Many people believe that the rich built their fortunes at the expense of others. And while most adults accept that life is not fair, the word fairness gets used a lot when discussions about income inequality arise.
Is it right that some can afford multiple luxury cars, lavish houses and exotic vacations, while others scrape coins together to afford a single meal that has to last them the entire day? On the other hand, is it fair that talented and successful people must give away the fruit that they worked so long and hard at growing?
What’s fair, what isn’t fair, and whether it matters or not depends on one’s personal values. But are the rich getting richer at the expense of the poor?
The short answer is No.
The world view in which people believe that others become poor to make others rich is also called zero-sum thinking. People who subscribe to this view see economic life as a zero-sum game, much like any competitive sport where one player or team has to lose for the other to win.
Dr. Christopher Nicol, who is an Economics Professor at the University of Lethbridge says this common thinking is fundamentally wrong because economies, in general are not finite, meaning the rich are not taking more of the ‘pie’, but the ‘pie’ is growing.
He says to Bridge City News, “If you assume that the economy is growing over time, which it does over the broad sweep of time, then someone can gain in a situation like that and nobody needs to lose.”
A quick glance at the list of the world’s billionaires reveals that many of them are self-made entrepreneurs. They didn’t take anything from the poor to become rich, but became wealthy by giving the the world something that enhanced or improved our lives. For Bill Gates (Microsoft), it was operating systems and Office programs, that many of us use every single day. For Jeff Bezos (Amazon) and Jack Ma (Alibaba), it was e-commerce. And for Mark Zuckerberg (Facebook), it was a social media platform that made it easier for us to stay connected to friends and family, near and afar.
And speaking of CEOs, several of them who run multi-billion dollar corporations actually take low salaries.
The aforementioned Jeff Bezos has made the same $81,840 USD salary for two decades. He also has never taken a stock award. He doesn’t need it as he already own a 16 per cent stake of Amazon, which is worth more than $100 billion.
Steve Jobs (Apple) took $1 every year (except for 2001). And Google founders Larry Page and Sergey Brin also only take $1 a year each.