Are Billionaires a Huge Problem for the United States? People Are Weighing In!

Every nation around the world has its fair share of troubles, and they come in all shapes and sizes. Society – and human beings – are complicated, and more than that, they seem to always be changing.

This poster on Reddit’s Change My Mind forum pointed out that, for the first time in awhile, neither Republicans nor Democrats are really on the side of the super rich, and so it might be that the time for change is ripe.

CMV: billionaires are a problem
byu/universetube7 inchangemyview

He reminds us that it’s all a game to those on top, and they’re also the only ones winning…so why isn’t everyone down to finally turn the tables?

Obviously this is a fraught issue with opinions coming from all sides, so let’s dig into these 15 replies and see what we’ve got!

15. She does give a lot of it away.

J.K. Rowling was poor, wrote the Harry Potter series and became the first billionaire author according to Forbes. Of course she earnt this. She didn’t inherit, manipulate the stock market or anything like that. She wrote a story, got it published then got film and merchandising deals.

There are some billionaires who just inherit it but there are some who absolutely did earn it.

14. A short economics lesson.

In economics, there is an idea called rent seeking. It’s where you try to increase your share of existing wealth without creating new wealth. If someone rich or poor is rent seeking, that is bad. If someone rich or poor is actually creating value, that’s good.

For example, say there are 100 bakers and each loaf of bread costs $1. Then I bribe a politician that says only I’m allowed to sell bread in the country. Then I charge $2 for each loaf. Since I run a monopoly, you have no choice but to pay $2 for a $1 loaf of bread. I’m now providing you with $1 of value, but I’m also taking $1 extra dollar from you too. This is rent seeking. I’m taking $2 in exchange for $1 of value.

Now say I invent a new machine that allows me to make a ton of bread. But it’s much faster and more efficient. I waste less heat, flour, water, etc. in the process of breadmaking. I charge 50 cents for a loaf of bread compared to the $1 you were paying before. In this example, I’d get a monopoly on the bread market because everyone wants to spend 50 cents, not a dollar. But I’ve created a ton of wealth for the planet. I’ve indirectly doubled the amount of bread in the world for a given amount of time and resources.

If someone becomes a billionaire by bribing politicians, stealing money, scamming people, etc. then they are rent seekers and they are a huge problem. If they become a billionaire by creating hundreds of billions of dollars of wealth for others and just getting to keep a small percentage of it, that’s fine.

Most successful business people fall into the non-rent seeking category. People voluntarily give them their money in the form of buying their products and investing in their companies. But there will always be scam artists who find newer and more clever ways to move money from your pocket to theirs.

13. It won’t last forever.

Billionaires in the US have approximately a combined total worth of $9.1 trillion as of 2018. Probably higher now. Total government spending in 2019 (before covid) was $4.4 trillion. Almost definitely higher now. So say the government takes all wealth away from billionaires, every penny (including both liquid and non liquid assets).

That funds the government for what, 3 years? Then if you add up normal government profits, maybe this cash is able to help for a decade without increasing the deficit or something. Then what? These hugely successful people are now worthless, have no influence in their businesses (since their non liquid assets were taken, they no longer have any influence in business), they can’t help move us forward any longer, etc.

Other people are no longer motivated to make revolution new inventions, technologies, etc because they see no benefit from it. So we get one decade of funding and many problems solved. But then we’re back to square one.

12. But, how can we fix it?

There are people starving and homeless.
How do you think making the rich give more money to the government will address this?

I do agree with the majority of your CMV, but the problem isn’t just rich people by themselves, it’s the collusion between the rich and the government.

If you can agree that the government is essentially a sock puppet for the elite, why would making the elite give more money to the government solve anything? They’ll just get it back under the table somehow.

11. Talent vs. products.

Amazon, apple, Facebook, Microsoft, tesla, spacex, PayPal etc are all direct byproducts of billionaires coming up with great ideas and making them reality. That’s just listing a few. Many more innovative, life altering companies are bound to come up as time goes forward assuming these companies and those in charge are allowed to succeed.

Now if you think we’d be better off without BOTH these companies and billionaires, then I think you have a solid argument, although I’d disagree. However, if you believe these companies are a positive to society and believe they they should exist, you have to be willing to accept billionaires will be behind it or succeed enough to become billionaires as a result.

10. This is one point of view…

The bigger the government the more opportunity for rent seeking. I am a libertarian and agree that income inequality is a big problem but I vehemently disagree with most of the solutions proposed by leftists. A “wealth tax” is a horrible idea for example, for logistical reasons if nothing else.

9. They didn’t do it alone.

But they depended on other people, ideas, and infrastructure every step of the way.
That’s how society functions. Nothing great comes without support. These people happen to have the leadership skills, the determination, the skills and the drive to make great things happen. They can get a team together to solve problems really effectively.

They can lead better than almost anyone. Yeah, right place and right time definitely makes a difference, but very few people have the skills to make these kinds of things happen. Most people couldn’t make stuff work even if they also were in the right place at the right time. For example, do you think spacex would even be a possibility without Elon musk?

Do you think smartphones would exist without Steve jobs? I don’t see these things existing without the leaders at the core. Some things were inevitable, like amazon, but I doubt anyone could’ve made a simple, nice system like jeff Bezos did

Society made these people
Then what’s the problem with them existing? If society thinks they add value to the world, what’s wrong with them being wealthy?

8. It all comes back to the government.

People in San Francisco who own houses influence their government (call it bribes if you want) to keep zoning laws very strict to prevent many multi-family homes from being built. This is because there’s a finite amount of space in SF, they have single-family homes in that space, and the scarcity of family units drives their values up to insane heights.

SF could rezone to allow a lot more multi-family units to be built, which would start bringing down the housing price, but they don’t because of the pressure from the people who have houses.

This is rent seeking, and it usually happens because of government regulation creating a scarcity, or in this case a government/land scarcity combined.

In most states you can’t just open up a restaurant and start selling drinks, you need a license. In California they have a limit on how many liquor licenses are sold in an area. and in a popular area where the licenses have all been issued you can pay a license broker close to a million dollars to buy it from someone else. That broker just sucks money out of the system, the guy who bought the license originally and just made bank sucks money out of the system. Neither of them would be getting paid if not for the artificial scarcity created by the government.

So why doesn’t this change? Of course, established restaurants, bars, and liquor stores already got theirs, so they keep influencing the government to keep the system from changing.

7. Deserves is such a weird word.

But they depended on other people, ideas, and infrastructure every step of the way. Their success is more of a matter of their talent being in the right place at the right time.
By that logic, NOBODY ‘deserves’ the money they’ve made or their accomplishments.

Everyone, whether you’re a billionaire or a hundredaire, has at some point walked on a sidewalk that was built by the Government, or driven on a street built and maintained by the Government, or attended public school, or called the Police or Fire Department, or put out their trash to be picked up. In other words, everyone has made at least some use out of the Government services and infrastructure that our tax dollars pay for. That doesn’t magically mean that you therefore didn’t ‘earn’ anything you’ve ever done.

This is like telling someone that they didn’t really earn their Doctorate (or whatever accomplishment), because if their parents hadn’t taken care of them when they were children they wouldn’t have been able to do that.

6. Throw the rules out the window.

The problem is the belief in political authority.

If people realized legislators have no special ethical license to coerce people, billionaires wouldn’t be able to use government apparatus to enforce the special rules they write for themselves.

AKA: the problem is people feeling like they have some sort of obligation to play by the rules billionaires pay legislators to write.

5. Not everyone has a problem with it.

Ok let’s take your point about depending on other people, infrastructure, etc. on the infrastructure part, businesses and wealthy individuals pay taxes to local, state, and federal governments. These taxes pay for infrastructure. You could argue that taxes on wealthy individuals should be a larger percentage of government revenues, but that alone wouldn’t prevent billionaires. Hell, you could tax dozens of people at 90% of their net worth and they would still be a billionaires.

As for the other people and ideas, it comes down to how free you think the labor market is. The employees with talent and ideas, the people who actually make the world go round, they know their worth for the most part and they will be paid competitively.

If Elon Musk wants to make billions of dollars on Tesla, he needs to make Tesla into an extremely innovative and valuable company, and to do that he needs to pay for the best engineers. You act like these employees are getting swindled or something.

Now of course there are inefficiencies in the labor market, but by and large you can’t make billions by paying people a pittance.

4. If only it were that easy.

Why don’t we just make rules to make the government transparent? Or you can’t be worth a certain amount of money and hold government positions?

Our politicians actively refuse to do this. Why do you think they have bills that are thousands of pages long and say things like “We have to pass the bill to find out what’s in it.”

As a side note, who do you think wrote most of every big bill that congress has passed in the last 40 years?

3. Change your mind(set).

It’s going to be that way, until the working class change their mindset with who they are, what they want, and the idea that they can be rich. Wealthy people own the rules because they have a vision they are achieving and going after.

They know how to problem solve to get what they want, they call creative accounting and financial intelligence for a reason. If you take all the money in the world and divide them equally, in a few years the rich will still be rich, the poor will still be poor. It’s all mindset.

2. Does that mean it’s never going to change?

Why don’t we just make rules to make the government transparent?
The same reason you don’t expect to infiltrate the mafia and get them to turn to a legitimate business. The government has no incentive to be transparent because it doesn’t actually win any business voluntarily. It sticks a gun in your face and demands your money, and will lock you up if you don’t agree to pay it.

Politicians have no reason NOT to accept bribes and enable rent seeking behavior when the only “punishment” they face is not being re-elected if they’ve been caught.

1. Capitalism for the win?

You cannot have a functional modern economy without some people getting very rich. It is a natural tendency for wealth to collect. This does not mean economies should not have functional redistribution mechanisms. Redistribution is required to make sure wealth concentration does not become to focused. But redistribution needs to be a lot more nuanced than picking a number and not letting people go over that.

The only type of economy that would not have super rich are socialist/communist ones. However in practice they do not work for modern complex economies for very simple and predictable reasons. They require centralized planning that is almost impossible to do well, even without the corruption which will enevitably set in. The systems also try to flatten the rewards for all work, however different jobs require different energy and time inputs a produce desperate value, so flattening their valuation is unstable. Lastly, like any system communism is susceptible to greedy and power hungry induviduals corrupting the system. Do to the amount of control required by the government to operate a modern complex socialist economy the effects of corruption will be magnified. There have been many functional communist societies in human history. Most tribal societies functioned well with the community working together and sharing resources equally. However, those societies and the economies were far more simple and left little room for gaming the system.

This is not to say some socialist policies are not good for society and do a better job a providing certain services compared to a capitalistic approach. For example universal health care is demonstrably more efficient. A blend of capitalism, socialism, and yet unthought of economic systems is required for a fully functional society.

Another thing to consider when discussing billionairs is the difference between wealth, liquid assets, and cash. For instance Jeff Bezos is worth a lot of money, but most of that is not liquid assets or cash. The lion’s share of his wealth is his stake in Amazon which only has value as long as the company generates cash. This is the case for many of the world’s richest people. Also take Bill Gates, he is worth billions but has provided jobs for thousands people through Microsoft and paid his workers much more than his worth over the years.

Lastly, all to often people will look at the US and decide the rich need to be taxed at a higher marginal rate. However taxation is only one half of wealth redistribution. The use of that money is just as important. I would argue the proper discussion about taxation needs to occur alongside a discussion on government spending. If instead of using tax revenue to fund the military industrial complex and a disastrous foreign policy we used the money on infrastructure and a truly reformed healthcare system we may find there is nothing wrong with current tax rates. The trouble in the US is not collecting funds for redistribution, its actually getting them to the lower rungs of the socio-economic ladder.

I’ve got to say, I’m surprised more people can’t align on this one – the vast, vast majority of us are all on one side of the playing field, after all.

That said, I’m no economics professor. If you are (or if you just have thoughts to share) the comments are open!