Hating on billionaires is not constructive

posted by Jeff | Sunday, August 2, 2020, 11:41 AM | comments: 0

I'm generally pretty clear about my distaste for sports rivalry politics, the phenomenon where you pick a team and stick with it regardless of policy or moral failings. While I often associate this with the right, and the cult of personality for Trump, it certainly happens on the other side as well. In fact, progressives get really latched on to CEO salaries and tend to demonize the billionaires. While I think their intent isn't the worst thing, I think they're going about it all wrong. There's too much nuance to simply declare the billionaires the bad guys. The rich may enjoy the result of income inequality, but I don't believe that they're at fault for it.

Take for example Jeff Bezos, the guy who runs Amazon. Let's be clear, they're treating warehouse workers poorly and they deserve more, especially in light of the fact that the company's gross margin is absurdly high at 40%. However, it's not Bezos' salary that's the problem. His comp has been about $81k per year for the last two decades, plus the cost of his security detail. He's rich because he owns 16% of the company, so his compensation is a non-factor. The comp shouldn't be the issue. He hasn't even taken a stock grant.

He's also hated for the theoretical amount he pays in income taxes, along with the company itself. These are fair complaints, but it's pretty weird to lay the blame at his feet. He doesn't write the laws, and he and Amazon haven't broken any when it comes to taxes. You can blame that entirely on Congress, not to mention the municipalities that were prepared to suck up to the company with wholly absurd tax incentives to open facilities in their borders. Some incentives to stimulate job growth are one thing, but some cities when too far.

So what are the real problems? Here's what I think, in no particular order:

  • First, the most obvious thing, if the rich should shoulder more responsibility, that means they have to exist. Things like universal healthcare and a balanced budget are not easily obtained without the input of the people who make the most. We just have to adjust how much they contribute.
  • There is a general attitude by boards that executives deserve a big pay day even if they fail. That's screwed up. You shouldn't get fired and walk away with 8- or 9-figure packages. That doesn't mean that those running huge, profitable enterprises should not be well compensated, nor does it mean that it comes at the expense of others down the reporting line. I imagine you could legislate this, but I think the markets have been too casual to view investments as worthy despite the willingness to contractually reward failure.
  • Corporate tax structure basically needs to be rewritten. If you have a small army of people to figure it out, you can avoid paying taxes no matter how profitable you are. To fix this problem, you need to get money out of politics, and stop pretending that corporate lobbying is free speech. Right now, the feds get 6% of the revenue from corporate taxes, and that's absurd.
  • Similarly, individual income tax law has to be revised. As a percentage of income, I pay less now that I did when I made less. It's natural to make more money as you get older and progress through your career, but that you can find more ways to avoid taxes is more than a little strange. I don't think you necessarily have to get the rich paying dramatically more as a percentage, but it definitely shouldn't be less.
  • Labor protection has to actually be enforced. Look, I'll be the first to say that unions yield mixed results, depending on the situation, but anti-union behavior has to prosecuted, and laws have to be strengthened. Some companies (like Amazon) deal with unions the way that politicians fan the flames of racism, with half-truths and implied threats.
  • Consumers have to stop rewarding bullshit. People shop at Walmart to save a few bucks, but it comes at the expense of lower employee pay and a market dynamic that crushes manufacturer competition by forcing the lowest cost goods to market, usually from China. You want an example? The example of Vlasic pickles shows what I'm talking about. There's a cost to your community, and the nation, when you shop at Walmart. Consumers need to understand these trade-offs.
  • Understand that economic prosperity is not a zero-sum game. As much as I'm annoyed by the right's scapegoating of brown people for every problem, the left blaming the wealthy isn't helpful. Yes, trickle-down economics is bullshit, we all know that. But the little guy isn't kept down by the financial success of the rich. A robust economy can have rich people and a solid middle class if some of the above issues can be resolved. My own fiscal condition is not diminished by minorities, and it won't be by the rich either.
  • We have to outlaw the traps that push people into poverty. How pay day loans are not illegal in every state is beyond me. Predatory lending in general has to stop.
  • It's worth noting that the wealthy typically play a big role in philanthropic efforts. Bill Gates plans to give all of his money away. Had we listened to him years ago, we might have been better prepared for the pandemic. His foundation's efforts have saved over 100 million lives.

Is it morally icky that people can make that much money? I don't know, maybe. I just don't buy in to the narrative that they're all evil and believe they must oppress others to stay there. I haven't met all rich people, but those that I've gotten to know are some of the most generous people I know. Income inequality is very real, yes, but it's not the people at the top who are the problem, it's the system. Let's fix the system, not demonize those who legally use it.


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