Debate: Should trillionaires exist? | Global Eye

Well, joining me for what is promising to be a lively debate is Jeffrey Meiron, senior lecturer in economics at Harvard University and director of economic studies at the Ko Institute. Dan Perry, international affairs analyst and author of the Ask Questions Later newsletter, and Nathan J. Robinson, editor and chief of Current Affairs magazine and author of Why You Should Be a Socialist. Before I welcome you all, let's get some background on this story. Take a look. For a brief moment this summer, Elon Musk became the world's first trillionaire. SpaceX's blockbuster stock market debut pushed his estimated fortune past the trillion dollar mark, an almost unimaginable concentration of wealth in the hands of one person. And it [music] comes as America is having a much bigger argument about wealth and capitalism. The richest [music] 1% now control roughly a third of household wealth while politicians on the democratic socialist left are gaining ground, campaigning on higher taxes for the ultra rich expanded public services and a bigger government role in the economy. Supporters of extreme wealth argue fortunes like Musk's are largely created through ownership of companies that innovate, employ people, and generate enormous economic value. Critics argue that when wealth becomes this concentrated, it can deepen inequality, distort political influence, and leave too much economic power in too few hands. So where should the line be drawn? Is accumulating this much wealth actually good for the economy? And ultimately, should trillionaires exist? >> All right, now it's time for our 30 secondond fire round. Each of our guests on the panel is going to have 30 seconds to answer our first question and then after that we're going to open this debate to longer answers. So, let's begin. Nathan J. Robinson, you're going to be the first one to answer our first question. You have 30 seconds. Should trillionaires exist? >> Well, let's just remember how much a trillion dollars is. If you made a million dollars every single day, it would take you nearly 3,000 years to accumulate a trillion. um a trillion dollars would stretch past the sun. This kind of amount of money doesn't make people happy. Once you're a millionaire or even a billionaire, you're doing fine. You can have everything you want. Whether or not having a trillion dollars would be justified in some abstract sense where everyone was doing well. I think there's no question that it's not justified when there are people who are desperately in need, when there are homeless people on the streets, um when there are people who are unable to afford food, unable to afford uh to go to college, good schools. So I think in the society we have there's no way that this kind of disparity can be justified. >> All right, Jeffrey Miron, 30 seconds. Should trillionaires exist? >> My key point is that it's not a well- definfined question. There's nothing governments can do to prevent trillionaires from existing. If you have laws or policies that try to limit that, people who are going to be trillionaires will find ways to divide their wealth with spouses, with kids, with fancy financial contracts, and so on. So, it's just a hopeless goal, and so we shouldn't be even talking about that. In addition, there are potentially very bad things that happen causing too much wealth concentration. Government is mainly responsible for those. >> All right. And last but not least, international affairs analyst Dan Perry. 30 seconds for this question. Should trillionaires exist? >> Well, in today's dollar valuation and today's uh purchasing price levels, no, they shouldn't exist because a trillion dollars is more than the GDP of many many countries. I think the edge case clarifies this. The free market, we're all in favor of it. I'm a capitalist myself. But if the free market created a situation where one person uh had all the wealth and all the income and 8 billion had nothing at all clearly wouldn't allow it. You'd have absolute revolution in every country. So most societies I know of do favor some degree of redistribution and therefore the principles establish that we need to have uh progressive taxation for example. And then the question is are we at the optimal points of inequality? And I think basically we're not. >> All right. Okay. Okay, we're now going to open up our panelists to longer questions. I want to start with you, Nathan. Elon Musk becoming the world's first trillionaire during a year that we're seeing, you know, food stamp cuts, record poverty, a war raging across the Middle East. Is this a sign in your eyes that capitalism is working or that it has fundamentally broken down? >> Yeah, well, it's starting to break down. I think we're getting closer and closer to the point that Dan identified. As Dan said, and this is important, uh, none of us would accept a situation in which all of the wealth were concentrated in one person and nobody had anything. Uh, nobody else had anything. So, this gets us closer and closer to that kind of feudal situation. And one of the problems is that with extreme concentrations of wealth comes power, comes corruption. We saw that Elon Musk really wanted to get Donald Trump elected in 2024. So, he spent hundreds of millions of dollars trying to tip the election. Now, we don't know if that actually made the difference, but the point is when you have someone who can just spend almost an infinite amount of money, they can effectively buy the political outcomes they want. It creates a kind of never-ending cycle. And of course, inherited wealth means that that kind of feudal wealth structure passes down to the next generation and the next generation. >> Interesting. Uh, you know, Jeffrey, I want to hear your take on this. I mean, my take is that government attempts to do various quote unquote good things in the economy play a much bigger role in creating inappropriate concentrations of wealth than anything that comes from free markets. Free markets of course allow for some people to have extreme wealth and there are examples of extreme wealth that come from corruption and fraud and crony capitalism and all that. But in addition, governments do things like subsidizing electric vehicles. That's part of why Tesla ended up being a success. government subsidized space travel. That's part of why SpaceX is a success. And there are millions of more examples. Those are far worse than what happens if you know Steve Jobs invents the iPhone and lots of people want to buy the iPhone. So Steve Jobs becomes very rich. But it's because he produced something that lots of people wanted. >> Yeah. And I see you were shaking your head there. Any uh feedback? >> Look, I mean this is a standard trope about how government is bad. And I'll tell you what, bad government is bad. And many governments, maybe most are indeed bad, but some government is good. Uh, I'll go back to my edge case. What if the free market didn't make it so that every six-year-old child had a first grade education? Uh, you know, I once had a friend who told me, well, that they absolutely should as long as their parents could pay for it. No, that's the government's role. Period. Governments have all kinds of good things that they not only should do, but do need to do. Perhaps there's no uh road leading to your incredibly nice villa because you're living on your own on the mountain. Well, government should produce one. So the idea that governments create the inequality I I I think is very very unfair and somewhat imprecise because at the end of the day what what made it so that the average CEO in 1980 earned in the US uh of large companies 30 times roughly their average worker now it's more like 300. governments actually did that and governments can reverse it and that was done through a lot of different things including uh li liberalization in the US and the UK changes in the uh draconian high level of taxation uh certain regulations around uh pension plans in the stock markets it created a not to mention of course the circular scheme where CEOs appoint the boards and the boards approve the pay packages which are in capital of course they're in the stock market further creating an inflation of wealth there's a lot of things that you could do to change these things. Why would we want to change these things? Because to answer Natasha's questions, it isn't working particularly well. And how do I know? Because people like Donald Trump are getting elected. There is a lot of anger in the system. And that anger comes from a lot of different things, including overreach by the progressive far left. No doubt about it. >> All right. One of the things I want to jump in though, Dan, here because I want to ask Nathan, we all are we are also seeing a lot of other people being elected right now who don't necessarily share that same love for capitalism that Donald Trump does. Uh there is now a wave of democratic socialists that are taking to office in the United States. Mayor Mum Daddy in New York City is just one of them. Nathan, what do you make of that? >> Well, I just want to first note that uh it seems like we're all in agreement that we should tax Elon Musk's money because Jeffree seemed to admit there that space travel and electric cars are government sponsored. So Elon Musk's trillion dollars would at least be illegitimate. But you can see from this election of a lot of Democratic socialists around the country that people don't agree with Jeffrey's perspective. They do think uh that there's too much wealth concentration and they are angry because they know that government could in fact do more. What they what we saw in New York is that Zoran Mamani got elected because he said you should be able to afford to live in your city. That was his fundamental platform. And so he said what we're going to do is we're going to make child care more affordable. We're going to make the buses affordable. We are going to make sure your rent is affordable. And these promises speak to people because people understand that it's not fair to have such concentration of wealth at a time when ordinary people are struggling every single month just to pay their basic bills. >> Jeffrey, I want to turn to you. The libertarian argument is that wealth is a reward for value that is created. But Musk's fortune, and you mentioned this, was built substantially on government contracts and subsidies that we saw through SpaceX, through Tesla. Is this really free market success or is it you could say socialized risk with privatized reward? >> I think a lot of it is not free market success. As as Nathan indicated, I've definitely been critical of people who have gotten rich off the back of the taxpayers because government created programs uh which made that possible. I guess one thing I'd like to add to this discussion that's relevant to points that both of the other panelists have made is >> it's one thing to say we should have redistribution to help people who are very poor or who are low income. Okay, as I as they indicated, very few people disagree with that. Even most libertarians would accept some redistribution in the form of anti-poverty programs. But what we're talking about today is going after people who've been very successful. And some of that is ill gotten and should be gone because the government shouldn't have created the conditions that allowed that to happen. But you could redistribute all the wealth of all the trillionaires, okay, to attempt to reduce poverty and would make an infantessimal difference. That turns out they're very, very, very few trillionaires. So even though each one has a lot, it still doesn't add up to nearly enough to meaningfully affect poverty rates and things like that. Anti-poverty programs are worth discussing. The anti- trillionaires policies don't make any sense. >> Dan, again, I see you shaking your head. >> Well, I I mean, it's it it's absurd when the wealth of Elon Musk is more than the GDP of many and if and maybe most countries. Obviously, it would make a difference. Now, you only have one trillionaire who's no longer even a trillionaire as of few weeks ago, right? But he'll become a trillionaire again and we'll have more. And the number itself is is not that that critical. I'm talking about the super uber rich and the idea that they need to be incentivized by letting the free market have its way. And I think we're all also agreeing that it's not really that free a market. A lot of it is a bit of a what Natasha said, a free market reward for a socialist situation uh benefiting uh the companies that then are able to buy the governments. No, I think realistically I want people to be incentivized by the prospect of becoming much richer than their fellows. I understand innovation depends on that and human progress depends on that and that's fine. The other extreme edge case of having everyone have the exact same no matter what they've achieved is equally as foolish as one person having all the wealth and income. But I'm talking about are we at the optimal level? I don't think we are. No one needs more than a hundred billion dollars. And since we have numerous people who have more than a hundred billion or more than 10 billion, I'm pretty sure that if their maximum marginal tax was 20%. And on the extra 100 billion, they could still keep, you know, 20 billion that would incentivize them enough. The idea that otherwise no, and they would be forced to do all kinds of dirty tricks, which the government, in your view of governments being incompetent, Jeffrey, would somehow, you know, fall for. I think I think it should be attempted >> because there I'm pretty sure they'd still be incentivized. >> Jeffrey, I saw you shaking your head there. You want to respond? >> I partially want to respond by emphasizing the point I made at the beginning. There is no way we will actually collect significant amounts of tax revenue by going after trillionaires. If one country does it, those trillionaires will move to some other country. If a bunch of countries do it, the trillionaires will find ways to divide up their wealth amongst their relatives or they'll put it in dummy shell corporations. They will do a whole manner of creative things. And so it's a false hope that we're actually going to collect any non-trivial amount of >> revenue into a bunch of countries wealth taxes recently have repealed their wealth taxes. Uh maybe the way to do it is not to go after trillionaires once they've become trillionaires or mega billionaires, but prevent the wealth from being accumulated to begin with. And again, I'm not saying don't let anyone make over a billion dollars. I'm saying at that point, tax it in a very draconian fashion, more or less the Nordic model. The problem with politicians who argue for this, and these are socialists in America and in various populists everywhere, is that they go after the upper middle class. They go after the people in New York who earn $700,000. And that doesn't really make you rich in New York. I wouldn't even go after people earning less than $5 million. But beyond $5 million, the idea that you really need that otherwise you won't be incentivized to be an excellent CEO is preposterous. And it enables accumulations of wealth that are >> I want to turn to Nathan. You know, Nathan, the standard argument uh against wealth taxes is that the rich are simply going to end up taking their companies and their jobs and their wealth with them. you know, leaving New York City, for example, now that Mamani is mayor because of his democratic socialist policies. Is that actually true? Uh, or do you think it's more or less an effective piece of lobbying? >> Well, let's let's be clear. What's being argued there, and that's the argument that Jeffrey's making, is essentially that these people are too powerful because uh you they are above the law. You can make any law that you like and they will just find a way to defy it because they have absolutely no respect for the laws that you put in place and they will shield uh their wealth from the democratic efforts to put in laws on how much wealth you can have. Um that really tells you everything about the fact that you shouldn't have a society with these people with this level of power in it. Now I I mean I this is always the conservative argument is um whatever you try to do will be futile, right? I don't think it holds in practice. In practice, if you put in income taxes and you enforce those income taxes, people tend to pay their taxes, you you just have to have enforcement. You just have to make sure um that there are economic punishments for people taking their wealth out of the country. You do need to do some of this at a national level because uh we have a 50-st state system and it does encourage this kind of race to the bottom where one state raises its taxes, another state can cut its taxes and and say come here. But that's an argument for doing this nationally where very few people are going to leave the United States rather than doing it on a city or state basis and it just proves that these people have too much power. >> Interesting. Okay. You know, I want to ask a question a little bit about some moral philosophy here. There are moral philosophers that argue that nobody earns a trillion dollars uh on their own. Essentially, extreme wealth is always built partly on social infrastructure and public education, legal systems, other people's labor. Does society have a legitimate moral claim to claw some of that money back per se from Elon Musk? Jeffrey, >> I'm not going to take a stand on what moral claims are or not. I just want to clarify my position. I am not arguing that we should not tax trillionaires. Okay? Of course, we're going to tax trillionaires. I'm arguing against the proposition that is the subject of this discussion. Should trillionaires exist implying that somehow we should ban someone from earning that much or we should have confisc confiscatory taxation that drives it all away. We should tax people of high income at reasonable rates, not excessively high rates because that in generates evasion and avoidance, but certainly we should be taxing trillionaires and they should be paying a reasonable share. Nathan, I want to turn back to you and kind of get a sense of what you think needs to be done. What policy would actually be implemented that would be effective in perhaps uh fighting uh the inequality that we're seeing in our world today and spreading the money? >> Well, just to say on the on the moral claims question, a society [clears throat] and a government has the right and the obligation to ensure that people's basic needs are met. And that obligation is more morally compelling uh than respecting the right of people to accumulate as as much wealth that can make them sort of mortal gods on earth. Right? The the the obligation to take care of people is vital. The obligation of employers to make sure that they are paying their workers a decent wage that their workers can at their companies pay for their basic needs. And so what I would say the policies that we need to put in place are the policies that ensure that outcome that everyone in the society is taken care of. That means making sure that every worker can join a union so that they have the bargaining power necessary to get a good deal out of their employer. That means yes it it it does mean things like the uh tax on luxury second homes that are being put that is been being put in place in New York. It does mean increasing income taxes, putting in place some wealth taxes so that you can make sure college is more affordable, so that you can make sure everyone has health care. Um, there's a whole set of proposals that socialist candidates have put forth, um, and that even liberal Democrats have put forth, all of which are designed to make sure that we live in a moral society that is taking care of people and is not respecting property over people. Dan. >> Well, the thing about these moral societies is that a lot of such efforts in the past have been much abused and ended up being corrupt and it went against human nature. Copi communism being the classic uh case and point. And you know, you talk about the need to be to have New York City be affordable. I'd like it to be. My daughter lives in New York City and it's unaffordable, but realistically, New York City is one of several world cities that are on top of the heap when it comes to capitalism. No one has a right to live there. You have to earn enough to be able to live there. That's just the nature of the beast. So, a lot of these plans that you talk about in New York with Mandani are not going to work uh simply because they're too far removed from capitalism. I'm talking about something else. There are things that a society absolutely has the moral right and indeed the imperative uh to to to do in order to make sure that the overall situation is for the greater good. I said I'm a capitalist. That means I want private property. Even the fact that societies allow private property is is something somewhat new when that property is backed by the state that enforces your right to have it and for no one else to take it from you. This is fundamental. We do this because we believe in the greater good. It is not the greater good to have a level of inequality that we have in the US right now. >> It it looks like a scam. It's making people unhappy. It's making people crazy. So whether it's wealth taxes or uh unrealized gains being taxed or capital being taxed at the same level of labor, uh something has to be done and can be done. And by the way, as for leaving the US or some other countries, [music] I'm not so sure, but there is universal taxation.