Friday, May 18, 2007

Will more billionaires help the poor

Every year, in the UK, a ‘rich list’ is published that outlines the names and fortunes of the richest people in the country. Lakshmi Mittal, the steel magnate, who is also the richest company director listed on the JSE, tops the UK list with a personal fortune of £19,25-billion. The top 1 000 rich people have a combined wealth of nearly £360-billion.

The UK Sunday Times also publishes a rich list of those under 30. Those involved in sport, film, fashion and pop dominate the list, with 65 of the 100 occupying these worlds.

The 2007 list also confirms that the superrich are getting richer. The number of billionaires in the UK rose from 54 to 68 between last year and this year, with the top 1 000 richest people’s wealth increasing by 20%. Over the last decade, there was a 260% rise in the wealth of the richest, compared with the 120% average wealth increase for the population as a whole.

So what does all this tell us?

Firstly, it proves the adage that the rich do indeed get richer. Secondly, fame, sporting prowess and celebrity are now surprisingly seen by most young people as a stepping stone to wealth, hence the obsession with TV talent shows. This feeds the obsession with celebrity status both on and off the sports field. Celebrity is seen as a quick financial fix.

Interestingly, however, 75% of those on the UK rich list have a university or college education. When the list was first launched in 1989, 75% of those on it were wealthy because of inheritance. Today, 78% of those on the list have made their money through business. This suggests that hard work does pay. But this does not mean that everyone has an equal chance of doing well. Those with access to education will do better. Not to mention that 90% of those on the UK rich list are men. Although there is a growing number of Asians on the British rich list, black faces are few. Clearly, the glass ceiling for women and for most ethnic minorities is alive and well in the UK.

South Africa has an even bigger problem owing to a massively distorted past in terms of access to wealth for blacks and whites, and men and women.

Transformation in the boardroom is, however, under way. Currently, 405 black South Africans hold 558 of the 3 125 director positions on South African listed companies. Black company ownership has moved from 0% to 10% in ten years, and the incomes of the richest black people have risen by 30%.

This suggests that wealth is slowly being shared, to a degree. Broadly, this is a step in the right direction, even though there is a long way to go. With time, South Africa will, no doubt, have its own, hopefully representative and rainbow coloured, rich list. But, if South Africa follows the UK, perhaps the real question is whether a growing number of billionaires, black or white, will really make a difference to the lives of the less fortunate?

In the UK, the wealthy are quick to point out that £1,2-billion was given to benevolent causes by the top 30 philanthropists alone in the past year. But about 25% of South Africans, almost exclusively black, have little chance of getting a job, let alone making it into the so-called middle class, or becoming superrich. Will charity, which domestically in South Africa is appallingly low, anyway, be enough to change this situation? I doubt it.

To be honest, studying the rich list over the last few days has left me a bit queasy. I strongly agree with the need for the economic pie in South Africa to be deracialised and for the economy to keep growing. However, I am left wondering, especially when growth largely benefits those at the top of the pile, exactly how this will make a difference to the poorest of the poor.

This article by Brandon Hamber was published on Polity and in the Engineering News on 18 May 2007 as part of the column "Look South". Copyright Brandon Hamber.