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Why Warren Buffett Is Poorer Than Mark Zuckerberg (inc.com)
Facebook's soaring stock price isn't the only reason 34-year-old Mark Zuckerberg is now richer than 87-year-old Warren Buffett. An anonymous reader quotes Inc:
There's another, more important reason that Zuckerberg is now worth more: Buffett has been doing a great job of giving his money away, something that he, Zuckerberg, Gates, and most of the world's most well-known billionaires have pledged to do.
Buffett has given Berkshire Hathaway stock now worth more than $50 billion to the Bill & Melinda Gates Foundation alone. When it comes to giving, Zuckerberg and his wife Priscilla Chan have a lot of catching up to do. They appear to have devoted well under $10 billion so far to philanthropy... On the other hand, Zuckerberg, is more than 50 years younger than Buffett, so they likely have a lot more time in which to do their giving.
Three years ago the couple pledged to give away 99% of their net worth within their lifetimes.
Buffett has given Berkshire Hathaway stock now worth more than $50 billion to the Bill & Melinda Gates Foundation alone. When it comes to giving, Zuckerberg and his wife Priscilla Chan have a lot of catching up to do. They appear to have devoted well under $10 billion so far to philanthropy... On the other hand, Zuckerberg, is more than 50 years younger than Buffett, so they likely have a lot more time in which to do their giving.
Three years ago the couple pledged to give away 99% of their net worth within their lifetimes.
These charitable foundations that are set up by these billionaires are to avoid taxation upon the billionaires' death. Rather than transfer the wealth directly to their children when they die, which would trigger death tax, they instead give the money to the foundation, and then make sure the foundation will be under their children's control. No death tax, they get to write the 'gift' off on their ongoing taxes, and it's all legal smegal. The children then skim off the foundation for all their lives.
Yeah, they actually do some real charity work, as part of the cover. But it sure as hell is less money going out for real charity works than they'd lose to taxation if they didn't set up the foundation.
The parent comment should be modded up. It's the most insightful one yet, and shouldn't be at -1.
In a proper free market economy, one that's relatively free of distortion, profit essentially gets driven down to nothing. That's because any surplus will entice new entrants to the market, driving down prices, and cutting into profit margins. In the long run, capitalists wouldn't be able to collect excess profit, and thus wouldn't become exceptionally wealthy.
Of course, things aren't ideal in the real world. We have excessive government regulation that limits competition, for example. It's distortion like this which enables economic inefficiency that results in some market participants becoming extremely wealthy, despite not being significantly more productive than others who are far poorer.
The parent is correct, in a sense: billionaires shouldn't exist because free market competition should drive their profits down to a much more reasonable level, simultaneously leaving more resources and capital with their customers.