The richest have become wealthier because they have delivered goods and services that make life better for the world’s people. Yet the left-wing charity Oxfam declares:
“The world’s five richest men have more than doubled their fortunes from $405 billion to $869 billion since 2020 — at a rate of $14 million per hour — while nearly 5 billion people have been made poorer.”
It is an untrue statement that 5 billion people have been made poorer since 2020. It is important to note that Oxfam admires Cuba’s communist economic system.
Because of the COVID-19 pandemic, emerging market growth declined by 1.8% in 2020. But cumulatively, emerging market GDP has expanded by more than 16% in 2021-2023. And GDP growth in emerging economies is projected at almost 4% this year. Today, the people of the world are wealthier, not poorer. Because of capitalism, global poverty has declined from 90% of the population to under 10%.
Importantly, that 10% of the global population that is still living in absolute poverty is economically deprived because of war, bad governance, and a rigid adherence to state socialism. It is not an accident that Cuba is the poorest country in the Western Hemisphere, while Guyana, which is embracing capitalism, is the fastest-growing country in the Western Hemisphere.
Oxfam’s statement of Jan. 15 thus boggles the mind. The socialist manifesto calls for a global wealth tax to revitalize the state sector. Oxfam says corporations should be run for the workers and not for shareholders.
Oxfam is wrong. As the size and power of the state grows, economic growth stagnates. Why is U.S. growth so much stronger than that of the European Union? Or just look at what is happening in China, where the state is swallowing the private sector and silencing billionaires. Economic growth in China is slowing dramatically and likely systemically.
When businesses are operated for the benefit of labor, not shareholders and the consumer, capital is destroyed, and everyone, labor, consumers, and shareholders, is made poorer. Rather than denigrating billionaires, we should celebrate the achievements that brought them great wealth. Research by Nobel laureate William Nordhaus explains that entrepreneurs only extract 2.2% of the profits from the enterprises they create.
Jeff Bezos’s Amazon has improved the standard of living for almost every American. As Michael Strain observes, by extrapolation, Bezos has created over $8 trillion in wealth. By comparison, his personal wealth is small, at $170 billion.
More than 70% of the wealthiest Americans did not inherit wealth. They created wealth through hard work and entrepreneurship. Seventy-five percent of the wealthiest Americans own private companies. The silver spoon path to great wealth is a myth.
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If a genius found a magic bullet to cure or prevent almost all cancers, would anyone complain if that person became fabulously wealthy?
I think not. The United States and the world are infinitely better places because of billionaires, and if Elon Musk or some other person becomes a trillionaire in a decade, the world should cheer. Entrepreneurial genius and free market capitalism lift all boats.
James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes a daily note.