Topic: Article
Posted on 6th Mar 2024

What Would You Do With A Billion Pounds?

When there are so many things to be concerned about in the world today, many of us like to find some kind of hope or form of agency to temper our feelings of helplessness.

When trouble strides the world, the potential for the public sector solutions diminishes because economies falter and taxes are harder to raise. Looking for a rescue remedy, some us might have been heartened to read the latest Forbes Billionaire List because that tells us that there are resources out there to solve much of the world’s suffering. While billionaire’s wealth fell by $500 billion from 2022 to 2023, Forbes estimates that there are still 2,640 people in the world with ten-figure fortunes with a combined wealth of $12.2 trillion. This is more than the combined wealth (in 2023) of every country in the world bar the top 31 economic powers. That is the entire economic output of 146 countries. There are a lot more disturbing statistics in this vein. Approximately 90% of global wealth is owned by 0.1% of the population. Billionaires in the USA accumulated wealth equivalent to 20% of the entire US economy (2022 GDP estimate) and 5% of the entire world’s GDP in that year.

In our hopeful moments we might imagine that those who control this vast pot of money have the world’s back. Alas, this does not appear to be borne out by the evidence. Bernie Sanders, the independent US Senator for Vermont, explains in his new book  that some of this wealth is spent influencing governments through donations and lobbying groups, while other amounts go to investments in the media that influences how we get our news and opinion pieces. He points out that they also own or have an interest in global corporations that exert control over levels of workforce income, and the way that goods and services are produced. This, he says, has a major impact of levels of unemployment and poverty, and on the deterioration of environmental conditions including air and water pollution and global warming. So far from using their wealth to make things better, Sanders suggests that they are making things worse.

Even if some of this wealth could be reclaimed to alleviate some of the world’s problems, there are those who defend the right of billionaires to retain their money. It is often claimed that government interference with the way the wealthy earn their money curtails their entrepreneurial energies and dissuades them from investing. This in turn reduces the potential for economies to expand thus limiting the creation of new jobs and the generation of taxes for the government. These advocates for unobstructed commerce say that it is a false economy to hinder our billionaires by demanding elevated levels of taxation or laws that direct their companies to adopt pro-social measures to recruit marginalised people or build more affordable housing.

The hard truth is that, even if governments could get their hands on a proportion of billionaire’s wealth, they seldom have the courage to do this for fear that investors will take flight and settle elsewhere in a more welcoming economic environment. Sanders does point out that in the 1950’s, super tax was up at around 92%, and yet the US economy was booming. Economists will tell us that this only works when economic growth is extremely high, but the precedent is still a historical fact.

When it comes down to it, societies and governments should be able to decide how wealth is distributed, without fear or favour, and without the unbalanced interference of those who are making the most money. This may be right, but many might also observe that it is unrealistic given our (globally) cash-strapped governments, or the neo-liberal political slant of administrations (both the centre right and the centre left) that are reluctant to interfere with market forces.

But perhaps the first step towards understanding whether it is worth the effort to try to access the missing trillions is to ask what difference it would make if the money was reinvested in a better global future. It is a well-known social psychological observation that people will not change their behaviour (in this case to push for a more equal economic system) unless they know that what they are being asked to fight for will solve the world’s problems. Equally as important is the knowledge that other people will not disapprove of their actions. The first issue can be addressed by showing people that harnessing billionaires’ money will make a difference to the world’s woes. Fortunately, many different parties have tackled the monetisation of global problems. Here is a selection of wrongs that the billionaires’ trillions could right:

  • Climate change – The LSE’s Grantham Institute estimate that the annual investment to keep climate change to below 1.5oC will be between $2 and $2.8 trillion per year up to 2030.
  • The UN reports that it would cost approximate $71.5 billion to clear the worlds 110 million landmines that daily ruin lives in 70 countries and territories.
  • UNHCR asked donors for US$ 10.21 billion in 2023 to fund programmes support the forcibly displaced. They are not close to receiving this sum yet. In addition to shelter and food, this money would help them to resolve their situations, and making them less dependent on humanitarian aid. The UN agency says that as new conflicts arise and others go unresolved, there are now more than 100 million people who are forcibly displaced in the world. This is the highest number ever recorded.
  • In 2021, the World Food Programme estimated that it would cost just $6 billion a year to save 41 million people who are in danger of famine in 43 countries.

While substantial projects by country standards, most of these issues would not make much of a dent in the sums quoted by Forbes. There are or course precedents for billionaires generously investing in a better world. The Bill & Melinda Gates Foundation announced at the start of 2024 that it is increasing its annual 2024 budget to $8.6 billion. The Foundation concentrates about half of this funding on programmes that reduce health inequalities caused by the burden of poor health, the development of solutions to infectious diseases, and the leading causes of child mortality in developing countries.

There are also some surprising stories of philanthropy. The New York Times reported that Dr. Ruth Gottesman (the widow of a Wall Street financier) recently donated $1 billion to her former Medical College to ensure that every new student would have their tuition fees covered by her gift. The College is located in the New York City Borough of The Bronx which as a 30% poverty rate. The area known as the South Bronx has an even higher poverty rate which is twice that of the overall average for New York City.

But when thinking about where the billionaire’s trillions might go, while the amount of money is important, so is the type on project that should be supported. In his article about the impact of super-rich philanthropy, Paul Vallely says that a well-intentioned philanthropist might finance educational bursaries, or training schemes to equip low-paid workers for better jobs. This is fine until he points out that very few consider giving money to research or advocacy to address why so many schools have limited funds to employ enough teachers and maintain buildings, or why so many jobs are exploitative. He argues that, because of their backgrounds, most are not interested in challenging how capitalism operates and are therefore unlikely to fund initiatives that increase the empowerment of disadvantaged people, or support groups seeking to change tax and fiscal policies, or people who want to strengthen regulators or to change corporate culture. If this type of activity was funded then it would have the potential to raise many more people out of poverty because it addresses the causes rather than the symptoms of economic inequality.

So how could we get into a position where we could spend billionaires’ money effectively? Bernie Sanders would redistribute some of this wealth (at least in the US) by putting a 45% tax rate on estates worth $3.5m or more, and a 65% rate on those worth more than $1bn. This might raise considerable sums if the wealth could be accessed. He would also close loopholes that allow individuals and companies to ‘offshore’ the wealth they make, thus avoiding being taxed in the countries where they generated their profits. But it is widely accepted that the wealthy understand how the shield their gains against tax by using tax havens, and other ‘tax efficient’ measures, and rallying support for their cause with elected officials. This pattern of behaviour is likely to be witnessed in many other countries. Then there is the concern that some problems need to be addressed sooner rather than later – the climate emergency would be an obvious example. The collection of taxes may not arrive soon enough in government coffers to make a sufficient difference.

If taxation is not the whole answer, either because the money is protected, or because it will not raise the required sums fast enough, then there needs to be new strategies to free these funds for the world. There have been experiments in parts of the world where behaviour has changed by applying non-cash solutions. In the 1990’s in Curitiba, Brazil, the city had a problem with rising amounts of rubbish that had built up in the unplanned areas at the urban fringe. There were no funds to deal with this, and the roads were inaccessible. Meanwhile market failure had hindered the ability of farmers to sell their produce. The solution was to request that people living in the favellas to bring their rubbish, particularly recyclables, out into the open. On handing this over they were rewarded with the same weight in fruit and vegetables, purchased by the city. Later they were also given transport tokens which allowed them to travel into the city to work. This solved the three problems at once, at a fraction of the cost of replanning or clearing the favelas.

While extracting billions from billionaires might be a tall order, asking them to harness the every-day activities that made them rich might be a more palatable ask. Many of the world’s problems would improve with better logistics, appropriate agricultural and energy technology, the production of cheaper goods and services, the supply of affordable shelter, and assistance to encourage micro-businesses and start-ups. While structural economic inequalities will still get in the way of equitable wealth creation, this assistance should at least reduce the distraction of suffering sufficiently to address these bigger issues.

Another idea is to address the other reason why people don’t always act on their feelings of frustration about global injustice – the concern that some people have that by demanding more from the super-rich and corporations they would identify themselves as cranks and agitators. Clearly some people don’t mind that label and would press ahead regardless. But many others will be hesitant, unsure whether this point of view is shared by others.

If people could see who is hording wealth, and have information about what amounts are needed to solve global problems, there is a chance to build collective outrage that is occasionally seen in countries around the world – the Post Office scandal, and the Contaminated Blood scandal in the UK are two examples of this. This desired transparency to see billionaires’ commitment to pro-social projects could be achieved by showing the ratio between profits and the amount of pro-social investment targeted at alleviating inequality and suffering. This can be easily done using social return on investment methodology. Companies and individuals that are seen to make vast amounts of money without sufficiently benefiting people beyond the narrow circle of their investors would have defend against the distain and public ridicule they would attract. This may not seem like a much of a punishment for those that are prepared to tough it out in the court of public opinion. But in the end, those behind the missing trillions often depend upon public support for their success. Boycotts, failure to gain permissions and permits and closer scrutinisation by auditors have all brought business empires down in the past.

While no single idea is likely to succeed, a combination of tactics may help to encourage more missing trillions back into active global assistance. This would include:

  • Raising the ceiling to tax super-profits and capital gains
  • Closing tax loopholes
  • Exploring creative ways to collect tax other than cash payments
  • Publishing league tables of companies and individuals who do not use sufficient amounts of their banked wealth to address global problems

The important thing is to work to raise hope that the world’s problems will not inevitably deepen. Encouraging everyone – even billionaires – to work as global citizens is certainly worth a shot.

– Erik Bichard

Crafted in Liverpool by Kaleidoscope