthropic efforts and initiatives in the past. Dublin city owes a lot of its social housing to the Iveagh Trust of the Guinness family and the Carnegie Trust in the UK. The efficacy of philanthropy boils down to this, can you trust the effectiveness of government to deliver social impacts or do you trust those who have been fortune or innovative enough to generate profit?
Given the systems and controls in place with government expenditure, it is in part, perceived that philanthropy can be more effective than government. There is considerable debate about the issue given the tax breaks that charitable donations give. Though there is the argument that it is a manifestation of the politics of others with means.
The question of innovation
Some have a lot, others don’t. It is that simple.
Whatever you want to say about a Pareto principle in place or the structural inequalities of an economic system, we could politically deem what are ‘ok levels of wealth’ or too much.
Generally speaking most politicians are only too happy to have jobs from billionaires investing in their areas to complain, they need such a power base. As the mega rich also know that at the end of the day, they can rely on the threat of capital flight from a country to prevent a single nation state from getting ambitions of ‘a maximum wage’ or higher taxes on investments.
The OECD has been working for over a decade on anti avoidance measures in tax harmonisation but have been bogged down by continued opposition and the difficulties of a global system unable to make dramatic changes. While indeed a lot has been done through the BEPs anti-avoidance measures, we as a planet don’t act as a single unit too often. That’s not great.
Especially when we come out of a once in a century crisis of a pandemic that inevitably causes deep changes in society. Something’s gotta give.
The larger companies and the billionaires might argue that they are permitting innovation due to their purchasing power. Indeed, some visual examples of innovation in this decade amaze and horrify us deeply such as the Boston Dynamics robots having a dance. Though a considerable amount of innovation is stymied from the need to get immediate results for investment, sometimes known as the ‘Last Mile’ problem.
McKinsey reckons that most innovation this past year has been with the pharmaceutical companies, no surprise there, the issue is how can innovation still happen sustainably if so many people are getting insanely wealthy.
So when we have billionaires potentially becoming Trillionaries, we need to stop and ask ourselves, can we get more done by working cooperatively via governments not competitively in free markets.
Let’s ask another question; how long will it be before we stop enjoying the innovations of the companies of the super wealthy, like the latest smartphones, before philanthropy will be deemed to be not enough?
Heber Rowan is a Sligo native with a passion for politics. He works in public affairs and enjoys listening to and narrating audiobooks. He can be found on Twitter and occasionally blogs on Medium.com.