It’s easy to hate billionaires. Although “hate” may be a bit strong, let’s rather say that most people are less than well disposed towards them. The narrative goes like this – to accumulate that much money is a mark of greed, or moral turpitude, or worse. It seems to violate some unwritten law of civil society. And there are indeed a great many odious representatives of the mega-rich class, and many who became billionaires by accident – they inherited it.
We can all agree, I think, that having your name on a last will and testament does not really count as fairly earned, so let’s ignore those people (and the records show that subsequent generations usually fritter it away anyway).
We’ll confine ourselves to the self-made crowd, with Musk at the top of the pile and the rest of his well-known and not-so-well-known cohort, including Page, Brin, Bezos, Dell, Zuckerberg, Huang, Ellison, Bloomberg, Buffett, Soros, Ma, Thiel and about 2,000 others, according to UBS’s latest Billionaire Ambitions Report, which counts 2,059 self-made billionaires among a global total of just under 3,000 (470 of them in mainland China).
Of course, the definition of self-made is a bit squishy. Some really did come from straitened circumstances, others had a starter pile to build upon, and others had rich connections to mine. No matter. Even if we take the truly unassisted entrepreneurs among them, why are they (or at least their sole possession of billions) so roundly reviled? Or deserving of contempt? Or assumed to be guilty of something malfeasant, corrupt?
Are there any good billionaires out there? This splits into two excellent questions. One is the people themselves. Can you even lay claim to virtue when you have so much and so many have so little? And secondly, can such wealth sitting under the control of one pair of hands be justified in any political system that strives for fairness for all?
So, let’s start with this. Should anyone be allowed to earn and keep that much money in the first place?
Hidden assumption
The question contains a hidden assumption, that there is a ‘we’ somewhere doing the allowing, a committee of the deserving handing out permission slips for wealth. There isn’t, of course. What there is instead is a system (both in the capitalist West and proto-capitalist systems like China) in which billions of people make trillions of small decisions every day, each one animated by exactly the same impulse. We all hunt for the good deal, the bargain, the profitable trade.
We comparison-shop, we haggle, we buy low and sell high when we can manage it, and we feel a small glow of triumph when we do. The billionaire is not a different species engaged in some alien activity. He or she is simply someone who played the same game we all play, every day, at the till and in the code and on the property market and at the bank and in the salary negotiation, and played it staggeringly, freakishly better than most of us.
Every rand of Bezos’s fortune began life as somebody clicking a button because the thing was cheaper and arrived faster. Every cent of Huang’s came from his original genius at spotting a gap in the silicon core of computer architecture, and subsequently someone else deciding that his chips were of sufficient value to pay the price. Brin and Page came up with the idea for a better search engine in a dorm room and met a massive unmet demand. Nobody was conscripted.
The wealth is the residue of a few billion voluntary transactions, each one of which the other party judged, at the time, to be a good deal. That is how the system works, and it is genuinely difficult to argue that it is rigged when you consider who some of these people were at the start.
Forex flows
Huang arrived in America as a child and washed dishes. Jack Ma failed his university entrance exams twice and was rejected by KFC. Soros survived the Nazi occupation of Budapest and came to understand capital and forex flows better than the Bank of England (his first big score). Musk’s childhood was middle class and his arrival in the new world was without the ballast of capital and connections. If the system were rigged, it was rigged spectacularly badly, because these were precisely the people it should have kept out.
Then there is the question of what the money does once accumulated. The record here is mixed, but in many, if not most, cases the evidence is that a single pair of competent hands deploys capital better than the alternatives.
Governments allocate money through grinding committees, five-year plans, endless politicking, flawed procurement processes and the gravitational pull of the next election. NGOs allocate it through a sludge of overheads, consultants, workshops and donor-relations departments. The results are frequently well-intentioned, occasionally effective and almost always slow. And then there is the professional class of money managers – competent custodians, but custodians are all they are. They do not build rockets or fund vaccine programmes. They rebalance portfolios of equities and bonds.
Focused private wealth
Against this, consider what focused private wealth has done. The Gates Foundation has helped drive measurable, dramatic collapses in malaria and polio, moving faster than any multilateral body because it answers to nobody’s re-election campaign or endless UN bickering.
Bloomberg’s money has bankrolled public health interventions that health ministries could not politically stomach. Musk, whatever one thinks of the man’s Twitter feed and politics, has provided connectivity to 12 million people, some isolated by war or geography.
I’ll stop here – it is a very long list.
These are not marginal improvements and would have been unlikely to have happened at all under any other ownership structure. Capital allocation is everything. Those who know how to do it grow businesses and wealth for themselves and others. Without smart capital allocation – stagnation and immiseration.
And that is before we count the operations of the businesses themselves, the millions of jobs, the pension funds fattened by their shares, the products that we grumble about and cannot live without. The billionaire’s fortune is mostly not a Scrooge McDuck vault of coins and mansions and yachts; it is equity in enterprises that employ, produce and pay tax.
On this last point, there is a lot of real and valid criticism, but most of the blame lies with the political system that makes legislation (and which allows big-money lobbying interests to influence decisions). Who among us does not seek to pay the minimum tax under law?
None of this requires us to canonise anyone, which brings us to the second question, the people themselves. Yes, some of these people are pretty awful – arrogant, mercurial, cruel, out of touch and without a shred of nuance or introspection.
But for every Peter Thiel nattering on about the anti-Christ, there are those who are decent and quiet, like Tim Cook at Apple or John Mackey at Whole Foods. But one does not see them in the headlines as often as the brasher characters. Their relative anonymity does not feed algorithms.
Blind spots
Most billionaires are somewhere in the middle, a familiar mixture of vanity, generosity, insecurity, ambition and blind spots – which is to say, just like the rest of us, only with the volume turned up. Money is an amplifier, not a character. It makes the generous more consequentially generous and the awful more consequentially awful.
The reflexive contempt for the whole class says less about them than about us – a suspicion that anyone who won that big must have cheated, because the alternative – that they simply played our game better than we did – is somehow harder to bear.
[Image: Anastase Maragos on Unsplash]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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