32. Is it ethical to be a billionaire?

Here’s today’s listener letter:

A friend and I recently got into a debate about whether or not there’s such a thing as an ethical billionaire? What do you think? I don’t think Billionaires should exist but my friend says that innovators should be incentivized to improve the world.

Hmmm. Is it ethical to have a billion dollars? I’ve been a part of many conversations where I’ve heard investment bankers, for example, or other professionals talk about deserving very high levels of compensation because of how hard they work. I can only assume that they’ve never lived a day as a farm worker, or a caregiver, or the many many many occupations in the US that are much harder than sitting at a desk and thinking hard all day. Or sitting on a plane and flying back and forth to think and talk in different locations. You’re just never going to convince me that Elon Musk has ever worked harder than the undocumented ladies who clean this building who wake up at 3am to drive an hour to lift heavy barrels of recycling and get up on ladders to clean the windows and then get in their cars at 3pm to drive to their next job where they bus tables at a restaurant until nighttime, at which point they go home to clean their own homes, do their family’s laundry, and prepare food for their kids to eat after they come home from school the next day. All while managing the stress of dodging La Migra, managing their stateside families, and often taking care of their families back in their countries of origin. You’re not going to convince me that any of these billionaires work harder than that.

Sometimes the debate then moves to the impact that someone has. It sounds like that’s the position your friend was taking. That it isn’t that billionaires have worked harder, but they have had more of an impact than everyone else. Again, I personally don’t buy it. There was a day in July when Jeff Bezos earned $13B in one day. These days he is reportedly earning about $200M a day. That means that in the time it takes me to read this one sentence, he has made $33,435 dollars. That is more than the average teacher annual salary in 28 states. There is just no way on earth we can say that his work or his impact in the past 10 seconds is equivalent to that of every single teacher in the United States over the course of a year. Yet that is what his earnings are like.

Compensation is way too high for those types of pursuits, and then the compounding value of money turns it into a runaway train.

I do think the elephant in the room is often that the super high earners like Bezos or Elon Musk work extremely hard to make sure that they don’t have to pay their fair share in taxes both for their corporations and in their personal earnings. They also tend to be the same ones who significantly drain our societies to serve their own profit goals. I’m not talking about the fact that these corporations put a significant wear and tear on our roads and infrastructure systems that our taxpayer dollars pay for. I’m not talking about the many government programs and subsidies that have allowed Elon Musk to grow his wealth. I’m talking about the dirty little secret of many corporations, that they are able to manipulate worker hours and pay so that they do not pay a living wage and rely on the government to provide federal aid in the form of food stamps and housing vouchers and Medicaid to be able to survive. Wal-Mart is an example of this. And McDonald’s. Their employees are the largest group of welfare recipients in America. If you’ve ever worked at one of these companies before as a front line worker- I’m not talking about a laptop job, I’m talking about a nametag job- if you have ever had a nametag job at a place like McDonald’s or Wal-Mart you will quickly notice an odd coincidence. Practically everyone is scheduled to work exactly one hour under the legal requirements to provide any kind of benefits. You see people being scheduled 29 hours a week instead of 30 hours a week which is the point at which they have to receive benefits. That’s not to mention the pay that is FAR below a living wage. And spoiler alert, McDonald’s and the other top corporations spend A LOT of money, millions of dollars a year to fight increasing the minimum wage. More than half of fast food workers are on public assistance because their employers are fighting against laws that would increase their pay. What are we doing?

In order to earn a billion dollars, someone, along the way, has been exploited. Someone was underpaid for their labor so that you could turn around and sell something for much much more.

But I actually don’t think there’s a lot of value in debating whether or not billionaires deserve to make that much money because it is very much a part of our culture here in America, to protect and worship and feel an irrational kinship with the rich. It’s weird, but it is who we are.

I think the more productive conversation to have might be what is an ethical use for a billion dollars? So, say, you are an Elon Musk stan. In your eyes, he really has had a greater impact on the world than every school teacher has ever had.

Maybe you heard the name Elon Musk and you rolled your eyes. Pick another billionaire, the one that you love and have a parasocial relationship with. Ralph Lauren, or my friend in my head, Rihanna, whichever billionaire you happen to love. Somewhere along the line, someone was exploited for this billionaire to reach a billion dollars.

But you know what, even if you did things fairly, you paid all of your workers a living wage, you paid your taxes, you didn’t lobby the government against providing basic human rights to your workers, you’re not creating your products in sweatshops. Let’s say you made a lot of money, in a way that you think is ethical, but now because of the compounding way that money grows in our current version of capitalism, you are seeing your wealth grow and grow and grow.

At what point are you _hoarding_ wealth?

Let’s think about this one together. What’s with the death grip on your billion dollars?

Bill Gates gave $300M for covid-19 relief, but his wealth is so huge that this is only 0.3% of his wealth. He could donate $300M every 2 weeks for the rest of the year and have just as much money on New Year’s Eve as he did at the beginning of the year. (Source: Alan Davis, Fortune Magazine, "America's billionaires have a hoarding problem"

Why is he hoarding so much wealth?

This I think is perhaps a more productive question. Why are billionaires and millionaires hoarding this level of wealth? How many generations of their descendants are they trying to make wealthy? And at one point is there an ethical responsibility to look around, see how much people are suffering today and to release the tight grip from their money?

It’s hard to understand an ethical argument for protecting your family 3 generations from now when your neighbor can’t afford to eat or buy life saving medicine today.

So try that perspective next time you talk to your friend. Ask if there’s anything ethical about HOARDING all that wealth when people are hanging by such a thin thread today. I don’t know if you’ll get very far debating whether or not someone should earn that much in the first place. Focus on the hoarding of it all.

Walmart and McDonald’s have the most workers on food stamps and Medicaid
https://www.washingtonpost.com/business/2020/11/18/food-stamps-medicaid-mcdonalds-walmart-bernie-sanders/

Wealth Hoarding in America
https://fortune.com/2020/07/14/billionaires-philanthropy-coronavirus-crisis/

America's Billionaires have a Hoarding Problem
https://fortune.com/2020/07/14/billionaires-philanthropy-coronavirus-crisis/