How rich are the rich? Well, Bill Gates has $75 billion, Warren Buffet $60.8 billion and Mark Zuckerberg about $44.6 billion. The people in the top 1 percent have so many assets that they own half the wealth on the planet, as reported by Credit Suisse. Specifically, 30 of the wealthiest individuals own as much as a trillion dollars collectively, according to Forbes. Nevertheless, not everything is good news for them. The combined wealth of the 20 richest dropped from $899 billion in 2015 to $827 billion in 2016; the Mexican businessman Carlos Slim alone lost $27 billion, according to The Guardian.
Most of the wealthiest billionaires in the world come from the U.S., and a little less than 20 percent are in the tech industry, according to Forbes. Of the wealthiest, 1,186 people are defined as self-made millionaires; 228 inherited their fortunes and 396 inherited at least a part of their wealth, as reported by The Guardian.
So, how did these people get to be so wealthy? It is clear that there was a huge amount of hard work, discipline, clear goals, ambition and guts. But is that enough to get into the billion-dollar club? You probably know many people with these traits yet they are nowhere near to becoming billionaires. One common trait, though, is that almost all owned and then sold stock in their own company or one of their relatives did.
That said, there are lots of people who sold their companys stock who did not become billionaires. So, what made the one percenters so rich? There is no single answer. Yet one possibility is outlined in Malcom Gladwells book: "Outliers." Outliers are people who find themselves far above average in their respective fields, like Steve Jobs or Mark Zuckerberg. They are hard-working, determined geniuses, who had the right abilities and found themselves with the right opportunities at exactly the right times. Luck?
An interesting question is: What would have happened if Steve Jobs had been born 30 years earlier? Even with his amazing creativity and sense of design, could he have been able to apply his genius in the field that he came to dominate? The industry itself did not exist and from a technological perspective, would not for another 20 years. Alternatively, what if he would have been born 20 years later? He would have been too late to an already crowded field. Timing is everything.
This does not have to be the end of the story. Although it is not obvious what abilities will be needed and when the next opportunities to become rich will arise, there is something societies can do. We can assist employees to understand and access the process of becoming financially stable. Employees can become owners of shares in the businesses where they work. Moreover, there are profit-sharing mechanisms available to employers through which employees have the incentive to perform better over the short and medium term as well as over the long term. Its simply a win-win.
The best incentive, we think, is to allow employees to own a share of the company through a mechanism known as an Employee Stock Ownership Plan (ESOP). That way, employees work as if they own the company, and it just so happens that they do own some or all of it.
Among the many ESOP benefits are: 1) often additional retirement plans; and 2) productivity increases, on average about 4-5 percent more than companies not owned by employees. No, ESOPs wont make us billionaires. But they are a fine way to make more capitalists and improve the economy.
John Hoffmire is director of the Impact Bond Fund at Sad Business School at Oxford University and directs the Center on Business and Poverty at the Wisconsin School of Business at UW-Madison. He runs Progress Through Business, a nonprofit group promoting economic development. Mario Alejandro Mercado Mendoza, Hoffmires colleague at Progress Through Business, did the research for this article.
Most of the wealthiest billionaires in the world come from the U.S., and a little less than 20 percent are in the tech industry, according to Forbes. Of the wealthiest, 1,186 people are defined as self-made millionaires; 228 inherited their fortunes and 396 inherited at least a part of their wealth, as reported by The Guardian.
So, how did these people get to be so wealthy? It is clear that there was a huge amount of hard work, discipline, clear goals, ambition and guts. But is that enough to get into the billion-dollar club? You probably know many people with these traits yet they are nowhere near to becoming billionaires. One common trait, though, is that almost all owned and then sold stock in their own company or one of their relatives did.
That said, there are lots of people who sold their companys stock who did not become billionaires. So, what made the one percenters so rich? There is no single answer. Yet one possibility is outlined in Malcom Gladwells book: "Outliers." Outliers are people who find themselves far above average in their respective fields, like Steve Jobs or Mark Zuckerberg. They are hard-working, determined geniuses, who had the right abilities and found themselves with the right opportunities at exactly the right times. Luck?
An interesting question is: What would have happened if Steve Jobs had been born 30 years earlier? Even with his amazing creativity and sense of design, could he have been able to apply his genius in the field that he came to dominate? The industry itself did not exist and from a technological perspective, would not for another 20 years. Alternatively, what if he would have been born 20 years later? He would have been too late to an already crowded field. Timing is everything.
This does not have to be the end of the story. Although it is not obvious what abilities will be needed and when the next opportunities to become rich will arise, there is something societies can do. We can assist employees to understand and access the process of becoming financially stable. Employees can become owners of shares in the businesses where they work. Moreover, there are profit-sharing mechanisms available to employers through which employees have the incentive to perform better over the short and medium term as well as over the long term. Its simply a win-win.
The best incentive, we think, is to allow employees to own a share of the company through a mechanism known as an Employee Stock Ownership Plan (ESOP). That way, employees work as if they own the company, and it just so happens that they do own some or all of it.
Among the many ESOP benefits are: 1) often additional retirement plans; and 2) productivity increases, on average about 4-5 percent more than companies not owned by employees. No, ESOPs wont make us billionaires. But they are a fine way to make more capitalists and improve the economy.
John Hoffmire is director of the Impact Bond Fund at Sad Business School at Oxford University and directs the Center on Business and Poverty at the Wisconsin School of Business at UW-Madison. He runs Progress Through Business, a nonprofit group promoting economic development. Mario Alejandro Mercado Mendoza, Hoffmires colleague at Progress Through Business, did the research for this article.
