This post originally appeared at Harvard Business Review.
Is there such a thing as too rich?
Like most reasonable people, I agree wholeheartedly that people who accomplish greater, worthier, nobler things should be rewarded more than those who don’t. I’m not the World’s Last Communist, shaking his fist atop Karl Marx’s grave at the very idea of riches.
Perhaps I’ve asked an absurd question. Perhaps there’s no such thing as too rich — anywhere, ever. But try this thought experiment: Imagine that there’s a single person in the economy who is so rich he’s worth what everyone else is, combined. If there were such a person, he’d be able to buy everything the rest of us own. In time, his family, inheriting his wealth, would become a dynasty and he could, by bestowing favors, direct the course of society as he so desired. In all but name, such a person would be a king and no one else’s rights, wishes, desires or aims could truly matter. And so no society with such a person in it could be reasonably said to be free.
It seems to me, then, there is such a thing as too rich, at least for people who wish to call themselves free. The only question is: Where is the line is drawn? How rich is too rich?
Imagine that you’re so rich you can afford the finest of every good in the economy. The best education, the best car, the best champagne and so on. Would that be a justifiable level of wealth for a person to not just enjoy — but to aim for? A lot of people would probably say yes.
Now imagine you’re so rich that you can buy the finest of every good in the economy not just once — but 10 times over. Everything. The 10 finest homes. Meals. Doctors. Servants. Entire wardrobes. Apartments, mansions, investment portfolios. The 10 best yachts. Ten private jets. Would that be an excessive level of wealth?
Suddenly, such a level of wealth begins to sound not just unreasonable, but senseless. After all, what possible purpose could owning 10 gigantic homes, yachts or jets serve? Why should anyone want to be that rich? Not just rich — but super-rich?
What is it that induces a sense of repugnance in many of us — in most sensible people — about not just riches, but super-riches? Why is it that when an invisible line is crossed, our attitudes to wealth transform from admiration, to repulsion?
The doctor, the businessman, the neighborhood banker — all these are likely to be merely rich; and probably, many would argue, justifiably so. Their riches can be evidently seen to reflect a contribution to the common wealth. There is a purpose to their work, which requires long years of training and discipline, to which society rightly assigns a steep value.
But to paraphrase the famous line from F Scott Fitzgerald: the super-rich are very different from the merely rich. The super-rich are not just worth millions — but billions. And they are not doctors, businessmen and bankers. They are hedge fund tycoons, “private equity” barons, privateers who have bought the natural resources of entire countries whole and CEOs with golden parachutes the size of small planets. And their wealth is questionable; not just in moral terms, but also in economic ones. For what useful purpose do speculation, profiteering and company-flipping serve? In what way do they benefit the societies that incubate them?
The rich, if they do not plant prosperity’s seeds, at least tend to its branches — but the super-rich appear to be merely picking off the choicest fruit.
When societies allow the rich to grow into the super-rich, they are making a series of mistakes. The mistake is not just that a class of super-rich are fundamentally undemocratic because they hold the polity ransom. The mistake is not just that a class of super-rich is fundamentally uneconomic because the super-rich hoard vast amounts of capital, starving the economy of investment and opportunity. The mistake is not just that a class of super-rich is fundamentally inequitable because it is essentially impossible that any human being has single-handedly truly created enough value to be worth tens of billions. The mistake is not just that a class of super-rich is fundamentally unreasonable because there is no good reason for anyone to want such extreme riches. The mistake is not just that a class of super-rich is fundamentally antisocial, for the super-rich will never have to rely on public goods in the same way that the merely rich still need parks, subways, roads and bridges.
All those are small mistakes. Here is the big one.
When societies allow the rich to grow into the super-rich, they are limiting what those societies can achieve.
Imagine a bountiful forest. And then — no one can say quite why — a small handful of the trees suddenly grow tall. Much taller. They became so tall and strong and broad that they block the sunlight from all the other trees. The other trees begin to wilt and wither and disappear. Their roots crack and split and turn to dust. And one day, not long after, even the roots of the tallest trees can find no water, can grip no soil. They begin to fall. Soon the whole forest becomes a desert.
A dry academic term like “income inequality” doesn’t really begin to cover it, does it?
When super-riches grow unchecked, no one wins — not even the super-rich themselves, in the long run. Everyone’s possibility is stifled when the invisible line from rich to super-rich is crossed. And that is precisely why no society should desire a class of super-rich; for it assures us that a society’s human potential will be eroded. And that is precisely why the moral sentiments of most reasonable people are instinctively, naturally opposed to the idea of super-riches.
At this juncture, I’m sure that defenders of free markets will complain: Who are you to say that anyone shouldn’t be super-rich? But it is precisely defenders of free markets who should object most vehemently to the super-rich. I defy you to find me a fully-fledged member of the super-rich today who isn’t a monopolist, a scion, an oligarch … or all three.
Is there such a thing as too rich? Here is my answer: No forest should become a desert.