Mark Zuckerberg recently announced plans to give away 99% of his stock in Facebook, but the news has been derided in The Guardian.
One writer has claimed that Zuckerberg and his wife giving away shares in Facebook worth equivalent of $45 billion will serve to perpetuate inequality and is tantamount to imperialism. Tim Worstall of Forbes explains why that view makes no sense.
More wealth created for society than for Zuckerberg himself
Worstall points out that entrepreneurs provide value to consumers in order to accumulate wealth, and the value provided to consumers is worth far more than the entrepreneur’s own fortune. With that in mind it must be said that the fact that Zuckerberg can give away $45 billion goes to show that the global population has benefited greatly from his entrepreneurial skills.
Accusations of imperialism make no sense given the fact that Zuckerberg’s personal fortune is enough to generate serious improvements in some of the world’s most serious problems. Although the Facebook founder has pledged that his money will go towards fighting inequality, the Guardian writer takes aim at him for increasing inequality.
Worstall argues that Facebook has actually made the world a more equal place, affording free communication to a billion or more people around the world. The advent of social media means that people of all ages can stay in touch with family and friends around the world at no cost, reducing inequality from the days when communicating cost money.
Facebook founder fighting inequality with personal wealth
He then quotes William Nordhaus, who studied value creation from entrepreneurial activity and concluded that “only a minuscule fraction of the social returns from technological advances over the 1948-2001 period was captured by producers, indicating that most of the benefits of technological change are passed on to consumers rather than captured by producers.”
Although that may not mean that from Zuckerberg’s $45 billion, society as a whole has benefited to the tune of $1.3 trillion, there must be some consideration for consumer surplus in the case of Facebook. Another point is that Zuckerberg’s success serves as an incentive to the next generation of entrepreneurs, who could also come up with a product or service that is beneficial to us.
Overall we benefit from the wealth created by people like Zuckerberg, and it is disingenuous to moan about perpetrating inequality.