Billionaires should not exist. A state producing billionaires has failed: the size of the failure is in proportion to how many billionaires have been created.
Understanding the wealth gap between someone on a median annual salary and a billionaire is, itself, quite difficult: humans (at least, this human) are not good at visualising such large numbers. Two visualisations help at least give a feel of just how large a billion dollars (or more) of wealth is: Wealth Shown to Scale and a NYT piece. Part of the reason billionaires get away with it, I suspect, is that our cognitive biases benefit them, not us.
There are many arguments about why we must reform society to eliminate the ongoing creation of billionaires (and through progressive redistribution, reduce the current level of billionaires). I’ll focus on three:
- The social contract argument;
- The ethical argument; and
- The economic argument.
I will then propose means of redressing the situation—and preventing its recurrence.
It may seem like a difficult problem to tackle, and in some respects, it is a difficult problem. It has a real feel of a David versus Goliath conflict to it. I draw comfort from the fact that we outnumber them, and I know that when people unite, they can achieve amazing results. To do nothing serves only the interests of billionaires. They very much want to protect the status quo, because of course they do.
The social contact
The countries with the most billionaires are not surprising: the U.S, China, India, and Russia. It strikes me that these billionaire-hotspots are not countries that are deemed to be liveable or happy by surveys and reports. I am not suggesting there is causation here, but the correlation is interesting. They are also countries that are increasingly beset with rising levels of nationalism and authoritarianism.1Of course, the exception to this is Germany, home to einhundertsechsundzwanzig Milliardäre and is rather a place I wouldn’t mind living in, although it is not immune to some of the broader socio-political trends of other billionaire-hotspots.
A state’s more basic and fundamental duty—that is, the heart of the social contract between the governed and those that govern—is that the state will care for and protect its citizens without discrimination. This care includes, but is not limited to, the obligation to provide quality health care, education, law and order, fit-for-purpose infrastructure and so on.2This is an undeniable liberal definition of what a state is, but I live in both a liberal country and am writing for a liberal audience. The state exists to serve its citizens, and not the other way around. You’ll note that I say serve its citizens, as in the plurality, and not serve, or favour, a select few who have amassed Scrooge McDuck levels of capital.
The existence of billionaires creates a situation that repudiates and hollows out both the intent and reality of the social contract. This occurs through the oversized influence billionaires have on the political system relative to that of a normal citizen.
Consider taxation, of which we shall return to in other arguments: billionaires pay shockingly little tax, because of their ability to hire top tax minimisation experts. One piece reveals that many of the super rich pay multiples of the median annual salary just on tax minimisation costs. Normal citizens just pay their tax: in Australia, people pay anywhere from 0% of their income to 45% at the highest tax bracket—similar figures abound in the rest of OECD countries. Perhaps more citizens would engage in tax minimisation strategies if they had the means to afford it. Ultimately, there is a larger group that accepts tax as the fair and necessary cost of living in a well-running society. Billionaires, in their hubris, come up with many creative arguments to justify why they refuse to pay their fair share.
While billionaires pay little, or no, tax, they benefit from the benefits that are the fruits of that taxable revenue: they use the roads, the airports, the networks, the cultural and education institutions that receive public funding. Even more so, their companies benefit from operating in countries with high-quality education, and indeed from leveraging the results of public research spending—would any of the tech-bro billionaires exist today without the public investment that led to creating the internet? Unlikely.3Jonathan Taplin makes this argument persuasively in his book The End of Reality.
Not only do billionaires refuse to pay their fair share, they exert an oversized, domineering influence on the political system at all levels. The idea of one person, one vote—a core tenet of democracy—breaks in a world of billionaires. This itself is alarming and ought to be grounds for a mass mobilisation against the billionaire class. The situation becomes worse when we consider that billionaires, as a class, care little for transparency, and instead practise what one study calls “stealth politics.” Billionaires do what a lot of us do—advocate for their own interests. Yet, unlike the rest of us, billionaires know that money—and their money applied as political donations—buys not only access or influence but also results. And this happens in a framework that lacks transparency or the usual democratic protections that help ensure fair and equitable decision-making. Behind closed doors the billionaire gets what they want. The billionaire is one who in private advocates for laws that grow—or at least protect their wealth—while in public makes the occasional show of splashing around some pittance of their wealth.
Billionaires possess power that can rival that of elected officials; and yet, unlike elected officials, there is no democratic method for curtailing their power. Take, for a telling example, Elon Musk’s destruction of Twitter, a tool that was once a fun way of wasting time and connecting with others, and now has become a hotbed of racism, hate speech, and bots. No politician could be expected to survive such a thoughtless and costly decision, and yet Musk not only remains in charge of Twitter, but continues to have almost unlimited freedom to make more awful decisions. He also continues to suck down public money at an alarming rate. An ordinary person may wish to see a change in the world, but it is only the billionaire who can bring this to reality with ease and speed. The rest of us need to work together.
The ethical argument
John Rawls, the great granddaddy of modern liberalism, has an effective thought experiment for us to use: how would you design a society if you had no knowledge of where you would end up in that society—that is, you were designing the society behind a veil of ignorance.
Would you design a world that allows a tiny few to have almost everything while everyone else has varying degrees of nothingness? You might be tempted to if perhaps you could ensure you were one of those that has almost everything, but there comes the brilliance of Rawls’ veil of ignorance: almost no one would, under the veil, set up a society where resources and wealth were unfairly and unequally distributed.
And yet, of course, our world is one of unfair and unequal distribution of resources: around one per cent of the world’s population holds almost half the total wealth of the world. In a case of sad irony, the opposite is almost true: 55% of the world’s population holds just over one per cent of the world’s wealth. That this is not grounds for global continuous protests is sad proof that we have become inured to inequality to such an extent that we can barely imagine a better or fairer world—or indeed, the structural entrenchment of such inequality is so complete as to become almost a constant of life, like the sun rising or gravity keeping us on our bottoms. We mustn’t though accept that this is the case. Inequality is not a natural force, it is a purely manmade and therefore artificial phenomenon.
Billionaires, then, are the most obvious representation of this inequality and the least defensible. I can think of no compelling ethical argument to permit the existence and continuation of the billionaire class. Not that there are no arguments, only those arguments fail to persuade, and often contain some sort of repressed aspirational thinking at their heart—a sort of ‘we cannot ban billionaires because then I could never become a billionaire myself’ pathology.4This is what makes conspiracy theories seem silly: through their aspirational thinking disadvantaged people are often to self-oppress and fight against their own interests as opposed to recognising what a path to real equality might look like. Or a sort of drawbridge mentality that people who have come into money may adopt.
Or the arguments in favour of billionaires are just so far into the deep unknowable cosmos of the free market neoliberal as to be a version of religious dogma and something beyond rational debate.
One of the most tedious arguments is that billionaires deserve their wealth because of their hard work, and therefore to deprive these people of their obscene wealth would somehow bring the entire global economy down, if not stop the planet rotating on its axis. Those who purport to believe so much in the free market (and human ingenuity and so on) seem to also believe that without the carrot of mass wealth accumulation, all human activity would cease overnight, and we’d revert to some sort of primordial sludge. The same rhetoric is deployed against universal basic income. It is, in my eyes, such a dim and misanthropic view of humanity that only money motivates our finest works. Most research notes that money does not motivate us that much, compared with, say, the intrinsic satisfaction of the creative, or of a job well done.
A similar argument (similar in both ideology and how little logical appeal the argument has) is that billionaires add so much value to society that it is only fair we allow them to keep their spoils. Tom Scocca’s essay debunks this argument with surgical precision:
A kindergarten teacher, teaching 25 new people a year not to bite each other and to work in occasional harmony with strangers, produces far more social good in a lifetime than an industrialist does. Even to picture the billionaire as a productive industrialist is too optimistic—read up and down the Forbes list, larded with monopolists, retailers, retail monopolists, the heirs of retail monopolies, real estate magnates, Mark Zuckerberg.
To say billionaires deserve their wealth is to be honest with what is valued in a neoliberal free market society: creating and accumulating capital and nothing much else. The efforts of, say, a single parent raising a kind and loving child is nothing compared with a billionaire’s value. There is something wrong with a society that venerates one sort of person—the tech entrepreneur, say—over all others. I cannot help but think when a clear accounting of the impact and value of the tech boom of the last decades is arrived at, Zuckerberg et al will be looked at with bitter regret for the damage they have done to the world and its peoples, and not celebrated and venerated as they are today.
Another line from Scocca’s essay—do read it, it’s a great one—answers the ethical question: “No one needs a billion dollars. No one deserves a billion dollars.” This is as true now as it was at any point in human history.
The benefits of billionaires, such as they are, are expressed on terms that are woolly and hard to prove. Conversely, the consequences of inequality (of which billionaires are the nadir representation) are apparent and real. Of course, I must be clear, it is not as if there is finite wealth in the world, and a billionaire having x billions means the rest of us have to scrounge for the rest. However, the accumulation of wealth by the few contributes to an environment in which inequality is perpetuated.
The economic argument
As touched upon above, much of the rationale for continuing to permit billionaires is economic. Yet economists are uncertain as to the actual benefit billionaires have on the global economy, and therefore the extent to which the existence of billionaires should be tolerated or fought tooth and nail.
Given this ambiguity, I am inclined, then, to view their benefits as limited at best, especially when we compare them to the observable benefits of fairer redistribution of wealth.
While redistribution is not the only economic argument against billionaires, it is, I think, one of the more persuasive. Certainly, this has some support. Picketty, he of the wonderfully revealing r>g, argues that greater redistribution will lead to reduced inequality.
Reducing inequality, then, becomes the central economic point behind tackling the billionaire problem. I ask you to reflect upon a question: can a society with billionaires ever contribute to the goal of equality? Permitting such extreme variations in wealth serves no humane agenda and instead feels like nothing more than indulging our worst accumulative urges to horrific consequences.
Reducing inequality has a myriad of benefits: education, health, social relations, and even reducing crime rates. And, here’s the kicker: reducing inequality has provable and significant economic benefits (as compared with billionaires who have few tangible economic benefits). Let me emphasise this: reducing inequality (be it through greater redistribution of the wealth of the billionaire class) benefits the economy. And does so in a way that is more aligned with human rights than with our current system.
Ending billionaires
As with all the urgent problems facing our collective existence, united action is the way forward. Two policy solutions, explored below, have the power to transform our world through ending excessive personal accumulation of wealth and promoting greater redistribution of capital.
These are solutions that restore the role of the state as the agent responsible for the welfare of its citizens, rejecting the notion that we should leave the solution of thorny problems (like climate change or global food shortages) to whichever billionaire of the day feels so predisposed. Certainly their ingenuity should be part of the solution, as should the ingenuity and creativity of humanity as a whole.
These policy solutions tackle both the present supply of billionaires and prevent future billionaires from emerging. They work hand-in-hand, albeit in a way that requires global cooperation to prevent the continued abuse of tax havens. Full consideration of each policy is beyond the scope of this essay, however various sources make the case in much further detail than space (and time) permits here.
A real billionaire’s tax
So many proposals involve taxing billionaires, and they are indeed a fine start. The issue with these ideas is not that they go too far, it is that they are not as brave as they need to be, and end up feeling like capitulations to the myth that billionaires are both inevitable and necessary.
I propose a progressive tax rate on wealth that will drain the amassed fortunes of current billionaires. The higher the fortune, the higher the corresponding tax rate on the billionaire’s wealth. Progressive taxation is already a familiar and feasible feature of taxation systems around the world, so it is nothing new or exotic.
This involves reform to taxation systems, and I acknowledge it will be difficult and contested by those that stand to lose out. The billionaire’s tax will need to touch upon wealth tax, income tax, corporate tax, capital gains tax, and inheritance tax. Few bloodier battles have been fought than those over taxation, yet it is the only real starting point to ending billionaires.
Public support should be secured through demonstrating what the seized funds will be spent on: ideas like universal basic income, universal access to quality healthcare and education (including tertiary education) become viable. As does a comprehensive response to climate change, to ending food insecurity, to dismantling international crime syndicates, and even responding to states who trample norms of international law.
The tax is a necessary way of shifting our model of wealth from its current setting of accumulation to one of redistribution.
Lifetime wealth ceiling
Parallel to the work being done above to address the existence of current billionaires comes a measure designed to stop billionaires from being created. A maximum lifetime net worth cap will be set at, say, a few hundred million dollars: a lifetime’s fortune by any standards, and would remain so even with a maximum lifetime wealth ceiling.5I struggled with what amount I should suggest: in many respects it is immaterial, as there needs to be a ceiling to stop the unlimited accumulation of wealth.
An individual may not exceed this cap, with taxation (see above) on their wealth increasing to 100% on amounts above the ceiling.
As with the taxation idea, and in line with current practice by the billionaire class, many tricks will be deployed to frustrate the purpose and ambition of this ceiling. States will need to become creative in how they ensure compliance with this policy.
Forwards with bravery
The wonderful thing about government is that it can—read: should—be creative in solving problems. This means being willing to be radical. Take, for inspiration, an attempt by a previous New Zealand government to introduce a raising ban on smoking, aimed at preventing a whole new generation from falling victim to a cigarette addiction. While that pioneering work was later dismantled by a subsequent government—plus ça change, plus c’est la même chose I suppose—it is inspirational for the way it suggests governments must be brave, fearless and innovative if we are to tackle the pressing problems of the day.
Many of our current approaches are not up to the task. Our current polity is characterised by timidity, by decisions that in their desire to be maximally appealing end up being ineffective. Our era is one that has become structurally committed to the idea of incrementalism; or as one essay puts it:
It is easy to encourage lawmakers to be moderate, or incrementalist. The case for incrementalism, or against dramatic change, where moderation and way stations could be managed, is built on claims about unintended consequences, expectations, risk aversion, and learning by doing. Meanwhile, any proposal for sweeping change can be derided as the product of impatience and an inadequate appreciation of history and precedent.
And I cannot help but feel some comfort in the author’s conclusion on the subject of incrementalism:
…Incrementalism has acquired far too good a name. More drastic changes, especially if they do not impose large, upfront, irreversible costs, might well be superior to incrementalism.
We cannot create the sort of world many of us desire, a world founded on concepts of equality, equity, and fairness with incremental movements. Billionaires pray we never realise this, for as soon as we do, their days are limited.
Piketty himself points out that such visionary changes are indeed possible, with using Sweden as an example:
If you had told people in Sweden in 1910 that the country was going to become a social democratic Sweden 20 years later, nobody would have believed it. The dominant groups always tend to be conservative and always tend to define the existing inequality as being natural, coming from some natural scheme or natural institutions or from rules that cannot be changed. But, in practice, what you see is something very different: The way inequality is organised can change very quickly. Sometimes it takes major shocks, including revolution and war, but it also happens very often in a peaceful manner like Sweden or the U.S.
Humanity has made many species extinct. Perhaps it would be fitting justice, then, to next make the billionaire extinct once and for all.
Notes
- 1Of course, the exception to this is Germany, home to einhundertsechsundzwanzig Milliardäre and is rather a place I wouldn’t mind living in, although it is not immune to some of the broader socio-political trends of other billionaire-hotspots.
- 2This is an undeniable liberal definition of what a state is, but I live in both a liberal country and am writing for a liberal audience.
- 3Jonathan Taplin makes this argument persuasively in his book The End of Reality.
- 4This is what makes conspiracy theories seem silly: through their aspirational thinking disadvantaged people are often to self-oppress and fight against their own interests as opposed to recognising what a path to real equality might look like. Or a sort of drawbridge mentality that people who have come into money may adopt.
- 5I struggled with what amount I should suggest: in many respects it is immaterial, as there needs to be a ceiling to stop the unlimited accumulation of wealth.