Weekend Reading /

Jeff Bezos the giver: Billionaires, inequality and charity in emerging markets

  • Amazon founder Jeff Bezos has announced plans to donate to charity most of his US$100bn-plus wealth during his lifetime

  • There are many emerging market billionaires: with wealth comes political clout but with inequality comes political risk

  • Charitable donations can compensate for shortcomings in the welfare state but the two do not appear well correlated

Jeff Bezos the giver: Billionaires, inequality and charity in emerging markets
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

Tellimer Research
19 November 2022
Published byTellimer Research

Amazon founder Jeff Bezos announced his intention this week to donate to charity most of his over US$100bn of wealth during his lifetime.

He provided no specifics and he is not a signatory to the Giving Pledge – a commitment, introduced by Bill and Melinda Gates and Warren Buffet, to give away at least half of their wealth during their lifetimes or in their wills.

Reports that Amazon is considering cutting 10,000 jobs may have taken some of the gloss off the announcement from the perspective of Bezos's public relations effort.

In my mind, all of this prompts a discussion of three issues that may be relevant for emerging market investors:

  1. The political clout of billionaires;

  2. The social and political risk inherent when there is inequality in income; and

  3. Charity as a substitute for the government's provision of welfare.

Billionaire political clout

Billionaires can be philanthropic but their wealth also gives them political clout, given how central fund-raising is to any politician's campaign in democratic system – irrespective of how riddled with inequity and inefficiency is the campaign finance and electoral process.

In the US, beyond political party donations by wealthy individuals, Jeff Bezos and Elon Musk, to name two, have been drawn into the discussion of political risk, eg the polarisation of politics, by their involvement in media assets, the Washington Post and Twitter, respectively.

Emerging markets have prominent representation in the global table of billionaires, from the likes of Forbes, beyond merely China and India. And this data may underplay the incidence of billionaires given the size of the shadow, undeclared economy in some of emerging markets.

Investment debates in emerging markets have sometimes included discussion of the outlook for recently successful private sector entrepreneurs in China, oligarchs in Russia and former CIS states, long-established business tycoons in LatAm and Africa, and royal families in the GCC monarchies.

An analysis of their fortunes, their connections with listed equity assets and, ultimately, their willingness to invest domestically, should perhaps play as big a role as, if not a bigger one than, the colder analysis of macroeconomics in emerging markets.

Emerging Markets now feature high up the Billionaires table

Income inequality

Social risk, in terms of the breakdown of law and order and corruption, and populist policy, in terms of higher taxes to fund subsidies and protectionist trade barriers, might be traced back, at least in part, to income inequality.

Income inequality in Emerging Markets and the US

Charity instead of welfare

Charity can offset the shortcomings of welfare provision to a certain extent. But there appears to be little (inverse) correlation between the data available on charitable donations and tax collection, with a high incidence of charity occurring across different tax collection, income distribution, religious and demographic profiles.

The two weaknesses in the data presented below are that, first, it is based on answers to a survey rather than actual observable actions, and, second, it does not measure the financial amount of charity, merely the declaration that a charitable contribution was made.

Charity in developed and emerging markets

The same source, the Charities Aid Foundation, did publish data on charity value as a percentage of GDP but this was back in 2016, used imperfectly comparable data and covered merely 24 countries.

The US statistic was 1.4% compared with 0.5%, 0.4%, 0.3% and 0.03% for South Korea, India, Russia, and China, respectively, in emerging markets.

Related reading and data

Inequality a key issue for many, not China alone, November 2021

Youth unemployment in emerging markets, August 2021

Corruption in emerging and developed markets, May 2022

Over 230 curated data points on macroeconomics, equity, debt and FX markets, ESG, manufacturing and consumer bases, and political risk – including the data referenced above – on over 50 emerging and frontier markets are to be found in Tellimer's Country Investability Index.