Wednesday, June 22, 2011

If we eat the rich, we will be hungry tomorrow.

Watching the economic and political problems in Greece is troubling.  The Greek government knows it has to cut back, but people don't want a reduction in services, so they take to the streets and squares to protest or riot.

The global economy appears to be making a slow comeback, but times are still difficult.  It's natural for people to look around, see the rich, and be jealous.  After all, if you're working hard every day and still struggling to make it, it's tough to watch another guy go buy a big, fat yacht.

Without getting too political about it (because it is hard to separate politics from economics), there are a lot of people in the world that believe in wealth redistribution, whether in the form of communism or socialism or punitive tax codes.  Basically, take from the rich and give to the poor.  So out of curiosity, I went to the Forbes site and checked out their famous list of billionaires.

Let's look at the top ten:  Carlos Slim Helu and family 74 billion, Bill Gates 56b, Warren Buffett 50b, Bernard Arnault 41b, Larry Ellison 39.5b, Lakshmi Mittal 31.1b, Amancio Ortega 31b, Eike Batista 30b, Mukesh Ambani 27b, and Christy Walton and family 26.5b.  Add them up and we have 406.1 billion dollars (let's round it to 406).

So if we took their money and gave it to everyone else, how would that work out? Well, there are about 7 billion people in the world, so each person would get $58.00.

Let's compare that to the yearly Gross National Income per person for three random countries.  Near the top of the list we have Norway at $35,053.30.  In about the middle of the list is Guatemala at $1,628.86.  Down near the bottom is Burundi at $88.82.

So for a person in Norway, $58 is a small percentage of their income--it might buy them a tank of gasoline for their car.  In Guatemala, it's .0356 of their income, which is a nice little bonus but probably not life changing.  And in Burundi, it's .65, which is a lot.  Wouldn't you like your income to jump 65% this year?

So for some, the $58 is small, for others big.  But for all, it is temporary.

I think we waste too much time worrying about the rich.  What we need to focus on is the middle class and the poor.  If you think of it as a chart, what you really want is for the middle to be very wide--for the majority of people on earth to have clean water, sufficient food, and a decent home.  This cannot be achieved by redistributing the money of the rich.  This can only be achieved when there are jobs for people that earn them a decent salary relative to the costs of the area they live in.

We need a broad middle class worldwide, and as few poor as possible.  And the rich? Forget about them.  Let them go invest and engage in activities that create jobs for other people.  The old saying, "A rising tide lifts all boats," is appropriate here.  We need the tide of a growing middle class.

(The Forbes list is here.  The gross national income data from here.  You can find contrasting figures on income all over the Internet, but I just used the numbers for purposes of comparison.)

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