Should we abolish billionaires?

With a record amount of billionaires in the U.S. and many citizens struggling to make ends meet, our economy and democracy is suffering.

673
SOURCERobert Reich

America now has more billionaires than at any time in history, while most Americans are struggling to make ends meet. With such staggering inequality, it’s fair to ask: should we abolish billionaires?

There are basically only four ways to accumulate a billion dollars – and none of them is a product of so-called free-market capitalism. 

Billionaires themselves aren’t the problem. The real failure is in how our economy is organized.

One way to make a billion is to exploit a monopoly

Jeff Bezos is worth $150 billion. You might say he deserves this because he founded and built Amazon. But Amazon is a monopoly with nearly 50 percent of all e-commerce retail sales in America (and e-commerce is one of the largest sectors of all retail sales). Consumers have few alternatives. 

Nor do many suppliers who sell through Amazon; for the first 25 years of its existence, Amazon wouldn’t let them sell at a lower price anywhere else. And Amazon’s business is protected by patents granted Amazon by the U.S. government and enforced by the government. 

If we had tough anti-monopoly laws, and if the government didn’t grant Amazon so many patents and trademarks, Bezos would be worth far less.

The same applies to people like George Lucas, Oprah Winfrey, or any other figure whose brands, ideas or creations depend on copyrights and trademarks, which are laws that have been dramatically extended in recent decades. 

If these were shortened, these people would be worth far less, too.

A second way to make a billion is to get insider information unavailable to other investors

The hedge-fund maven Steven A. Cohen is worth an estimated $12.8 billion. Now, how did he do it? According to a criminal complaint filed by the Justice Department, insider trading at Cohen’s SAC Capital was “substantial, pervasive, and on a scale without known precedent in the hedge fund industry.” 

Eight of Cohen’s present or former employees pleaded guilty or convicted for using insider information. Cohen got off with a fine, changed the name of the firm, and apparently is still at it.

A third way to make a billion is to pay off politicians

The Trump tax cut was estimated to save Charles and David Koch– each of whose net worth is estimated to be about $50 billion – and their Koch Industries – 1 to 1.4 billion dollars a year, not even counting tax savings on offshore profits and a shrunken estate tax

The Kochs and their affiliated groups spent an estimated $20 million lobbying for the Trump tax cut, including major donations to politicians. 

Not a bad return on investment: More than a billion dollars a year back for $20 million put in.  

Koch Industries has also been a major beneficiary of government programs to fill the Strategic Petroleum Reserveprovide roads and access to virgin growth forestsuse eminent domain to seize private land for oil and gas pipelinesget oil subsidies, and profit off federal lands.

A fourth way to be a billionaire is to get the money from rich parents or relatives. 

About 60 percent of all the wealth in America today is inherited.

That’s because, under U.S. tax law – which is itself largely a product of lobbying by the wealthy – the capital gains of one generation are wiped out when those assets are transferred to the next, and the estate tax is so tiny that only 0.2 percent of estates were even subject to it in 2017

America is creating a new aristocracy of people who never worked a day in their lives.  

Let’s abolish billionaires by changing the way the economy is organized. 

This doesn’t mean confiscating the wealth and assets of the super-rich. It does mean getting rid of monopolies, stopping the use of insider information, preventing the rich from buying off politicians, and making it harder for the super-rich to avoid paying taxes. 

In other words, creating a system in which economic gains are shared more widely.

Entrepreneurs like Jeff Bezos would be just as motivated by say, a $100 million or even $50 million. 

But the cost to our democracy of billionaires with enough wealth and power to dictate the rules of capitalism for their own benefit is incalculable.

FALL FUNDRAISER

If you liked this article, please donate $5 to keep NationofChange online through November.

Fall 2019

$
Select Payment Method
Personal Info

Credit Card Info
This is a secure SSL encrypted payment.

Donation Total: $5.00 One Time

SHARE
Previous articleHawaii bans herbicides on school grounds
Next articleUnfair food pricing is killing family farms and regenerative farming
Robert Reich
Robert B. Reich is Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. He served as Secretary of Labor in the Clinton administration, for which Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written fourteen books, including the best sellers "Aftershock", "The Work of Nations," and"Beyond Outrage," and, his most recent, "Saving Capitalism." He is also a founding editor of the American Prospect magazine, chairman of Common Cause, a member of the American Academy of Arts and Sciences, co-founder of the nonprofit Inequality Media and co-creator of the award-winning documentary, Inequality for All.

COMMENTS

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.