Between February 1692 and May 1693, in Salem, Mass., more than 200 people were accused of witchcraft, 20 of whom were ultimately executed. Five more died in jail.
It’s a dark and shameful blot on the history of the colony—on the history of humanity in general, truth be told. The trials speak to the nature of many things. Theocracy. Society’s view of women. Mob mentality. Criminal justice. Fear of the unknown, or at least the unexplained. Its lasting impact on our collective conscience is evidenced by the fact that 300 years later, we still use the term “witch-hunt” to describe unjustifiable persecution of a person or group.
So, with that in mind, I think it’s fair to say the vitriolic and very public denouncement of billionaires in America today may be accurately described as a modern-day witch-hunt. That the ultimate goal of this billionaire bash-fest is expropriation and redistribution of wealth and not public execution is hardly of any matter.
Witches/billionaires are a blight on our society. Their corruption and immorality are self-evident to the righteous. They are evidence of our sin as a population. Witches/billionaires harness the power of Satan/money for their own evil gains at the expense of the good, God-fearing/hard-working everyday people of this land. We must purge them from our ranks lest we fall prey to their wicked ways and wiles. Only through torture/taxation may their souls escape damnation and our own civilization be saved. Burn the witch. Soak the rich.
The Algal Bloom of Competitive Billionaire-Hating
A bit melodramatic, is it not? And yet, here is where we find ourselves. If my description of the situation that burst to life like an algal bloom smacks of pearl-clutching, it’s no more histrionic than the source material.
That particular tweet is in reference to the 60 Minutes announcement by former Starbucks CEO Howard Schultz that he’s considering a run for president in 2020. Granted, antipathy toward the wealthy isn’t a new phenomenon. But in the post-Occupy America that we live in, the sentiment of sticking it to the rich has become increasingly more fashionable. All anyone need do is cast a quick glance at the social feeds of progressive darlings like Sens. Bernie Sanders and Elizabeth Warren or, the newest belle of the ball, Rep. Alexandria Ocasio-Cortez, to see the public evidence.
And while it might be simple enough to ignore the persistent bleating of the Twitterati in this matter, you can hardly swing a cat without hitting a mainstream article calling to abolish billionaires or openly questioning whether billionaires should exist or insisting that their simply being is indicative of the immorality of the capitalist system and so on and so forth. It’s almost like they’re trying to validate my belief that—along the same lines as Rule 34—if it exists, there is a competitive version of it, including this new sport of “Who Can Hate Billionaires the Hardest?”
Factual Correctness and Moral Rightness Are Not Mutually Exclusive
This great hue and cry about the “problem” of billionaires seems to me to be based in two enduring human failings: a fundamental misunderstanding of economics and envy.
As esteemed economist Murray Rothbard said:
It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.
These “loud and vociferous” critics of the existence of billionaires are coming from a state of ignorance. But they seem to be taking their cues from Ocasio-Cortez, who recently declared that it is more important to be morally right than factually correct. This bit of philosophy is offered up as though moral rightness and factual correctness are mutually exclusive, but they most certainly are not. As evidence, I submit the father of economics himself, Adam Smith.
It isn’t widely known, but Adam Smith never really considered himself an economist, and not just because economics was not yet a defined area of study. He considered himself a moral scientist. And, in the tradition of the Scottish Enlightenment, he was one. As I wrote in the show notes for this particular episode of FEE’s weekly podcast, Words and Numbers:
[Academic] study [during the Scottish Enlightenment] was largely divided into two categories: natural science and moral science. Natural science largely explains itself, but moral science was an attempt to ground ethics and morality in as much scientific reality and fact-based reasoning as possible, and it's from that branch of study that the subject of economics bloomed. If you want to make moral statements, if your heart is in the right place, then you need to have your facts straight.
Not only is it possible to be both morally right and factually correct, it is imperative that you be so, especially if your goal is to better the world you live in.
Most of the Richest Americans Are Self-Made
There is a widespread belief that if your net worth exceeds a billion dollars, it was achieved through ill-gotten gains, passive inheritance, or out-and-out criminal activity.
By and large, this isn’t true. Forbes puts out an annual list of the 400 wealthiest Americans. The 2018 list (the most recent) includes some other interesting data about the ultra-rich, and it’s worth looking at both the results and the methodology. According to their accounting (emphasis added):
At 269, list members with self-made fortunes vastly outnumber those who inherited wealth (64 members), and those who inherited a fortune and have worked significantly to increase it—what Forbes calls “inherited and growing” (67 members).
For the first time, we scored each Forbes 400 member on their philanthropic giving, with scores ranging from 1 to 5, 5 being most philanthropic. For details on our scoring methodology, go here. The list can be sorted by philanthropy score here. In 2014, we launched a self-made score to give some perspective on where each Forbes 400 member started out in life—whether they were born into a wealthy family or started out very poor. Go here for details on the self made score.
If you follow that last link to the drilling-down of the self-made score, you’ll discover this fascinating little tidbit:
Over the past 30-plus years, the number of Forbes 400 members who have forged their own path, using entrepreneurial capitalism as a means to attain a vast fortune, has increased dramatically. This tells us many things, but one should stand taller than the rest: The American Dream, it seems, is alive and well.
Every Billionaire Is Not a Policy Failure
Surely, the progressive left doesn’t mean to include Oprah Winfrey (net worth: $2.6 billion)—the first black female billionaire and the 20th wealthiest American who had the highest possible Forbes self-made score and the left-leaning public wanted to run for president in 2017—in their sweeping condemnation of the entire billionaire breed. But in painting with such a broad linguistic brush, they do. Because, after all, “every billionaire is a policy failure.”
Dan Riffle is the “policy guy” for Ocasio-Cortez. I’m not exactly sure what that actually means, but it’s good enough to get him a Blue Check.
Regardless of Blue Checked opinions, a large percentage of billionaires in this country earned their wealth themselves through entrepreneurship. They saw a need, and they risked their capital to meet that need better than anyone else. Maybe it was the price point of their goods and/or services that attracted customers. Maybe it was the quality. Probably, it was a combination of both. The point is, by enriching the lives of others, by easing complete strangers’ pain points, they were able to enrich themselves.
Billionaires Are Necessary
But the marketplace is a fickle mistress. The vast majority of entrepreneurial endeavors fail. And of the ones that don’t, very few manage to grow to a point where the entrepreneur could be accurately called a millionaire, much less a billionaire. With the average company’s profit margin percentages hovering in the single digits, can you even imagine how many satisfied customers it would take to make a billion dollars? That comes to, near as I can figure, a whole lot.
And it’s not just customers these businesspeople are pleasing. Amazon employs around 600,000 people worldwide. Apple, about 132,000. Microsoft, 131,000. Walmart has a whopping 2.2 million employees. All of these companies are owned and/or managed by billionaires.
Now we have thousands of people out of work who now need that wealth because the billionaires they worked for are no longer billionaires.
If we confiscate the assets (and I do mean assets; when we calculate a person’s net worth, it’s not just the dollars in a checking account—the vast majority of billionaires’ net worth is tied up in capital investments and is not at all liquid), there goes the vast majority of investment in the now-former-billionaires’ own companies, capital that could be used in various ventures: business updates and/or expansion, research and development, charitable efforts, etc.. Without these investments, businesses and organizations are much more likely to go under because they can’t afford to update to please the marketplace. And when they fail, there go the jobs those businesses and organizations had created.
So, sure, the idea was to take the wealth that wildly successful billionaires worked extremely hard to create and redistribute it to those in need, but now we have thousands or even millions of people out of work who now need that wealth because the billionaires they worked for are no longer billionaires. In trying to solve the “problem” of wealth inequality, it’s now become worse. What you thought was water to quench the dumpster fire turned out to be gasoline. One need not be an economist or hold a Ph.D. to see that this is a less than optimal result.
Capitalism Is Working
But let’s leave aside the employment numbers and satisfied customers for a moment. Progressives are vocally dismayed by the fact that billionaires simply exist. And that their ranks are increasing. In short, they really hate that capitalism is working.
Once again, this is a misunderstanding of how capitalism works. The “largess of billionaires,” is it? Once again, we turn to Adam Smith in The Wealth of Nations:
It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our necessities but of their advantages.
An entrepreneur only succeeds in business by fulfilling the needs and wants of others. He or she improves the lives of others. And in improving others’ lives, in exchange they receive, generally speaking, currency that their customers have voluntarily traded for the entrepreneur's goods and/or services. All involved parties are acting in their own self-interest and all involved parties are satisfied, each believing that they are now better off for having made the exchange. “Largess” never comes into it.
Stealing Is Always Wrong
And then there’s this gem:
That is factually incorrect. Thankfully, there’s at least one economist who understands how math works.
Thankfully (for some), in the democratic-socialist world of Ocasio-Cortez, it doesn’t so much matter as long as they’re morally right. But I submit that those calling for wealth confiscation and an end to billionaires aren’t morally or factually right. If the average man-on-the-street were to demand another’s money on threat of violence, we’d rightly call it theft and demand the thief be punished and the victim made whole. But somehow, if that exact same situation occurs and we simply replace our Average Joe with a government employee, it magically becomes not only legal but laudable?
Sorry, folks, but that spade is still a spade.
Confusion and Envy
At its core, it’s pure covetousness that the socialist system of thinking not only enables but relies upon.
I don’t doubt that these prized opinion-holders genuinely believe that they are correct in every way when they say that billionaires shouldn’t exist, that they are evidence of the immorality of our (semi-)capitalist economy, that the only way to amass that much wealth is through shady shenanigans planned with malice aforethought. But it’s highly likely that what fuels that opinion is their own emotional reaction to financially successful people: confusion and envy.
Confusion because they don’t understand how a person could honestly earn that much money, and envy because they themselves don’t have that much. Sure, they dress it up as concern about the poor and “inequality” and “fair shares,” but at its core, it’s pure covetousness that the socialist system of thinking not only enables but relies upon. (And, perhaps, old-fashioned political ambition.)
Could it be possible that we didn’t invent witch-hunts because we hate witches, but we invented witches because we love witch-hunts?