Three Cheers for Billionaires

Why does the left hate billionaires?When Bill Gates recently opined that climate change is not actually an existential threat to planet earth, Laura Maudlin of the University of Connecticut sniffed in “The New Republic” that, “Reporting the thoughts of billionaires as news is as grotesque as the amount of wealth they’ve been allowed to accumulate.”Quoting billionaires simply because they are billionaires is, to be sure, an ad hominem argument. But saying that billionaires “accumulate” their wealth, like collecting seashells during a beach walk, is economic illiteracy. Only crooks accumulate wealth. The rest of us create it through work, skills, and talent.Most people, of course, produce only modest amounts of wealth over a lifetime and consume much of it purchasing the necessities.A few, however, are born with so much talent, and develop such formidable skills, that they create far, far more wealth than the ordinary citizen. The Los Angeles Dodgers are more than happy to pay Shohei Othani $70 million a year to play baseball.Self-made billionaires (and two-thirds of those on the Forbes 400 list are self-made, including all of the top 10), create wealth in vast amounts, not by playing baseball but by founding companies that sell goods and services previously unavailable or very expensive that millions want to buy. And, despite living in the lap of luxury, they keep most of the wealth they create.Many on the left, Zohran Mamdani, for instance, seem to view the wealth of billionaires as wealth was depicted in the old Scrooge McDuck comic books. Uncle Scrooge stored his in a vast, three-cubic-acre money bin and got his exercise by swimming happily through the coins and bills.Why shouldn’t that money be put to good use, Senators Sanders and Warren seem to be arguing?That is also economic illiteracy. The wealth created by billionaires isn’t stored in money bins, it is invested in productive enterprises. In other words, it is capital, one of the two fundamental inputs in any economic system (the other being labor) – not just money sitting around.So putting an upward limit to how much wealth an individual is allowed to create and possess by taxing away the “excess” would be an existential threat to the future of the American economy. It would cripple the growth of the country’s capital base.And it is the prodigious growth in the world’s capital base since the birth of the Industrial Revolution that has made everyone – not just billionaires – so very rich by the standards of earlier times. After all, not even kings had hot and cold running water in the 18th century. Today everyone does. They also have iPhones (thanks, Steve Jobs!) and a million other things once undreamed of.Corporations are nothing more nor less than wealth creation machines. People come together under a set of rules hoping to create more wealth collectively than they can individually.But most start-up corporations don’t make it and end in bankruptcy. So the risk inherent in starting a company to exploit a commercial idea must be balanced by the potential rewards of success or that risk won’t be taken.Why would anyone take a big risk and work very hard to make it a success if leftist politicians get to spend the reward? Human nature doesn’t work that way.Want proof? In the decades between the end of World War II and the collapse of the Soviet Union, wealth-seeking corporations in the West produced a cornucopia of new technologies that transformed the lives of everyone for the better. The Soviet bloc during those years came up only with soft-contact lenses and Rubik’s Cube.Further, Senators Sanders and Warren et al don’t seem to know that the Gilded Age is over. In those days most financial assets were, indeed, owned by the billionaires. But today 60 percent of American families have substantial financial assets in the form of home ownership. Only about 10 percent of non-farmers did in 1900. And one in ten Americans, 34 million people, have a net worth over $1 million. And millions more have substantial retirement funds that are invested in productive assets.The investment firms Vanguard Group, BlackRock Inc., and State Street Corp, for instance, collectively own 15.2 percent of Amazon for the benefit of their customers. That’s almost twice the amount of stock that Jeff Bezos now owns in the company he founded.So forcing the billionaires to sell their stock to pay wealth taxes would not only diminish the net worth of the billionaires, it would also severely adversely impact the retirement accounts of millions of ordinary Americans.And one of the unbreakable laws of economics is that you can’t take it with you. The wealth created by billionaires stays right here, creating ever more wealth. Henry Ford became one of the world’s first literal billionaires by turning a rich man’s toy – the automobile – into a vehicle the middle class could afford. Ford died in 1947, but the Ford Motor Company continues to produce millions of vehicles.Further, because this country does not practice primogeniture, megafortunes are soon dispersed among all the heirs. Thus no plutocracy can develop. Of all the legendary names of the Gilded Age – Vanderbilt, Astor, Rockefeller, Morgan, Gould, Carnegie, etc. – not a single one is to be found on any recent Forbes 400 list.Lastly, there is a tradition, uniquely American, that those who flourish so abundantly in the American economy have an almost moral obligation to use a significant portion of the wealth they create in such abundance to fund eleemosynary institutions.Thanks to this great tradition, this country fairly bristles with universities, museums, opera houses, parks, foundations, libraries, zoos, aquariums, botanical gardens, hospitals and more that were funded not by government but by billionaires.The more billionaires this country produces (and we have twice as many as any other country, with 89 new ones just in the last year) the better for everybody.Hurray for billionaires!

Three Cheers for Billionaires

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