Billionaires Should Exist

A couple of weeks ago, Democratic Presidential candidate, Bernie Sanders, tweeted that “Billionaires should not exist” to introduce his proposal to tax the wealth of the richest Americans. My immediate reaction was that Bernie is dead wrong. But as I have had more time to ruminate on the subject, I’ve developed a more cohesive reason why he is wrong.

This morning, Melinda Gates announced that she is committing $1 Billion over the next decade to expand women’s power and influence in the United States. Her company, Pivotal Ventures, will focus on three key priorities; eliminating barriers to women’s professional advancement, fast-tracking women in high profile sectors such as technology, media, and public office, and applying external pressure on companies and organizations to reform.

Over the weekend, I thoroughly enjoyed watching the Netflix documentary Inside Bill’s Brain: Decoding Bill Gates. It covered the work that Bill and Melinda are pursuing through their foundation to tackle some of the largest, most impactful problems facing global society. Bill has a personal vendetta to eradicate the polio virus from the globe, spending hundreds of millions of dollars despite enormous challenges. There were 33 cases of polio in 2018. Bill and Melinda are laser focused on finding a way to provide safe drinking water and sanitation services to developing countries, a leading cause of child and infant death across the world. The Gates Foundation is also working on solutions to make nuclear energy production safer, which could be a major source of clean energy.

None of this would be possible if billionaires weren’t allowed to exist.

 

Warren Buffett and Bill Gates developed The Giving Pledge in 2010 to encourage the world’s wealthiest individuals to give away more than half of their wealth to charitable causes. To date more than 204 individuals and families have pledged to donate over $500 Billion. Each billionaire making the pledge wrote a letter explaining their reasons for giving. These letters are posted on the Giving Pledge website and are magical to read. One of my favorites is from former Goldman Sachs partner turned hedge fund manager Leon Cooperman and his wife Toby.

In the early 1900’s Andrew Carnegie said “He who dies rich, dies disgraced.” In the 1930’s, Sir Winston Churchill observed that “We make a living by what we get, but we make a life by what we give.” In 1961, President John F. Kennedy in his inaugural address stated “Ask not what your country can do for you, ask what you can do for your country.” Well before all these gentlemen expressed their thoughts, it was written in the Talmud that “A man’s net worth is measured not by what he earns but rather what he gives away.”

It is in this spirit that we enthusiastically agree to take the Giving Pledge.

-Lee and Toby Cooperman

If you spend a few minutes reading these letters, you will understand why Billionaires Should Exist.

 

According to the National Philanthropic Trust, 90% of high net worth families give to charity. In 2018, Americans gave $427 Billion to charity, which accounts for 2.1% of the our GDP. But charitable giving isn’t the only reason billionaires should exist. It is the profit motive inherent in a capitalistic system that provides the environment to create the products, services, and innovations that make modern life so miraculous and comfortable. Capitalism has raised billions of people from poverty and continues to do so today. Limiting the upside is potentially catastrophic to a system that, although imperfect, continues to grow the pie.

There is no question we have rising inequality in the US. Instead of targeting the income and wealth at the top end, our policies should focus on raising incomes at the bottom and in the middle. We have a progressive income tax that is meant to ensure the wealthiest pay a “fair share”. But no tax system is perfect, and the wealthy will find loopholes and strategies to minimize their taxes each time we change the rules. Blanket statements that “billionaires should not exist” do nothing to further this conversation or provide solutions that will help the millions of Americans living paycheck to paycheck. The billionaires are not the problem, they are a big part of the solution.

 

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