Why Society Hates Billionaires
A couple years ago I stumbled upon a Facebook post by a friend where he argued that income inequality is the worst it has ever been and therefore the poor are worse off today than ever before. This seems to be a widely shared view in today's culture that romanticises socialism. But there are 2 glaring flaws with this logic, which I'll discuss below.
Inequality Is Not A Problem
The masses see the world through a zero-sum lens. This very lens is what keeps most people poor. Money isn't scarce, it's readily available if you bring value to the world. The idea that for me to gain something, someone else has to lose something is a naive oversimplification. Rather than fixating on the size of our own slice of the pie, we should focus on the size of the pie as a whole.
Would our world be better off if Carnegie wasn't around to invent steel? We probably wouldn't have any buildings taller than 4 stories, no heavy machinery, no skyscrapers. Would our world be better if Bill Gates didn't bring us the personal computer? Would the world be better if Bezos never built Amazon? We fixate on the money these billionaires make, yet are completely oblivious to the fact that the entire modern society benefits from their inventions and if it wasn't for these very people, our technology wouldn't have advanced past the middle ages.
At the end of the day who cares that Bezos makes 100x more than you, if you can do 100x more today than your ancestors could BECAUSE of people like Bezos? Just 200 years ago having running water in a house was a luxury only the rich could afford, today NOT having running water in our home would be absurd. Just 50 years ago computers were only used by the government and select few corporations, today even the homeless have smartphones with processing power that would put the best supercomputer of that time to shame.
You could make the argument that not all billionaires are philantrophists, not all deserve the wealth they have, and that many spend lavishly on exotic purchases. But then you're making the argument that not all billionaires are the same, effectively agreeing with me that the real problem is not inequality, but individual people. Blaming the entire class of people for lavish habits of a few is toxic, and we went down that rabbithole multiple times in history. Let's not repeat the same mistake.
Society Would Not Spend This Money Better
If we're going to take money away from Elon Musk, we should probably have a better plan for that money, one that furthers our society as a whole more than Musk could himself. Let's discuss some alternative plans for Musk's money.
We could split that money evenly among his employees. After all, according to popular socialist belief, company executives unfairly benefit from the productivity of their employees. Basically the idea is that employees get underpaid for their contributions, while executives receive that excess income. But if that was true, how could Henry Ford afford to hire unskilled labor and pay his employees four times what they would have earned otherwise? Same is true of Google and many other innovative firms, where the average employee gets paid more than they would doing equivalent work elsewhere. Where exactly are these employees who're getting underpaid?
To be fair, companies like Amazon do hire low-wage labor to work in their warehouses. Similarly, many Uber drivers end up making close to minimum wage once all the expenses are factored in. But the truth is, regardless of which industry you're in, if you're doing tasks that are easy to automate, you'll always be competing with machines. The problem is not CEOs being greedy, it's that these jobs bring relatively little value compared to automating them completely.
While we're on the topic of automation, let's give it credit where it's due. The reason Henry Ford could afford to pay his employees so generously is because he figured out how to build an assembly line, automating most of the process of building a car. Automation is the main reason corporations make surplus income, not employees that get screwed out of their fair share of the income.
The other popular proposal is to tax the rich more, but where do these tax dollars go? To the government that has a horrendous track record both of finishing projects on time and under budget? Compare NASA to SpaceX, public schools to charter schools, public transit of US to privatized subway system of Tokyo. The government never does anything faster or cheaper than the private sector. Why? Because there is zero incentive to innovate, there is zero incentive to automate. When a company fails to innovate, it goes out of business. When the government fails to innovate, our collective tax burden gets higher. Giving more of Musk's money to Uncle Sam is quite literally flushing money down the toilet. And for what? Just so you feel better about income inequality?
Perhaps the better approach is to cut out the middleman entirely and give that money directly to the people. The population of US is 330 million, which means that if we took Musk's entire net worth of $190 billion and split it evenly, each one of us would get a one-time check of $570. Would that $570 make a difference in your life? And if so, would that difference outweigh the collective benefit of us all owning self-driving cars 10 years from now? Because that's what you're sacrificing when you ask that billionaires be taxed more. Majority of Musk's money isn't kept in cash in a bank account, it's tied up in company stock. By taxing him more, you're forcing him to sell a portion of his company to pay those taxes.
In the grand scheme of things, over-taxation of the rich is a one-way street to nationalizing the very businesses that give our country a competitive advantage, and if there is one thing we learned from Soviet Union and Cuba, it's that we want our businesses to stay private. After all, why give it to the politicians who have a track record of mismanaging it?
The Real Reason Society Hates Billionaires
The real reason our society hates billionaires can be summed up in one word: envy. We are resentful of those who have more than us. Most of us would rather see someone else fail than ourselves succeed. There is a genuine difference between how the poor and the wealthy think. The poor see the world as a zero sum game and are upset when others get ahead in life. The wealthy are happy to see people around them succeed, they're happy to share their own success, they see life as a game to make society collectivelly better off as a whole. Wealth is a mindset, adopt it and you'll rise to the top.