Hi. Economist here. There are two fundamental economic problems with billionaires. Both of which are quite easy to prove.
The first problem is that the very existence of billionaires literally precludes others from earning a fair & equitable wage.
Let's prove the case: 1/10
The first problem is that the very existence of billionaires literally precludes others from earning a fair & equitable wage.
Let's prove the case: 1/10
If we think of the total output of the economy as a giant pie and then we were to divide up the entire pie equally among all workers who contributed to making it, each slice would be roughly $130,000 per year*. 2/10
*2018 US Gross Domestic Income / # employed at the time
*2018 US Gross Domestic Income / # employed at the time
If wages were equitable, that would mean the avg worker, working the avg duration at an avg effort, should receive the avg income of roughly $130,000 per year. Of course, some might earn a bit more or a bit less for greater or less than avg effort, sacrifice or duration. 3/10
In other words, if you are putting in an average number of hours with average effort and you make less than $130,000 per year, you are being paid less than equitably. So, what accounts for the difference between equitable wages and our actual wages? 4/10
Simple. Some people take more than is equitable. They take much larger pieces of the pie than is proportional to their efforts or sacrifice or duration of work.
No person can amass a billion dollars equitably. 5/10
No person can amass a billion dollars equitably. 5/10
We all intuitively know this to be the case, even if we lack the economic theory behind it. We all know that no one works 100x or 1,000x or 10,000 times longer or harder than anyone else. But some do receive 100x or 1,000x or 10,000 times more income than others. Why? 6/10
Bargaining power. Wages bought & sold on a market settle on a price (wage) that is reflective of the relative bargaining power between buyers (owners) & sellers (workers). 7/10
So, the first problem with billionaires, or more precisely, a system that allows for billionaires, is that by allowing some to amass the type of income necessary to become a billionaire, we preclude others from receiving their fair share of the pie. 8/10
The 2nd problem is that they distort the allocative properties of markets. For example, billionaires spending billions on things like luxury yachts means our economy over allocates resources to produce luxury yachts & under allocates to produce things like affordable housing 9/10
So, by having a system that allows for billionaires, we not only preclude others from receiving their fair share of the pie, but we also have an economy that grossly misallocates resources.
So yes, every billionaire really is a systemic failure. 10/10
So yes, every billionaire really is a systemic failure. 10/10
