Thursday, 20 September 2012

Rich Rewards Richly Deserved

I never think of myself as poor, but in comparison with the world's super-rich, I am pretty poverty stricken, as a story in the BBC News has just reminded me.

According to "Bill Gates Tops Forbes Rich List for 19th Year", the list of America's wealthiest people is largely unchanged from a year ago, except that most of them are much richer than then, with their total assets having increased by 13% (2012).

Although he is vastly richer than I am, I do not feel any envy of Bill Gates, who tops the Forbes list for the 19th year running. Some people only inherit great wealth, or steal it through corruption, war and other crimes, and never do anything to honestly and justly acquire it, but Bill Gates and his fellow members of the Forbes list are not like that. He is rich because he has created enormous value for billions of other people, and these people, including me, are very happy to pay him a few dollars each for the value he gives in return. For example, I am writing this on a computer running Microsoft Windows 7, for which we must thank Mr Gates, and I have been using Windows, MS Office and other programs productively and enjoyably for many years now. I've always been happy to do the right thing and pay Mr Gates for the value he has contributed to my life through his products. I don't want to steal from him by using illegal software. He might not need my little bit more, but he deserves it more than the criminals who make, sell and buy pirated software, DVDs and the like.

I think most, if not all, of the super-rich Americans made their wealth honestly through fair competition in free markets by providing real value to millions, often billions, of happy, satisfied customers. This can be seen in the large number of technology billionaires on the list, including poor Mark Zuckerberg, whose fortune has dropped by nearly half, but he's still 36 on the list with more than $9 billion. Zuckerberg, like Gates, has also earned his extreme wealth by creating immense value for almost one billion users of Facebook, who don't even have to pay for the product they use so very often.

The other thing that always impresses me about a lot of these very rich people, again, the honest ones, not the selfish, worthless type, is their extraordinary generosity, their eager philanthropy. The two richest people on the Forbes list are also the two most philanthropic people on earth, having given away billions, in Bill Gates' case something like $30 billion, to help millions of truly poor people around the world. What a wonderful example they set: having contributed so much to the world through the value they created, they then give selflessly to benefit others.
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Reference
Bill Gates tops Forbes rich list for 19th year. (2012, September 19). BBC News US & Canada. Retrieved September 20, 2012 from http://www.bbc.co.uk/news/world-us-canada-19652594

14 comments:

  1. I had hoped that this post would be short. It started out well, but then I had another idea, and another one, and another one. And then it ended up not so short.

    I've been writing these response posts to make sure we have a few examples to analyse because next week you are going to write the same sort of responses to stories on the BBC News.

    For now, there is one question you might start thinking about. All of these blog posts responding to articles published on the BBC News are organized in exactly the same way.
    What is this common organization?
    How many parts are in all of the posts I've written over the last couple of days?
    Where would you draw the lines dividing the parts?
    What is each part?
    What does each part do? Why is it there? What is its purpose?

    OK. I changed my mind. There is more than one question you might usefully start thinking about, but they are all closely related questions. I will also prepare a handout with these and a few more questions for us to look at on Monday.

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  2. I agree with you, Peter.

    According you said, we should buy the license of software that we used it.

    However, most of Thai people think any software is free to use it because they never had paid any baht to software’s company and they can get the copy version in low price easily.

    In the past which the internet did not be like nowadays, when Thai people bought the new computer, there was a tradition that the computer sets usually already have windows and other software installed on its self, but these software were not the original one and the computer shops never charge the software fee on them, just charge for maintained fee. Even though Thai people support to buy the original software, there were hardly to find the shops which have original software for sale, not a copied version. That is why Thai people never have be a familiar relation with paid software license fee.

    Although, Thai’s government tried to encourage Thai people to use the original software, it still has a copy version sale on market and they can have a copied CD of software from the dealer beside of the road or in the department store, especially Pantip. These copied versions always have a lower price than the original one , just only one hundred baht per a CD and it does not often become lonely. These phenomena still happen in the present and the material and production cost of these copied CD is less than 10% of the selling’ price, but the highest portion of the cost is corruption fee for selling it in the public area.

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    1. Bas,
      It makes me wonder when I see things like this why so many Thai people say that they are Buddhists. Doing things like using pirated software and DVDs is stealing, and I'm sure Buddhism teaches that stealing is wrong.
      Can you really be a Buddhist if you don't follow the most important teachings of Buddhism?

      This sort of theft also seems to me to be bad for the whole economy because if people know that others are only going to steal their ideas, they will not be motivated to work on developing them.

      I don't think it's the Thai government's fault. The fault is with everyone who steals. If a lot of people were not stealing, the illegal piracy industry would not exist. I do think the government could to more, but it's a problem with society, culture and customs more than with the government, which just reflects the values and attitudes of society.

      But maybe there is some other explanation?

      Actually, I think that stealing is natural to human beings. That's a bit sad, but the evidence from some studies by behavioural economists in the US shows that very similar behaviour happens at places like Harvard University as well.

      Perhaps it would be better if we were not so natural? Maybe being natural is actually very bad. What do others think?

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    2. Note: the experiments were done by academics at those universities, with students at Harvard, MIT and other well known places.

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  3. I also think it is no problem that Bill Gates and other entrepreneurs are rewarded for their struggle and diligence with billions of dollars. They are also symbols of so-called American dream. Younger generation must be encouraged by their success to start own businesses, which can contribute to make the life of people more convenient and comfortable. But when I skimmed the Forbes list, I found four of ten top billionaires are people who just inherit Walmart fortune. Don’t you think it is a little bit too much? I’ve heard that the U.S.is a country of equal opportunity, but if someone has such an amount of money from the beginning and others not, can the opportunity be equal? It is as if while ordinary people had to run to archive the success, the rich just drove their super cars. I’ve heard in the U.S. the difference between the rich and the poor is getting bigger and bigger. Some people can’t afford tuition for higher education or medical expenses. Isn’t it a better idea to raise the inheritance tax, and use it to improve social infrastructures?

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    1. Chieko,I didn't think like that.

      As you said, The US is the land of opportunities for everyone and you felt that there are still having a gap of rich people and poor people.

      In my opinion, I believe that everything has an up-side and it also always has a down-side too. Although they are the richest family, they cannot avoid this truth because businesses quite change often. Their family business might be in right time and right place and then their business grow up to billion businesses, but they do not have any guaranty that their business will be good all the time. It depends on their leader‘s experience. If their leader is a young guy who never interest on their business, they might have problems or they might fell and lose their business as soon. For example, In 1982, everyone might knew IBM, likes a biggest computer company in the world for that time, but a few people might knew Bills gate who was an ordinary student and still studied in university for that time. Nowadays, bills gate is a popular person in the world and his company, names MICROSOFT, just launched Windows 8 product, however, unfortunately, IBM give up on their operating system since it was the 86-DOS and gave the chance to Bills gate for selling the his operating system (MS-DOS 1.0) with IBM'PC around the world. Did Bills Gate born with the rich family?
      References:
      http://en.wikipedia.org/wiki/MS-DOS
      http://en.wikipedia.org/wiki/History_of_Microsoft_Windows

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    2. sorry, I made a mistake on his name. his correct name is Bill Gates.

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    3. Bas, I agree with you. Being a successor of a big company is not easy. Even supercars have to be maintained carefully to be in good condition, and they sometimes break down and can have traffic accidents, as IBM couldn’t adapt well to the change of information technology and lost its advantages. I’ve heard that Bill Gates is from a relatively rich family, but not a super-rich one, so he achieved his success by his own talent not by inherited fortune.
      What I’d like to point out is that in these years, the rich has become richer, while the incomes of ordinary people decrease in the U.S. (and also in some developed countries including Japan). If both of them could have enjoyed the increase of their income, I would have found no problems there, in spite of difference of a sum of money they earn. But in fact, they don’t. The one reason of this is the change of tax system, which is now very advantageous to rich people. This is what I think a problem.
      As a result of decreasing income, some people can’t afford to send their children to universities, because scholarships are not enough, and they hesitate to use an education loan because in these days it’s difficult to get a proper job after graduating universities.
      Not always, but in most cases having good education is a key for better life, and if people lose the opportunities for it, they may lose their motivation, and as a result, the society will lose their energy. Same thing can be said about the medical expenses. A medical expense in the U.S. is very high, and because there is no public insurance system, people have to get private insurance. But insurance company sometimes refuses to pay for special treatment, and the patients must pay the medical fee by themselves, and not a few people go to a bankruptcy because of it.
      When I think about such situation, I think it is not a wrong idea to change the tax system (especially inheritance tax), to get money to give people more opportunity to have higher education and have proper medical treatments.

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    4. Chieko,
      According to your ideas that the US' taxation also provide benefits to rich people

      I understand what the points are but I would like to share my information about American taxation. Today, I was in a speaking class in AUA's library after speaking class in the afternoon. I talked with AUA’s American teacher and just knew about US's tax system works

      How does the taxation in the US works?

      The American’s government divided American people into three groups which are low, medium and high group and they measured by using your annual income summary. If your total incoming was under their lowest point of incoming standard –sorry, I can’t remember exactly how much, I guess it is about 23,000 USD or 30,000 USD per year-, they will put you into a low group which you do not pay any tax to them, but your total incoming more over their lower point and less under their maximum point – may be a million USD per year-. Then they will charge you 22% of your annual incoming.

      In contrast, if you are richer than their highest point they will put you into high group which charged by 12% of your total incoming. It’s less than medium group’s tax rate by 10% for two reasons.

      Firstly, the American’s government thinks it is an injustice for the rich people, which charging billionaires with high tax rate seem like punishments on their successful. Secondly, they want to encourage their people to be richer than them are in present time because if American can earn more money than their highest point, they can discount their tax around 10 % off.

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    5. Thanks for the information about American taxation. I found it very interesting, because we think differently about tax in Japan.

      About 30 years ago, the richest of the rich had to pay 70% of their income as tax. We thought it was a kind of obligation of the rich to pay tax to make our society happier and more confortable. Paying high tax was regarded as a honor.

      Nowadays the highest rate of incometax is around 40 %, but as in the U.S., people who gain their money from stock or property can use lower taxrate, around 10~15%. So, also in Japan, super rich can have advantage.

      Still,many Japanese people think taxsation is an important part of redistribution of wealth, which is necessary for democratic society, and because of this, they think the taxation system which is too favorable for super rich has to be changed,and so do I.

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  5. I agree with the point of view that two of the richest people spend money to charity, people who are short of some necessary things, who rack of education.

    Warren Buffett, I have read about a column in thai website, it refer that he don't prefer a huge house and he can't figure it out, what the life in the many houses in different countries. Now, he living in the simple house in Omaha. Also, He has an purpose to donate 99 percent to five charitable organizations.

    Bill Gates, He was very influence for my life because I have to use his program or operation system for my education, fortunately, He gave every students the program downloading for free by register in Microsoft website with student ID number. Some people told me that is a marketing strategy, brainwashing but I still support him about to distribute the program for free.

    I grate to realize something will make equality of human, it involve to rise the inheritance tax to enchance the social infrastructures and I really hope to see every people on the earth living without corruptions and exploitions.

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  6. I have a completely different idea Peter's response to the article. It looks a bit pessimistic because it is based on Marxist aspect of dialectic materialism. In fact, billionaires usually earn a large amount of money a day in spite of days off or no work. However, their income exploit many people who are mechanism running business for them but the return is usually very low, particularly in developing countries workforce make a daily living under the poverty line - U.S.$ 1.

    In addition, they pay tax at a high level but their charity is an activity that can be used to reduce tax payment. It seems to be acceptable for everyone including me. On the other hand, i aim to express that they are not good at all and charity programs as well as their contribution may be a propaganda that helps their image become generous and respectful billionaires. As a result, their companies or their products become more popular because people look up to the owners. There are some Thai well-known businessmen (I haven't seen a businesswoman in the same case yet) who build their images in good ways. I know many of you can guess who they are.

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