Bernie Sanders wants to tax extreme wealth.
Bernie Sanders is on a tear, tossing off declarations about how He Alone Can Fix the Economy. One day he’s on Twitter announcing we need national rent control because, apparently, the Vermont senator walks around knowing the correct price of every housing unit in America. The next, he’s declaring “Billionaires Should Not Exist.”
And, hilariously, an aide to Sanders posted a video mocking Amazon.com AMZN, -1.07% founder Jeff Bezos for funding space exploration, saying “we’ve got a better idea.”
Because, in a fight over who should allocate American capital, bet against the guy who conjured $1 trillion out of a business plan that his wife at the time wrote in a car. And bet on the socialist crank who knew the proper price of every asset in America, all this time, and how to run Wall Street, insurance and health care (plus real estate), yet didn’t make a million until age 75 and is defensive about it.
Counterpoint: Billionaires haven’t earned all their wealth
Let’s take on Sanders’ idea about billionaires — which inspired the wealth-tax proposal that, along with Medicare for All, may be his most provocative policy idea. The idea is less that inherited or dynastic wealth stagnates the economy — not an unconventional thought — but that any great wealth accumulation bespeaks immorality.
Who are the billionaires?
I’ll differ with both. And since America only has about 600 billionaires, it’s a small sample to think about. (Since Rupert Murdoch controls the company NWS, -0.91% that owns MarketWatch, nothing here about him). Let’s think, in broad strokes, about how they made their money and what the best of them do with it.
The picture’s more flattering than Sanders thinks.
Microsoft MSFT, -1.25% co-founder Bill Gates, America’s second-richest man behind Bezos, is on the verge of eradicating cholera. No. 3 Warren Buffett BRK.B, -0.03% , who knows what he’s good at and what he’s not, lets Gates manage his charitable money.
No. 10 Mike Bloomberg gave away $767 million last year, with much more to come. He’s been campaigning for a decade to close coal-fired electricity plants, the most-concentrated source of global warming, and is now helping gun-control advocates outstrip the financial power of the National Rifle Association. When either climate or gun violence gets solved, Bloomberg will be a hero.
In all, about a third of American billionaires have signed the Giving Pledge, vowing to give away at least half of their fortunes.
And of course, Donald Trump’s foundation once gave $7 to his kid’s Boy Scout troop.
Bezos hasn’t given away much — his ex-wife signed the Giving Pledge, but he hasn’t. Yet even he pledged $2 billion last year to homelessness and education causes (a drop in his bucket) and he bought the Washington Post. That may have saved the country from despotism — that is, from President Trump.
No great crime
Which brings us to the other point: The notion of billionaires as robber barons doesn’t fit.
There’s a cliche that behind every great fortune stands a great crime. But the crimes, if any, behind today’s great fortunes look dinky alongside the Triangle Shirtwaist Fire.
Microsoft bundled a free Web browser with its Windows operating system. Horrors! Facebook sells ads, using data users give them. The humanity! And some Wall Street billionaires skate close to the edge on insider trading.
Hedge funds aside, look at the utility you get from relatively young companies founded by people who became billionaires.
Google GOOG, -1.59% , of course. Amazon has cut prices of everything it touches, especially corporate computing. Netflix NFLX, -0.56% revolutionized Hollywood, streaming channels now make 500-plus scripted series yearly, creating hundreds of thousands of jobs. Apple AAPL, -0.70% invented the iPhone. Gilead Sciences GILD, -0.44% solved Hepatitis C — curing mine. And so on.
Yes, way down the list, you find people who spread vaping, and the opioid-enriched Sackler family, now being parted from their fortune by lawyers. But they’re the exception.
Billionaires acting on politics different than yours, from the Cathy family’s promotion of anti-abortion groups with Chick-Fil-A dividends to Bloomberg’s liberal agenda, are entitled to do so.
About 13% of the world’s billionaires inherited their money, while 55% are self-made and 31% are a mix of both, according to wealth-management firm WealthX. The biggest shares come from finance and real estate (24%, says Forbes magazine), fashion and retail (11%), and technology (10%, including a third of newly minted billionaires).
Manufacturing and oil and gas combined — the dirty stuff — provided 13% of billionaires. And not a health-insurance mogul on the list.
Sanders, like his rival Elizabeth Warren, makes a good point that accumulated, stagnant wealth is bad.
But if we want higher working-class wages, push for higher minimum wages and more collective bargaining. If we want to finance government equitably, a wealth tax is as good an idea as voters decide it is. A $1 trillion deficit while domestic discretionary spending is the smallest share of the economy in decades means upper-bracket taxes are too low.
But saying wealth accumulation stagnates innovation bucks reality. The prospect of wealth is the antidote to economic stagnation, not its cause. Sitting still, betting on old ways lasting forever, causes stagnation.