Why You Might Not Want to Take Away a Billionaire’s Money
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Version 0 of 1. There is a problem with billionaires: They’ve got way more money than any human deserves. But if you were simply to take it all away from them, you would, in many cases, be doing more harm than good. In my teens, when I saw hungry people on the streets of New York I started to dream of expropriating money from the wealthy to feed the poor. My father, who rose from Depression-era poverty in Scranton, Pa., to modest affluence as a New York City businessman, tried to set me straight on the subject. “Think it through,” he said. “You might bring some justice to the world and you’d help some needy people. But you’d lose what people like the Rockefellers have done for the common man, the museums, the parks, the libraries, the schools, and the contributions to medical research, and on and on. It’s no small thing.” He was referring, of course, to the family of John D. Rockefeller, the industrial titan who transmuted colossal wealth into enduring philanthropy. Then, my dad said, consider the horrendous cost of expropriation in countries that have tried it — the bloodshed, the lost lives, the ruined families, the economies stunted by revolutionary violence. In the 1980s and 1990s, I spent time as a reporter in countries that had endured such ordeals — particularly post-Cultural Revolution China and Russia before and after the Soviet Union’s collapse. Taking from the rich and giving to the poor didn’t work out well in either place, and both China and Russia backtracked from their early revolutions. China began to “let some people get rich” in the 1980s, as Deng Xiaoping advised, and the hybrid economy, a mix of socialism and capitalism, has boomed. But China has now created a billionaire problem of its own, amassing scores of powerful billionaires in a country that still has millions of impoverished people. And Russia, under President Vladimir V. Putin, has spawned plenty of oligarchs, a.k.a. billionaires. In the United States, of course, the disparity in wealth has only become more glaring as Donald J. Trump occupies the office of the president of the United States, accompanied in the executive branch by a small army of billionaires and multimillionaires. Rarely have the political advantages of untrammeled riches been so conspicuously displayed. Measuring the net worth of the new administration is something of a journalistic parlor game, with estimates ranging from about $6 billion to $13 billion. Really reliable numbers are unavailable, partly because Mr. Trump and others have not issued all of the conventional financial disclosures but also because billionaires have so much money and so many opportunities for sheltering it that it is difficult to keep track. But it is clear that while Mr. Trump has pledged to “help struggling families all across our land,” his administration is staggeringly rich, especially in comparison with all of those struggling families. Consider that Secretary of State Rex W. Tillerson, until recently the chief executive of Exxon Mobil, ranks as a man of only middling wealth, with disclosed assets in the $400 million range. By contrast, Wilbur L. Ross, the distressed-asset investor and commerce secretary nominee, is worth more than $2.9 billion, according to Bloomberg. Steven T. Mnuchin, the secretary of the Treasury, is so rich that he neglected to account for about $100 million in assets on a disclosure form because of what he called an “unintentional” oversight. That Mr. Mnuchin overlooked perhaps $100 million is unfathomable for many people. It is, in fact, roughly equivalent to the total net worth of more than 1,200 typical American families. And $1 billion is more than 12,000 of those households, according to the Federal Reserve Survey of Consumer Finances of 2013. It found that the median American household had a net worth of $81,200. What’s more, it said, the bottom 25 percent of the population had no net worth at all, in dollar terms: When household debt was included, the net worth of these families was less than zero. And along racial lines, the wealth gap was preposterous: The median net worth of black families was only $11,030 compared with $134,230 for whites, according to an analysis of Federal Reserve data by the Urban Institute. For people of all races, the gap between the very rich and everyone else has been expanding in recent years, and not only in the United States. A report by the charity Oxfam last month, for example, found that the richest eight billionaires on the planet, led by Bill Gates, the founder of Microsoft, were worth more than half of all of the people on earth. Yet one in every 10 of the world’s people, the report found, must get by on less than $2 a day. “Inequality is trapping hundreds of millions in poverty; it is fracturing our societies and undermining democracy,” said Winnie Byanyima, executive director of Oxfam International. My father died in September 2015, a month before his 93rd birthday, while the presidential primary campaign was still underway. Income inequality was a big issue. In his insurgent campaign on the Democratic side, Senator Bernie Sanders focused on it directly. Despite his wealth, Mr. Trump addressed it too, indirectly, promising to restore lost jobs and prosperity to downtrodden Americans. And perhaps he will accomplish that. It is not impossible, after all, to imagine a small elite of extremely wealthy people’s presiding over an economy that provides a rising standard of living for everyone else, especially for people at the bottom. America has had wealthy politicians before, Rockefellers among them, and some have attempted such a feat. Two wealthy presidents came from New York — aristocratic cousins named Roosevelt — and both pushed for what was sometimes considered “revolutionary” redistribution of wealth in the United States, as my father periodically reminded me. In a fiery speech on April 14, 1906, for example, President Theodore Roosevelt, a progressive Republican, said the country needed to “grapple with the problems connected with the amassing of enormous fortunes, and the use of those fortunes, both corporate and individual.” He advocated “a progressive tax on all fortunes beyond a certain amount,” adding that such a tax should make it impossible for “the owner of one of these enormous fortunes to hand on more than a certain amount to any one individual.” That didn’t happen on his watch. But his younger cousin President Franklin D. Roosevelt, a pragmatic Democrat, said in 1932, in the depths of the Great Depression, that it was high time to take risks and help suffering people. “Above all, try something,” he said. “The millions who are in want will not stand by silently forever while the things to satisfy their needs are within easy reach.” Roosevelt tried so many unorthodox things — including establishing Social Security, a minimum wage, vast public works programs, limits on child labor, and stronger regulation of banks and the stock market — that he was reviled as “traitor” to his rarefied social class. While not a billionaire, Mr. Roosevelt was a rich man, yet millions of far less privileged people revered him and did not resort to violence to “satisfy their needs.” As Russell Baker wrote in 2009 in The New York Review of Books, one reason may well have been that Roosevelt himself had created something of a social and political revolution, yet one that was orderly and controlled and left the nation’s elites in place at the top of the heap. Some very wealthy people in the private sector are taking action aimed, at least in part, at voluntarily redistributing their enormous wealth through charitable giving. Bill and Melinda Gates and Warren E. Buffett some years ago organized a “giving pledge,” in which rich people promise to give most of their money away. Such voluntary good deeds, if embraced by the world’s richest people, can go a long way toward solving the billionaire problem peacefully. Progressive taxation is another tried-and-true remedy, when it is actually applied. But the federal income tax, the Internal Revenue Service reported last year, is now less burdensome for the superrich than it is for those lower on the income scale. At the stratospheric level of $10 million in annual income in 2014, I.R.S. statistic show, the effective tax rate was actually lower than it was for people with slightly less exalted incomes. Changes in the tax system — which, for the most part, will favor the wealthy — are widely expected under the Trump administration and the Republican Congress. My dad isn’t around to discuss any of this now but I know what he would say, and I say it to my own son. I tell him that our flawed civil society is nonetheless precious and that all of us, billionaires included, need to do whatever we can to make it more just. |