Let me start by saying that I get it.
A few years ago, I read a fascinating piece about how professional basketball had lost its cool factor. The current stars of the NBA, like Jayson Tatum and Shai Gilgeous-Alexander, just don’t have it. They aren’t charismatic in the same ways Kobe Bryant or Michael Jordan or Dr. J were. They aren’t eccentric, or captivating, or culture-defining. “No aura,” as the kids say.
Spend a few minutes watching Elon Musk work a room or Mark Zuckerberg testify before Congress, and it’s hard not to get a similar feeling. These guys do not exude aura. They don’t present as classy or high-minded or suave, which — frankly — is how we prefer our rich people. They are awkward and make bad jokes and laugh in uncomfortable ways.
It at least feels like it was different before. The elites we grew up reading about operated in a classy manner, offered timeless wisdom or expressed humility when reflecting on their station in life. Andrew Carnegie was known for reciting poetry from memory, holding dinners where he’d debate Shakespeare and the merits of socialism, and waking his entire household with a bagpiper every morning. He’s credited with saying, “As I grow older, I pay less attention to what men say. I just watch what they do.” J.P. Morgan was famous for locking bankers in his library during the panic of 1907 and not letting them leave until they solved the crisis. He once said, “A man always has two reasons for doing anything: a good reason and the real reason.” Elon Musk wielded a chainsaw while bragging about cuts to USAID, and once entered Twitter HQ during a hostile takeover while carrying a sink. He tweeted: “Entering Twitter HQ — let that sink in!”
These people are not the same.
Recently, I was in Italy for a friend’s wedding. I visited the Great Synagogue of Florence, one of the largest synagogues in southern Europe — a true architectural masterpiece. I was struck by its history (the building survived the First and Second World Wars, and it even took a few direct hits to its roof) but also its origin: It was built after a wealthy Jew donated his entire estate to building a synagogue “worthy of Florence.”
What a magnificent thing, I thought. In the old days, rich people would build great, big, beautiful synagogues — or schools or libraries or museums — and donate their entire life’s fortunes to build something meaningful in a city they love. Today, our billionaires spend their wealth on pissing contests — 400-foot yachts and sports teams and a private space race.
I’ve realized that I hold old wealth in a certain esteem; I have a kind of base-level belief that money and wealth used to be accumulated with hard work and merit, earned by the best of us, all before they left behind some great thing — timeless wisdom, inventions, railroads, mausoleums, or other feats of ingenuity or philanthropy. Today, it’s all about extracting cheap labor, then buying everything you want and trying to live forever, society be damned.
But it turns out that’s not really true — at least not anymore. Paul Graham, a billionaire himself, wrote a fascinating piece in 2021 about how America’s richest people in 1982 predominantly inherited their wealth. But things have changed. Today, as in the early 20th century, they are making it themselves. The number of heirs in the top-100 wealthiest Americans dropped from 60 to 27 between 1982 and 2020, and only about a quarter of new fortunes were made through investing smaller fortunes; the other three quarters were made by people starting companies.
Before we get into the debate about the validity of an economic system that creates billionaires, one point seems fundamental: A lot of billionaires made their fortunes by creating something awesome in the truest sense of the word — something that causes mixed feelings of awe, reverence, and fear. Sergey Brin put search engines in everyone’s home, unlocking limitless knowledge. Jeff Bezos completely changed how consumer goods are bought and sold. Musk reshaped the auto industry and made satellite internet accessible to millions. Zuckerberg reshaped the cultural fabric and connected the world via social networks.
This kind of fortune is not the same as a multi-million dollar basketball contract, and these billionaires are not the same as athletes famous for playing a sport that is unlikely to impact your daily life in any meaningful way. Put differently: If you were to create a scale for “how much did this person change the world” and “how much are they worth,” many billionaires’ wealth is closely proportional to the impact they’ve had — whether you are in awe of them, revere them, or fear them.
And yet, the scale of this wealth is still hard to comprehend.
While writing this piece, I was astounded to learn that I am probably in the top 1% of all Americans when measured by wealth.
I had a pretty humble and normal upbringing. But if Tangle were valued at more than $13 million, which I think it is, that would put me in the top 1% of all Americans in wealth. We’re big fish in the small pond of independent newsletters, but a small fish in the big ocean of major media. Still, I own 100% of it, and that’s probably enough to propel me into the 1%.
Yet, the idea that Jeff Bezos and I are both in the “top 1% of Americans” feels as difficult to fathom as comparing myself to LeBron James because I might be in the top 1% of all living people as a three-point shooter. If I took every single dollar Tangle made from subscriptions last year — a little over $4 million — and pocketed it, without spending a single cent on my employees or the business, that’d still be just 1/250th of a billion dollars. The difference between $4 million and $1 billion is proportional to the difference between $4 million and $16,000. If my net worth is $13 million, Jeff Bezos’s net worth — at $267 billion — would be 20,530 times larger.
This disparity in wealth among even the top 1% of Americans shifts the focus to the top 0.1% of Americans. “Every billionaire is a policy failure” has become a common progressive slogan, one that bemoans extreme wealth inequality, which, as the theory goes, is accomplished only by exploiting others — by underpaying workers, manipulating tax loopholes, and monopolizing power.
“There’s a certain level of wealth and accumulation that is unearned,” Rep. Alexandria Ocasio-Cortez (D-NY) once said. “You can’t earn a billion dollars. You just can’t earn that. You can get market power, you can break rules, you can abuse labor laws, you can pay people less than what they’re worth, but you can’t earn that.”
Many people who argue that billionaires represent an economic system’s failure argue that redistributing even a small share of their wealth would dramatically reduce suffering in America and globally. The logic isn’t hard to follow, and it’s probably true — in a vacuum. $10,000 means a lot more to someone in abject poverty than $10 million means to a billionaire. Thus, the utility of extracting $10 million from billionaires to give $10,000 to 1,000 people in abject poverty is self-evident.
Proponents of legislating or taxing billionaires out of existence will also argue that the wealth generated by a company is unfairly apportioned. Hundreds or thousands of workers create that company’s value, they’ll argue, yet its revenue will disproportionately go to its executives, owners, and shareholders. Meanwhile, extreme wealth has exploded at the same time that median wages have stagnated.
And once you have wealth, it’s easier to multiply it through real estate or investments. So people who are already rich have a much easier time getting richer. Even the most basic passive investments can turn $1,000,000 into an additional $50,000 in a year — and moderately successful investments can do much more than that. About 30% of all American households make $50,000 or less per year.
Then, of course, there are the policy implications. Extremely wealthy Americans have a vast and powerful system through which to influence our politics and legislation — they donate to and lobby for their preferred initiatives, and they can often cajole politicians toward their preferred decisions. Our current political landscape is littered with people who have funded their own campaigns to simply take office and attempt to change their district, state, or country for their benefit. All the while, they’re savvy enough to avoid taxes by offshoring wealth or hiring advisors to capitalize on loopholes, and then use the combination of their wealth, power, and access to monopolize and crush competition.
The accumulation of these advantages has led to this: In the 1960s, the 400 richest Americans paid more than half their income in taxes. In 2018, America’s billionaires were paying just 23% of their income in taxes, according to an analysis by Gabriel Zucman. As Zucman explained, billionaires now have a lower effective tax rate than working-class Americans, because America’s super-rich have started living off their wealth, which is much harder to tax, rather than their income. We’ve been levying much smaller taxes on wealth, corporations, and the rich; at the same time, the super wealthy have gotten even wealthier, and workers across the country are watching their wages stagnate and benefits deteriorate. Zucman’s solution is a global minimum wealth tax, which could be enforced by individual countries and would make tax dodging through international loopholes less attractive.
I see some validity in all of these arguments. The question is: Are they persuasive enough to make the case that billionaires should not exist? Enough to take steps to prevent them from ever existing? Enough to focus public policy specifically on redistributing their wealth?
My best argument for the existence of billionaires looks like this:
