Why we love to hate billionaires

Recently, I was watching one of my podcasts and saw an interview with Walter Isaacson. The name might not be familiar, but the biographies that he's written are all well known—most notably that for Steve Jobs and Elon Musk. I was surprised to know that Elon grew up in such rough conditions where he received next to no emotional support as a child. Despite turmoil at home, as well as rejection and teasing by his peers who didn't understand his lack of social skills due to autism, he somehow managed to persevere and become a successful engineer. If Musk had turned out to be a regular 9 to 5 workaholic trying to make ends meet, his story would still be an inspiration, showing that one's potential can be realized even when it seems they've been dealt the worst hand. But, Musk is now among the wealthiest persons who've ever lived even though he started from such humble beginnings.

This got me thinking about the widespread animosity towards billionaires. It seems to be a popular pastime to demonize the ultra-wealthy. But where does this hatred stem from? Is it rooted in genuine concern about economic inequality, or is it something more primal—envy, perhaps?

The Myth of Ill-Gotten Gains

One of the prevailing narratives is that billionaires accumulate wealth through exploitation and unethical business practices. While there may be exceptions, the reality is that many billionaires achieved their status by providing goods and services that people willingly pay for. They identified a need, created a solution, and scaled it effectively.

Take Elon Musk, for example. He revolutionized the electric car industry with Tesla, pushing the boundaries of sustainable technology. Or consider Jeff Bezos, who transformed the way we shop with Amazon, offering unparalleled convenience and selection. Oprah Winfrey survived crushing childhood abuse to rise up the ranks from a tv reporter, to talk show host, and now billionaire media mogul and philanthropist. These individuals became billionaires not through malice, but through innovation, perseverance and market forces.

Furthermore, a significant portion of billionaire wealth is inherited. A 2021 report by the World Inequality Lab found that inherited wealth accounts for approximately 60% of total global wealth. This suggests that many billionaires simply started life with a considerable advantage, rather than amassing their fortunes solely through personal effort.

The Pot Calling the Kettle Black

It's interesting to observe that some of the most vocal critics of billionaires are themselves quite wealthy. Celebrities, politicians, and even academics who decry the "obscene" wealth of the 1% often belong to the top 10% of global earners. From the perspective of the remaining 90%, the difference between a millionaire and a billionaire is negligible—both are unimaginably rich and living unatainable lifestyles.

This raises the question of whether these criticisms are rooted in genuine concern for economic inequality or simply a form of virtue signalling. It's easy to condemn the ultra-wealthy when you're comfortably situated within the upper echelons of the income distribution yourself.

The "Redistribution" Fallacy

The concept of wealth redistribution is often presented as a simple solution to economic inequality. Take from the rich, give to the poor – what could be more straightforward? However, the reality is far more complex.

Firstly, wealth isn't some static entity sitting in a vault waiting to be divvied up. It's intricately linked to the productive forces of the economy. A significant portion of a billionaire's wealth is often tied up in assets like businesses, stocks, and real estate. These assets represent investments that generate jobs, drive innovation, and contribute to overall economic growth. Forcibly seizing and redistributing these assets could disrupt the delicate balance of the economy, potentially leading to job losses, decreased investment, and a decline in overall prosperity.

I saw this meme floating around on social media recently and while it's meant to be satirical, it's emblematic of the simplified way in which people think wealth can easily be "redistributed."

Secondly, the mechanics of redistribution are fraught with challenges. How do you determine a "fair" level of wealth? Who decides how the redistributed wealth should be allocated? And how do you prevent such a system from becoming a disincentive for hard work and innovation? If people know that their earnings will be forcibly redistributed, it could stifle ambition and lead to a less productive society.

History provides cautionary tales about the unintended consequences of radical wealth redistribution. In the 20th century, communist regimes attempted to create egalitarian societies through forced collectivization and wealth confiscation. These experiments often resulted in economic collapse, widespread poverty, social unrest, and eventually mass migration out of the country. While these extreme examples may seem distant, they serve as a reminder that tampering with the delicate mechanisms of wealth creation and distribution can have far-reaching and unpredictable consequences.

Finally, the focus on redistribution often overshadows the importance of addressing the root causes of inequality. Instead of simply shifting existing wealth around, we should focus on creating a more equitable playing field where everyone has access to quality education, healthcare, and opportunities for economic advancement. Investing in human capital and promoting social mobility are far more sustainable solutions for reducing inequality in the long run.

Beyond Envy: A More Nuanced Perspective

While concerns about economic inequality are valid, demonizing billionaires based on their wealth alone is misguided. To the extent that these billionaires aren't illegally manipulating markets for their personal gain, there is no grounds on which to direct any animosity towards them. Our energies are better spent promoting the systems which allow each citizen to generate their own wealth commensurate with their output, and reducing the systems which mitigate against that happening (e.g. political corruption, runaway debt, repressive tax laws etc.)

Instead of fostering resentment towards the successful, we should celebrate their achievements and learn from their example. After all, many billionaires are innovators, philanthropists, and drivers of progress who contribute significantly to society.

Perhaps it's time to move beyond the simplistic narrative of "us vs. them" and engage in a more constructive dialogue about wealth, inequality, and the role of successful entrepreneurs in a thriving economy.