Raymond Da Silva Rosa: They're easy to hate but do billionaires deserve their bad rap?

West Australian

4 days ago

In light of the extravagant Venice wedding of Amazon co-founder Jeff Bezos and Lauren Sanchez it's ironic that in 2013, business commentator Matthew Yglesias famously remarked that Amazon 'as best I can tell, is a charitable organisation being run by elements of the investment community for the benefit of consumers.' Amazon back then was running at a loss.
Consumers continue to benefit from Amazon's competitive pricing but now the company ekes out enough profit to make Bezos the third or fourth-wealthiest person in the world, according to Forbes.
As consumers we may welcome lower prices but should we be concerned about Bezos' wealth? Is it a threat to democracy to have so much money in the hands of so few people?
An Oxfam report claims that the 'world's top 1 per cent own more wealth than 95 per cent of humanity' and 'billionaires are exerting new levels of control over economies, with a billionaire either running or the principal shareholder of more than a third of the world's top 50 corporations.'
In its 2023 report, Rising inequality: A major issue of our time, the Brookings Institute states that the US and China are among the countries with rising inequality. For example, in 1980, the richest 10 per cent in China earned about 28 per cent of total income but in 2020, they took home about42 per cent of total income.
It's interesting to note that in 1980, the average per capita income in China was US$189; in 2020, it was US$10,408.
Do you reckon the average Chinese person was better off in 1980 when income inequality was lower?
Sure, income inequality in China measured in dollars increased over the four decades from 1980 to 2020 but the economic growth that powered rising inequality created massive wealth that benefited everyone.
The same thing happened on a world scale. In February 2024, the Lowy Institute reported that 'three decades ago, about 2 billion people, or almost 40 per cent of the world, was living on the equivalent of less than $2.15 a day. In 2019, the figures were about 700 million people or 9 per cent of the world's population.'
We have a massive good news story about the reduction in global poverty that is widely underappreciated because the economic growth that enabled the reduction has happened incrementally. The associated increase in wealth inequality is a trade-off that we may consider worth accepting.
What about political influence? Many believe that money can swing elections. In 1958, US Senator John F Kennedy was gearing up his presidential campaign and claimed to receive this telegram from his wealthy father: 'Dear Jack — Don't buy a single vote more than necessary — I'll be damned if I am going to pay for a landslide.'
The Kennedys had a fine sense of humour but are votes easily bought?
Nineteenth century philosopher and economist John Stuart Mill famously claimed that people are the best judge of their own interests, which implies voters are not easily swayed by media campaigns.
Many find Mill's claim hard to believe — it's not provable — but it's clear that money alone is not sufficient to win an election.
For example, Kamala Harris raised more than US$1 billion more than Donald Trump and lost. Elon Musk spent US$25 million trying to influence the outcome of the election of his preferred candidate to the Wisconsin Supreme Court and lost.
Andrew Cuomo had tens of millions more financial support from billionaires than his 33-year-old opponent Zohran Mamdani in his campaign to secure the Democratic Party's nomination for New York mayor and he lost.
In Australia, the ABC reports that Clive Palmer's Trumpet of Patriots party spent $60m on campaign advertising but did not win a single House of Representatives seat at the recent Federal election.
Money may talk but voters don't necessarily listen. Democracy can withstand considerable levels of wealth inequality.
If money can't buy votes, how about taste? That's a question to ponder as Mr and Mrs Bezos-Sanchez feed us images of their glitzy wedding.
Winthrop Professor Raymond Da Silva Rosa is an expert in finance from The University of Western Australia's Business School