The billionaire class: a threat to democracy? | Business Beyond

The billionaire class: a threat to democracy? | Business Beyond

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They hold the world in their hands.  An elite class of individuals with   more wealth than entire countries, and all  the power that comes with it: Billionaires. “Inequality is rising to the highest  levels ever seen in human history.  

Where the concentration of wealth  in few hands is off the charts!” “A new billionaire is created   about every 26 hours. That is not normal.  That's actually quite frightening.” In this video we’ll look at what  it takes to become a billionaire. “They are extremely proficient in, so to say,  communicating their vision, their goals, and   making other people join them  somehow in their mission.” We’ll ask a billionaire what it’s like  to be among the world’s most wealthy.

“Growing up you're fascinated by a bunch of  things that you think you want, you really   want. And when the time comes and you can afford  those things, they lose value very quickly.” We’ll also explore some of the dangers  that wealth and power can bring. “Some people at that time started  to joke that whenever you end up on   such a list of the wealthiest entrepreneurs in  China, you are somehow an endangered species.” And hear about attempts to fight back against the  enormous inequality that billionaires represent. Those people are going to fight for their  own interests and there's nothing weird   actually about it. There's nothing surprising  about it and we should just fight for ours.

That’s all coming up on Business Beyond. In our quest to understand the world’s  wealthy, there is only one place to start:   in the United States. The US is home to the   superstar billionaire: the self-made man  - and it’s almost always a man - who built   themselves up to become rich and famous.  The embodiment of the American dream. The US has produced almost all of  the top 10 richest in the world,   with the likes of Elon Musk, Jeff Bezos and  Bill Gates achieving riches that no human being   has ever achieved before - mostly through  owning astonishingly profitable companies.

“In the United States today, two people   have as much wealth as the entire  bottom 50% of the US population.   That's Jeff Bezos and Elon Musk, just two  individuals, as much wealth as the bottom half.” But how did they reach this point? Do billionaires  set out with the goal of becoming billionaires? “You will never become a billionaire with the  motivation of just making money. It’s about   winning the game of business, it’s about also  building something, creating something unique,   it’s also about social impact because they  don’t want to be the flag in the wind,   they want to be the wind. They want to have impact  on their environment, on the world around them.”

The world’s richest have mostly exerted  their influence through technology:   be it home computing, online  shopping or electric cars. “This is something also that Elon Musk and even  Steven Jobs were talking about pretty often:   instead of waiting for the future  or trying to predict the future,   we can actually create it. Right?” Their positions at the forefront of tech   mean America’s leading billionaires certainly  have their fans. They’re also responsible for   employing hundreds of thousands - and in  Amazon’s case over a million - people.

But there is also a firm movement within  the United States to curb what is seen   by some as the excessive wealth, and  the excessive power of a tiny elite. “When you look at the Jeff Bezoses or  Elon Musks or Bill Gateses or others,   they live in this world in which they  can increase their wealth in business,   and then use some of the spoils of wealth  to buy political influence, which they do. Billionaire wealth doesn't  just buy you a fancy yacht or a   trip to space. It also buys you a  pliant media. It buys you policies   and politicians in your favour, and  it buys you impunity from justice. We’ve seen that enormous political influence  brought by wealth play out in front of our eyes. Perhaps the best known example  in the US is the Koch brothers,   whose family founded America’s second biggest  private company, Koch Industries. They used their  

billions to directly fund political causes,  such as bank-rolling Republican candidates,   who support minimal government  interference in their business activities. But others have found more creative ways  to avoid excessive scrutiny from the state. “When mark Zuckerberg spends  $300 million as he did in 2020 on   securing the American election - an  election he profited from making less secure   by allowing this information to run rampant,  hate speech, to run rampant, Nazi speech, to run   rampant on his platform - when Mark  Zuckerberg then turns around and does that,   and gets a lot of headlines for his small gift  to secure the election that he has made unsafe,   what he does is he kind of douses the flames  of anger just enough that he can keep doing it.

The very famous US Supreme Court justice  Louis Brandeis said many, many decades ago.   He said that we can either have an  extreme concentration of wealth,   or we can have democracy. But we can’t have both.  And I think that rings so profoundly true today. Later on, we’ll look a little deeper at whether  or not the wealth and power of billionaires should   be reined in. But first, we need to better  understand who it is we’re dealing with.

To do that, we need to head to  another hot-bed of billionaires:   the world’s industrial powerhouse, China. According to the Hurun Global Rich  List, it is China that has the most   billionaires of any country in the  world, including the United States. But the story of China’s super  rich goes back only a few decades.

“The whole thing started in the eighties  when the Chinese government decided to   first informally, and then  eventually formally allow   private business again. Prior to the  reforms, we didn't have private enterprises.” Communist China’s conversion to a socialist   market economy meant new opportunities for  individuals to make large amounts of money. “Starting from the nineties, a lot of people took  the opportunity for a number of reasons. One was  

that they realised that those who had dared to  do so already in the eighties, started to become   rather rich. I mean, comparatively at that time’s  level. They were far from four billionaires at the   time, but we have the first millionaire.  So that was quite impressive for a lot of   people. [...] We then saw a new development in  the 2000s and 2010s, so to speak, but especially   in the 2000s where in several areas people became  somewhat super rich already for Chinese standards.   That was on the one hand in things related to  film and media and so on. I mean, the first  

celebrities that became really prominent. And  on the other hand especially in technology.” And it’s China’s booming tech sector that has  produced some of the most famous names in Chinese   business. Names like Jack Ma - the charismatic  co-founder of online retail leviathan AliBaba. But just as he was once a symbol  of China’s entrepreneurial prowess,   Ma has now become the symbol of what some see  as China’s attempts to tame the ultra-rich.

Jack Ma all but disappeared  from public view in late 2020   after giving a speech in which he  criticised China’s financial regulators.   It followed Beijing’s intervention to block  the IPO of his digital finance firm Ant Group. “The discussion is still open, whether he knew  that the winds were changing and that was kind   of the last effort to, to speak out openly against  this change or whether the speech itself kind of   triggered the change. I tend to the former but  at least after that we saw much more regulation  

for the FinTech sector for technology, internet  technology companies. And also then last summer,   a lot of regulation coming out for other areas  where some people had made a lot of money.” As a result of the tighter regulation, tycoons  in China’s technology, education and real estate   sectors have found themselves slipping down  the rich list. Some onlookers are convinced   that these individuals had accrued too much power  - along with their money - for Beijing’s liking. Nowhere do billionaires have their hands more  firmly on the levers of power than in Russia:   home of the world’s most notorious oligarchy. 

When President Vladimir Putin ordered Russian  troops into Ukraine, one of the first ways   in which Western allies responded was to  impose sanctions on Russia’s super-rich.   That tells you a great deal about how important  they are to propping up Putin’s government. Another clue is in the word we use to  describe Russia’s billionaires: “oligarch”. “It's a word that is actually very ancient. It  goes back thousands of years. And oligarchy refers   to a very special situation in which extremely  wealthy people have tremendous political power.”

Russia’s super-rich largely made their money by   seizing upon opportunities brought  by the fall of the Soviet Union. “In the first years, starting with the  late eighties going into the nineties,   pretty much the only way one could  become extremely wealthy very quickly   was if you somehow were smart enough to be able  to grab assets and to privatize them to yourself.” The unceremonious fall of Communism  in Russia left huge opportunities   for individuals to acquire lucrative  property and resources from the state   at knockdown prices. And purchases made back then  shape the billionaire landscape in Russia today. “If we're talking about the very,  very top, how one can make a fortune   in the billions or tens of billions, it depends on  what it is that your country has riches in. So for   example, in the case of Russia pretty much most  of the action is in things like oil, gas, things   like that. So that's why we saw so many of the  oligarchs around metals and natural resources.” But being a Russian billionaire  can be a risky business.  

Acquiring and then holding onto your wealth  often means playing a dangerous game. “The more to the east you go, the more  entrepreneurs are considered more maybe   like gangsters or something, right? And it was  really difficult for me in countries like Russia   or China to find entrepreneurs who have white  vests who can be role models, who didn't have any,   let's say contacts to  Kremlin and so on and so on.” “Pretty much the only two - and we're talking  major countries here - the only two countries   in the world where one is really in danger as an  oligarch of being jailed are Russia and China. And   you could be killed in either of those  places as well, by execution or by, I guess,   plutonium and other kinds of dangerous substances  that might be used in the case of Russia.”

So being a billionaire in Russia  can often mean watching your back… But what is it like to live the  billionaire lifestyle elsewhere.   For that, let’s head to India. In the year 2000,   India had only a handful of billionaires. Now, some estimates put the number at over 200.

One of them is Nikhil Kamath. More than a decade  ago, he and his brother set up the online trading   platform Zerodha. A boom in individual Indians  taking to the stock market in the past couple   of years propelled the pair of them up the rich  listings and into the dollar billionaire club. I asked Nikhil what motivated him at the  start of his entrepreneurial journey. “Turning a profit I think was the primary goal,  right? You can do many things, but you need   to be profitable before you can think about  being responsible with money and all of that.  

So at the very beginning, the journey started with  the intention of making money, turning a profit.” A modest aim to start off with, but Nikhil  admits that he still ultimately had his   sights on joining the ranks  of India’s most wealthy. “Growing up in a middle class household. Uh,  you always, as you kind of like, you know,   we celebrate our entrepreneurs and societies  across the world, uh, celebrate the more affluent   human beings to social media, to television  or movies, and the same happens here. So,  

uh, growing up, definitely your subconscious is  programmed to want to have what you do not have.” But now he does have it. So what is it  actually like, having all that money? “The strange thing about money is, money gives  you more, when you do not spend it, but know   you have the ability to buy something. When you  end up buying the thing you have aspired for,   it becomes less valuable. And in a way,  I would say money to me is freedom. It's  

that ability to be able to do all these things,  even though I don't actually do these things.” India is a country that’s become characterised  by the yawning gap between its richest and   poorest people. But more broadly, the  distribution of wealth the world over   is seen by some as nothing short of obscene. According to Oxfam the 10  richest people in the world   have doubled their combined wealth  since the start of the coronavirus   pandemic - helped by soaring stock markets  and our increased reliance on technology. Oxfam also points out that those same 10  people now have a combined wealth greater   than that of the least wealthy  3.1 billion people on the planet.

“Do we want to live in a world in which we  have such extremes of wealth at the top?   At the same time that world is one in which  inequality literally kills. Yes, inequality   leads to unhappy, unhealthy, unfair societies,  but we've been able to show how inequality itself   kills. Inequality contributes to one death every  four seconds. Is that a world we want to live in?” “Every billionaire is a policy failure. And it's  important to say that that is not to say every   billionaire's a bad person or a mean person  we don’t like, or we should go lock away in   a cabinet. It's just a policy failure, right?  And by the way, every hungry person is also  

a policy failure. And those policy failures  are related to their failures of priority.” So if the mere existence of billionaires is  somehow a failure on the part of humanity,   how do we go about making amends for that? Well   one way would be to take some of their wealth from  them, and redistribute it. Basically: tax them. But opponents of those who want  billionaires hit with extra taxes   argue that we would put at risk the businesses  and millions of jobs that they’re responsible for.

“Now imagine you own 60% of that company. You  are in charge. You can decide about everything.   Now you get a tax. And in order to service that  tax, you would need to sell, let's say 10 or 11%   of that company, right? So you sell the shares,  then you lose maybe the control of the company,   the new management doesn't perform  that well, people lose jobs,   the economy loses products or services. Does it  solve any of the problems? I don't think so.” An alternative to taxing billionaires is to  encourage them to share their wealth themselves.  

It’s a policy China is already deploying. Doris Fischer, chair of China Business  & Economics, University of Würzburg+++  “While they have to give back, so they are  doing what’s good for society on the one hand,   on the other hand for those companies, being  somehow encouraged or forced to do charity is   in the short run, maybe hurtful. But in the long  run, they prefer this to tax payments because   once you have a new tax for the super rich,  it’s very difficult to take that back.”

Alternatively, you can just hope the billionaires  will perform their own acts of philanthropy.   And that’s something we do already see. Bill  Gates and his then-wife Melinda pledged 15   billion dollars to charity through  their own foundation during 2021,   making them the world’s biggest charitable donors. But even then, activists seeking  greater wealth redistribution   are sceptical of the motivations of billionaires. “I don't think Bill Gates is in some narrow  cunning sense trying to score a few reputational   points. I think he's genuinely trying to  make the world a better place in his mind.   The problem is with almost no exceptions, the  people in that class, when they set out to do   this kind of do-gooding, even when they're earnest  about it and want to do it, they tend to do   it in ways that rule out any threats to their own  power, right? So you don't see bill gates saying   let's fix the American education system  by taxing very rich people a lot more.“

Earlier we heard the existence of  billionaires described as a policy failure.   It begs a big question: would the world be a  better place if there were no billionaires? “I think we have to be really upfront and really  be quite clear to say that a world of such extreme   Billionaire wealth is a fundamental problem.  It's an impediment to human progress.” “The billionaire class in the world is one of the   great threats to democracy and  human flourishing everywhere.” Or have billionaires simply earnt  their place at the top of society,   and should be celebrated for that? Making someone who is a by-product of  capitalism and has done well through that   look like the enemy, I don’t think  that’s right, because, you know,   you need these people for societies  to grow and economies to do better. "Billionaires are world Champions in the industry.  

They've just outcompeted everybody else  in the field and they look it as a game   of business. And this is another motivation.  They just enjoy playing this game of business.” That’s all for this episode of Business Beyond.  For more from us, check out our playlist.   Thanks a lot for watching and  until the next time, take care.

2022-05-22 00:07

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