A Flawed Idea About Billionaires

 

Quote from a friend on Facebook that's doing the rounds: 

“Elon Musk’s wealth is projected to more than double over the next five years, placing him on track to become the world’s first trillionaire.
Here’s what that actually looks like:
- $1 trillion = $1,000,000,000,000 — that’s a million million dollars.
- A worker on £30,000/year earns around $38,000/year at current exchange rates.  It would take that worker 26.3 million years to earn what Musk could be worth.
- If Musk dropped $10,000 on the floor, it wouldn’t be worth his time to pick it up — he makes more than that in under 10 seconds.
- If you spent $1 million a day, every single day, it would take 2,740 years to spend $1 trillion.
In a world where millions struggle to eat, there is no moral or economic justification for billionaires to exist — never mind trillionaires.”

My response: If you’re worried about ‘millions struggling to eat’ then the anti-billionaire logic is backwards. Billionaires tend to do disproportionately more for the poor than any other group, because the more money that comes into one person’s treasury, the more they can scale up their beneficence in the wider globe (through investment, job creation and charitable causes). Here I make no comment about Musk as a person, but generally, as wealth accumulates for an individual, every increasing pound or dollar increases the chances of it doing some external good elsewhere. This is because very rich people accumulate wealth with capital that has declining marginal utility.

If you look at the history of the world since the Industrial Revolution, significant individual or corporate wealth is frequently tied to large-scale economic impact for good, like investment in companies, global job creation, infrastructure, technological innovation, philanthropy, aid and lifting millions out of poverty. And as wealthy people’s personal spending needs become more and more trivial compared to their capital, their positive global influence just keeps increasing, where their own personal declining marginal utility engenders rising utility for the world’s poorest people.

Because of declining marginal utility, one single billionaire is likely to do more good across the world than one thousand millionaires, because a single billionaire has more concentrated resources, which can enable very large-scale projects that the single millionaires would not likely facilitate on their own (most single millionaires would have invested a significant chunk of their million in a decent home).