More On: French Revolution
People want to hang Musk and Bezos because they are affluent. However, closer study reveals that this is not the case.
When Elon Musk became the wealthiest man in the world, one Redditor stated “Elon Musk becomes richest man: First in line for the guillotine,” to which another answered “Once his head's off, we're tossing Bezos on there next.”
In August 2020, activists put up a genuine guillotine outside Jeff Bezos’s residence. At a rally supporting Elizabeth Warren in 2019, the audience started shouting “Eat the rich,” an allusion to a phrase ascribed to Jean-Jacques Rousseau: “When the people will have nothing more to devour, they will eat the rich.”
Many individuals, including Rousseau's contemporaries, faced famine while he was alive. About 200 thousand French citizens died as a result of the famine that ravaged the country in 1709, and he was born not long after. Workers in the 1780s in Paris routinely spent 70-90 percent of their salaries on food alone. Their indignation against the French nobility, which comprised largely of those born into or awarded riches rather than obtaining it through industry and talent, was understandable, particularly because of the exceedingly restricted social mobility allowed at that time.
By comparison, in the United States today, over 90 percent of the population never needs to worry about having anything to eat, and even the poorest spend a maximum of 43 percent of their income on food. How did the French Revolution generate all of this animosity against the super-wealthy? Is this justified?
Many individuals feel enraged by billionaires like Bezos and Musk for no other reason than their money. Bernie Sanders's "Billionaires should not exist" tweet, which received over 19,000 retweets and 103,000 likes, exemplifies this opinion. Representative Alexandria Ocasio-Cortez said at a speech that "No one ever earns a billion dollars," according to a widely read piece with the same title. A billion bucks is yours to keep.
In that speech, AOC asserts that billionaires are billionaires because they don’t pay their workers a “livable wage” (a vague phrase that overlooks the reality that the price of labor is determined by the same variables that establish other market prices, such as scarcity) (a nebulous term that ignores the fact that the price of labor is determined by the same factors that set other market rates, such as scarcity). But consider an example from one of Musk’s own firms. More than 15 to 81 percent more than the typical American, Tesla employees earn more money per hour (plus perks) than their unionized colleagues at GM and other big automakers. In addition, thousands more people would be working for less or no pay if it weren't for the entrepreneurs who put in the time, effort, and money to make these positions possible.
To be fair, it is conceivable to become a millionaire by cheating the system. In spite of the fact that many of today's super-wealthy have amassed their fortunes primarily through the creation of innovative products that people want to buy, many of these individuals have also benefited from unethical practices such as government subsidies, corporate bailouts, and other forms of fraud.
However, many on the left do not stop at these reasonable concerns. To the contrary, they falsely assert that the super-rich hide their riches from the rest of us like a dragon guarding its gold. Although there is nothing unethical in a person keeping or spending all the riches he has honestly earned, the truth is that most wealth is not in the form of cash, boats, or mansions. Most maintain practically all their money in active business activities and investments; Jeff Bezos, for example, has around 90 percent of his fortune invested in Amazon. That implies that much of what he ‘owns’ is warehouses, delivery vans, and other products that are truly out in the economy servicing his clients.
Every dollar that is saved or insured is put to work for the benefit of the policyholder. Economist Ludwig von Mises explains:
When a man has accrued a certain amount of money—let us say, one thousand dollars—and, instead of spending it, entrusts these dollars to a savings bank or an insurance company, the money goes into the hands of an entrepreneur, a businessman, enabling him to go out and embark on a project which could not have been embarked on yesterday, because the required capital was unavailable.
What will the businessman do now with the new capital? The first thing he must do, the first use he will make of this new money, is to go out and recruit people and purchase raw materials—in turn generating a further demand for workers and raw materials to emerge, as well as a trend toward greater salaries and higher prices for raw materials. Long before the saver or the entrepreneur earns any profit from all of this, the jobless worker, the producer of raw materials, the farmer, and the wage-earner are all sharing in the advantages of the greater savings.
In other words, money saved or invested in a bank helps company owners, workers, and customers, who may now choose to patronize the firm that the investor's cash has enabled. Although charitable giving and private spending might benefit others (by paying for their goods and services), economist Henry Hazlitt argues that investment is the most effective way for wealthy individuals to aid those in need:
Even if the affluent spend their money recklessly and wastefully, they offer work to the poor as servants, as suppliers, even as panderers to their vices. But what is too often forgotten is that if the rich saved and invested their money they would not only give employment to just as many people producing capital goods, but that as a result of the reduced costs of production and the increased supply of consumer goods which this investment brought about, the real wages of the workers and the supply of goods and services available to them would greatly increase.
By “real wages,” Hazlitt meant not just to the worker’s take-home income, but to the amount of buying power he had. The lowered costs of manufacturing and increasing supply lead the price of things to go down, so the worker may buy more with what he earns. And capital investment is mostly utilized to supply, update, and maintain tools, machines, and facilities. This enhances worker productivity, which increases actual worker earnings. This is not merely because of the employer’s higher earnings, but also because the larger supply of goods and services accessible make all such things cheaper, improving spending power both for employees and other customers. Better tools and machinery boost production and improve quality, as Ludwig von Mises says. Employers are able to charge more for the labor of their employees because they can charge customers more for the goods and services that their employees create in a single hour of work.
Consider the bigger picture when it comes to people like Elon Musk. At the end of 2021, Musk had roughly 65 percent of his fortune invested in Tesla, a further 18 percent in SpaceX, and lesser amounts invested in other firms such as The Boring Company and Neuralink. Since Tesla and SpaceX alone accounted for almost a quarter of Musk's $260 billion fortune at the end of last year, the firms were able to acquire and maintain premises, equipment, and machinery; recruit people; and pay them above-average wages. Similarly, Bezos’s large investment in Amazon allows it to provide affordable, accessible items to people all over the globe, as well as a platform on which millions of other businesses deal with consumers using Amazon’s tools.
To suggest that nobody should be a billionaire, or obscenely, that the affluent ought to be guillotined for their affluence, or that the ultra-wealthy are hoarding resources—these assertions don’t make moral or economic sense. Rational economists such as Mises and Hazlitt long ago showed the nature of the mistakes underlying them.
Accusing Jeff Bezos of following in the footsteps of Louis XVIII or Marie Antoinette is nonsensical. Their productivity and the level of life they make possible for millions of others should be appreciated, not vilified.