Time we re-evaluate real value of wealth
Jeff Bezos' suggestion in a recent NYT interview that the world's richest be listed not by the fortunes they have amassed, but by the wealth they have created for others is an interesting take on the debate over rising inequality. It's also a new, legitimate take on what it means to be wealthy. In the process of making a couple of hundred billion dollars for Bezos, Amazon has made its investors richer by over $2 tn, perhaps a truer indication of wealth-creation.
And the impact is not restricted to shareholders alone. Publicly held companies have a much bigger economic throw on jobs, finance and property markets. The world's biggest companies drive international trade, which redistributes incomes among countries.
Companies of the scale of Amazon redefine how markets and economic agents within them function. Public obsession with individual wealth gives short shrift to shareholder capitalism. Bezos' point is well made.
The logic applies to economies as well.
The strongest determinant of an economy's ability to grow is income distribution. Markets are fairly efficient in allocating an economy's resources, including incomes and wealth. Governments that provide a backstop only in the event of market failure have a greater chance of pushing the economic growth frontier.
This puts enterprise at the centre of any form of economic management. Countries that take their job of making it easier to do business have an advantage in spreading mass affluence. It's easier to redistribute wealth after it has been created rather than carve it out of existing stock.
So, redistribute through creation.
Bezos makes an additional point worth pondering. Enterprise may be driven by profits. But that's not the only driving force.
