Can Rich People Fix Poverty?   2 comments

There’s a belief that the problem of poverty can be solved if only rich people were forced to give their wealth to poorer people. There’s a certain plausibility to that myth until you do some math. I know … I don’t like math either, but I know a few math nerds and when you feed them figures, they do what they do best.

Image result for image of wealth redistributionIf you combine the entire net worth of Forbes’ list of the world’s 400 richest people, you’d come out with about $2.4 trillion. Yes, it’s an enormous number, but it’s about one-quarter of the annual US budget. It’s also not quite what you think.

We’re talking net worth here, which is not money all piled up somewhere for a rich guy to admire. It’s the estimated monetary value of all the assets they own. That means all the office buildings, furniture, computers, telephone lines and other capital infrastructure of their various businesses. It also includes the value of their employee salaries, payroll, and pensions; and the on-paper economic value of the businesses themselves.

Let’s just look at one example.

Amazon reportedly holds $83.4 billion in assets. That includes all their warehouses, trucks, servers, and the actual stuff they keep in stock for people to purchase (stuff like my books). Jeff Bezos himself suppostedly has a personal net worth of $89 billion, but he can’t just cash out all of those billions without liquidating the inventory his company holds, selling all of his buildings, and divesting himself from Amazon entirely. Of course, he wouldn’t find a lot of buyers for his stuff if all the other rich folks were also being forced to sell everything off. Who would buy it? I don’t have a spare $80 billion. Do you?

Thus, that $2.4 trillion isn’t a real number in any sense that can be converted into a transfer of income.


Posted October 5, 2017 by aurorawatcherak in economics

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2 responses to “Can Rich People Fix Poverty?

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  1. If the rich got rich because they exploited families and individual to a point where they end up in poverty, it isn’t handouts that will fix the problem. Families and individuals need to be re-instated to what is rightfully theirs, be it land, a livelihood, fair wages etc.

    Handouts are never the sustainable answer to ending poverty. Partnering with people who are in poverty will help them see a way forward, giving them hope and a goal to work towards. At heart people don’t want to be dependent on handouts. It’s demeaning and erodes a person’s self-worth.

    There are organizations that have programs that are successful in helping people out of poverty, mentoring them, offering micro loans and helping mobilize resources at an average cost of $150 per person.

    Many people end up in poverty when multi-nationals take away people’s land and livelihood, when governments don’t protect people’s rights and other injustices meted on families due to lack of literacy or access to support. and are two organizations that I support because of the model they use to end the cycle of poverty.


    • So is the assumption that a rich person could only become rich by exploiting people?

      What is the evidence that Jeff Bezos or Elon Musk has stolen anything from anyone?

      While I do believe there are rich people who got that way by doing awful things, I don’t think that is the norm. Most businesses offer jobs to people at the rate they can afford to pay and making a wage is better than unemployment, so it’s not an exploitive relationship. I suspect if we could look back honestly at all the people who have become rich in the last 200 years, we’d find that the vast majority of them did so by legal means and through free market voluntary exchange. When you study the “Robber Barons” for example – really study them, not just the rhetoric around them — you find they mostly weren’t exploitive. They just got lucky during a time of new technology that allowed them to make a lot of money.


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