The headline news over the past two weeks, Gautam Adani, climbing up the Forbes billionaire lists, to become the 2nd richest person in the world. Indeed, a moment of pride in India, the presence of Indian dominating the Forbes List. Perhaps, the impact of mixed emotions among the masses, Indian economy will be on the radar for next several months. The oppositions rattle that Adani holds Lion's share and these Super riches are widening the inequality gap, needs to be validated. In hindsight, over the mushrooming of billionaires, the public could backlash over the widening inequality gap.
The first line of argument, Which kind of billionaires are productive to the economy? Will productive billionaires make an impact over the economy to move in the upward trend in the upcoming years.
Well, First, Lets understand the billionaires across the world. Take the American billionaires from the 21st century, out of which majority of them are from Service and innovation industry. Back in the baby boomer era, the hey days for the manufacturing and mining sectors, Billionaires were mainly from Commodities - Mining of Gold, steel, aluminium and other precious metal and energy resources. Back then, Manufacturing & Mining Sectors contributed major share in the America's GDP. Well, the Americans didn't leave any stone unturned. The Paradigm shift happened and the big dogs of 20th century were replaced, from the late 20th century and early 21st century witnessed the emergence of the new faces from Technology and innovation sectors. Averaging the present GDP shares, the Service industry contributes to nearly 60% of the GDP. At the height of the dotcom boom period, the techie billionaires outnumbered the billionaires from commodities sectors, however, the dotcom bust flipped the balance.
Good and Bad Business
How do even figure out which is Good business and which one is Bad business. Good business - Business that are productive in nature and contribute its share in the growth of the economy and don't need cronies (political friends and their support) to run its business. Service Sector industries - Pharmacy, Finance, Manufacturing, Technology & Innovations fall under the Good business.
Bad Business are "Rent Seeking Industries" - Industries include Construction, real estate, mining, gas and other commodity industries that mainly involve digging natural resources out of ground. The billionaires win the regulation and politicians by milking the political situation, bribe the concerned people to get the deal done and exploit the resources as much as possible. Unfortunately, exploitation in the mining sector don't have the strict rules to deter over exploitation of the resources. Well, in the sense, these sectors are more prone to corruption than service sector and don't contribute much to GDP of the country.
Billionaires that fall under Good business are Good Billionaires and those who do bad business are Bad Billionaires.
Common misconception, the masses backlash against the all wealthy billionaires over the doubts of wealth accumulated. Falsify statement, We adore Ratan Tata of Tata & Sons, Mark Zuckerberg of Facebook, Jeff buzz of Amazon and so on, they are treated as universal Heroes by us. The reason these billionaires are celebrated as heroes, because people understand their business are productive in nature, generate jobs, chain creates consumers and eventually contributes to the growth of the economy. So, people don't find something fishy over their fortune, considered them to be Self-made billionaires . On the other hand, Bad billionaires, from the viewpoint of the public, felt they build their fortune through crony capitalism, corruption and settling things by illegit means. Business seems non productive in nature and through the political support get loans from Govt banks - Indeed, Loan not repaid is regular ritual of these Bad billionaires and ultimately economy lands in trouble. Hence, people seldom considered these billionaires worthy to earn the fortune and in the sense, they conclude their fortune will not contribute to spike the economy.
Did a Quick scan on the recent Forbes top 10 Billionaires list, and surprisingly found out that Gautam Adani is the only billionaire who comes from a non-service industry background. Elon musk - SpaceX & Tesla, Warren Buffet - Finance, Jeff Bozz - Ecommerce and Techie guys - Bill Gates, the Larry's , Sergio were all representatives from Service Sector. Mukesh Ambani does share common business traits with Adani, but Ambani had his business spread across various sectors, So lets keep him aside and just focus on Adani, the topic of the day. He builds most of his fortunes through mining, energy and construction sectors. His fortune increased five fold over the last 2 years, which resembles the Larger than life scenes - Rajini with no capital, and by a blink of eye becomes millionaire, those unrealistic scenes but well crafted goose bump moments
So, the second line of argument, is Adani bloated billionaire and where does he fall into the kind of billionaire (Good/Bad)?
What's your take on this argument? Where does he fit in. Remember, Service Industry contributes 65% share to the Indian GDP and Mining & Gas industry contribute less than 20% to Indian GDP.
My future prediction is there will be rising Indian economy through fortunes accrued by the billionaires from the Service industry. I foresee more new faces emerging from the dominating service sector.
Thanks for spending your precious time to read article.
Reference: The Rise and Fall of Nations - Ruchir Sharma
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