Should billionaires exist?

I participated in a written debate recently on the question "Resolved: Billionaires Should Not Exist." Unfortunately, the limit was 1000 words. I have a lot more than a thousand words to say about billionaires, and how much I don’t think they should exist. So here’s the uncut version for you guys.

To be clear, I don’t actually want anybody to try to get rid of billionaires right now. Even Bernie Sanders and Elizabeth Warren, both of whom said billionaires should not exist, didn’t propose tax plans that would come close to putting them back in the millionaire bracket. The influence billionaires have on our political life would make this almost impossible to achieve. And it isn’t really necessary, because much (not all) of the good you can do by eliminating billionaires could also be done by taxing them just a wee bit more. But if I could wave a wand and transfer the wealth of America’s 700 billionaires into the bank accounts of the 40 million Americans in poverty, I would do it.

I will start with a caveat: I do not intend to argue that in a future, poverty-free world, billionaires should not exist. I intend to argue that in the world of the present, in which poverty does exist and inequality is constantly increasing, billionaires should not exist.

My argument is that happiness would be increased if the wealth of billionaires were redistributed and they were taxed to prevent them from earning more than one billion dollars, while no serious disadvantages would result.

Utilitarian argument

I will pass over any question of deserving money, since that relies on a sense of justice not everyone can agree on, and consider only utilitarian goals. Would America be a happier place if the money of billionaires were redistributed to the lowest income tiers?

The folk saying that money can’t buy happiness is untrue. Scientists have calculated that money increases happiness, but only to a point. Up to $70,000 a year, every increase in income correlates to an increase in happiness. That’s unsurprising, because much suffering is caused by poverty or anxiety over falling into it. An individual who makes $70,000 can afford a house where he doesn’t have to listen to his neighbors screaming at one another; he can afford to travel to visit family; he can afford a healthy and varied diet and a meal out from time to time; he can afford entertainment and art and time with friends. An individual making the minimum wage of $15,000 a year or less, which includes over 13% of Americans, can afford none of these. Naturally he will be much less happy.

A billionaire, however, enjoys no utility from all that money. A person who possesses $900 million can already purchase anything a person might reasonably want: a mansion with grounds and a beautiful view convenient to a large city; a yacht, a private jet, employees to handle every need. A billionaire has passed, long ago, the point of diminishing returns, where more money can truly increase happiness. The same money will purchase a much greater utility when it is redistributed to the rest of the nation.

The 400 wealthiest Americans have, collectively, 3.6 trillion dollars. Distributed among the 34 million Americans in poverty, it would give each poor American $103,000. That’s enough for a modest house, owned debt-free, or a four-year degree at a public college. The gain in net happiness would be massive.

By distributing this money more carefully, through a long-term basic income or poverty-reducing programs, the increase in happiness could go on for years. As families pull themselves out of poverty, they will increase both production and spending, boosting the economy and reducing social ills like crime and homelessness.

So, once we acknowledge that redistributing money would increase happiness, we can start asking what other consequences such a move could have. Is there good billionaires do that we would miss? Or is there additional harm we could prevent by abolishing billionaires?

Argument from power

Once a person has satisfied all happiness-related desires, the only thing left their money can buy is power. When you have more money than most other people, you can influence society in a direction you choose. Some exercise that desire by giving to charities related to the world they want: whether, like Gates, to vaccination research, or, like Cordelia Scaife May, to causes like restricting immigration and population control because she wanted to preserve America’s open spaces.

Others exercise that desire politically, by donating to candidates, hiring lobbying firms, or bribing politicians directly. They can also fund media favoring their preferred worldview, as the Kochs or Michael Bloomberg do. Even in our court system, the rich always have a massive advantage over the poor, because they have better lawyers. Large companies can trample small ones in patent lawsuits, and rich people avoid jail time for crimes that would lock up a normal person for years.

In 2014, a Princeton study surveyed the effects of money on politics by measuring how often government policy follows the interests either of the economic elites or of the people at large. Their conclusion was that when the majority of economic elites disagree with the majority of average people, the elites were far more likely to get their way--45% of the time, rather than 18% for average people.

It would be nice to say that billionaires having money doesn’t affect the rest of us. But, since we’re all affected by politics, it absolutely does. This also casts a worrying light on our odds of ever changing the uncomfortable status quo.

Argument from charity

We are sometimes told that billionaires do good because they can donate large quantities to charity. But billionaires give a lower percentage of their income to charity than others. Even the biggest givers in the nation, Bill Gates and Warren Buffet, give less than 5% of their income annually. If we discount those two, the rest of the richest 20 Americans give about .3% of their combined income--less than the average American.

Even that charitable work isn’t necessarily helpful. Much charitable giving exists for a tax write-off rather than actually doing good. Money given to foundations can stay within the foundation forever. Donations can be used to strongarm nonprofits into whatever a billionaire wants, or to start organizations promoting a political interest. The Kochs, for instance, give to charity, but those charities are largely climate change denialist media.

If we are to spend funds wisely to help the needy in this country, we shouldn’t leave the distribution of it to billionaires. This money is better administered by smaller owners, nonprofits, and government.

Argument from investment

The next defense of billionaires is that they invest capital in the market. But that isn’t specific to billionaires. Wherever money is, it is active in the market. However, investment patterns are different at different income brackets.

The poor primarily spend their money on their needs. This fuels business at the level of demand: whatever businesses best satisfy the needs of people prosper when people have money to spend.

People of middle income invest money in mutual funds, government bonds, and banks. This fuels the market in general, making capital available for business and government.

Billionaires, however, have more money than they can easily spend. Some goes into the stock market, of course, in the same way as smaller fortunes. Some is spent on venture capitalism--investment in prospective businesses. And some goes to investing in real estate.

How much good is this capital doing, compared to the capital that is simply spent? Funding new businesses is good, but billionaires may not be the best placed to decide what ventures are worth investing in. For instance, the ridiculous juice subscription company, Juicero, was fully funded by the Silicon Valley wealthy, while diabetics are forced to hack insulin pumps because of a lack of innovation in the ones available. Assigning capital to causes is an important job, and having it done by a few super-rich eccentrics might not be the best way.

Money invested in real estate may be the worst for the common good. When a person of moderate means flips a house or buys an apartment building to manage, they usually do add some value. Real estate speculation, or buying large tracts on the promise the price will rise, can do harm. The mere fact that people use real estate for investment makes the price go up, causing housing to become less affordable and driving homelessness. Housing bubbles are an example of this.

Properties owned by large investors are 18% more likely to evict tenants than those owned by smaller landlords. This is because they can easily afford the loss of letting a unit stand empty. In some areas, many units remain empty because the market can’t fill them at that price. Large investors will buy up entire neighborhoods and drive up the price as high as they want, because they have no competition.

Another method of expanding wealth is to extract more resources. The urge for constant growth is a driver of environmental destruction: the pumping out of aquifers, burning of rainforests, fracking. Without the political advantages billionaires have, millionaires aren’t often able to exploit the environment on the same scale. But, since these are not necessary activities we need billionaires to do, we’d be better off with smaller investors.

In short: capital exists, and if there were no billionaires, there would still be capital. But that capital would be assigned by a larger number of people, and thus more accurately aligned to what the market needs rather than the quirks of a few people who need nothing.

Argument from innovation

Another argument for billionaires is that they fund great innovations. But in reality, most innovators do whatever they are known for before becoming billionaires. Once they are billionaires, they may appear to innovate, but more often, they use patent law and buyouts to suppress other innovations.

Bill Gates and Tim Allen weren't billionaires when they started Microsoft. Jeff Bezos started Amazon with $250,000. Elon Musk wasn't a billionaire when he started his first company either. It requires basic financial security to make an invention, but not billions of dollars. After becoming billionaires, these men mostly have not invented anything personally, but rather funded other people's research. This research could have been funded by government or jointly-owned associations.

In fact, in many cases, it already has been. GPS, digital assistants, touchscreens, and WiFi come from government research. Elon Musk's companies Solar City, Tesla, and SpaceX have received billions in government funds, and much of his money came from PayPal, which he didn’t invent at all.

We also have to consider how many innovators and inventors never get a chance to make their big breakthrough because of a lack of opportunity. No billionaires are entirely self-made; they generally come from comfortably well-off families and have college degrees. They have the leisure to work on their ideas and the ability to raise funds through impressing investors or getting loans.

One wonders how many Americans have been just as talented, but held back by circumstances. Maybe they were forced to drop out of high school to make a living, or they were too busy struggling as a single parent, or they had their credit destroyed by medical bills, and never had a chance to invent anything or start a business. It is wildly implausible that all the talent just happens to be found among the well-off. Perhaps we would have many more life-changing inventions if every creative person were financially secure and able to access education and necessary funds.

What would happen to the money?

So, imagine a system wherein it become impractical to become a billionaire. High wealth taxes force billionaires to divest their wealth. Where would that wealth go? Would it vanish? Would billionaires stop doing whatever it is that produces so much value?

Most likely, many of them would choose to donate large quantities to charity--better to at least control where your money goes. Many would divest stock, perhaps by offering employees joint ownership or finding family members to hold some of it. Some would continue as they are, passively earning wealth which goes directly to taxes. And more people would choose to stop at the eight-figure level of wealth rather than the nine-figure level--making business choices that produce a steady level of income rather than constant high growth.

Would it have been a bad thing if Amazon had chosen to stick to books instead of trying to devour the market share of every kind of product that can be shipped? Would it have been so awful if Microsoft hadn’t bought XBox, LinkedIn, Skype, and Mojang? Did the market ever benefit from Warren Buffet owning so many properties? Not at all. If billionaires stopped doing what they do, which is increasing their portfolios through the investment of capital, smaller investors would own those assets. We do not need to “motivate” people to innovate and invest with the golden carrot of becoming a billionaire, because there is nothing only billionaires do that has any value. Motivating people to run reasonably-sized businesses with reasonably-sized fortunes has exactly the same benefit.

None of this would end poverty overnight, but the tax revenue brought in could do a great deal of good. The wealth of billionaires could fund universal health care, subsidized college, rent assistance, better elementary schools, and so on. While billionaires’ efforts to divest money would reduce tax revenue, many billionaires simply can’t help continuing to earn money, and the public coffers would benefit.

The result of this would be a nation both economically and politically more equal than what we have today. The gains of the poor would result in widely increased happiness, and the only suffering caused would be the temporary disappointment of billionaires at not being so rich--though, to be clear, with 999 million dollars each, there would still be little they couldn’t afford. There is no reason we need billionaires.

Seven autumn takes

Time for an update, isn't it?

1

The pandemic stretches on. A lot of people seem to have gotten bored and gone back to usual activities. We mostly have not. Luckily, our state is keeping r<1, which means it's not spiking. Probably due to mask wearing, which people are actually doing pretty faithfully.

The schools gave us two choices, virtual or in person. The in-person classes are socially distanced, and the students are supposed to be wearing masks all day. In order to spread out the amount they need to, different cohorts are there different days: elementary kids four days a week, middle schoolers two (I think), and high schoolers one.

Virtual kids got a loaner chromebook and have two video calls a day. The rest is video lectures they can watch at any time, and assignments they can finish on their own. That's a lot less burdensome than many long video calls, which sounds like a nightmare when I hear other kids are doing that.

It was a huge struggle deciding what to do. On the one hand, I'm home all day, so theoretically I should be able to keep everyone with me. And that would be safer, and save the school resources. But on the other, Jackie is intense enough to make it virtually impossible for me to teach anyone. I struggled last spring because of that. The best case was that she'd watch TV and distract everyone. The worst case was her directly interfering or freaking out when I attempted to help anyone. Even before the pandemic, because of her difficulty in social situations in the past, I really wanted to get her into preschool this year. The school agreed she needed it and let her in, which wasn't a guarantee. The thought of losing that--an actual, extended break from this extremely difficult child, plus maybe help for whatever the heck is going on with her--was one of my major pandemic-related stresses.

So, when it turned out in-person preschool was an option, I signed her up. Even though I know she might not be great at wearing her mask, and there is risk involved. My thought is that, because we have very few contacts of any kind outside of school, it's more of a risk to us than to the teachers. And we really do have a legitimate need.

I also signed up Miriam, because she did very little work in the spring. She'll do anything for her teachers, but when it's me asking, suddenly she resists. She also has a strong need for social interactions with other kids, since her brothers often exclude her and Jackie is too young. I felt that she could be relied on to wear her mask and follow the rules. And this way she will learn to read this year. I really don't know whether she would if it was just me and some video calls.

Michael and Marko are learning virtually. They are old enough to read their assignment lists and get them done fairly independently, and if they do get stuck, I'm there to help. Michael wanted to stay home, because he doesn't like school and didn't miss his friends. Marko would have preferred to go in person, but given his habit of putting everything into his mouth, I felt he would be a worse risk even than Jackie. I also kind of appreciate the chance to separate him from the bullies he dealt with last year, and to supervise what he's doing myself so that I know he actually understands what he's being taught. He's getting very little in special ed assistance now, so having me on hand is probably more useful than getting twenty minutes with a professional once a week.

2

So how's that going?

Jackie adores school. Just loves every minute. The second she finds out it's a school day, she jumps for joy. I can't say I was expecting that at all; even the days she liked daycare last year, she didn't like actually getting dropped off for it. But preschool is just super fun, apparently. People not getting within six feet of her is a plus.

It does seem to exhaust her. We've had a lot of hard afternoons. Two-hour meltdowns over her favorite towel being in the wash have made a comeback. Her teachers say she's as good as gold while she's there, but when I mention some of her at-home behavior, they seem incredulous. Like .... this is the child who clawed my arm this morning because there were no raisins in her cereal. This is the child who pretty much won't walk anywhere some days. It's really hard for me to deal with this disparity. Like, am I just a garbage parent that she acts so differently there than here? The teacher says it's common for kids to save their worst behavior for home, where they feel safest. But it still makes me feel like I'll never get any kind of diagnosis or help for her, because she's only like this at home.

Miriam loves school and seems to be doing great in it. Like last year, she has one best friend that she is obsessed with and tells us all about. They don't have proper recess, but they have "chat time" at their six-feet-apart desks, and also directed activities outside. She's being a trooper about all the extra safety procedures. Except the one day she had a slight fever at dropoff, and had to come home again. She was furious about it. Luckily, she turned out to have no other symptoms. Maybe she was just warm.

Michael is doing just great with virtual school. His teacher has everything very well organized. And it's nice that I'm home and can look over his work and figure out what he's having trouble with before he turns it in. Last year at school, he'd sometimes come home with whole worksheets marked wrong and have no idea why.

Marko resists some work and dives into other assignments. Everything having to do with ecosystems has been thrilling to him. Math, not so much. If I homeschool him any other year, I think I'll have to put together my own curriculum, because he really needs to be excited about a subject to pay any attention to it at all.

3

A plan of mine for a long time has been to get an exercise bike so I can improve my health without having to wait till somebody can watch the kids while I go for a walk or something. I finally got one off Craigslist.

It's been great, because I can put my phone up and watch The Late Show or put on some tunes and distract myself from the fact that I'm doing exercise.

I am pretty sure it's helping; I have had less dizziness and shortness of breath lately. Though taking vitamins seems to also be essential.

While the kids are at school, I finally have some time to myself. Most of that is getting taken up on self-care (like exercising and showering) and on chores, but I've had some time to write also. I'm trying to turn last year's book into a trilogy, but it's hard. I usually do one-offs for a reason.

I also have been writing some web content for a friend's business. Which means I have been getting paid to write. It's about finance, which isn't exciting to me, but honestly as long as I'm writing, I'm never bored. And I'm getting PAID. To WRITE. 

4

The pandemic isn't hindering us from having fun, because this time of year all the fun is outdoors anyway. We've gone to a lot of parks lately, and haven't found them crowded. Playgrounds sometimes are, but not creeks and hiking trails.

I love Virginia this time of year. Winter is bitter and summer is like being slowly steamed and eaten alive, but fall is perfect.

5

Which makes it a really bad time to think about possibly moving. Not far--the idea is to move closer to John's work, so that he doesn't have to spend over three hours commuting every day. But . . . the DC area is kind of terrible, even if you can afford to live in the nicer suburbs, which we couldn't.

There are a lot of good arguments in favor: greater population density means better odds for each of us to find activities or hobby groups. John could find a gaming group. I could find a writing group. The schools are better rated, and there are more autism groups and resources. We'd have an easier time getting to DC to see museums. There would just be more to do . . . at least, if this dang pandemic ever ends.

Plus, the election going on makes me feel . . . not very welcome around here. This is one of the reddest counties in the state. I've seen a lot of ugliness among the locals lately: threats to run over BLM protesters, carrying weapons to threaten ten people holding a quiet gun-violence vigil, nasty bumper stickers. I'm afraid to put up a Biden sign or sticker. I have a few friends here, but there don't seem to be any other people here I'd get along with.

But I can't shake the feeling that I need to be close to nature to be happy. Right now I can go in my backyard and not see any house but ours. There are trees on every side. I can take walks and see beautiful fall colors. A ten-minute drive brings us to the Shenandoah River, and twenty minutes takes us into a national forest.

Of course suburbs can have nature too. There are parks out there, and playgrounds, and green spaces. But there are also cruddy strip malls and used-car lots and six-lane roads. We'd probably have to live in a townhouse, with barely any yard. No matter how close a park is, a park is a trip. You can't just be in and out of the house all day like we are here.

We don't have to decide now. The plan is to move next summer, if we decide to and John is still at his current job. He very much wants to go, and I don't think he understands at all why I'm hesitant. I think some people can just not look at a tree all day and be fine. I feel I need beauty to live.

Maybe I can train my eyes to find beauty in more places. I sure hope so. I've never been happy living in a city. But maybe a dense suburb I could still do.

6

Kitty Kitty has finally, three years after moving here, made her peace with the rest of the house. She mostly hangs out in my room, but she is sometimes spotted in the family room, even when kids are around!

Tiger remains perfectly relaxed.

7

The election is coming up soon. I know hardly anyone is undecided, but if you are, I urge you to vote for Biden. I believe that voting for a major party has the best results, and of the two main candidates, Biden is the one who seems to have a conscience and operate in reality. The pandemic has shown us just how important experience and knowledge are, as our entry-level president delayed and mismanaged us to one of the highest death rates in the world.

I'd really like someone who knows the details about how our country runs and who actually cares about doing a good job. I don't think we've had that for the past four years.

Warren was my first choice, but Biden seems at least to be a decent human being who believes in the norms of democracy and the counsel of wise people. While he isn't going to turn America into everything I'd want in four years, he will restore some of the norms of civilized society, making it easier for future elections to go better than the last one did. People who won't vote for Biden because they're holding out for something better don't seem to recognize the harm Trump can do, not just to the next four years, but for decades to come by encouraging voter suppression. We need to get our country back on some kind of reasonable track before we can steer it anywhere good.

How is October treating all of you?