On September 24, 2019, Senator Bernie Sanders retweeted an article from The New York Times on the idea of a wealth tax with a simple comment:
“Billionaires should not exist”
While Sanders is certainty one of the more radical members of the Senate, he is not alone in this sentiment regarding billionaires. On October 1, 2019, Representative Alexandria-Ocasio Cortez retweeted a video, saying:
“’Billionaires should not exist’ does not mean certain people should not exist. It means no person should have a billion dollars. The ascent of billionaires is a symptom and outcome of an immoral system that tells people affordable insulin is impossible but exploitation is fine.”
These comments are indicative of a larger anti-billionaire sentiment that has been on the rise for the last several years. This movement has been fueled largely by younger generations, Millennials and Generation Z, and especially by Left-leaning individuals. Pew Research Center has found that those aged 18–29 are much more likely than any other age group to agree that the existence of billionaires is a bad thing for the country, a sentiment that has only grown even stronger over the course of the COVID-19 Pandemic.
The central idea behind this disdain for billionaires and the “top .01%” is that there is no way to accumulate so a large amount of wealth through ethically legitimate means. Such a stockpile of wealth means one has to have exploited and taken advantage of others in some way. There must be some skeletons in the closet, so to speak. As Representative Ocasio-Cortez wrote above, the very existence of billionaires is indicative that the economic system we currently exist under is fundamentally broken in some way. Their very existence proves as much.
It is important to specify that this is a belief about billionaires as a whole and not just the specific individual billionaires that exist today. It would be one thing to argue that the billionaires that exist today do not receive their wealth as a result of the market, but as a result of special privilege from the government. However, this is not the argument from Senator Sanders and Representative Ocasio-Cortez. In their minds, billionaires cannot exist at all without unethical conduct. Their existence itself is offensive to moral sensibilities.
Is this an accurate view of the billionaire class? Are market realities such that one cannot possess such a large hoard of wealth and remain ethically pure? For the sake of argument, we will concede that there is no way for one to own such large amounts of wealth through market processes. Even so, this doesn’t preclude other ways of receiving billions of dollars outside of the pure market process. Let us say, as a pure hypothetical, that everyone in the United States suddenly feels very generous one day, and decides to direct their generosity towards one individual person. This single individual then receives monetary donations flooding into his pockets and bank account from all members of society. If the total amount of donations from the public to this individual is equal to at least one billion dollars, then this lucky recipient is now a billionaire! Is there anything objectionable to this method of becoming a billionaire? Given that all of these contributions are voluntary gifts from one group of individuals to another, we would have to answer in the negative. How could there be any ethical objection to gifts given out of the generosity of one’s own heart? Just because these gifts add up to an arbitrary point of one billion dollars fails to change the ethical calculus at all.
For the sake of intellectual interest, let’s continue in this hypothetical situation. Instead of the individuals freely giving their money to one individual, our billionaire wishes to show his appreciation for their gift and produces a good to send them a gift in return. Rather than just a free gift, all of the donors now receive a gift in return for their contribution. As a result, there is now a reciprocal exchange of gifts. All of the monetary grants from the people are given to our billionaire, and he sends something back to them out of gratitude. Does this addition of a gift in return change our ethical evaluation? Not at all. If it was ethically permissible for the gifts of money to be given voluntarily, nothing is fundamentally changed if the billionaire decides to send a gift in return. Both gifts are freely given, and as such, are perfectly permissible from an ethical point of view.
We can extend this hypothetical even further, however. Instead of the billionaire producing these gifts he gives in return to his donors himself, a group of individuals decide to produce these goods for him. They wish, for whatever reason, to save the billionaire time and to produce the goods the billionaire would have had to spend time producing himself. The billionaire still has to organize the production processes and actually sending/delivery of these goods, but the physical work of production is being carried out by his new-found volunteers. Does our ethical evaluation change? The workers are voluntarily giving their time to the billionaire, and our evaluation of the situation remains unchanged.
Going even further along this line of thought, what if the billionaire wishes to give gifts in return to his workers who do his production for him. Perhaps he feels bad about receiving their work for free, and similar to those who contributed money to make him a billionaire, he wishes to give them gifts in return. Our economy is now a transfer of gifts from the general population to the billionaire, which the billionaire returns with his own gifts produced by the workers, whom he also compensates with gifts of their own. I am sure that the reader can see by now that our original analysis of the ethical state of affairs here remains unchanged.
At this point we have arrived at, there cannot be any sensible ethical objection to the scenario as pictured above. All actions taken by all individuals involved, from the billionaire to the general population and the workers, are all perfectly voluntary. All transfer of money and goods are free chosen actions of individuals. However, the situation we have laid out above is identical to the situation of billionaires on markets today. There is no conceptual difference between the two. All exchanges that take place on markets are voluntary transactions. The primary quality of free markets is their lack of force or coercion. In our hypothetical economy with our billionaire, we used the word “gift” to emphasize the voluntary nature of transactions, but the completely free nature of these gifts is maintained in exchange on markets. I give a gift of my own free will, and I make a purchase equally of my own free will. The only substantial change that occurs when we move from gifts to purchases is that there is a certain “gift price” that sellers ask for. Even so, this changes nothing about our analysis, as this is just a way for the gift givers to allocate out their gifts to whoever desires them the most! The voluntary nature of the system as a whole remains unchanged.
Therein lies the flaw in the “anti-billionaire” sentiment. As long as wealth is accumulated on the free market, it is accumulated as a result of the free exchanges of individuals. It just so happens that one individual might be so successful in these exchanges that they amass a large amount of wealth, totaling one billion dollars or more. There is no “exploitation” of labor or anything of the sort occurring. Any laborers who work for him do so of their own free will because they view it to be the best line of employment available to them. Even if it were the case that the entrepreneur was paying the laborers less than what their work was truly worth, this would soon be ameliorated as other entrepreneurs will see the profits available and bid up the price of wages.
Therein also lies the beauty of free markets. Every exchange that is made, every good supplied, and every contract agreed upon are all purely voluntary measures. Televisions, cell phones, and cars are produced every day without gun being pointed anywhere at anyone. It is precisely this voluntary spirit of the market that creates the incomes of others as well. If I value the goods and services that you can trade to me more than the money I am holding, and if you value my money more than the goods and services you can produce, then we will exchange. Not only is the transaction voluntary, but it also makes both of us better off than we otherwise would have been, as we are both giving up something that we value less for something that we value more. The income that one receives on markets is a function of how much one is able to satisfy these wants of others. If one is particularly apt at doing so, their income will reflect this fact.
We are then brought to our original question: is it possible for one to ethically accumulate one billion dollars? We are driven by our analysis of the voluntary nature of the market to answer clearly in the affirmative. As we demonstrated, the activity of the market is marked by the fact that it is voluntary. Even if one were to amass a fortune equal to one billion dollars, it would still ultimately be voluntary transactions with other individuals that would lead to such a state of affairs. Given this fact, there is no ethical condemnation that we can bring upon the market billionaire. He receives his income purely as a function of the buying choices of others. To reduce his income by preventing exchanges with him will not only reduce his own income, but also reduce the total welfare of all those who wished to trade with him. To prevent the existence of billionaires is not to improve the welfare of society, but to diminish it in the name of enforcing one’s own arbitrary ethical pronouncements upon the actions of others.
