2009 will be remembered by millions of ordinary
people as the year they lost their job, their house, or the prospect of
an education. For the rich, however, it was a bonanza.
The
world’s billionaires saw their wealth grow by 50 percent last year, and
their ranks swell to 1,011, from 793, according to the latest Forbes
list of billionaires.
The combined net worth of these 1,011
individuals increased to $3.6 trillion, up $1.2 trillion from the year
before. On average, each billionaire had his or her wealth increase by
$500 million.
Four hundred and three billionaires reside in the
United States. They constitute just 0.00014 percent of the country’s
total population, but control 8 percent of the national wealth. Each of
these individuals holds over 300 million times more wealth than the
average US resident.
The list included 21 hedge fund managers,
who as a group more than made up for whatever losses they incurred in
2008. Some of them, including James Simons, John Arnold, and George
Soros, raked in profits during both the collapse and the market
recovery.
Topping the list of wealthiest hedge fund managers was
John Paulson, at $32 billion. Paulson made billions in 2008 by betting
that the housing market would collapse, and billions more through the
stock market recovery of 2009.
Only one of the 21 hedge fund
managers on last year’s Forbes list
fell off. This was Raj Rajaratnam of Galleon Group, who was arrested
last year on charges of insider trading.
Hedge fund managers
James Simons, John Arnold, and David Tepper got average returns of 62,
52, and 31 percent, respectively, between 2008 and 2010. David Tepper
made $2.3 billion over the past year, while John Paulson’s wealth grew
by $6 billion.
The number of US billionaires grew to 403, up
from 359 last year. The Asia-Pacific region had 234 billionaires, up
from 130 the last year. Europe has 248 billionaires, despite having
twice the population of the United States.
The 1,011 people on
this list command a phenomenal amount of personal wealth. Their
holdings are larger than the gross domestic products of every country
besides China, Japan, and the United States. The wealth of the 403 US
billionaires could more than cover the 2008 US federal deficit, with
money left over for the states.
While the number of billionaires
on the list is just short of the all-time high of 1,125 reached in
2008, it represents a phenomenal rebound. At this rate, the number of
billionaires will once again hit record levels next year.
Carlos
Slim Helú, a Mexican telecommunications tycoon, moved up to the first
position on the list at $53.5 billion, beating out Americans Bill Gates
($53 billion) and Warren Buffet ($47 billion). The wealth of all three
men rose dramatically. Over the last several years Slim Helú made
roughly $27 million a day compared with the average daily income of
$16.50 for Mexican workers.
The rich in India
and China gained among the most. “For the first time, mainland China
has the most billionaires outside the US,” Forbes said in its
statement. “US citizens still dominate the ranks, but their grip is
slipping.”
The hedge fund managers and financiers on the list
benefitted directly from the bank bailout, which transferred huge sums
of public funds into the accounts of the largest financial companies.
But the billionaires in every other industry were the indirect
recipients the government’s wealth transfer program also.
The Wall
Street Journal,
commenting on the figures, wrote, “How did the world’s rich get so much
richer? Stock markets…. In short, what the stock market had taketh, the
stock market hath giveth back–-at least to the billionaires.”
But
the stock market recovery itself is no accident; it was the direct
outcome of policies pursued by both US political parties. The bailout
has been financed by a policy of fiscal austerity and high
unemployment. The rapid increase in the wealth of the billionaires is
the result of the impoverishment of tens of millions; it is the other
face of mass unemployment, poverty, utility shutoffs, and foreclosures.
Aside
from direct government handouts to the banks and super-rich, the major
driver of the recovery of corporate profits—and thus the stock
market—was productivity growth and corporate downsizing.
In
2009, the unemployment rate rose from 7.7 to 10 percent, three million
jobs were lost, and wages fell dramatically. Millions of families lost
their homes and became dislocated. But productivity, the amount of
output that is produced from each hour of work, rose by 7 percent.
The
money
freed up through the destruction of social programs, higher
employee output, and corporate restructuring has found its way into the
pockets of the people on Forbes’ list.