A Billionaire Ban? No. Tougher Regs and More Taxes? Yes.
Billionaires are not always the most lovable people.
Remember the Silicon Valley venture capitalist who said wealthy Americas were victims of persecution, just like Jews in Nazi Germany?
Oh, the horrors! Our super-rich are so jeopardized that only three billionaires, Jeff Bezos, Bill Gates and Warren Buffett, are together wealthier than the lower half of our population if we go by a 2017 study. Their fortunes now total about $300 billion.
Highlighting the wealth issue is the entry of yet another billionaire, Michael Bloomberg, into the Democratic race. Bloomberg already is gearing up to spend tens of millions, which will hardly dent his $50-billion-plus.
In the worst way, we’re in another Gilded Age. The sheriff of Nottingham might as well have cooked up the U.S. tax system in cahoots with Gordon Gekko. The 400 richest American families in 2018 actually paid a lower rate in combined local, state and federal taxes (23 percent of incomes) than did the bottom half (24.2 percent). Compare that to 47 percent in 1980.
What to do? An outright ban on billionaires, as if that could happen, would be a Soviet-level mistake. I’ll explain why while arguing for tougher regulations and higher taxes on the billionaire class. I even favor a small wealth tax, a much-milder version of what Bernie Sanders and Elizabeth Warren have called for in the spirit of AOC’s thoughts on billionaires. And if we could limit the percentage of our economy that each billionaire and his or her family could own or even control via corporations or otherwise—well, that would be wonderful.
Just the same, I respectfully disagree with the wish of Sanders, and others, that billionaires shouldn’t even exist someday. I’ll demur on the “de-Billionairization” plan of Rob Kall, editor of OpEdNews, who has articulately channeled the thoughts of many understandably furious progressives (here and here). Ahead are my arguments for the continued existence of billionaires, albeit much-better taxed and regulated ones:
Different people respond to different incentives
Commentators like Rob Kall are personally driven by creativity and idealism. But creativity can take different forms.
Kall presumably would focus on the work product—a life-saving drug, better, cheaper electric cars, better solar cells, a worthwhile political manifesto, a poem, a novel, a movie script, or the stress-monitoring device that he invented. But so many of the world’s most dynamic business people see the acquisition of wealth itself as at least one form of creativity. They do count their billions and are competitive about it. Elon Musk, Tesla CEO, nailed down a deal that could net him $55.8 billion in a decade.
Can we wave a magic wand and instantly change the business culture to kill off this obnoxious way of keeping score? Likely not.
Remember, we’re not the only country where ambitious would-be billionaire-innovators can go. Even the Chinese would love to get in on the action. Chinese Premier Li Keqiang presumably was joking when he offered Musk a green card, but in the case of less established innovators, Beijing can be a lot more serious.
Let us remember, too, the philanthropy that great wealth makes possible. Where would American libraries be without the robber baron Andrew Carnegie?
As a co-founder of LibraryEndowment.org, calling for the establishment of a national library endowment funded by the super-rich, I’m eager for the next Carnegies to come along even if I’m hardly a fan of his darker side.
Now, I’ll add some major caveats in my enthusiasm for philanthropy from those most able to afford it. Despite the famous Giving Pledge, for example, the super-rich aren’t giving nearly as much as they could, especially to causes for the non-elite. Billionaires often favor elite universities and other causes that directly benefit them and their children. Harvard’s endowment of about $40 billion dwarfs the several billion or so total of public library endowments and equivalents. That’s hardly the only issue here. Either voluntarily or if need be through laws, the largest philanthropic efforts should include a wider range of board members who aren’t wealthy or from the philanthropic elite—for example, well-informed advocates for the poor.
Done right, especially when certain social-services budgets are tight, philanthropy can fill major gaps that will be inevitable even if the Democrats regain control of the Senate and White House. Government at all levels isn’t as responsive as it could be, and competing demands abound. Too often, for example, the issue for local politicians is, “Librarians and books vs. police and firefighters.” And thousands of school libraries have closed for lack of funds. No, billionaires couldn’t and shouldn’t pay for everything. But they can help—both through cash and by not lobbying for outlandish tax breaks at any level of government.
At least in money and material things, imagine how much richer we are than our ancestors, thanks to inventions ranging from the electric light and television to the automobile and the cellphone. We are healthier and live longer, too, partly due to drugs and medical technology that required many millions to develop. The creation and growth of wealth needn’t be a zero-sum game. The benefits of inventions and research go far beyond the elite.
In a related vein, here’s a question to ponder. Would we have been better off if, say, Thomas Edison had had to rely on some Central Economic Coordinating Committee? Even the Chinese government, the ultimate collection of control freaks, in recent years has let tech billionaires and others flourish as long as they pay due obeisance to The Party and the right corrupt people within it.
The Hive Mind and groupthink have their limits. I want geniuses such as Jeff Bezos and Elon Musk to be free to develop their own space companies. Where would the United States be if we’d simply depended on NASA alone to advance the technology? Now we have competing vendors with visions of Mars settlement and other examples of long-term thinking. The grand plans may or may not succeed. But I’m glad the billionaires are persisting, given the desirability of finding possible new homes for the inhabitants of Planet Earth amid all the apocalyptic possibilities in the long term.
While never forgetting the need for tough regulations—whether in drug-price control, worker-safety protections, antitrust law or guaranteed political freedoms for future Mars settlers—we should be grateful that certain billionaires are around. I’m not saying to bow down to Bezos and Musk three times a day or exempt them from regulation. It isn’t as if they are saints. They are simply doing what comes naturally, often with surprising benefits for society when they act on their better instincts.
Bezos, for example, rescued the ailing Washington Post, one of the major bulwarks against the aspiring dictator in the Oval Office. Remember, he bought the Post as an individual. The purchase didn’t make full sense for the usual corporations in this area, with the possible exception of greedy hedge funds more eager to milk the Post dry rather than reinvigorate it. Bezos even has turned the Post into a profit center. I wish he were more enlightened toward the unions there and paid certain people better, but at least the Post has survived.
Alternatives to a billionaire ban
Instead of a billionaire ban with, say, a 100 percent tax on assets above that amount, let’s bring on:
–Carrots and sticks to encourage billionaires to invest at least a certain percentage of assets in at least potentially productive ways within the U.S. The wealthier the billionaire, the higher the percentage.
–Much higher estate taxes on the super-rich as well as restraints such as tougher banking, securities, occupational-safety and anti-monopoly laws, not to mention campaign finance reform. Should Michael Bloomberg be able to finance his Democratic primary campaign without other donors? Above all, we need to kill the Supreme Court’s loathsome Citizens United decision. It let billionaires’ money and others’ pollute our elections to the point where plutocrats’ needs so often come ahead of other Americans’.
–The aforementioned wealth limits—far more sophisticated than simply a billionaire ban. The five richest Americans are now worth more than two percent of our GDP. Perhaps too high? Maybe not. But look ahead. Suppose breakthroughs in artificial intelligence or other areas allow individual inventors or companies to squash the competition in a way and to an extent harmful to the average citizen. Then a percentage-based wealth limit could make sense to account for weaknesses in anti-trust laws or interpretations of them. Better to be proactive and pass such a measure when the political climate permits—no small detail in regard to other ideas here, too.
–Prohibitions on companies exceeding a certain ratio between total compensation for CEOs and the average pay for the workforce.
–Tough laws to protect labor’s right to organize in the U.S. while pressing as much possible for similar measures globally.
–Legally required worker representation on the boards of at least the very largest companies, even privately owned ones.
–A carefully phased in universal basic income, at least eventually, in the spirit of proposals from presidential candidate Andrew Yang and others. The more automation, the more desirable a UBI will become not just for workers but for also enlightened business people who want to expand the market for their goods. Marvels such as artificial intelligence and nanotechnology could multiply the total size of the pie in time, leaving billionaires far wealthier than today, while the rest of society participated in the gains.
A $12,000 annual guaranteed income, the amount proposed by Yang, might be too high today. But sooner or later, it could be just a fraction of an affordable UBI. Far better a basic income than a stiff, productivity-sapping tax on robots and artificial intelligence. Meanwhile, if nothing else, we should increase Society Security and medical benefits and otherwise improve the economic stability of the nonwealthy.
Not all billionaire-control measures need come from the government. Business professors and others on campus should take ethics more seriously, including those required of prospective donors to universities. And assuming that the Social Register and local versions in D.C. and other cities still count, an oft-iffy proposition, here’s to more deletions of billionaire crooks and near-crooks!
Still, the real goal shouldn’t be to ban or otherwise afflict billionaires, but rather to improve the lot of the rest of us.
About the image: Billionaires for Wealthcare satirized Barack Obama’s healthcare plan, suggesting that it didn’t go for enough and that billionaires should pay more taxes to meet Americans’ health needs. CC-licensed photo by Will O’Neill.