Op-Ed: Can People Who Think Billionaires Shouldn’t Exist Do Math?
Last week, ProPublica caused a stir when the it obtained tax returns (likely illegally leaked) for the 25 wealthiest Americans. It also performed an absurd “analysis,” designed to fuel outrage, by comparing each person’s increase in wealth (which we don’t tax) to the amount of income taxes paid. Plenty of outlets troubled themselves debunking ProPublica’s methodology. Despite that, many people still found themselves outraged that a billionaire didn’t pay taxes in a given year, even though the billionaire didn’t have any income.
The more hysterical people claimed that it’s disgusting that billionaires even exist. This assertion caught my eye. Let’s leave aside that such an statement betrays a lack of understanding even basic economics and focus on the math of being a billionaire. The arithmetic behind amassing that kind of wealth is surprising simple, showing just how a good idea can lead to what some consider obscene wealth.
Becoming a Billionaire Using Back of the Envelope Math
The first thing that we must remember is that the United States has 330 million people out of a global population of 7.8 billion people. If we exclude the world for a moment, that means that if a person can come up with an idea that causes 100 million people to pay them a penny more than their good or service costs, they’re a millionaire. That’s right, if less than 1/3 of the people in the U.S. give you a penny, you’re rich by most definitions.
Should a person want to be 1000 times wealthier and become a billionaire, their good idea must persuade every person in the country to fork over a whopping $3.03 cents. While many in the “billionaires shouldn’t exist” crowd suggest that the super-wealthy only accumulate their wealth by stealing from the poor, the working class, blind grandmothers, and babies, even if that were true, they’re stealing an amount so small that the Dallas County District Attorney wouldn’t bother to prosecute.
But what about Jeff Bezos? The wealthiest, and according to some, most sinister of all billionaires (because he’s the wealthiest). Certainly, to amass a fortune of his size, he must be stealing money from anyone and everyone. As of this writing, his fortune amounts to a hair under $197 billion. That means that he schemed his way, conning every single American man, woman, and child to part with $597.88. Put another way, a working poor person, if they make $20,000 a year over their entire career will still have $1 million in earnings. Even if Mr. Bezos made his entire ill-gotten fortune by only selling to such people, he would have managed to capture 0.0005978% of their lifetime earnings. For those who don’t do numbers, that’s almost six one-hundredths of one percent. Two-day shipping to your door, a streaming service, and the world’s leading cloud services platform never looked so expensive.
People’s Inability to Comprehend Large Numbers Makes Billionaires an Easy Target
Most people cannot visualize 1 billion of anything. People who demonize billionaires rely on that fact. They also rarely provide context for large fortunes, while implying that if folks didn’t have such large fortunes other people would have more. Illegality aside, suppose the government could seize and sell every asset that Jeff Bezos has and spread out the proceeds to all Americans. Everyone would be $600 richer. That doesn’t sound nearly as outrageous as one man possessing a fortune of $197 billion.
A couple of years back, another billionaire, Mark Cuban, made headlines when he said that he believes the first person who will amass a $1 trillion fortune is alive today. For a single person to possess that kind of wealth sounds unfathomable. However, to achieve what sounds unthinkable, a businessperson only needs to create a combination of goods or services that entices every person on earth to hand over $128.21. Given the growth in living standards and wealth over the last 50 years for the earth’s 7.8 billion people, that seems like an achievable goal.
When one breaks down how billionaires become wealthy, capturing small amounts of money per person, in a vast marketplace, their fortunes hardly seem shocking. As best I can tell, no one makes serious claims that billionaires in the developed world stole their wealth, so their existence strikes me as completely unsurprising. There’s a large moral difference between the fortunes of those who invent companies that change how we live for the better and dictators who use corruption and violence to amass their wealth. If we’re going to direct our wrath against billionaires, as many would like, my question is why don’t we start with the dictators? Which country should we invade first? Or are we okay with billionaires existing, as long as they have a military backing them up?