Millionaire Democratic presidential candidate Bernie Sanders is on a rampage against billionaires.
“We need a tax system which asks the billionaire class to pay its fair share of taxes and which reduces the obscene level of wealth inequality in America,” Sanders said when he released his proposal for an estate tax of 77 percent on estates worth more than $1 billion.
And he’s recently focused on the top three U.S. billionaires: Bill Gates, Jeff Bezos and Warren Buffett—all of whom, we might add, are quite liberal and big supporters of the left.
He’s not the only Democratic presidential candidate to express such anti-billionaire consternation.
What he ignores is there are different roads to the billionaire’s club.
First, the criminal billionaire. That’s a person who has made his or her fortune by engaging in illegal, or at least shady, activities such as drug smuggling or black-market arms sales.
Second, the government-made billionaire. This refers to dictators or strongman rulers who amass millions, if not billions, of dollars through corruption or by stealing from their constituents. For example, Forbes magazine used to rank Cuba dictator Fidel Castro as one of the world’s richest men. (See MSN’s list here.)
Let’s also include in this section crony businessmen who persuade the government to grant them special monopolies. The monopoly allows that person to become very rich, who in turn funnels money back to the politician(s) who made it possible.
Incidentally, the first and second types of billionaires overlap.
Third, the honest billionaire. This is a person who starts or takes over a business that provides products or services that consumers or other businesses want and voluntarily choose to pay for.
These billionaires often employ thousands, if not hundreds of thousands, of employees. And they become rich in so doing.
But it is important to understand that the majority of that wealth typically comes not from salaries but the increased value of their company’s stock.
Yes, their salaries are often very generous, but they typically pale in comparison to the value of the stock provided by the most successful companies.
And we should add that these honest billionaires often create lots of honest millionaires who likewise benefited from rising stock prices.
Ironically, Sanders never seems to criticize the first or second type of billionaire, just the third.
Indeed, Sanders is more likely to praise and even coddle the government-made billionaire, as in 1988 when he toured the Soviet Union and in 1985 when he praised Fidel Castro and the Sandinistas.
Billionaires are not the problem; honest billionaires are the solution. They build companies and in the process build wealth.
All Sanders wants to do is to take that wealth and give it to others so he can “build” a constituency that will put him in power—much like those government-made billionaires he’s so often praised.
July 9, 2019