The wealth of billionaires reached record highs during Covid-19 while millions of middle-class citizens around the world found themselves unemployed and on welfare for the first time.
But billionaire and Microsoft co-founder Bill Gates believes the wealth gap isn’t getting bigger - in fact, it’s getting smaller.
In the second episode of his new podcast with actress Rashida Jones, Bill Gates and Rashida Jones ask Big Questions, Gates said the “greatest inequity” was to be born in a poor country.
But nowadays, those poorer countries are getting rapidly richer - faster than developing countries.
“The global wealth gap keeps getting smaller because the poor countries like India, Brazil, Mexico, they're getting wealthier faster than the rich countries are,” he said.
“If you take all of humanity, we are closing that wealth gap again and again, and again. That’s a constant thing.”
According to Gates, inequality is better today than in the past: “The picture of poverty in the '60s was people who really didn't have enough to eat, no air conditioning, certainly no way of connecting up with information in a deep way.”
Today, Gates said life and survival expectancy as well as literacy are all higher.
However, the billionaire did say more could be done in terms of progressive tax policies to ensure the top 10 per cent don’t continue to take as much wealth as they currently do.
Jones on the other hand said capitalism was “failing”, as a small percentage of people were able to make an unlimited amount of money with no obligation to give back - and they manage to evade taxes.
And while the middle-class was deferring bills under hardship clauses, offshore bankers experienced their busiest period as billionaires continued to bank cheques, according to the Financial Times.
“[Our clients] did not panic during the sell-down,” UBS chief executive Sergio Ermotti told the publication. “Instead they used it to build up positions.”
Amazon founder Jeff Bezos saw his net worth rise by US$73 billion between mid-March and mid-September. Over the same time period, Mark Zuckerberg and Elon Musk also saw their net worth surge by more than US$45 billion each.
And while Gates agreed that the pandemic had placed those who were in tough situations pre-Covid into even tougher situations, blaming the billionaires wasn’t “valid”.
“Every country other than very few is capitalistic at this point, and how you build the two key things - the safety net and the opportunity for mobility - the Nordic countries tend to do very well on these measures and say, South America actually doesn't do very well on these measures. The U.S. would sit somewhere in-between,” he said.
Is inequity inevitable?
The podcast, which looked at whether inequity was inevitable, discussed American economist and Harvard professor, Raj Chetty’S, theory of social mobility, which is where society is divided into quintiles, and your position in those quintiles as a child is likely where you’ll say.
“You'd like as a society for there to be a pretty high chance that you can be mobile,” Gates said.
“But the top 20 per cent who are children of professionals, managers, lawyers, they are getting a stable childhood, they're getting far more educational resources; tutors, specialists to help out and so they are way more likely, as children of those parents, to be in that top quintile.”
But the reality is that that is far less likely, he said.
“You're not going to get to a point where your parents' situation doesn't bias the outcome for you - that is the bottom 20 per cent, we won't have 20 per cent of those kids getting into the top 20 per cent,” he said.
“I mean we believe, and the science on this is very strong, is that the intellectual potential is there across the board [but] you're not tapping into that for your bottom two or three quintiles and the public school system is the agent of mobility.”
The hosts interviewed Chetty, who said that, particularly in the US, the schools you attend and the neighbourhoods you grow up in significantly impact your chances of success.
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