In Defense of Billionaires

Michael R. Strain. Excerpts:

"Billionaire innovators create enormous value for society. In a 2004 paper, the Nobel laureate economist William D. Nordhaus found “that only a minuscule fraction” – about 2.2% – “of the social returns from technological advances” accrued to innovators themselves. The rest of the benefits (which is to say, almost all of them) went to consumers. 

According to the Bloomberg Billionaires Index, Amazon founder Jeff Bezos is worth $170 billion. Extrapolating from Nordhaus’s findings, one could conclude that Bezos has created over $8 trillion – more than one-third of the United States’ annual GDP – in value for society. For example, Amazon has reduced the price of many consumer goods and freed up an enormous amount of time for millions of Americans by eliminating the need to visit brick-and-mortar retailers. Bezos, meanwhile, has received only a tiny slice of those social benefits."

"Entrepreneurship and hard work, not dynastic inheritance, is the primary path to a nine- or ten-figure net worth. Around three-quarters of the wealthiest 1% of American families own privately held businesses (compared to 5% of families in the bottom half of the wealth distribution), with business assets accounting for more than one-third of their balance sheets. A 2013 paper found that around seven in ten of the wealthiest 400 Americans were self-made, and that two-thirds did not grow up in wealthy families."

"when measured using the income of all households – not just billionaires – inequality has been stagnant or declining for well over a decade."

"Take a look at the top ten billionaires on Bloomberg’s index. They are largely self-made innovators who have changed the way we live: Bill Gates and Steve Ballmer revolutionized personal computing; Jeff Bezos upended retail; Larry Page, Sergey Brin, and Larry Ellison elevated web search and database software; and Elon Musk disrupted the automotive industry and space commerce. Mark Zuckerberg is a social-media pioneer, Bernard Arnault a skilled CEO, and Warren Buffett a legendary investor."