How Many Billionaires Should There Be?
Recently at a lunch gathering of the White Rock Philosophers, the topic of economic justice came up, which gave me an opportunity to ask one of my favorite questions: how many billionaires should exist in the world? One suggested answer was: as many as there are people who put in the work to earn their billions. Here is the best argument I know of to support this view:
1. In a capitalist system, each individual is free to compete in the marketplace for as much wealth as they can accumulate in accordance with law.
2. The individual is entitled to spend, save, or invest the money they earn any way they see fit.
3. Some individuals become billionaires or even multibillionaires in this system (after taxes).
4. They are entitled to 100% control of their wealth because they deserve it and because the law allows it.
5. There is no theoretical or legal limit to the number of individuals who might become billionaires.
6. Therefore, the number of billionaires that should exist is just the number that does exist at any given time.
My argument is for the contrary proposition: there should be zero billionaires in the world. Given the well-known facts about inequality in capitalist societies these days, I am tempted to suggest that this view is self-evident. To be blunt, to become a billionaire is to commit a moral crime against humanity. However, a philosopher is required to supply supporting argument for such views. Here is mine:
1. Inequality of wealth is inevitable in any economic system. It does not follow that any degree of inequality is morally justifiable.
2. People are roughly equal with respect to their basic needs: survival and safety, health, belonging, self-esteem, etc. (see A. Maslow's hierarchy of needs here).
3. In a just society, an inequality is justified only if it makes the least advantaged members better off than they would be if the inequality didn't exist. ("Better off" means 'better able to satisfy at least their basic needs.') *
4. The vast inequality represented in the ratio between the wealth of billionaires and the poor obviously does not make the poor better off than they would be if the vast inequality didn't exist; that is, if wealth were re-distributed in a way that satisfied every person's basic needs insofar as that is possible without degrading the social order in any significant degree.
5. A redistribution of wealth in advanced societies to accomplish the satisfaction of needs as specified in Step 4 would leave today's billionaires still very rich. (Economic justice does not require elimination of all inequality.)
6. If, after the redistribution, there were some leftover billionaires, their surplus wealth - the amount not required for them to enjoy a very high standard of living - should be taxed away to be spent on public works, healthcare, education, and cultural projects that have the potential to enhance the well-being of all the citizens.
7. This would result in the non-existence of billionaires which is what I have been arguing for - zero billionaires - exactly the number which should exist.
* John Rawls, A Theory of Justice.
Appendix
Diagram of Abraham Maslow's Hierarchy of Human Needs. Notice that no stage of need satisfaction requires one to be super-rich. Maslow's scheme has stood the test of time fairly well, but it reflects a study of only one culture (western, USA) and probably needs revising in some ways. Nevertheless, the basic idea of a needs hierarchy of some sort in humans of every culture seems sound.
Here's another thought on the subject: most billionaires, I suppose, donate generously to various charities but not according to any recognized measure of urgent social need, even when a pressing need exists right under their noses. For example, Warren Buffett lives in my former hometown, Omaha, Nebraska. In that city, about 90,000 citizens live below the poverty line (really low in the U.S.), and over 36% of those are children - about 32,400. The families of those children need affordable daycare. Let's assume that none of them have access to affordable care. The average cost of center-based daycare in Nebraska as a whole is about $7800 per year. Now, even assuming each of those children lives in a one-parent household, the total cost of daycare for all the children would be $252,720,000. That's a lot of money, but only a tiny fraction of Buffett's total worth, about $35 billion. He could fund daycare for poor kids in Omaha indefinitely and hardly notice the difference to his bottom line.
ReplyDeleteBut he doesn't. Why? Because he doesn't have to. He may not even be aware of the facts I have cited above. My point is not to criticize Warren Buffett, but to argue that decisions about how to use the superfluous wealth of the super-rich should not be left up to them. They should be social decisions.
I'm not sure your numbers add up. By dividing $252,720 million into $35 billion, I get 138 years of daycare coverage, not an indefinite period of time - and that's just for Nebraska.
DeleteAlso, total worth is not the same as income, or available cash on hand. The companies that Buffet invests in employ hundreds of thousands of workers. Without this investment, those companies might have less capital to grow and flourish and might have to lay off workers.
The question becomes which is more moral: to provide daycare for a limited amount of time, or support companies that hire people so that they can afford their own daycare if they so desire?
I'm not saying there aren't problems with capitalism, especially crony capitalism where governments are in bed with companies to the detriment of the citizenry. I'm just saying that it's better than communism which has killed 100's of millions of people and always ends in fascism.
The top 20% already pay more than 80% of the income taxes collected in the US. Over 40% of lower to middle income earners will pay no income tax. Frankly, without the rich, the US and Canadian governments would be even broker than they are.
https://www.wsj.com/articles/top-20-of-earners-pay-84-of-income-tax-1428674384
I guess I have a problem with the idea that just because someone is wealthier than I am, that we are justified in taking some of their wealth to make things more "equal". If my neighbour has three cars, and I only have one, am I justified in taking one of his to make things more equal? Maybe my neighbour works twice as hard as I do, or is twice as smart. Equality of outcome is impossible unless you completely discount differences in ability, intelligence and drive. Is that moral?
Finally, the problem with searching for equality of outcomes at the expense of the wealthy is that the needs never end. Why stop at daycare? How about free cars for the poor? Housing? Yoga? Lattes? Spiritual enlightenment? We've already seen trial balloons on guaranteed income plans for all. Eventually, the most productive people will decide that it's simply not worth it to work. And then, where will governments find the money for all these promises? (Trudeau thinks debt is a good way.) Is social democracy just a kleptocracy with better PR?
I hope you can help me out with these questions because I really do value things like public healthcare while at the same time worrying that governments tend to be rapacious if not checked. Where should the limits on "social decisions" be drawn?
I wonder if approaching this topic from a different perspective might shed some light on the issues. I am reminded of the differences in IQ distributions of men and women. Women tend to cluster around the mean while men are more spread out both at the high and low ends of the curve.
Deletehttp://4.bp.blogspot.com/_tMf89VnFjEE/RrTlh7iu98I/AAAAAAAAB_E/qfPj_KOXamo/s400/SexIQa.jpg
In short, while most women are of average intelligence, a greater proportion of men are either "dumbbells or Nobels" - idiots or geniuses.
Would society be better off if we were somehow able to redistribute IQ more evenly throughout the population? One could reduce inequality by simply killing all those at the high and the low ends of the distribution. Putting aside the moral implications of killing the least intelligent, one would also lose precisely those who are the best and brightest. The penalty would also fall entirely on the male sex, which makes it a perfectly acceptable feminist argument. ;-)
But honestly, where would we be without the contributions of Galileo, Newton or Einstein? Society would be more impoverished without these great minds?
This is the price one would pay to make everyone more "equal". I hope that most of us would not choose such a course of action to feel like we're part of a group where everyone is more or less "average".
Billionaires, like geniuses, contribute far more than they take. The businesses they create employ millions. The taxes they pay are disproportionately large compared to their number. Without billionaires, we would all be poorer.
Envy is a poor substitute for inspiration.
Excellent comments! I will need more than one reply to deal with all of them. For now, re your objection to my arithmetic: we crunched the numbers differently. In any case, I would be happy with 138 years of affordable daycare. My point was that Buffett could easily afford it. He could probably do it indefinitely by setting up a foundation to fund the project.
DeleteThank you for this. Your zero billionaires argument is new ground for me and will require some chewing.
ReplyDeleteMy only thought is to question the morality of what it takes to accumulate $1B. I suppose it can be done without the denigration of others but I’m not entirely positive on that. Arms dealers, for instance. Not paying a livable wage.
And an even bigger concern: how many billionaires actually did their accumulating, and now hold onto it, all within the law. Offshore, hidden tax havens, etc.
Re your second paragraph: I share your doubts. Anyone who makes a billion or more in manufacturing is very likely using cheap labor, which is a moral crime if not a legal one. Tax laws favor the rich, of course, and hidden tax havens are illegal.
DeleteWhy is using cheap labor a moral crime? Cheap labor in China has allowed millions to rise out of desperate poverty. It may not be perfect, but if one insisted on "made-in-America" policies such as Trump is doing, not only would Chinese workers be worse off, but American consumers, especially the poor, would be, too.
Delete"...the poverty rate in China fell from 26% in 2007 to 7% by 2012,[6] although World Bank extrapolations suggest that the percentage of the population living below the international poverty line continued to fall to 4.1 percent in 2014.[4]"
https://en.wikipedia.org/wiki/Poverty_in_China
That's a huge decrease, all because US manufacturers used cheap labor to produce their goods. Of course, some American workers have suffered because of this shift, too. But, in the end, a balance will be found where Chinese workers' wages and benefits will rise while American ingenuity may once again make manufacturing in the US competitive once more.
Or we'll end up in a trade war, or a real one. ;-(
"Decisions about how to use the superfluous wealth of the super-rich should not be left up to them. They should be social decisions."
ReplyDeleteQuestion: Who makes up the "social decision" making? The government as is?
Personally I think child care should be available to all, as schooling is. Private childcare could exist just as private schools do. Quebec has had this system in operation for years. Affordable childcare for all, is a government's responsibility. Private money in the right hands could help where government fails.
If one has an immediate concern about the children in Nebraska needing affordable childcare why not write Warren Buffett a letter? As was mentioned, "he may not be aware of the facts."
"Question: Who makes up the "social decision" making? The government as is?" I'd be delighted if it would, but that seems unlikely.
Delete"Affordable child care:" Go, Quebec! What's up with the rest of the provinces?
Send Buffett a letter? No point. He has already pledged all of his wealth to the Bill and Melinda Gates Foundation.
This plan requires judgments of various kinds. Is Man capable of making judgments in how to distribute funding fairly and without prejudice in view of the "freedoms" of faith, place and politics. It begs the premis of Man as being neutral in all of those aspects. Can He be?
ReplyDeleteTerry here....I have read the comments to date and what Dirk has put forward is supportable. May I suggest that rather than taking a stick to beat up billionaires that we start by re engineering a more just society.
ReplyDeleteThat means we put value back into mom and pop mercantile element that died with the advent of Sears and Eatons who put many small shops out of business. Walmart did the same to the first two vultures.
We need to dial back on consumption taxes on many items as this represents an unjust tax on the poor.
Perhaps we can tether out a flexible tax system that credits entrepreneurs who produce actual dignified jobs versus the Google etc moguls who have engineered a vacuum funnel of money into organizations that are being winnowed out of real people.
When some patented gizmo or software becomes ubiquitous and essential then we need to define statutes that will make these things open sourced and free for other suppliers.
As a society we could make the availability of financially sustainable work a right and also an obligation for all well bodied members.
We cannot have a just society when we have choke points like the Gates, Buffets and Koch Bros distorting our social fabric by the knots that they choose to tie.
To the point .... when society really starts to value justice and honours the contributors then the rapacious billionaire will become the outcast.
Hi Terry. It may in fact be impossible to engineer a just society due to something called Price's Law. Inevitably, the majority of wealth will go to the most productive, even if redistributed. For an excellent overview of the problem, you can check out this video by Jordan Peterson of U of Toronto.
DeleteInequality of Wealth and Productivity
https://youtu.be/6Q0PCDEJWek