Working hard for the ‘unearned increment’

In the spirit of How Many Elephants in a Blue Whale?, I thought I’d do a quick calculation of how much hard work was in Bill Gates (variously estimated) fortune.

At one point, Bill Gates was said to be worth US$50billion. That’s a lot of ‘money’. What would it take to earn that at an hourly rate?

Let’s make it as easy as possible. Imagine Bill started working hard the moment he emerged from the womb. Pretend he’s now 70 years old. Imagine, also, that he never slept in all those years but just carried on working hard every hour God gave him.

Pretend he never spent any of his hard earned cash on food, accommodation, clothes or any other modern luxuries. Imagine, further, that from day one he had the best accountants in the world working for him and, as a result, never had to pay a cent in income tax. He just saved everything he earned.

Ignoring interest on those savings, to accumulate $50billion in 70 years of – literally – full time work, what would the hourly rate need to be?

Pretty easy calculation – 50,ooo,ooo,ooo/24 x 365 x 70 = $81,539.47 per hour* (and, of course, that’s US$).

That’s better than most people earn in a year. Now, that’s what I call working hard.

Or, more precisely, it’s what’s called capitalism. Only that system can shoehorn that wealth into the hands of one person, so spectacularly far above any sensible notion of ‘hard work’.

Why is Bill Gates so rich? Nothing (or very, very little) to do with Bill Gates. Certainly not his ‘hard work’. That could only ever explain a vanishingly small, miniscule proportion of his accumulated wealth.

It’s the economic system. It’s a system that – in theory at least – efficiently maximises the return of capital on capital. It also efficiently concentrates ownership of that capital. It will accumulate in the hands of those who can best leverage that system to their particular advantage.

‘Leverage’ – ‘Give me a place to stand and I will move the earth‘.

Capitalism is a leverage mechanism – it gives Bill Gates ‘a place to stand’. In this case, however, it’s not so much to move the earth as to own it.

But ‘we all know that’, don’t we?

[*A more realistic – but still generous – calculation would be 40 years of work at 80 hours per week for 52 weeks a year. Still with no income tax. That equals $300, 480.77 per hour. That’s the equivalent of a reasonable First Division prize in Lotto – every hour. I won’t even begin to show the calculations for the period of time Gates was supposedly worth over US$100billion]

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