The word billionaire has been thrown around in the news a lot recently as Tesla stock (NASDAQ: TSLA) rallied by over 11% over the last two weeks, making Elon Musk the richest man in the world, passing Jeff Bezos, with a new net worth of $185 billion.
But what does it really mean to have that much wealth? Big numbers are hard to comprehend, and that’s completely natural for humans. But this mental limitation can cause problems when talking about things that matter. The wealth gap in the United States, for example, is a major problem that has been ongoing for the last three decades. Yet, when this huge inequality is presented numerically, it oftentimes creates a black hole in people’s minds and the gravity of the situation is lost.
Thus, in order for us to truly understand big numbers, we have to imagine them in terms we can understand.
Here’s a classic example:
1 million seconds = 11.5 days
1 billion seconds = 31.7 years
1 trillion seconds = 31,709 years
Hopefully, your mind is blown.
I really like this mental exercise. It makes it really easy to understand the difference between a million, a billion, and a trillion because the difference between days and years is something I understand fairly easily due to our own experiences with time. I hope this has helped you understand big numbers better as well.
Now, let’s add some context.
Top Ten Richest People’s Net Worths
- Elon Musk = $185 B
- Jeff Bezos = $182 B
- Bill Gates = $132 B
- Bernard Arnault = $109 B
- Mark Zuckerberg = $95.6 B
- Warren Buffet = $88.3 B
- Zhong Shanshan = $84.7 B
- Larry Page = $ 81.7 B
- Sergey Brin $79.1 B
- Larry Ellison = $79.1 B
These billionaires, individually, have more money than the annual GDP of over one hundred countries. Elon Musk’s net worth, for example, is five billion dollars more than the annual GDP of Iraq. Jeff Bezos’s net worth is 14.5x that of Mozambique’s annual GDP. These countries have tens of millions of people. And the collective monetary value that these millions of people produce each year is less than the net worth of a single billionaire.
Broken Tax System
The biggest negatives of the wealth gap come from the unequal distribution of wealth in our country. If the rich paid their fair share, many of the problems we see in society — poverty, unemployment, evictions, and starvation — could be addressed by investing more tax money into devastated communities.
But the system is broken and easily exploitable. It’s so badly broken, in fact, that some billionaires, like Warren Buffet, have spoken out saying that the rich should be paying more in taxes rather than putting the onus on the average American.
Here are the facts:
1 out of 5 millionaires in the U.S. pay a lower rate than someone making $50,000 to $100,000
In 2018, billionaires paid a smaller portion of their income in taxes than average Americans. Much of this has to do with loopholes in the system that can be exploited.
Some Ideas for a Fairer Tax System
- Tax income from investments/ capital gains like income from work.
2. Strengthen the estate tax.
3. Close the Wall Street carried interest loophole.
4. Expand the earned income tax credit.
In a nutshell, the first three proposals would close loopholes and increase taxes on passive income and capital gains that benefit the ultra wealthy. The fourth proposal would allow more working class Americans to qualify and apply for a tax break.
Reimagining the Future
The U.S. is the richest country in the world without a close second. The problem is just that our wealth is highly concentrated. A wider and more equal distribution of wealth could allow the standard of living to skyrocket for everyone. Every citizen of the United States of America could have housing, food, and a decent paying job if we just reimagine how society should be.
Too many times, the working class has been tricked and swindled to defend and worship the rich. It’s embedded into American culture. We need to stop digging our own graves now and clearly understand our situation. If we dig any further, I fear that our children might not be able to get out.
