Billionaires part 1: The Good

By | August 26, 2016

Billionaires are more common than ever. Ruchir Sharma- Morgan Stanley global strategist – notes in Rise and Fall of Nations (affiliate link) that the number of billionaires increased from 1,011 to 1,826 between 2009-2014. That is a 80% increase in billionaires over 5 years.  If the number of “billionaires” were a stock, it would been a great investment. As a cliche confirmation of anti-establishment protesters, the top global 1% now own 48% of global wealth.

Increasing money supply = boom for rich. Sharma argues that an enormous expansion of money supply (read: printing money) created a boom in prices in stocks, bonds, and real estate, which unsurprisingly helped the rich. After all, the rich are the ones with assets and equity. Its been an unprecedented simultaneous rise in asset classes (stocks, bonds, real estate) = kind of spooky to think about.

Good billionaires. We can look at the cover of Fortune or Forbes magazine and read about technology icons (Ellison, Musk, Benioff, Kalanick), investors (Buffett, Dalio, Soros) and company founders (Shultz, Knight, Bloomberg) who built enormous businesses and improved the lives of millions of people. Free-market types like me (yes, I am a fan of Milton Friedman, University of Chicago) believe that competitive markets are the best way to produce the most value for the most people. These folks deserve their success. Ingenuity + Toil + Point of View + Luck = Value for Lots of People = Money.

The Giving Pledge. Many billionaires are aggressively gifting their wealth – in the best tradition of Rockefeller and Carnegie. Currently, there are 135 billionaires who have signed the Giving Pledge here to give the majority of their wealth away during their lifetimes, or in their will. You will easily recognize 10%+ of the names on the list. As an added feature, each of the philanthropists write a letter explaining their rationale for giving away their wealth. See sample in blue below. Completely inspirational.

Consultantsmind - Giving Pledge

  • Paul Allen (Microsoft): The Giving Pledge reminds us all that our net worth is ultimately defined not by dollars but rather by how well we serve others.
  • Warren Buffett (Berkshire Hathaway): More than 99% of my wealth will go to philanthropy during my lifetime or at death. Measured by dollars, this commitment is large. In a comparative sense, though, many individuals give more to others every day.
  • Ray and Barbara Dalio (Bridgewater Associates): We also believe deeply in equal opportunity, so much so that we feel that not contributing to it is tantamount to helping to perpetuate an injustice. To us providing equal opportunity means delivering quality education and lending enough money to help all people who are capable of helping themselves.
  • Michael Bloomberg (Bloomberg): If you want to fully enjoy life—give. And if you want to do something for your children and show how much you love them, the single best thing—by far—is to support organizations that will create a better world for them and their children. Long term, they will benefit more from your philanthropy than from your will.
  • Gengshen Niu (Mengniu Group): Small victories are based on wisdom, great victories are based on virtue; with the increase of wealth, comes an increase in responsibility; Helping people lets you walk the way of kindness; Let the benefactor be thankful for the beneficiary. . .One’s happiness is directly correlated to how many people love you

Make more, give more. For all you hard-charging MBA-types (like me) who are so focused on career and financial success – go to the Giving Pledge here and read a few of these letters. It will get you motivated to earn a fortune – and more importantly – find great ways to give it away.  Remember all, gratitude is the secret to happiness.

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