October 22, 2021 | Reading Time: 3 minutes
Why does a democratic republic founded in opposition to monarchy tolerate billionaires?
They are never self-made.
In Thursday’s post, I imagined a world in which conservatives placed equality at the center of their sensibilities. It was fun, though hardly realistic. As one reader said, conservatives never do that. If they did, they’d be liberals. But the goal of the exercise was less practical than imaginative. At the root of the many problems we face are thorny questions difficult to answer. But there’s also a failure of imagination.
I don’t mean to say we need “attitude adjustments.” I mean to say we tend to accept conditions as if they were natural rather than what they are, which is constructed. So today, I want to stretch our imaginations by asking a deceptively simple question. Why does our democratic republic, founded in opposition to monarchy, tolerate billionaires?
There has to be a system established in tandem with the government, or in tacit approval by the government, to make such a pile of cash.
I say “deceptively,” because the question might prompt a quick reply: why not? Most Americans believe billionaires don’t intend harm, earn their wealth and, on the whole, benefit society. Some Americans even think billionaires deserve our respect. After all, they sell things consumers like, innovate useful technologies, and some, like Warren Buffet and Bill Gates, give away their fortunes to worthy causes. But what if I suggested this is rationalizing a democratic abomination?
Let’s cut through the haze to state two things plainly about how one person becomes a billionaire. One, it’s with the government’s blessing. Two, it’s with the government’s willingness to look the other way. The free market is not free. The very obscenely rich would not be nearly as very obscenely rich if it were. Billionaires, therefore, are not self-made. They are politically, legally and socially made. Yet the vast majority of Americans tends to believe billionaires are just the way things are.
Here’s the tip jar!
I am not suggesting some kind of malicious conspiracy. I am merely pointing out an obvious fact. Jeff Bezos is worth a reported $200 billion. (He is personally financing all those rockets to space.) It is not humanly possible for one man to work so hard so much so fast to earn $200 billion. (It’s been a little over two decades since he founded Amazon.) There has to be a system established in tandem with the government, or in tacit approval by the government, to make such a pile of cash.
Ten percent of the country owns 89 percent of stocks on Wall Street, according to new data from the Federal Reserve. “The top 1 percent gained over $6.5 trillion in corporate equities and mutual fund wealth during the pandemic,” CNBC reported this week. (The bottom 90 percent holds about 11 percent of stocks.) All that idle money is, moreover, taxed at lower rates than income you earn with your labor.
If it’s taxed at all. Lots of very obscenely rich people hide their wealth. (Gerard Ryle, head of the International Consortium of Investigative Journalists, said of the global network of secretive and legal tax havens: “The people who could end the secrecy … are themselves benefitting from it. So there is no incentive for them to end it.”) Meanwhile, the US government’s ability to find wealth to tax has been hamstrung by decades of starving the IRS of resources. The result, according to the LA Times’ Michael Hiltzik, has been a “tax gap” that reached a stunning “$630 billion in 2019 — more than 2.5 percent of gross domestic product and about 17.5 percent of the more than $3.6 trillion owed.”
Let’s say that again, with feeling. The very obscenely rich owe more than $3.6 trillion. That dollar amount should sound familiar. It’s roughly the same one being haggled over by the Democrats and the White House. If passed, the legislation would be, along with another spending bill, the biggest investment in the American people since the 1960s. Spending so much is controversial, but it might not be if the very obscenely rich had not, as they have for years, created the impression that there’s not enough money to spend on public goods and works. There has always been enough money, but this idea keeps living, in part due to the inability of normal people to imagine an alternative.
I haven’t explained yet why billionaires are a democratic abomination. I’ll close with that. I think it will help to imagine a political alternative.
What does it mean when a government of, by and for the people treats the very obscenely rich in ways it does not, and never would, treat the people? It means the government, founded in opposition to monarchy, has found ways of replacing the old order of greater mortals (kings and queens) with a new order of greater mortals. Instead of having “magic blood,” as Lindsay Beyerstein put it, this new order has magic money, meaning they have so much of it, they can create whole industries to rationalize their existence, thus forcing the rest of us to fight with each other over whether to pay for things like community college.
That’s not just wrong.
It’s a democratic abomination.
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John Stoehr is the editor of the Editorial Board. He writes the daily edition. Find him @johnastoehr.