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Wealthy Hoarders—American style

3 weeks ago
David Surdam
Foreign gold coin

Recently I’ve seen a spate of posts on Facebook—granted not the most veracious of mediums—bemoaning rich Americans’ penchant for “hoarding” their wealth. One envisions human versions of Disney’s Scrooge McDuck character defying physics by diving into treasure chests of gold coins.

Compared with wealthy people of the past, one can easily argue that America’s current wealth-holders are socially more beneficial. Today’s billionaires invest in real estate, stocks, bonds, and other productive investments. To be sure, they may also hold wealth in assets of lesser productivity such as mansions, fancy cars, jewels, pieces of art, and government treasury bonds.

For many thousands of years, rich people held their wealth differently. Consider those dead Egyptians. The pharaohs left behind impressive pyramids. They’ve resided entombed for thousands of years, along with a retinue of presumably unwilling retainers. They also buried large amounts of goods. While such waste may have redressed imbalances in wealth, the goods could have been put to other uses (although the pyramids currently bring in tourist dollars). The dead retainers, too, could have continued to lead productive lives. The pyramids also required vast amounts of labor, whether free or coerced.

The Greeks introduced democracy—limited, of course, by their dependence upon slave labor—and a lot of deep thoughts. They touted public works, such as public buildings. The wealthy competed to finance ostentatious projects, such as building edifices or supplying naval warships. Although such ostentatious projects persist today and provide income from tourism, just like the Egyptian pyramids, the common people reaped little benefit.

Romans gained wealth through conquest and slave labor. As with the Greeks, wealthy Romans competed to gain status and public acclaim via putting on chariot races, gladiatorial fights, and funding lavish buildings. Roman citizens enjoyed free food (funded by taxpayers), sort of a precursor to modern-day income-maintenance programs. The bread and circuses provided by the wealthy, therefore, acted as a safety valve with regard to the restless mass of Roman citizens. Aside from entertainment, however, Roman wealth provided little economic benefit for the masses.

Although the Medieval church (as well as Islamic doctrine) forbade extending loans at interest—usury—the need for loans overrode religious scruples. Church officials fought against usury with varying degrees of severity. They hit upon the dandy idea of getting usurers to repent and to pay restitution for ill-gotten gains. The church often received proceeds from such restitution. Church leaders also encouraged wealthy patrons to absolve themselves of sinful usurious behavior by donating money for cathedrals and other construction projects. One could argue that behind every cathedral there lies a crime of usury. Although some of the wealthy donated money to succor the poor, most were not too concerned with the poor (although the medieval poor were in much worse shape than today’s poor).

If today’s rich people were to disburse most of their wealth in lavish endowments to charitable and educational institutions, I suspect the rest of us would be worse off. Some of Bill Gates’ billions are invested in efforts to create new and better products that satisfy millions of people, including many poorer ones. Warren Buffett’s billions are directed to companies that he deems likely to continue to reap profits by satisfying customers with their products and services.

Gates and Buffett, just to name two of the more prominent billionaires, are free to disburse their money as they see fit. My guess is that they are and will continue to be good stewards of the wealth they currently but temporarily control. After all, unlike the dead Egyptians, few modern-day people believe the rich can “take it [their wealth] with them,” when they die.

So be glad that American billionaires are less like Scrooge McDuck, dead Egyptian pharaohs, Romans, or medieval usurers. Be thankful that American billionaires are investing they wealth in productive outlets.

Author

Headshot of David Surdam

David Surdam

David Surdam received his Ph.D. in Economics from the University of Chicago. His dissertation, "Northern Naval Superiority and the Economics of the American Civil War," was supervised by Nobel-Prize Winner, Robert Fogel. Professor Surdam has taught at the University of Chicago, Northwestern University, Loyola University of Chicago, and the University of Oregon.

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Comments

Submitted by Jordan Rempe on
I think it article brings up important historical facts about what people use to do with their wealth. Keeping your wealth in an Egyptian pyramid was just how they did it back then. It is interesting to see how each different society valued wealth differently and what they did with wealth. Society has obviously changed and developed since that point allowing very wealthy people to be able to set up charities and funds for their wealth to support. I think we have a few very great 'billionaire leaders' in our mists who are willing to donate so much and encourage others to do the same. I also applaud the people who do give so much of their wealth to organizations they support because by sharing their wealth it is a great benefit to many other people.

Submitted by Mustafa Akbar on
Maybe one day billionaires might be a secondary word as once millionaire was. zillionaire could be a new thing considering the pace we are growing in terms of wealth each year. But one thing to think about is that some 200 years later the Billionaire in likes of Bill Gates and Warren Buffet might be the pharaohs of the past leaving us in awe with what they had built. (Just like we admire John Rockefeller or Andrew Carnegie)

Submitted by Adam Kirk on
I think sometimes more money is made after death. In The Band Perry's If I Die Young Song, the lyrics are "a penny for my thoughts oh no I sell for a dollar, they're worth so much after I'm a goner." I think there is some truth to that, as following Micheal Jackson's death that Beatles albums were released digitally because he owned the rights to them. Rockefeller's wealth has only increased after his death because of inflation. Sometimes, wealth is only realized after death like with this custodian. https://www.dailymail.co.uk/news/article-5710849/Kentucky-janitor-bequeaths-175k-life-savings-child-abuse-victims.html I do not believe that wealth does not stop at a headstone. A lot of famous wealth distributors are still recognizable as business titans such as Carnegie, Rockefeller, Henry Ford, Chase Morgan today as they were in their period in history. Rockefeller even though his monopoly was broken up, still helped with establishing the Great Smokey Mountains National Park https://www.gsmnp.com/great-smoky-mountains-national-park/history/ amongst other national parks.

Submitted by Carly Seely on
This article points out interesting facts from history about people and their wealth. Everyone had their own way of using their wealth. I think millionaires today should be able to spend and invest their money how every they want. Right now with the covid-19 people are complaining that millionaires are donating only $25 million or more and that is not enough for them to appreciate because they are worth much more than that. But as said in the article a lot of rich people have investments, real estate, stocks, etc. This is not liquid money that they are able to just give away. They are trying to help the people which they do in many other ways not by just donating money. They invent new technology and help improve people's lives with these new advances. Not all wealthy people are generous and willing to give their money to help out. But those who do should be recognized because they could just keep it to themselves like some rich people do.

Submitted by Colin J Kirchhoff on
This was an interesting article as it looks at a brief history and clear examples that mass wealth held by a few has been around hundreds of years. If defends that the wealth gained by billionaires is actually a good thing. There seems to be an increasing attitude that "billionaires are evil, bad" or insert whatever adjective you see fit. I agree that most billionaires are very conscious of what wealth they hold and are aware they need to spend /invest in things that will benefit more people than just themselves. We should be thankful that our current day billionaires are unlike the Egyptians and actually give their wealth away to a greater cause.

Submitted by Adam Nalley on
I'm not sure I agree with most of this. While I do agree we have progressed from the Egyptian standard of burying gold and slaves with you when you die, the rest of it doesn't really sound that different. I'm really not sure how things like stocks and bonds are more productive than the Greeks building lavish ships or the Romans building buildings and infrastructure. I would imagine those would employ hundreds of the poor citizens. FDR helped pull us out of the great depression by spending lavish amounts on buildings, social programs, and infrastructure. It's clearly a boon to the economy. Sure, businesses need bonds and stocks sometimes for cash, but that really only affects the average person indirectly, at best. How would spending money on charitable and educational institutions make us worse off? Seems like an odd assumption to throw in. As far as Warren Buffet and Bill Gates, they do do great things with their money, especially Gates, and I'm really glad that there are some billionaires out there who are actually using their money for good. That being said, every time people want to defend billionaires, they bring up these two. Always these two. There's thousands of billionaires out there; why aren't any of the others pursuing such things? 1/1000 doesn't seem like a great ratio. If that was a payout on an investment, I'd have to pass.