Three cheers for the world's first trillionaire
As every legitimate investment warns, "Past performance is no guarantee of future results." But if the financial past did somehow accurately predict the financial future, it would be awesome for Jeff Bezos. Amazon's founder and CEO is already worth nearly $150 billion, even after paying out a $38 billion divorce settlement in 2019. And if shares of the online retailer just keep on doing what they've been doing over the past five years — the stock has already mostly rebounded from a brief pandemic plunge — Bezos's 11 percent equity stake would make him a trillionaire by sometime in 2026.
Clearly this is not a sophisticated calculation. It's just the practical magic of compounding interest. But it's plenty good enough for social media, which has run wild with a click-bait press release containing that forecast from "small business advice platform" Comparisun.
Cue the populist outrage, especially on the left. "While Jeff Bezos is on track to become the world's first trillionaire in the middle of a pandemic, Amazon is ending overtime pay for warehouse and delivery workers on the front lines. This is immoral," tweeted Sen. Elizabeth Warren (D-Mass.).
Now, the word "trillionaire" does have a lot of shock value. Not only has there never been one before, there's never been a person with anywhere near that much accumulated wealth in all of modernity, no matter how you fiddle with the numbers. The current record holder might be Gilded Age oil tycoon John D. Rockefeller with an estimated fortune equivalent to just over $300 billion today, based on a comparison of his wealth to the size of the American economy back then.
It's even hard to find fictional characters worth a trillion bucks. Forbes magazine used to annually publish its "Fictional 15" list of pretend super-rich people. Or creatures, at least. The most recent compilation was in 2013, when Scrooge McDuck took the top spot with an estimated fortune of $65 billion. That amount, by the way, would place the gold-coin collecting waterfowl at a mere seventh on the current Bloomberg Billionaires Index, just behind former Microsoft boss Steve Ballmer and just ahead of Google co-founder Larry Page.
If Forbes still published that list, however, it might well be led by fictional trillionaire Lady Trieu. She's the Vietnam-born founder of technology conglomerate Trieu Industries in HBO's superhero miniseries Watchmen. Unfortunately, although a truly legendary entrepreneur and job creator with an endearing puckish charm, Lady Trieu was, in the end, no hero.
And perhaps the same heel turn would be the fate of a trillionaire Jeff Bezos. His Blue Origin spaceflight company does seem to provide plenty of opportunity for supervillain mischief. Then again, plenty of folks already think he's a baddie, either because his warehouse workers aren't unionized or because reporters at the Bezos-owned Washington Post ask tough questions of the Trump White House.
Mostly, however, the anti-Bezos crowd doesn't like him because he's really rich, and they think no one should be really rich. If you think every billionaire is a "policy failure," like some on the left do, then a trillionaire would be a thousand times worse of a failure.
But billionaires are OK, actually, and so would be trillionaires if they got to that lofty level the Bezos way: by cleverly applying massive technological investment to the historical playbook of American retailing and creating tremendous long-term value for customers, as well as for himself. But mostly for customers. That's how it usually works. As the economist and Nobel laureate William Nordhaus concluded in a 2004 paper, most of the benefits of innovation, roughly 98 percent, are passed onto consumers rather than captured by the innovators themselves. And many Americans currently relying on Amazon for essential products during our national quarantine might well agree.
Moreover, a world where Amazon's stock keeps rising is probably one that ultimately got control of the coronavirus pandemic. Although shares have bounced back from their March lows, that's only because investors seem to have concluded that the outbreak was going to be better than the one in Contagion. Indeed, at one point it seemed like they were pricing in the zombie apocalypse of I Am Legend.
Of course, there's no guarantee Amazon's value — and thus Bezos's wealth — will rise as fast in the future as in the past. As bigger companies get bigger, their growth tends at some point to grow more sluggishly. Hungry competitors typically rise and overtake them. Even though Amazon sales are rising fast during this pandemic, sales at some e-commerce and online retailers are rising even faster.
But if not Bezos, then someone else will eventually be a trillionaire. Maybe the Google Guys, maybe Mark Zuckerberg, maybe some biotech entrepreneur who right now only has a big idea and is looking for cash to fund it. Rich, growing economies on the technological frontier tend to produce lots of rich people who make everyone else better off, too. That's the way it's always been in America. Sure, past performance is no guarantee of future results, but in this case, that's how you should probably bet.
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