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Should billionaires be cancelled?

You don’t deserve your money. You were lucky to be born in a wealthy country with well-off parents. Instead of hoarding and saving your wealth, you should be donating it to charity or helping the poor. Feel attacked? Billionaires feel the same way.

Amidst the extreme inequality in all parts of the world, people are angrier than ever at the highest echelons of the upper class. However, on discovering the reasoning behind their rage, a few questions are left unanswered.

Where do we draw the line?

$4,210. That’s how much you need to be worth to be richer than over half of the planet. To be richer than 90% of the world, you need to have just over $93,000 to your name. So chances are, you’re richer than most of the planet.

And this begs the question; how rich is too rich? If you asked someone who lives below the poverty line, they’d definitely say anyone richer than half the planet was too rich. So the middle-class US citizen tweeting about wealth inequality might actually be considered too rich by the Liberian upper class.

Setting an upper limit on wealth validates the opinions of the poorest elements of society. And in doing so, it establishes a dangerous precedent that could make anyone richer than average (that’s anyone with more than $4,210 to their name) liable to give up their wealth in the name of inequality. If billionaires are considered too rich, why are multi-millionaires, or even people with hundreds of thousands of dollars not? The line never stops because there will always be someone poorer and angrier.

The problems of taxation

If we were to cancel billionaires, the most effective way would be to impose a tax on them (as opposed to starting a communist revolution). This undoubtedly leads to some administrative issues. Perhaps the biggest myth about billionaires is that they actually possess all their wealth in cash. Some billionaires (notably Warren Buffett) do have substantial amounts of cash but this isn’t really what being a billionaire entails.

Most of the time, the ultra-rich attain their immense wealth by building or investing in something and then having their share of it grow in value to over a billion dollars. They don’t earn a billion dollars like employees do with their salary.

And therein lies the problem. All of a billionaire’s value is dynamic and perceptual instead of static and tangible. If society decided that Tesla was a worthless company, Elon Musk would lose his access to the three comma club instantly.

This lack of proportionate income makes it incredibly difficult to tax the rich accurately. You can tax income and the movement of money, but there’s no way to tax wealth itself without going down the slippery, subjective slope of valuing someone’s assets. We can tax objective earnings, but the subjective value is really hard to base a concrete tax figure on. Violence is probably less complicated.

The goose that laid the golden egg

Society measures value using money because it’s the best way we know how. The money we pay for goods and services represents how much we value them. If we add value to a good/service, like making apples cheaper to deliver or improving the efficiency of a car engine, we can keep some of the excess value we generate.

That’s how billionaires and the rich earn their wealth; by adding value. Based on this philosophy, billionaires are the highest expression of value that society can produce. Very few of them provided no value to society (other than being born to another billionaire). In fact, only 13.3% of billionaires inherited their wealth entirely and 55.8% of billionaires are self-made.

This money wasn’t stolen from anyone either, as Twitter revolutionaries lead us to believe. It was added to the economy. So, one person’s success doesn’t result in anyone else’s failure.

By saying no one should ever be a billionaire, we’re saying that no one should ever provide a billion dollars worth of value to society. Similar to a salesperson who has hit their commission cap, the ultra-rich will simply stop innovating and providing value. In setting an arbitrary cap on value generation/wealth, we kill the engine of economic growth and allocate capital to less efficient individuals that leech off of society. Sort of like getting rid of gold medals and replacing them with participation trophies for all the kids that aren’t great at sports.

Perhaps the root cause of all the anger towards billionaires is the struggle to make ends meet shared by the masses. As someone who definitely isn’t a billionaire, I share that struggle. However, what I don’t share is the profound sense of generalized rage towards the rich. I’m not saying there aren’t obnoxious rich people and toxic billionaires in this world. What I am saying is that by understanding that we might actually be richer than the average, and that our money isn’t necessarily being stolen by billionaires, it becomes clear that the rich are generally a net benefit to society, instead of a hindrance.

This article was originally posted (and then taken down on request) on/for Citizen Obsessed by me on May 6, 2020

Cover photo by CitizenObsessed