Opinion: Billionaires Should Not Exist
Updated: Oct 18, 2021
During the 2019 Democratic Presidential Debate, Senator Bernie Sanders said 4 simple words: “Billionaires should not exist.” As of March 12, there are 2,095 billionaires in the world. They run the biggest companies and own most of the media. One even lives in the White House. Today, the world’s richest one percent have a combined net worth equal to that of the poorest half of the world’s population —3.8 billion people who are struggling to make ends meet.
Studies show that the human brain can’t process large numbers. To exactly show the difference between a million dollars versus a billion dollars, web developer Tom Scott uses distance. He shows that a stack of one million dollars is simply equivalent to a one-minute walk, whereas a stack of a billion dollars is around a 12-hour walk.
But how exactly are billionaires able to make as much money as they do?
There are four main ways to make one billion dollars: exploiting one’s monopoly and workers, receiving insider information, buying off politicians, and inheritance. None of these, however, are a product of free-market capitalism. Free-market capitalism is defined as a competition between companies and owners to create profit with little to no government intervention. The technique of becoming “super-rich” by neglecting the free-market system is not a product of billionaires themselves, but rather how our economy is set up.
CEO of Amazon, Jeff Bezos, has a net worth of over $150 billion. However, his wealth is based on the exploitation of his workers. Amazon is ranked as one of the companies with the world’s worst working conditions, with over 60 injuries in the last 5 years and more than 600 employees diagnosed with COVID-19 during the pandemic. The company even fired a worker leading a strike for increased safety precautions. In addition to the workforce, Bezos has exploited his company’s monopoly. Amazon has nearly 50% of all e-commerce retail sales in America, creating little, to no other competition.
Amazon’s business is protected by patents given and enforced by the U.S. government. William Mansfield, Head of Consulting at PatentSight, explains that Amazon’s patent portfolio is unique in that the U.S. government protects 100% of it. “Since 2010 Amazon has grown its patent portfolio from less than 1,000 active patents in 2010 to nearly 10,000 in 2019, a ten-fold increase in less than a decade,” Mansfield said.
Former United States Secretary of Labor Robert Reich explains steps the government could take to prevent exploitations to this level. “If we had tough anti-monopoly laws, and if the government didn’t grant Amazon so many patents and trademarks, Bezos would be worth far less,” Reich said. Creating tough anti-monopoly laws would not only make Bezos less rich, but also any other billionaire whose brand or ideas depend on copyright and patent laws. These laws have been dramatically extended in recent years, helping billionaires get even more money.
Gaining Insider Information
In 2014, a company called SAC Capital pleaded guilty for the charges of insider trading by the Department of Justice. Insider trading is when investors get information unavailable to other investors. An example of illegal insider trading is when a board member knows a company will undergo a merger in the next day or so, making the stocks rise. The board member buys 1,000 shares of the company’s stock under his mother’s name, so he can make profit without publicly reporting his trade. The Department of Justice deemed SAC Capital’s insider trading, “substantial, persuasive, and on a scale without known precedent in the hedge fund industry.” The company is run by billionaire and hedge fund manager Steven Cohen who has a net worth of over $14.1 billion.
Eight of Cohen’s employees pleaded guilty and were convicted, while Cohen was let go with a 1.2 billion dollar fine. However, Cohen did not seem too affected by the case as he not only changed the name of his company to Point72 and continued his trading ring, but also threw a party 2 days after he was charged. A separate lawsuit also including insider trading banned Cohen from investing client money for two years. Subsequently, he continued his business through his employees, continuing to profit illegally.
Insider information creates an unfair advantage to competition, taking away from the ideology of a free market system. A handful of billionaires, including Cohen, continue profiting illegally and avoiding losses even when faced with substantial charges from the government. They simply lobby and rub off major fines that are usually less than 5% of their total net worth.
Tax Cuts for the Rich
Koch Industries, the second-largest privately owned company, gets a one billion dollar tax cut per year, excluding offshore tax cuts, from the Trump Tax Cuts and Jobs Act. However, owners of the company, Charles and David Koch, have a combined net worth of about $100 billion. How did these billionaires get a tax cut of more than 1% of their combined net worth? The answer is lobbying. Lobbying, or the act of influencing politicians on their stance on legislation through large amounts of donations, drives the rich’s ability to stay rich.
The Kochs only put about $20 million into lobbying for the Tax Cuts and Jobs Act, essentially profiting through politicians.
In addition to Tax Cuts, Koch Industries has largely benefited from government programs. Reports show that the Kochs have helped fill the strategic petroleum reserve, provided roads and used eminent domain to utilize private land for gas lines. Moreover, they profited more than $500 million on federal subsidies profiting off of federal land. The Kochs have repeatedly broken the law, but these illegal activities are commonly overlooked due to their large donations to politicians.
The last major way to become a billionaire is through inheritance. About 60% of all wealth in America is now inherited. “Under U.S. tax law —which is itself largely a product of lobbying by the wealthy —the capital gains of one generation are wiped out when those assets are transferred to the next,” Reich said. Reich continues to suggest that America is creating a new aristocracy of people who have never worked a day in their life.
Another way the rich stay rich is through the bypass of inheritance tax, also known as the estate tax. The estate tax was originally created to raise government revenue for those with the greatest ability to pay and put a brake on the concentration of wealth and power. The Walton family, founders of Walmart, exploited a loophole in estate taxes to avoid paying 3 billion dollars in taxes. In addition, the Institute for Policy Innovation reported that less than one percent of estates who owed estate taxes in 2017 actually paid their taxes. Many politicians opposing the estate tax claim it’s a form of double taxation and claim that the wealthiest individuals plan around the tax anyway.
The most pressing rebuttal to the abolishment of billionaires is their support for the charity. In April, Jeff Bezos made headlines for donating $100 million to Feeding America. However, he makes $215 million a day. Even though millions are donated, this money is coming from the exploitation of the poor working class. Powerful people use philanthropy for malicious reasons to cover up their illegal and unfair earnings.
In addition, if billionaires wanted to truly make a difference, they have the money to do so. It costs $20 billion to end homelessness in the United States. Bill Gates could put an end to homelessness tomorrow and still have $96.3 billion to his name. Stopping global warming would cost $300 billion. If the world’s 10 richest people put in $30 billion each, they would still have a total of 386 billion dollars among them. Together, the world’s richest could end homlessness, stop global warming, provide clean drinking water, and end poverty all together on a global scale while still having a substantial amount of money to their name.
Rather than taking away the wealth and assets of the super-rich, the U.S. must reorganize the way our economy is structured. Steps to reorganization include stricter monopoly and patent/trademark laws, stopping the use of insider information, preventing the paying off of politicians, and making it harder for the extra wealthy to get tax cuts. Instead of taking from the well-earned income of the working class, increase taxes for the wealthy. The government should help the poor, not the rich.
Through Teen Lenses: Do you think billionaires should exist? If not, what could the government do to prevent the high-income cycle?
“Billionaires should exist because they do not go from rags to riches entirely through fraud. Whether it’s through inheritance or innovation, they have a basis for the wealth that they built on. Although some billionaires are not self-made, that does not prove that others do not deserve a similar fortune.” Tanish Jain, 15, Rising Sophomore at Thomas Jefferson High School for Science and Technology, Ashburn, Virginia
“The question of “should billionaires exist” depends on if billionaires are unique to our current economic system or if they are inevitable and would occur in any economic system. If they are inevitable, then there isn’t much that the government can do to make any changes. Assuming that billionaires are a product of the economic system they are a part of, their existence is due to an imbalance. This imbalance might be due to not paying their employees enough, getting the tools and supplies needed to make their products for unfairly low price, or exploiting other countries for their cheap raw materials and labor. All of this also compounds with the fact that billionaires might not even spend most of their wealth. If they make a lot of money, most of it gets put into long term investments which won’t get put back into the economy anytime soon and lead to a greater imbalance in wealth. Some ways to prevent this imbalance is to prevent or diminish the effect of the unfair practices which wealthy businesses can abuse. Unions can be powerful negotiators and can help find a fair free market rate to pay workers. One recent example of this is the teachers unions fighting to make sure that college professors continue to get the same wage despite many universities shifting to online learning. Another way can be to prevent monopolistic behavior that gives certain corporations the power to create an imbalance. Without a monopoly, the competition will naturally drive up costs of raw materials and labor so that the producers can also get their fair share. There are many other things the government can do, but it’s mostly limited by differences in power of the lobbyists of large corporations and the lobbyists fighting against billionaires. Lobbying can be expensive, and billionaires can put in the money to protect their investments and business. Ordinary individuals working against them don’t stand much of a chance. The lobbyists of the billionaires can fight against these reforms too.” Anonymous, 19, Rising Sophomore at George Mason University, Herndon, Virginia
“I think that there should be some difference in income because some people work really hard and people can set goals to be like them so [they’ll] save up, so they can be role models in a way. There also are some people who have money passed from family along with their own money that seems like a lot but it makes sense if their family worked hard. However some people some people are just stupid and waste family fortune. I think there should be higher income people but not extremely high. And the government could tax them before they make so much it’s out of control. An example of this are monopolies.” Grace Kennedy, 15, Rising Sophomore at Herndon High School, Herndon, Virginia