Why are billionaires rich

Bezos, Ma and Co .: How billionaires use their power to stay rich

  • The Viennese economist Martin Schürz took a closer look at the mechanisms between rich and poor.
  • Accordingly, the rich have a variety of opportunities to influence politics and society and to secure their wealth. Their wealth is hardly called into question as a result.
  • But even poorer people often do not act in their own interest.
  • You can find more articles on Business Insider here.

The distribution of wealth in Germany has been very uneven for decades. The top ten percent own at least 56 percent of the assets, shows a current DIW study. The poorer half of the population, on the other hand, owns just 1.3 percent. But why doesn't that change anything?

The Viennese economist and psychoanalyst Martin Schürz has been researching the distribution of wealth in Europe for two decades. For his new book “Überreichum” he took a closer look at the connections between rich and poor. "In my book I wanted to show the various mechanisms for securing wealth," he explains in an interview with Business Insider. These mechanisms can be economic, cultural, historical, moral or even emotional - because the rich know how to influence politics and society in their favor.

Little is known about billionaires and their fortunes

Schürz criticizes the inadequate data situation on the wealth situation of rich people in Germany and Austria. Since the wealth tax was suspended in Germany in the 1990s, there is hardly any reliable data on it. “The Forbes list is the best there is, but it's not scientific. You only take them out of necessity, ”says Schürz in an interview with Business Insider. But it is important to know what assets are there, where they are and how they came about. “You need transparency in order to be able to assess the impact of economic policy measures,” argues the economist.

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An example of how wealth transparency does not necessarily eliminate inequality is Sweden. Here everyone can see the income of their neighbors or of stars such as the ex-ABBA singers. Nevertheless, wealth inequality in the country is extremely high. "That refutes the fact that the question of transparency is about envy," says Schürz. Such data are, however, the prerequisite for a democratic discussion. In addition, in Germany in particular, many billionaires avoid the public.

At one billion euros, our imagination "collapses"

Studies show that most people underestimate the wealth inequality and the enormous wealth of individuals. “I think it's because there are no images of wealth yet,” says Schürz. “There are pictures of luxury goods like yachts, airplanes, luxury cars or villas. However, they are only a relatively small part of wealth. Shareholdings or entrepreneurial assets make up the greater part. "

Certain luxury goods such as a beautiful, large house or a sports car are also still within reach for many people from the middle class - but there are worlds between this wealth and the actual wealth of what Schürz calls.

These huge sums are beyond our imagination. Most people can still imagine how much a million euros is - with the help of their annual salary or real estate values. But a billion or even 120 billion euros like the one Amazon boss Jeff Bezos is supposed to own? “Our imagination collapses,” says the economist.

The Power of the Rich: How Billionaires Influence Politics

In his book, Schürz poses the question of whether a democracy with billionaires can continue or whether it will be undermined. To what extent do the "rich" exercise power?

“It's not like billionaires buy direct political measures,” says Schürz. But: "Politicians know what interests the wealthy have and act accordingly." There are several scientific studies on this, both for the USA and for Germany.

Billionaires are also behind most of the major media companies, such as Jeff Bezos at the Washington Post or Jack Ma at the Hong Kong South China Morning Post. Others got rich through the media, such as Silvio Berlusconi or Rupert Murdoch, owned by Fox News and the Wall Street Journal.

Read also:The “uncanny power” of Blackrock: A little-known company has a gigantic influence on the global economy

The discussion about the distribution of wealth is conspicuously often fended off with the accusation of envy. However, Schürz does not consider the argument to be credible, because social closeness is necessary for envy: “Envy is much more intense at a high school graduate meeting. You get annoyed if, for example, someone who was worse at school is more successful than you are. ”In addition, we are all somehow jealous, even rich people.

This mechanism also applies to the phenomenon of how quickly indignation over the wrongdoings of the rich - such as tax fraud - subsides again. Revelations about the Panama and Paradise Papers or the Cum-Ex scandal, which showed how billions of euros had been stolen from the state, hardly resonated. In contrast, particularly poor people such as welfare recipients or refugees often attract more anger and envy. Schürz attributes this to the social closeness, which allows a direct comparison. Low-income or low-pension people are more likely to compare themselves to these groups than to billionaires.

Should there be a cap on wealth?

The economist wonders why there are so many debates about how much money someone needs to live, for example with Hartz IV sentences. Conversely, however, there are hardly any such considerations about wealth. Should someone only be allowed to have as much money as they and their children and grandchildren can actually spend?

Schürz believes that for many people such considerations restrict their freedom too much. He himself does not want to determine the amount at which wealth begins. At ten million euros? Hundred million? A billion? Even more? “Every limit remains arbitrary,” says Schürz. Society would have to negotiate such an upper limit itself.

Also read: What the fortunes of Zuckerberg, Bezos, Buffett and Co. would look like if there was a tax on the wealthy in the USA

Schürz points out that the rich also benefit from a wide range of government support, but - unlike social welfare recipients - do not have to disclose their assets. Such government support ranges from corporate subsidies and public infrastructure to property protection, which is secured by the police and the military, and inheritance law. "The decline in taxation of the rich in the US has in fact led to a redistribution to the rich," emphasizes the economist. Instead, the rich let themselves be celebrated for generous donations.

When asked how to change wealth inequality, a strange paradox also presents an obstacle: because, although the poorer suffer most from the inequality, they do not always act in their own interests. Unions are losing more and more members. Inheritance taxes are also very unpopular.

Also read: These are the youngest heirs in the world who will receive their parents' billion fortune

“A society agrees on values ​​when inheriting,” says Schürz. Family values ​​such as solidarity and the support of one's own offspring are viewed more highly than justice. “Poor and rich families share similar values,” says the economist.

"If everything belongs to a few families in a democracy, then there is no longer any democracy"

Instead, right-wing populists and even billionaires benefit from anger over inequality, even though their policies often harm the poor themselves. “The people downstairs admire the people upstairs,” says Schürz. Silvio Berlusconi is admired for his “courageous, innovative demeanor”. The fact that Donald Trump is foregoing his (comparatively low) salary as US President is also recognized. The “misconception” prevails that “the rich in politics do not have to steal”.

Why are there so few sustainable movements that actually want to change something in the financial situation? Schürz suspects that politicians fear that they will be portrayed in public as economically illiterate if, for example, they propose a wealth tax. "The wealthy are not easy to be taxed because they have alternatives these days."

Most of the suggestions are therefore rather harmless. “It is exhausting to fight against something that can hardly be changed.” Nonetheless, inequality harbors great danger. “If everything belongs to a few families in a democracy, then there is no longer any democracy,” says Schürz.