Thought Shrapnel

I’m sure Charles Feeney was a great guy, and it certainly sounds like he gave the money he amassed to very good causes (and anonymously too!)

The thing to remember when reading these stories, though, is that billionaires shouldn’t exist. They make their money off the back of workers and tax loopholes. I’d challenge anyone who says otherwise to send proof.

As I’ve said many times before, if a regular person wakes up with what they think is a ‘good idea’ but is actually misguided and dangerous, then nothing much is likely to come of it. But a billionaire, by dint of their huge unearned wealth can make it happen. And recently, we’ve had an object lesson in how that can go wrong… (cough Musk cough)

Feeney was a proponent of “Giving While Living,” believing he could make more of a difference in causes he cared about while he was alive, rather than setting up a foundation after he died, according to the Atlantic Philanthropies.

“It’s much more fun to give while you are alive than to give when you are dead,” Feeney said in a biography about him, “The Billionaire Who Wasn’t.”

Feeney set up the Atlantic Philanthropies in 1982, transferring all of his business assets to it two years later, according to the foundation. In 2020, the foundation closed its doors after it said it had successfully given away all of its funds.

In total, the Atlantic Philanthropies made grants totaling $8 billion across five continents — much of it anonymously, the foundation said. Donations supported education, health care, human rights and more. Feeney’s foundation donated to infrastructure in Vietnam, universities in Ireland and medical centers devoted to finding cures for cancer and cardiovascular disease, according to the foundation’s website.

Feeney chose to live the last three decades of his life frugally, his foundation said: He did not own a car or home, preferring to live in a rented apartment in San Francisco, according to the foundation.

The article in Insider discusses the findings of the 2022 World Inequality Report, which highlights extreme levels of wealth and income inequality globally. The report was coordinated by leading economists and debunks the trickle-down economic theory.

They found that the bottom half of the global population owns just 2% of total wealth, while the top 10% holds 76%. It also notes that billionaires now hold a 3% share of global wealth, up from 1% in 1995. As everyone knows, inequality is a result of political choices and the only way to fix it is through progressive wealth taxes and perhaps even reparations.

The data serves as a complete rebuke of the trickle-down economic theory, which posits that cutting taxes on the rich will "trickle down" to those below, with the cuts eventually benefiting everyone. In America, trickle-down was exemplified by President Ronald Reagan's tax slashes. It's a theory that persists today, even though most research has shown that 50 years of tax cuts benefits the wealthy and worsens inequality.

The researchers are some of the leading minds on inequality in the entire field of economics. Chancel is the co-director of the World Inequality Lab, while Saez and Zucman have literally written a book on the rich dodging taxes and helped create wealth tax proposals for senators like Elizabeth Warren and Bernie Sanders.

[…]

Billionaire gains are a well-documented trend: The left-leaning Institute for Policy Studies and Americans for Tax Fairness found that Americans added $2.1 trillion to their wealth during the pandemic, a 70% increase.

Image: Mathieu Stern

I’ve had reason to reflect on how easy my life is recently. Not only am I a straight, middle-aged, able-bodied white guy but, according to Gapminder, I’m living life in a prosperous country on ‘Level 4’.

Worth pondering.

People at Income Level 4 earn more than $32 a day. At this Income Level, we find thee richest billion  on the planet, who work in jobs that typically require at least 12 years of education — something those on the lower Income Levels cannot currently aspire to.

People at this Income Level are able to buy consumer goods, fly abroad with their families on holiday, and eat out at restaurants. None of these luxuries are available to people living at Levels 1 – 3, but are considered normal by most at Level 4.

The food they eat is often highly nutritious and diverse, as well as being rich in protein and vitamins. People at Level 4 can even buy pre-prepared food to save them time on cooking.

At this Income Level, not only electricity but also Internet connections are extremely reliable. Nearly every home has at least one TV and computer, and kitchens are equipped with stoves, ovens, toasters, and microwaves. Homes also have baths and showers installed with both hot and cold water — another luxury that is extremely rare at any other Income Level.

Instead of bikes and mopeds, people living at Level 4 usually own a car — sometimes even two per family. Public transport is also organized and readily available to everybody.

Perhaps most importantly, life at Level 4 is more secure than it is for people at levels 1 – 3. Not only are doors and windows locked securely, valuable property is usually insured against damage or theft. People also have bank accounts, access to credit, and pension funds for when they retire. Healthcare is also readily available to people living at Level 4, with basic medication available at affordable rates from local shops, and advanced and emergency medical treatment available locally to almost everybody.

This seems obvious to me: that luck plays a great part in success. Well, serendipity, perhaps which can always be given a helping hand by elite networks and pushy parents…

The conventional answer is that we live in a meritocracy in which people are rewarded for their talent, intelligence, effort, and so on. Over time, many people think, this translates into the wealth distribution that we observe, although a healthy dose of luck can play a role.

But there is a problem with this idea: while wealth distribution follows a power law, the distribution of human skills generally follows a normal distribution that is symmetric about an average value. For example, intelligence, as measured by IQ tests, follows this pattern. Average IQ is 100, but nobody has an IQ of 1,000 or 10,000.

The same is true of effort, as measured by hours worked. Some people work more hours than average and some work less, but nobody works a billion times more hours than anybody else.

And yet when it comes to the rewards for this work, some people do have billions of times more wealth than other people. What’s more, numerous studies have shown that the wealthiest people are generally not the most talented by other measures.

What factors, then, determine how individuals become wealthy? Could it be that chance plays a bigger role than anybody expected? And how can these factors, whatever they are, be exploited to make the world a better and fairer place?

Image: CC BY-ND fearthekumquat