from The Worldview Literacy Book   copyright 2009            back to worldview theme #43


     As an economic system capitalism has a formal definition.  Looked at as a game individuals play—some of them "Seeking Wealth and Power"—one unfamiliar with it might ask certain questions.  How is this game is played?  What knowledge is needed to play?  Many succeed modestly by working hard and making sound financial decisions—which requires financial literacy.  The National Endowment for Financial Education describes this as "the ability to read, analyze, manage, and communicate about the personal financial conditions that affect material well-being"—"including the ability to discern financial choices, discuss money and financial issues without (or despite) discomfort, plan for the future, and respond competently to life events that affect everyday financial decisions, including events in the general economy."  

     What about those who succeed wildly—what strategies do "the masters of the game" employ?  Besides their own hard work, these people typically "put their money to work."  To many, capitalism is a game in which "it takes money to make money."  Often the investment capital used is not even one's own—it's borrowed money.  Typically the key question behind the decision to invest in something is "Will the expected annual rate of return on the investment exceed the annual interest rate charged for the money borrowed to make the investment?" Suppose $ 1 million of financing is obtained. If a project returns 15 %/yr and the cost of financing is 5%/yr, the net return is 10%/yr, or $100,000/yr.  Of course not everyone can get million dollar financing at low interest rates!

     Imagine a person who is well-equipped to succeed in "Seeking Wealth and Power."  Let us describe him.  (Sorry ladies, Forbes magazine lists of rich people typically include few women!)  He 1) is an economic individualist (theme #19) who thrives on competition; 2) simply believes with respect to money that "More is Better" (theme #26B), has no "money hangups," and believes (in the words of Bob Weinstein, author of Winning the Battle With Your Money Hangups), "Money is the national yardstick by which ability is measured...Having a great deal of money means you're respected."; 4) is endowed with "excessive or reprehensible acquisitiveness" (a dictionary's definition of greed);  5) is a Machiavellian who feels "the end justifies the means" and that "nice guys finish last";  6) believes in "the power of positive thinking"; 7) has read the 1937 classic book Think and Grow Rich, by Napoleon Hill, and is a living embodiment of quotes from it like "a winner never quits" and "desire backed by faith knows no such word as impossible."

     Hill's book "conveys the experiences of 500 men of great wealth who began...with nothing."  He "describes the famous Andrew Carnegie formula of personal achievement by which he accumulated hundreds of millions of dollars for himself and made no fewer than a score of millionaires of men to whom he


taught his secret."  But not everyone can win: competition im-   plies both winners and losers.  In his 1889 essay "A Gospel of Wealth," Andrew Carnegie commented on "the price which society pays for the law of competition." "[While]...the law may be sometimes hard for the individual, it is best for the insures the survival of the fittest in every department."

     Carnegie was joined by other economic lions of America's Gilded Age—such as John D. Rockefeller, Chauncey Depew, and James J. Hill—in using Social Darwinism to justify their wealth.  Still, Carnegie felt there was a limit to how much a rich man needed for personal use.  Upon reaching that limit, Carnegie felt he should begin "disposing of surplus using it year by year for the general good."  While historians would later link the rise of capitalism to the creation of such surplus—made possible by, as John Calvin put it, "unceasing activity in the service of God"—and the Protestant work ethic, there was one sin that Carnegie sought to avoid.  In his words, "The man who dies disgraced."

     Consider two extraordinarily wealthy men of recent decades: Ferdinand Marcos, who disregarded Carnegie's advice, and Bill Gates, who is taking some of it to heart.  Marcos was president of the Philippines from 1965-1986.  As head of a kleptocracy, he looted the nation's economy an estimated $5 — 10 billion while many Filipinos starved.  While Manila's city dump was home to 3,000 families,  Marcos' wife Imelda's personal ward-robe included 4600 pairs of shoes, and 500 black brassieres! 

     In contrast, MicroSoft cofounder Bill Gates has a sense of distributive justice.  The world's richest person as 2009 began  (see Figures #43a and #43b) with net worth  ~$40 billion, he also heads the largest charitable foundation.  With additional funding provided by multibillionaire Warren Buffet, as 2009 began the Bill and Melinda Gates Foundation had an endowment of $35 billion.  It was annually providing $ billions to fund programs aimed at combating extreme poverty and promoting healthcare in developing countries worldwide.

     While Gates now pursues philanthropic activities fulltime, aspects of the aggressive business strategy he used in managing MicroSoft—which brought anti-trust litigation by both American and European governments—are reminiscent of tactics used by others who have built great fortunes.  The building of many late 19th and 20th century fortunes involved questionable or illegal business practices— including insider trading, collusion, monopoly, union busting, and massive political campaign contributions to key legislators (often funneled through lobbyists). While some defend the wealthy, and many more lust to be counted among them, others are uncomfortable in a plutocratic "Winner Take All Society."  In such societies, as Molly Ivins described it, "A few people get ungodly rich, and the rest of us fall behind!"  

Figure #43a: 

NEWS ITEM  Forbes Magazine  3/05/08  

"For the first time ever, the number of billionaires Forbes could identify crossed into four figures, reaching 1,125.  The total net worth of the group is $4.4 trillion, up $900 billion from last year." 


NEWS ITEM  Forbes Magazine  3/11/09

"The richest people in the world have gotten poorer, just like the rest of us. This year the world's billionaires have an average net worth of $3 billion, down 23% in 12 months. The world now has 793 billionaires, down from 1,125 a year ago... Americans account for 44% of the money and 45% of the list's slots..."


Figure #43b: 

NEWS ITEM   Helsinki, December 5, 2006 

The richest 2% of adults in the world own more than half of global household wealth according to a path-breaking study released today by the Helsinki-based World Institute for Development Economics Research of the United Nations University (UNU-WIDER).  The most comprehensive study of personal wealth ever undertaken also reports that the richest 1% of adults alone owned 40% of global assets in the year 2000, and that the richest 10% of adults accounted for 85% of the world total.  In contrast, the bottom half of the world's adult population owned barely 1% of global wealth.

(Note: The total net worth of the world's 6.7 billion people in 2008 is around $150 trillion).


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