Billionaires and the rest of us

​​The problem with income inequality is that most people don’t like it when others are richer than them. As soon as winter is over and the weather turns pleasant the 99% will take to the streets to riot, burn cars, etc., to show how unhappy they are about some people being billionaires. Of course, the assumption is that billionaires must have done something wrong (cheating, stealing, being greedy, being unfair to other people, etc) to invite public ire.

​Regardless of your opinion about economic inequality, you have to pay attention when people start rioting, because even if you are not yourself inclined to riotous pursuits you could still get caught up in the unrest and that can be quite inconvenient. Generally speaking it’s easier to go about your business when there aren’t people rioting in the streets. So we all have to care about inequality: the fact is that many people find inequality infuriating, and their ire must therefore become our ire.

Many people blame capitalism for inequality, and this gives rise to the idea that if we get rid of capitalism, we can fix the inequality problem once and for all. Getting rid of capitalism is easy when you live in a democracy: you just need to vote in a series of legislative reforms that will achieve that end. Given that the rich are 1% of voters and the poor are 99% of voters, this becomes quite straightforward. The popular theory is that 'private interests' i.e. rich people, are hugely annoying to 'democratic interests' i.e. poor people. Thus the representatives of democracy (the poor) have to do something about it:

Capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based. There are nevertheless ways democracy can regain control over capitalism and ensure that the general interest takes precedence over private interests.

Piketty, Capital, p. 1.

According to that theory, wealth distribution is 'arbitrary' meaning that people find themselves rich or poor quite randomly and entirely unrelated to anything they have ever done. Rich people just got lucky and poor people just got unlucky, or so the theory goes.

Wealth distribution is also described as 'unsustainable' which is vaguely alarming. The minute someone evaluates your position in life as being 'unsustainable', you know you're living on borrowed time.

This leads naturally to democracy and the need to vote in a new dispensation. This creates serious and indeed violent political conflict. Like 18th century France, but without all the guillotines. 

There will always be a fundamentally subjective and psychological dimension to inequality, which inevitably gives rise to political conflict that no purportedly scientific analysis can alleviate…expert analysis will never put an end to the violent political conflict that inequality inevitably instigates. 

Piketty, Capital.
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'Democracy' works by allowing the majority to take control of things and seize property from the selfish capitalists who care only for their 'private' interests. In Piketty’s book, 'democracy' is about pursuing the ‘general interest’, meaning the interests of the majority of people who will never amass billions of dollars no matter how hard they work. Billionaires are on the wrong side of history at this point. It was ever thus.

Not everybody accepts the popular perception that it sucks to live in a world that has billionaires in it. There are one or two benefits to the existence of wealth, such as the trickle-down effect and the law of unintended consequences where billionaires inadvertently benefit the rest of society.

The rich only select from the heap what is most precious and agreeable. They consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements.

​They are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.

Adam Smith, Theory of Moral Sentiments.
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​So, in the interests of listening to each other, if only out of politeness, here are 5 reasons why some people think there's enough room in the world for a varied and variable wealth distribution:

1. Some billionaires today are self-made. Presumably, we can sort of grudgingly respect anyone who started off with nothing and pulled himself up by his bootstraps. 
2. Billionaires these days tend to disinherit their children, so there’s no need to worry that they will lock up the wealth in their private family coffers forever. Even the children who are not disinherited tend to be a bit idle, doing nothing useful with their lives and getting into trouble with the law. So they’ll soon dissipate the family fortune. Studies show that very rarely does a wealthy family hold onto its wealth for more than three generations. First generation does all the groundwork, second generation builds it up, third generation enjoys it, fourth generation dissipates it. This is why family empires rise and fall.
3. If you're still not convinced, then consider that money doesn't really buy happiness and many billionaires are generally very unhappy people with a multitude of personality problems and failed family situations, so it is ridiculous to be envious of them.  In fact, we should probably feel sorry for them because apparently they're ghastly, really, and they don't have any real friends to love them for who they are. 
4. The rising tide lifts all boats. A society with some billionaires scattered here and there is better than a society where everyone is poor and starving, waiting for foreign aid so they can have their next meal before they expire. In societies with rich people in them, there is a wide selection of shops offering an amazing retail experience, public roads and bridges are built for the billionaires to drive their cars on and you get to drive on the same roads, hospitals are well equipped in case the odd billionaire comes in with a heart attack, it’s easy to get a McJob or work in the Walmart stock room to avoid starving to death from lack of food, etc. If you live in such a society, you should know that it’s better than living somewhere in the third world where everyone is equally poor and there are no shops or anything fun to do, ever, and no roads to drive on even if you had a car, which you obviously wouldn't. Capitalism sucks, but socialism sucks much more, and at least with capitalism you can have a bit of fun along the way whereas with socialism you're probably going to spend most of your time being bored and miserable. Equality is fantastic as an ideal, but there's nothing actually fun about sitting around, constantly measuring everyone to ensure that nobody is growing taller than the others.
5. Sometimes billionaires do random selfless good deeds like giving to charity and endowing great schools, hospitals and universities. People think that if you’re poor then it’s better for the Law and the Government to shoulder the responsibility for giving you your rights, feeding you, making sure you’re ok, etc, but actually private charity produces much better outcomes.

So there are good reasons why billionaires are quite useful to have around, when you think about it. This shouldn’t stop you from rioting about inequality, of course: who doesn't love a good riot, especially when it's August, the sun is out, and there's nothing interesting on the telly? But at least now you can riot from a more informed perspective. 
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