If you’re keeping up with the latest developments in the world’s-richest-man competition, you’ll know that Jeff Bezos is now richer than Bill Gates, and Mark Zuckerberg is now richer than Warren Buffett. From these facts, and Bloomberg’s “Mark Zuckerberg Tops Warren Buffett” headline, you might start drawing conclusions about the new economy. Don’t. Because there’s an even more important competition out there, which is the competition to give away the most money in service of making the world a better place. And you can only win the latter by losing the former.
Since 1994, Bill Gates has donated more than 700 million shares of Microsoft to the Bill and Melinda Gates Foundation. If he’d simply held on to those shares instead, he’d today be some $71 billion richer, and his net worth would be $165 billion, making him comfortably the world’s richest man.
Much the same can be said about Warren Buffett, who has given away some 290 million Berkshire Hathaway B-shares since 2006, many of them to the Gates Foundation. Today, those shares are worth about $54 billion. Add that to his current net worth of $81.2 billion, and it turns out that Buffett would be worth roughly $135 billion today, were it not for his charitable donations. That’s way more than Zuckerberg, and getting very close to Bezos.
To be clear: Gates has not given $71 billion to charity, and Buffett has not given $54 billion. When they made their early donations, they donated shares that weren’t worth as much as they are today. They knew their shares were probably going to continue to rise in value, but they also knew that many of the world’s problems are so urgent that it doesn’t pay to delay interventions. And they had to give shares rather than cash, because shares comprise the overwhelming majority of their wealth. Microsoft might pay a modest cash dividend, but not nearly enough to allow Gates to make donations of this size. And Berkshire Hathaway pays no dividend at all. Selling shares and then donating the proceeds also doesn’t make sense, because it would trigger enormous capital gains taxes.
As for Bezos and Zuckerberg, both of them have made charitable donations, but they’re small enough that they have not had any visible effect on their respective net worths. Zuckerberg has promised to give away 99 percent of his wealth within his lifetime, but is currently only at the very beginning of that project; Bezos, meanwhile, has barely started his giving.
The important thing to remember is that capitalism is not a game where the person who dies with the most money wins. Wealth is deferred consumption, and if you die without spending your money or giving it away, then, assuming you’re not interested in starting a dynasty, you’ve deferred that consumption a bit too much. If Gates wanted to play the wealth-maximization game, then he would still be the world’s richest person by a comfortable margin. It’s to his credit that he isn’t playing that game, and it’s to Buffett’s credit that he’s happy to be overtaken in the richest-man stakes by Zuckerberg.
Many of the world’s richest billionaires have pledged to give away most of their wealth, and most of them have been doing a pretty bad job of it. Gates and Buffett could always do more, but they have been doing better than most. Which is something to bear in mind, the next time you look at how other billionaires are overtaking them.