Americans have been told time and time again that if the rich are allowed to continue growing their wealth that, inevitably, that wealth will “trickle down” to the rest of the population. Improvements in automation and shrinking innovation from the richest in this country have lead to the error of that economic strategy becoming more and more apparent, as 1% of the country sits on 90% of the wealth. It’s a disparity that is on track to only widen and new data shows that there are few incentives for the rich to change course.
According to the Billionaire Census from Wealth-X and UBS, billionaires are now holding onto ten times the amount of cash they were just last year. This is a number that has gone up from $60 million to $600 million.
What are the super wealthy investing in? They definitely aren’t giving to charity. The wealthiest in America on give about 1.3 percent of their income while the poorest give approximately 3.2 percent, according to The Atlantic. Oh, you would have never guessed it: hedge funds for their children.
These billionaires are establishing funds and passing them onto their children, according to a report from the Wall Street Journal. But like Hamilton Nolan at Gawker points out, this isn’t a wise investment:
It is important to remember that successful hedge fund investing is an exceedingly rare skill in an exceeding [sic] competitive field. It’s like an NBA all-star assuming his kid will also be an NBA all-star (except in a field that has an entry cost of hundreds of millions of dollars). It is, in other words, a very bad bet! An even worse bet, by orders of magnitude, than buying your teenager a Rolls Royce, and accepting the possibility that they could total it. A bet that you would never make unless you could absolutely afford to lose.
So, when the billionaires in this country are in a position when the market is unstable and the public would benefit from their investment, they’d rather just burn the money and let their kids dance around the fire.
For most, the idea of sitting on $600 million instead of $60 million is so remote that they cannot even begin to understand it. That’s a fact that the wealthy rely on. Instead, focus on this statistic: the American middle class hasn’t gotten a raise in 15 years. While the wealthy have money to burn, average Americans don’t have a cent to waste.