Does now become harder to be one of the richest person in history?

Someday ago, suddenly I found a very interesting article in Wikipedia, about the wealthiest person in history (inflation adjusted).

In this issue, I found some very interesting fact. The list tells us that no one of the richest person live in this era (Late 20^th Century and 21^st Century). Even Bill Gates wealth just a little piece of theirs. John D. Rockeffeller (The wealthiest in history) net worth has ever reached US$329.9 billion. However, Bill Gates can only achieve US$101 billion (He got it in 1999). While analyzing the source of their wealth, we can divide it into two type. First is from business and other is from political power as a king, queen, or other form of authority.

If we analyze the condition while they achieve that, simply we can find an interesting pattern. All that businessman lived in the late Industrial Revolution era. The biggest different between the era and now, is about the flow of information that still bad (Asymmetric Information), lack of equality (in knowledge and education), High Barrier to Entry, lack of competition policy and another condition that make the business have very high market power and can exploit it in order to maximize the profit. For Example : Rockeffeler has monopoly power in oil market in US through Standard Oil, and enjoy it very well until Sherman Act issued at 1890. We can imagine, how much value has been achieved by him.

In the cause of political power. politician (king, queen) achieve wealth with exploiting their power, as a consequence lack of development of democracy, no balance of power and another bad condition that make government is far from efficient. Tsar Nicolas II from Rusia is one of good example for this condition. He achieved net worth US$290.7 billion in his life. In Russian History, he is known as a dictator and has made many disaster like Khodynka Tragedy, Bloody Sunday, and the anti-Semitic pogroms and many more.

What about now? Today we can see that, market is become more competitive and more efficient. Globalization also make everyone can do many thing more flexible and easier than ever. Information is become easier to get. The access to education is become easier to find, and knowledge not only a competitive advantages that enjoyed only by a little segment of society. In government side, now, democracy is well developed, the balance of power is formed, and control mechanism for government action are well established, and become harder for politician to get abnormal gain from his power.

So, can a person today become as rich as them? The answer is “possible” but it become harder than before. The market become more efficient, low barrier to entry, regulation for monopoly case, and another constraint make impossible for businessman become as rich as rockeffeller. For politician, the developing of state, republic and Democracy make impossible for them become as rich as Tsar Nicholas.

Ow… It is a good point. In other side we can conclude that, the equity between human in the world become better, since economic growth and opportunity between human become equal. May be now, you can not be as rich as Rockeffeler. But your opportunity to become wealth and rich is greater than before.

(re-post from my article at Youthfull insight)

Fooled by the market

After 1.5 years, I leave Lovely dormitory of University of Indonesia . I start to think, what had I got from that place. The special one is about the canteen.
At the first time, I try to enjoy the food that served in that canteen, there are five merchant in that with low level of differentiation ( at leash for my self). But, honestly for a boy, like me who grow up at West Sumatra that have many food with great taste, the food in canteen was very bad.
The next interesting condition in that time is about the price. While, I eat in first time, the price is really cheap. It was relatively wise and give me high consumer perceived value. As a naive person, I think, it is a great place to live. I don’t have to spend much money, since the rent of dorm is also cheap. Finally, I decide to live in dorm for two years.
In two years, i got some interesting condition in canteen. Unexpected condition is happen. The price of food in dormitory canteen is growing up, and hurt my life. Since try to learn economics, lately I knew,why it happen.
If I were know economics, I will decide not to live in dorm. The market condition (structure) on dorm, naturally make the merchant have high market power. It happen because there are more than 1000 student in dorm that served by only 5 merchant, and the condition of dorm, make the student is hardly to go anywhere to get another food merchant. Maybe simply we can call this condition as an oligopoly market. And, in reality, the price is very expensive lately in my first semester in this university.
The one big question is, why in the first time the price is very cheap? The Answer is simple. As a new student I can choose many place to life, If I knew that, the real price of the canteen is expensive, I will not choose to stay in that place ( may be some people will think like me). In Industrial Organization, we can say that in that condition the market is more contestable, the merchant cannot use full of market power, because we can easily move from dorm to other place. So they try to cheat some of student by making relatively cheap price and make them choose to stay in dormitory. After you have stayed in dorm, it will hard for you to move to other place. It was part of their strategic behaviour to compete in the market and got higher long run profit.
Now, I just thinking, Market Structure tell us everything. It is weird for the merchant for making cheap price without other motive. An anomaly like that had to be something to explain. If I know it before, surely, I will not fooled by the market.