Tags: Dorfman | billionaires | value | wealth

Dorfman: Billionaires Provide Plenty of Value to Society

By    |   Monday, 16 March 2015 07:20 AM

The harsh criticism of billionaires going around is unjustified, says University of Georgia economist Jeffrey Dorfman.
"There is a widespread presumption that these successful people must have come by their high salaries, bonuses and wealth unfairly; that the rest of us must have been exploited or shortchanged in order for this level of inequality to arise," he writes in an article for Forbes.
"Fortunately, such a narrative is almost completely false."
To prove his point he divides the 1,826 billionaires on Forbes' billionaires list into two categories: "those where revenue is generated by selling a product to a customer and those where assets are traded and capital allocated."
The first group, which produces a wide array of goods and services, tends to provide more social value to the economy than the second does, which consists largely of financial services, he notes. The good news is that 75 percent of billionaires are in the first group, Dorfman explains.
"While much of the world is convulsing in horror over economic inequality, it is important to stop and note that such inequality is, in the vast majority of cases, arising because these few people have proven themselves exceptionally good at improving the lives of others," he notes.
"When we think about economic inequality, two things should come to mind: sympathy for those at the bottom and gratitude for those at the top. . . . We should remember that the richest among us mostly got there by improving the lives of millions of people," Dorfman adds. "We are better, not worse off, for having so many billionaires. We have not been exploited by the billionaires, but, rather, enriched by their ingenuity."
Meanwhile, Scott Winship, a fellow at the Manhattan Institute for Policy Research, challenges the evidence that income inequality is growing.
"The top 1 percent is obviously not hurting by anyone’s standards, but it remains the case that income inequality is lower and the rich are poorer than at the start of the recession," he writes.
The Great Recession lasted from December 2007 until June 2009.
Estimates from economists Emmanuel Saez and Gabriel Zucman show that the wealth of the top 1 percent fell 3.5 percent from 2007 to 2012, Winship reports.
"Incomes at the top had clearly not recovered by 2013, while the wealth of the top probably had not by 2012. Strong claims beyond these conclusions are unwarranted."
Income measures how much money you have coming in, while wealth measures how much you are worth, he explains.

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The harsh criticism of billionaires going around is unjustified, says University of Georgia economist Jeffrey Dorfman.
Dorfman, billionaires, value, wealth
Monday, 16 March 2015 07:20 AM
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