I was having dinner with a group of very old friends a few weekends ago and we talked about many topics but one of things that came up was when “Bob” said something that startled me, “billionaires shouldn’t exist” he said as part of a discussion about the state of the economy, poverty and our retirement plans.
I was immediately turned off by what Bob has said because a core facet of living in a free world is the ability to do what makes you happy. No one ever says, “farmers shouldn’t exist” or “plumbers shouldn’t exist” because it doesn’t make any sense to say such things. We all know we need plumbers and farmers and I would argue that we need billionaires too.
Why Billionaires Shouldn’t Exist
The conventional “wisdom” of why billionaires shouldn’t exist is that they have too much money and if the ‘government’ could simply take away (i.e. steal) all the money that person has worked for and simply “give” it to the poor then everything will be better for everyone.
Assuming that we did just that and we took say, Jeff Bezos, money away and handed it to the poor what do you think the poor would do with the money? My guess is that they would take the money and spend it and whoever is on the receiving end of that transaction effectively becomes the new billionaire.
Amazon
Jeff Bezos became a billionaire because he created a great company that offered a delivery service for books right to people’s door. People were accustomed to driving to a book store like Barnes & Noble, walking the floor, peeking through shelves, looking for a book they wanted. Bezos took that concept and made it easy to find the book you wanted and ship it to your door. No one forced anyone to shop online at Amazon, it was just easier and better to do book shopping that way.
Later on Amazon added a bunch of other services and expanded retail from books to everything and it continues to put many other retail stores out of business. Again, no one is forcing anyone to shop Amazon, it is just so easy and effective that more and more people use it to do their shopping.
Should Millionaires Exist?
The obvious problem with stating that billionaires shouldn’t exist raises the question if millionaires should exist. There are 8 billion people on the planet right now and most people around the world live on $2 (yes TWO) dollars per day. By the “no billionaire” standard, millionaires shouldn’t exist nor should hundred thousandaires nor ten thousandaires.
Based on my math, if most of the 8 billion people live on $2/day and there are 365 days in a year then the most anyone should ever be worth is $2 x 365 = $730 but we’ll add an additional $270 as a buffer so the total anyone on planet earth should be worth at any given time is no more than $1000. Will that make everyone happy?
Why Billionaires Should Exist
I took a snippet from finance.yahoo.com about Amazon (shown above). Amazon has 1.525 million full time employees. That’s a lot of people that would be unemployed if ONE billionaire didn’t exist so how many more would lose their jobs if all of them were gone?
“Oh but we’ll just take their money” you say…well that’s called stealing or in ancient terms, “robbing Peter to pay Paul.”
The core problem I think needs to be fixed is a sensible taxing policy. In my post, ‘How I’m Investing My Buckets of Money: Taxable Bucket” I wrote about how I can avoid paying capital gains tax despite having millions of dollars. Those type of tax holes should be closed for EVERYONE so that the system is more fair but I certainly don’t think we need to cancel all billionaires.