Oxfam, a global confederation of charitable organizations, just released a report demanding that billionaires be abolished. The report, Survival of the Richest: How We Must Tax the Super-Rich Now to Fight Inequality, states that:
[T]he world should aim to halve the wealth and number of billionaires between now and 2030, both by increasing taxes on the top 1% and adopting other billionaire-busting policies. This would bring billionaire wealth and numbers back to where they were just a decade ago in 2012. The eventual aim should be to go further, and to abolish billionaires altogether, as part of a fairer, more rational distribution of the world’s wealth.
Oxfam correctly identifies source of much of this wealth:
Billionaires have seen huge gains during the pandemic. A flood of public money pumped into the economy by rich countries, which was necessary to support their populations, also drove up asset prices and wealth at the top. This meant that in the absence of progressive taxation, the super-rich pocketed unprecedented fortunes.
The U.S. government, for example, responded to both the Great Recession and COVID by increasing the nation’s money supply. As a result, between the beginning of 2009 and today, the average home price has more than doubled. During those same years, the Dow Jones Industrial Average tripled in value. Thus, asset inflation has increased homeowners’ and investors’ “paper wealth,” widening the disparity between the country’s rich and poor.
Oxfam’s solution to the gap created by government monetary policy is for governments to aggressively confiscate wealth through draconian taxation, including increased capital gains taxes, wealth taxes, taxes on unrealized capital gains, and higher property and inheritance taxes. To keep the rich from escaping, Oxfam recommends granting additional powers to national revenue agencies and strengthening international government-to-government data sharing mechanisms.
In one of the report’s two forewords, José Antonio Ocampo, Colombia’s Minister of Finance and Public Credit, makes clear that the goal isn’t just to reduce inequality by making the rich poorer:
By abolishing decades-long tax privileges and loopholes that benefit only the richest, there will be more money to invest in free, quality public services like education and healthcare. To invest in agriculture. In climate and nature. And in peace.
Minister Ocampo’s faith in the efficacy of government to ensure good and prevent bad is touching, but hardly realistic. Far more likely, political leaders will use the funds to line their pockets and those of their allies, further cementing themselves in power. Meanwhile, shifting resources to government and away from the private, productive sector, is likely to make the average individual – not just the rich – much poorer.
Yes, Jeff Bezos is a multi-billionaire, but most of his wealth is in the form of Amazon stock. Bezos owns only an insignificant fraction of the nation’s physical wealth (factories, machinery, offices, houses, cars, aircraft, computers, TVs, microwaves, dishwashers, washing machines, and so on and on) and an even smaller share of its human capital (knowledge, experience, skills, values). Confiscating his wealth would force him to sell his shares, tanking the value of Amazon stock and causing much, if not most, of his “wealth” to vanish.
While a worldwide collapse of market share prices might make Oxfam happy, it would starve whole industries of resources leading to worldwide depression. Great for equality, but terrible for human flourishing.
Richard Fulmer worked as a mechanical engineer and a systems analyst in industry. He is now retired and does free-lance writing. He has published some fifty articles and book reviews in free market magazines and blogs. With Robert L. Bradley Jr., Richard wrote the book, Energy: The Master Resource.