OPINION: David Harvey
One of the more absurd questions to emerge in the leaders’ debate on Tuesday 6 October focused upon the morality of wealth and whether it was morally acceptable to be a billionaire. The absurdity continued into the “Futures” debate the next evening.
In my view, the question should have been rejected at the outset. To ask whether being a billionaire is acceptable or moral assumes wealth needs moral permission, as if the default is guilt.
An honestly earned fortune isn’t something to excuse. It’s an achievement to admire. The productive billionaire is a moral hero. But not so in New Zealand – land of the Tall Poppy Syndrome and the politics of envy.
Human survival depends on reason. Food, shelter, medicine and machines all exist because someone thought, planned and created. Wealth isn’t a fixed pile of which the rich have grabbed more than their share. It is created, and it is created by minds. A billionaire who built a company has made something that didn’t exist before.
Most billionaires got rich by building companies that sell things millions of people freely buy, such as search engines, smartphones, cheap retail or software. Every sale is a voluntary trade where the customer judged the product worth more than its price.
On this view, a fortune is a rough record of the value delivered to others.
The money made from that company is a tool of exchange that represents productive effort. It isn’t the root of evil.
Pursuing your own flourishing through productive work is therefore moral, not merely permitted. The ambitious entrepreneur who wants to get rich is doing exactly what a moral person should do –living by their own judgment and effort.
A trader deals with others by voluntary exchange of value for value. They neither sacrifice themselves to others nor sacrifice others to themselves. A billionaire who got rich selling products that people freely chose to buy has dealt with millions of people as a trader. Everyone in those exchanges judged themselves better off. Nobody was forced.
Violation of rights
The common claim that billionaires owe their wealth to the poor or to society is an immoral demand. It treats those who are productive as servants of the unproductive and makes need a claim on someone else’s life and productivity.
Charity is fine as a personal choice made from goodwill. It is never a duty. It never is a justification for having wealth.
So where does government fit in? The only proper role of government is protecting individual rights – courts, police and the military. Capitalism is the only moral social system because it bans the initiation of force.
Taxing fortunes to redistribute them means taking by threat and coercion something that someone earned. This is a violation of rights, however well intended and for whatever admirable purpose.
Implicit in the question posed is the type of society we have become. Our society depends upon the creators of wealth whilst condemning them.
The problem is that producers who accept guilt for their success give moral legitimacy to those who exploit them. A billionaire who apologises for being rich is making a moral mistake.
Wealth obtained through production, risk-taking and voluntary trade is to be admired and encouraged.
Billionaires don’t actually have a billion dollars in cash. Most of it is in ownership stakes in productive companies. That capital is already employing people, funding research and building infrastructure.
Calling it “hoarded” misdescribes it. Forcing it to be sold off wouldn’t produce piles of cash to hand out. It would transfer ownership and likely reduce the value of the companies themselves.
Longshot bets
The starting point for considering wealth creation is a distribution that may be considered just. Let people freely pay the person for what they offer. If any inequality follows, it came about from steps that were just. Therefore, it is wrong to say that the resulting outcome is unjust.
On this view, what matters is how wealth was acquired, not how big the total is. Honestly earned billions are legitimate. Fraud, theft or exploitation are not.
The possibility of big rewards drives innovation and risk-taking. Most startups fail. Founders often give up years of income and security on longshot bets. The chance of an enormous payoff is part of what draws capital and talent into risky ventures that produce breakthroughs. A rule that capped success would also shrink the incentive to try.
In addition, billionaires can fund things that markets and governments neglect. Large private fortunes have paid for big philanthropic efforts, such as the Gates Foundation’s work on malaria and polio.
They have also backed unpopular or long-horizon research, and things that would struggle to get through government budgets. Concentrated wealth lets someone make big, fast unconventional bets with their own money.
Moral responsibility attaches to conduct rather than net worth. Judging someone to be wrong simply for crossing a dollar threshold treats a number as a vice.
Excessive profit?
Perhaps we should evaluate what billionaires do. Did they treat workers fairly, pay their taxes as required by law and avoid harming others? Do they use their resources well? A billionaire who meets those standards has done nothing wrong merely by being rich.
Those of the Left who question the morality of wealth and who would redistribute it would use the coercive power of the State to deprive the wealthy of that to which they are legitimately entitled. One should ask whether that is moral.
It depends upon how you view property rights. The Left – feeding upon the productivity of the wealthy – are not respecters of property or of success. They complain – as they have during the current election campaign – about “excessive profits”.
What is an excessive profit? The Left would suggest that it is a level of profitability that is beyond that which they think is reasonable.
Thus, we have the suggestion that the State should determine how much profit a business can make. Such an approach stifles initiative and starves innovation.
The morality of having billionaires? There have been several inane questions posed and equally inane answers. But this question is the most inane, stupid and irrelevant that has been posed so far.
About the Author:
David Harvey is a retired District Court Judge and a member of The Law Association’s Public & Administrative Law Committee.
