Mark Zuckerberg has recently become the second richest person in the world, reaching a networth of $206 billion, one of the only three people to have a net worth of over $200 billion. This immense wealth has called to question the value of having so much wealth. For reference, if you saved $100 a day, it would take 27,397.26 years to reach $1 billion, so to reach Zuckerberg’s wealth, one would have to save $100 everyday for 5,643,835.56. This would mean saving this money from when humans first split off from other apes until present day.
In the US, the top 1% hold over 30% of the nation’s total wealth (link). Moreover the bottom 50% of the US have a combined wealth of $1.1 trillion, about as much money as the combined wealth of the 8 richest people in the US.
This wealth disparity has only increased during the recent years, as for the first time in 25 years, extreme wealth and poverty have both increased at the same time (link), and since 2020, two thirds of all new wealth went towards those in the top 1%, which means that the other 99% of the world earned a total of one third of all the new wealth amassed.
The Great Gatsby Curve
Introduced by Alan Krueger, the Great Gatsby curve refers to the lack of and difficulty in upwards social mobility for children from poor families. The curve refers to the relationship between income inequality in a country and intergenerational wealth, where children from low-income households will likely not be able to move upwards (link).
This is amplified by the fact that in 2023, for the first time in the 9 years of UBS’s data publishing, billionaire wealth that had been inherited is now outweighing the wealth of self-made billionaires (link). This statistic will only continue to widen the income gap between the top 0.1% and the rest of the world, especially affecting those who live in lower income households. In the US, this curve is especially evident, as the wealth of billionaires gets exponentially larger, less people are able to earn more than their parents did. In the 1940s, more than 90% of all children earned more than their parents while only half earn more than their parents today.
Trickle Down Economics
Trickle down economics is supposed to be a justification for the exponential growth in billionaire wealth. In essence, the theory proposes that through economic processes, money created for those at the top would eventually “trickle” down to lower income groups. This idea has become immensely popular for leaders in wealthier nations such as Margaret Thatcher, Ronald Reagan, Donald Trump, and Liz Truss. However, a research paper by LSE proved that this was not the case, since over the years monitored, the rich continued to amass more wealth while unemployment and economic growth rates remained the same.
The article then became the most downloaded article in the LSE’s online database history, amassing over 150,000 downloads. This high number emphasizes people’s discontentment over the lack of action taken to directly improve the livelihoods of those who need it, instead opting for creating more wealth for those who already have impossible amounts of it.
If We Eat the Rich, How Do We Even Spend Their Money?
Currently, billionaires pay an average of 3% in tax rates. If this number gets increased to 5% taxation on billionaires and if multimillionaires paid 2-3% wealth taxes globally, this would generate $1.7 trillion. These improved tax rates would give governments more money, enabling them to bring 2 billion people out of poverty (link). Also, it is estimated that around $100 billion is required to lift all of the poor people in the world out of poverty. This is about a half of Zuckerberg’s wealth, and less than one-tenth of the combined wealth of the eight highest net worth individuals in the US.
With these disparate wealth gaps, it is important to understand media literacy and join in on the criticism against billionaires who own the majority of world’s wealth, further widening the wealth gap and making it increasingly difficult to achieve upwards social mobility, whether as a lower income household or even a middle class household. The encouragement of, or mandating billionaires to donate their money to certain organizations would be extremely beneficial to the world’s economy, with lower unemployment rates, and a larger workforce.
Trickle down economics has been proven to not work; and if it did, its effects are either too minute to make a difference, or still disproportionately focuses the wealth on those who already have enough of it. Rather than giving more money to people who are already swimming in it, governments should focus on providing more opportunities for upward social mobility, and creating stricter regulations on the taxable income of billionaires, possibly planning world economic growth around the amount of money that will be given to the government from these billionaires.
Written by Vi Lam Dinh
