Bill Gates owns about 519 million shares* of Microsoft, and at today’s price of $33.33 a share is worth about $17.3 billion. MSFT also pays a quarterly dividend of $0.23 cents per share, which would pay him about $477 million per year. As a result, he is the wealthiest person in the US, and I believe second wealthiest in the world.
Let’s say, hypothetically, that people finally get sick of Windows, that Windows 9 is a total flop, and the company starts to sink. The share price falls to $10, and they cancel the dividend.
Bill Gates’ wealth would fall $12 billion, and he would be earning $477 million less each year.
The question for debate: how would your life be better?
As the richest person in the US, he is partly responsible (along with about 399 others) for the massive wealth/income inequality. If we go with the assumption that inequality is bad, this loss would mean that the gap between richest and poorest would shrink, which would be good. We should all be happy.
So how would you, personally, be better off? And all the other people in the 99%, how would their lives improve?
*He’s been selling them off so he might currently only own 400million shares.
Maybe this is the first time you’ve discussed this issue, but I thought income inequality concerns were based on perceived flaws with the economic system itself and not personal wishes to see rich people lose a bunch of money. Perhaps I’ve missed something.
One person making a zillion dollars does not represent income inequality. Here’s a rule of thumb for you: in almost any social or economic analysis, you have to lop off the tips of the curve for any judgment or analysis to make real-world sense. I don’t know how many sigmas Bill Gates is from the median income, but it’s a hell of a lot of them.
Actually, back up the truck. I read awhile ago (I think in the Blank Slate) about some research showing that a lot of folks’ happiness is based less on the absolute value on their own material goods, and more on the value of their material goods relative to that of their perceived neighbors. If that’s true, then it depends on whether folks perceive Gates et al as their perceived neighbors. If so, then when Gates gets poorer, it might make others feel better.
While this is true - I think this is generally predicated on stuff like - “would you rather be earning 80k a year if everyone in your neighborhood earned 65k per year?” vs “would you rather be earning 100k per year if everyone in your neighborhood was earning 125k per year?”
One single person changing from being worth 20 billion to 10 billion really isn’t going to make me feel any richer.
Plus one could argue Bill Gates is pretty good with his money - I don’t remember the exact amount, but it isn’t like he is giving pocket change to fighting Malaria and stuff.
Income inequality in and of itself is not a bad thing. The problem is that too much income inequality becomes a bad thing at some point (e.g, the King has all the money and the peasants have nothing… hello French Revolution). Disagreements about income inequality are mainly about where that ‘bad point’ lies.
Income inequality is good because it creates a gradient by which hard work leads to greater income (mostly). Too much income inequality messes the gradient up because instead of an incline, we have a huge flat spot followed by a humongous mountain.
Anyway, the Gates scenario is too contrived to mean anything. Lopping of the wealth of one wealthy person is both not the point and too small of an effect. Making Gates artificially poorer does not address the fundamental structures and operations that create income inequality (executive pay going up and up while worker pay stagnates).
Well, if we want to take the OP seriously, presumably the demise of Windows means a whole new crop of operating systems and desktop software (Office, etc) is now ascendent. So if I have stock in those companies I would be better off, obviously. Also, I could probably get a new PC for $50 less, so that would be nice. The demise of MSFT would also open up some opportunities in their peripheral offerings as well, so a crop of new tech entrepreneurs would have some good opportunities.
And personally, I could probably convince my bosses to use open-source development tools rather than Visual Studio, which would be nice. And I wouldn’t have to code to the insane Win32 API (or worse, MFC).
Of course my index funds probably on a decent amount of MSFT, so I’d take a hit there as well.
If Bill Gates lost billions of dollars in investments, he’d have a lot less to give to charity. I think it’s fair to say the world would be at least slightly worse off in that scenario.
I’m not all that financially-savvy, but I was under the impression that one particular stock losing money doesn’t benefit anybody else in any way. It’s not like taking hundred dollar bills from his savings account and throwing them to street kids in a Louisiana bayou. Lost investment income doesn’t “go” anywhere, it just vanishes. (I’m willing to be corrected by someone savvier, of course)
I think you have actually. One reason for opposition to inequality in wealth (not just income) is that a person with a hugely disproportionate amount of wealth has a disproportionate amount of political and economic power as well.
Thing is, from that perspective the proposed loss isn’t enough to matter much. 12 billion dollars is still vastly more political and economic power than the overwhelming majority of people will ever have. Reduce his fortune into the realm of millions and not billions and then we’re talking. And preferably by redistribution, not his investments going up in smoke; economic equality is about wealth being better distributed, not the nihilistic desire to see wealth destroyed.
I don’t mean to imply I think emacknight’s point is good or thoughtful, because I don’t. But any extreme outlier is going to increase the inequality or skewness of the population. Particularly in the case of income, where low income people can only go as low as $0.
Not really. If median income where 50K, Dave going from 0 to 50k has effect 5 orders of magnitude smaller than Bill going from 17B to 12B. you would need 100,000 homeless people to go from 0 to 50k to get the same magnitude shift.
The answer is obvious to any free marketeer. Windows 9 flopped. Which means it failed on the marketplace. Microsoft either designed a bad product or misread the direction the computer world was moving in. Some other company must have done a better job and is taking away the sales that Microsoft lost.
Why should Bill Gates be rewarded for failing? He lost twelve billion dollars because he wasn’t selling a product people wanted to buy.
Somebody else apparently was selling a better product and people bought that instead. The guy who designed that product made twelve billion dollars. And all of us are better off because we’re using that guy’s product instead of Bill Gates’.
When Henry Ford started selling all those Model T’s he probably put a lot of other automobile companies out of business. Those other guys lost fortunes because they didn’t build cars as good as Ford’s. And the 99% benefited because they could buy Model T’s.
Putting your millions into creation of good-paying new jobs to build your business is also pro-social. I don’t want to demonize all of the rich. But I do think that greater income and consumption equality is a plus.
That’s a pretty vague fear though, not a lot to go on when you consider that the way to assuage the fear is to trample on people’s liberties.
Not to mention that where wealth doesn’t equal political power, other factors do, like party loyalty and fame. There’s a wide variety of ways that one can gain political influence. Knocking rich people out of the circle just means more influence for journalists, trade associations, career political flunkies(like Karl Rove), and Hollywood actors(who would arguably have influence even if they were vastly underpaid).
This argument also justifies making the rich poorer for its own sake, proving that the OP is not exactly making a straw man argument.
Using your numbers, Gates’ alleged Microsoft only net worth does not make him the wealthiest person in America. Warren Buffet has more than three times the total net worth that Gates has in Microsoft stock, using your numbers (unverified). Bill Gates has only a five percent stake in Microsoft stock. He has diversified his net worth in private equity, bonds, and stocks. According to Forbes, Gates has a net worth of $67 billion, the wealthiest person in America, and second on the worldwide list.
If you are going to pose a hypothesis about wealth/income inequality, get your facts straight first.