Who wants to be a trillionaire?

By Tyler Cowen

When will the world have its first trillionaire? A recent report from Oxfam International predicts one within a decade, noting that the five wealthiest men in the world are 114 per cent richer today than they were in 2020.

That timeline strikes me as unrealistic. The path to becoming a trillionaire is very difficult — for both individual and macroeconomic reasons. Unless there is a big wave of hyperinflation, significant obstacles stand in the way of anyone trying to reach a trillion dollars in net wealth.

Some of it has to do with human nature. As a once-popular game show asked, “Who Wants to Be a Millionaire?” Add six more zeroes, and it is no longer a rhetorical question: A lot of billionaires seem less interested in making more money than in having some fun.

Jeff Bezos, for instance, at the time of this writing the world’s second-richest man with $177 billion, is no longer running Amazon and seems to spend a lot of time in the gym. Not to take away anything from his talents, but he has no obvious path to a trillion dollars, even if his rocket company Blue Origin is a huge success.

Family life can also affect wealth accumulation. Bezos, Bill Gates and Elon Musk, among many others, are all divorced, which reduced their wealth. The Walmart fortune is now spread among the many heirs of founder Sam Walton.

Charitable giving and projects are another reason why wealth does not accumulate indefinitely. Gates very admirably has given away much of his wealth to the Gates Foundation, with more donations likely. That limits his ability to reach trillionaire status.

It’s worth noting that billionaires don’t give away money simply because they’re altruistic. If you have scores of billions of dollars, the social capital you get from giving it away is often worth more than the private consumption you are forgoing; in fact it is hard to spend that much money, much less spend it well, over the course of a lifetime. So for the super-rich, giving away some of their money maximizes well-being even if it lowers financial wealth.

Sometimes the projects aren’t charity per se — but they’re not purely financial, either. Musk, whose $222 billion makes him the wealthiest person in the world, spent $44 billion to buy Twitter, now X. He seems to want to own Twitter to influence political and cultural discourse. Now Twitter is worth much less than what Musk paid for it, making it that much harder for him to become a trillionaire.

So maybe there is not much obvious personal benefit to becoming a trillionaire. If anything, it might make a person a political target.

The desire to diversify is another limiting force. Once you have a considerable sum of money, it makes sense to spread your assets widely. Gates, for example, sold a good deal of Microsoft stock early on, presumably with diversification as a motive. At the time it seemed like an obviously good idea. Yet today Gates would be much richer if he had held onto his Microsoft shares. By one estimate he would in fact be a trillionaire, but even that hypothetical required a very dramatic recent run-up in Microsoft shares.

No one gets to be a billionaire by fully diversifying, anyway. Rather, billionaires pour their hearts and souls into a small number of very particular enterprises, which then (might) earn very high rates of return. But throughout the course of one’s life, it doesn’t make sense to keep on holding so much risk. It is better to cash in and enjoy some safety, in turn limiting your chance to become a trillionaire.

Finally, there are the macroeconomic factors. The fiscal position of many governments around the world implies further obstacles. In most wealthier countries, both debt and deficits are very high, and populations overall are aging. Those fiscal pressures may well lead to higher taxes, and it hardly would be a surprise if some of the tax hikes fell on the very wealthy.

At any rate, there is no single identifiable person who seems on track to become a trillionaire within the next decade. Eventually it will happen — and a good share of the credit should go to the Federal Reserve, not necessarily the person who earned the money.