In most of John Tamny’s posts for RealClearMarkets I agree with some of his observations but disagree with many. His most recent offering, critiquing an article by Financial Times columnist Jenny Lee, is no exception. I agree with him that in many cases billionaires deserve their wealth:
Lee has a problem with the superrich. As she sees it, “We don’t need billionaires. We need their billions back. For the cities that already exist. For the people in them.†That’s why Lee supports Warren Buffett’s “Giving Pledge.†She believes that “it is moral to fix what is broken,†and that the billions given back by billionaires will help fix what she deems broken. Where does one begin?
Up front, it’s their wealth. So while the self-unaware Lee isn’t at all guilty about giving away that which she had no role in producing, it should be said that it’s not my place to tell the rich what to do with their billions.
There are cases where the very rich clearly do not deserve their wealth. For example, politicians like Mike Madigan who has amassed a fortune by cross-ruffing his law practice, challenging property tax assessments, with his post as Illinois House Speaker, increasing property taxes and further complicating them. That is de facto corruption and he doesn’t deserve whatever he’s derived from that corrupt practice. He’s no exception. Any number of congressmen and senators have entered public office as paupers and emerged after a lifetime of “public service”, have accumulated a fortune.
Did Bernie Madoff deserve his wealth?
However, I think Mr. Tamny is overly rosy or maybe romantic about how billionaires become billionaries. Those born in a log cabin who pulled themselves up by their bootstraps, meeting “the needs of millions and millions in order to earn billions” are rare even among billionaires. I’ve been acquainted with a number of Fortune 500 CEOs over the years and those I’ve met have been of a particular stamp, skillful navigators of the currents of our society, government, and economy, politicians who exploit government policies to their own advantage.
Some, like Donald Trump, have parlayed inherited wealth into more wealth, or, in Mr. Trump’s case, about the same wealth he would have it if he’d put his inherited wealth into a mutual fund. Not dishonest but not particularly praiseworthy, either.
In the particular case of Warren Buffett, it would be much more virtuous if he were to give his wealth to the deserving poor while he was alive rather than after he’s dead. He reminds me of the young man in Matthew 19:20-22:
“All these I have kept,†said the young man. “What do I still lack?†21 Jesus told him, “If you want to be perfect, go, sell your possessions and give to the poor, and you will have treasure in heaven. Then come, follow Me.†22 When the young man heard this, he went away in sorrow, because he had great wealth.
IMO we’re going to have billionaires. There will always be the ultra-talented who fully deserve their wealth along with those who want enormous wealth and who are skilled navigators of the sort I’ve seen. Rather than confiscating their wealth we should be making the waterways easier to navigate and therefore less profitable.
The “we need their billions back” doesn’t make much sense. Jeff Bezos isn’t a billionaire because people gave him money, his billions aren’t sitting in a bank account somewhere waiting to be distributed.
Folk Marxism. The only way someone can become richer than anyone else is exploitation.
The rest is a version of the “roomful of money” theory. She’s been reading Disney comics too much.
Coveting what others have, along with dreaming and demanding a share of another’s wealth is legendary. The progressives seem to capitalize on such yearnings, churning them adroitly and then channeling their festering desires into loyal constituencies.
However, people with money are the ones usually behind putting a new wing onto hospitals, contributing funds to R & D, space travel, museums, art foundations, big chunks to diaster relief etc. Therefore, I tend not to begrudge those with big money.
NO! This is why we need a wealth tax. Next you’ll be talking about Trillionaires. Who could tax them?Their power is too great. We need relief from the Oligarchs.
“…or, in Mr. Trump’s case, about the same wealth he would have it if he’d put his inherited wealth into a mutual fund.â€
The most credible estimate I’ve seen is Trumps inheritance share was $40mm. At 8% per year it would double every 10 years. That would make it in the $700s over four decades. That ignores taxes on mutual fund STCG and dividends and personal consumption. It’s more likely a mutual fund would have yielded $100-$150mm.