
Ask HN: What would happen if we prevented the creation of billionaires? - Bodhisattya
What would be the fallout, under the hypothetical assumption that we manage to outlaw having a net worth above a billion minus one (or any scientifically determined stopping point for net worth)? I think the narrative of inequality is very much wealth driven, though there are other forms as well. Would it have a major impact on the way the world works? Would we instead have much more millionaires, with very little impact on the bottom of the pyramid?<p>The poorest section should have the maximum utility from additional income. However, is there any form of benefit the society can derive from individuals controlling wealth at scale?
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ThrowawayR2
Excepting a few philanthropists, they would leave whichever nation that passed
such a law, bringing their influence and power to a nation that doesn't, and /
or funnel all the excess wealth into overturning or subverting it, of course.
I mean, wouldn't you?

Even if the ban were universal, money at that scale is power. Alternative
social or economic constructs would form to allow the ex-billionaire to
continue to wield that power, e.g. some form of trust or corporation that the
ultra-wealthy don't own but does their bidding or some form of clan or
dynastic structure where family members and trusted retainers each hold part
of the wealth but coordinate their actions.

~~~
Bodhisattya
This. However, it should reduce power being wielded by people with money alone
and incentivize wealth being spread more evenly. If some one has to spread
their moolah to the their twice or thrice removed cousins, I would still
consider an erosion of power and a better distribution of wealth than before.

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isabelc
Some of the tools we use everyday were created by people _after_ they made
their first billion dollars. iPhone and Microsoft Office, for example.

People will always create things, but if you have more money than you know
what to do with, and your mind is not worried about working to put a roof over
your head, then your mind is free to imagine and build the next _world-
changing_ thing.

Capping the income would then also put a cap on innovation. This is not
necessarily bad; many people think we could have enjoyed a few more decades
before the creation of the smartphone.

~~~
Bodhisattya
I wonder whether the innovation will really be capped in a real sense. Lets
say if Apple does not introduce the iPhone, would some one not eventually
still come up with a similar product? I (personally) consider that opportunity
is a rarer commodity than innovativeness, and that most innovations will come
about, albeit a little later.

~~~
isabelc
_> I (personally) consider that opportunity is a rarer commodity than
innovativeness_

I agree. I think to create _world-changing_ things, 3 things are needed:

1\. Innovativeness or creativity.

2\. Lack of neccessity to work to put a roof over your head, which frees the
imagination.

3\. Enough money to make it actually happen. This is the opportunity.

Many of us have #1, some also have #2. But 1 or 2 are not enough. You need all
3. Billionaires _can_ have all 3.

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1123581321
It’s an interesting thought experiment. We would expect to see an increased
market for financial hedging close to the limit. It would be worth paying a
great deal of money to ensure that almost a billion remained available without
endangering either cash or highly valued company ownership. Imagine spending
$40 billion over your life to guarantee always having almost a billion. The
financial industry would grow enormously.

There would be other second order effects preventing the law from functioning
well, and preventing successful people from becoming trapped in such a
capricious state, but I’m seeing those aside.

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fiftyacorn
I've a bigger issue with the inheritance of this money. You look at the news
globally and so much is driven by those who have inherited it yet seen to
think it's been achieved thru their own hard work

This is where the Carnegie's, Buffetts and Gates are right about being
custodian of wealth. It also adds a generational reset on great fortunes

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justcomments12
Empirical evidence: They would denounce citizenship and move to other
countries. This happened in France with a wealth tax, which caused high net
worth individuals to move to other countries (like Gérard Depardieu). You can
see the same thing in other places of Europe, where citizens flock into
Monaco, Jersey etc. The US is no different, plenty moved to Singapore,
Cambodia, Monaco, Jersey and other places. The same is true for Chinese
nationals and others.

Wealth can be used to influence political power, which can be used for good or
bad (In the past billionaire Pablo Escobar was overthrowing the Colombian
government, funding terror group FARC etc.). So it depends on what the
billionaire wants, not democratic process.

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patatino
I don't understand this obsession with billionaires lately. Why exactly stop
there? Why not millionaires? Or people with 100k? You are still in the top x%
of the world. Or does that hit too close at home?

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LatteLazy
Yes.

The US\UK model of capitalism has 2 properties that combine to make
Billionaires both necessary and sustainable: they are very capital intensive
AND they are consumer based societies.

Modern economies need big piles of capital. Somehow you have to get (say) 50bn
USD together every time you want a new semiconductor fab facility or Facebook.
Someone has to pay for that.

Historically, that money was raised from the middle class: if 20m people have
$2500 each in the bank, the bank can pool that and a $50bn pile and lend it to
make new businesses.

Those days started to end with consumerism: instead of sitting on a small bank
balance, the average American\Brit(\Aussie) is in debt. So that means there
were loads of opportunities out there going unfunded. So people who did have
piles of cash could now reliably get big returns from lending. They could lend
to capital intensive new businesses AND to companies like credit card
providers for average Americans to use to fund pure consumption.

That's why you've seen these historically high rates of return on capital for
the last 40 years. That's what caused billionaires in the first place AND what
sustains their existence. That's why the US\UK have so many, while countries
with strong savings cultures (Germany or Japan) have so few. It is also why
you "need" billionaires: someone has to fund the average person spending more
than they earn and fund new businesses (and to a lesser extent government
debt). We could kill all the billionaires tomorrow, spend their cash for the
new few months, then suddenly your credit card company would cancel your card
as there was no one to fund you buying things and not paying for them, your
employer would have to restructure as the interest on it's debt shot up as no
one was lending etc.

A billionaire is just someone with a 100m AND 30 years of 8% RoI. They're the
natural consequence of under supply of capital and high demand for products.

Wealth inequality is very much a function of individual over-consumption on a
mass scale. If you want fewer billionaires, spend less than you earn and put
the rest of the money into investments (a bank account or a shares\bond
account). Vote for higher taxes and less spending to get the government doing
the same thing. Billionaires are flourishing because they basically they hold
a monopoly on the capital supply and the rest of us demand ever more capital.

~~~
cyberdrunk
You don't need domestic billionaires though, foreign ones can do as well. For
example, there are trillions of petrodollars that go through City/Wall Street
and fund various initiatives around the world.

~~~
LatteLazy
You're completely correct.

I think the Petro-billionaires are a good example of this actually. Their
petro income has dwindled over the last 12 months as prices have collapsed.
Even the Saudis can't keep up with their expenses. So soon, petro-billionaires
will just be billionaires. What happens then? Will they get poorer because
they have no actual skill at investing? or will the market keep giving them
high rates of return for nothing more than renting out their capital during a
capital shortage?

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muzani
A lot of the billionaires do spend it on worthwhile things. Elon works on
transportation and energy. Bill Gates tackles climate change, wiping out
polio, sanitation, revolutionizing nuclear energy. These guys take huge risks
on multi-million dollar projects that no other people would do.

Then you have Warren Buffett, who buys stocks that plummet from hype, probably
preventing or dampening recessions.

On the other end you do have the monopolists who use their wealth to choke
competitors, and Trump, who got lucky a couple times, but otherwise make the
world a worse place.

For the most part, billionaires rarely do nothing with their money. They get
there by being willing to take big risks, being good at taking risks, and they
do things that no billion-dollar CEO would be willing to do. I'd say a huge
reason USA is so rich is because of the spirit of taking risks. If you get rid
of billionaires, you lose that.

From a practical angle, how would you outlaw that? It's not like a billion
dollars in gold or cash lying around somewhere. Much of it is in stocks that
go up and down.

What if they put $100 million into a failcoin, which drives up the value of
that failcoin? What if they put half a billion into buying ancient Roman
busts? What if they invest $1 million into a startup, and then "donate" $100
million into it?

I doubt a FAANG founder would just sell his shares if there was such a legal
reason, because it's still a cash cow. It's easier for them to just milk it to
hit a quota then throw away the milk.

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082349872349872
Andrew Carnegie's thoughts (1889):

[https://www.carnegie.org/about/our-
history/gospelofwealth/](https://www.carnegie.org/about/our-
history/gospelofwealth/)

TL;DR keep billionaires, but since they've obviously beat the easy-mode
personal accumulation game, they ought to play the harder-mode societal
benefit game.

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meiraleal
No need to prevent, just tax more. Then what would happen is that the
government would have more money to offer life quality to the people that
worked for that billionaire get that rich.

~~~
Bodhisattya
Would taxing be more efficient from a wealth redistribution standpoint than a
hard cap? Not a rhetorical question.

~~~
meiraleal
I think it is more fair to equalize power and avoid people being capable of
manipulate too much of the society with their money. If the tax is progressive
at some point you will have a hard cap of 100% tax.

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Trias11
Obviously in today's world people with potential to earn more would move away
to jurisdiction that has no restrictions.

Vote with your feet.

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advocateone
In response to your question, about exactly where to come down on
billionaires, I'm not sure but there are some great points on here, and for
the folks questioning why so many techies question having billionaires and
lean more toward socialism, here are my views. And I’d love to hear yours, pro
or against.

If you’re in the US or Europe, you live in countries that are capitalist, but
that have a huge helping of socialism so that we can take care of our
citizens.

At the turn of the 20th century, we had more “real” capitalism with the social
safety net. The result is that J.P. Morgan literally worked his starving
employees to death, which was called “morganization.” Andrew Carnegie was able
to get away with having union demonstrators shot to death by the Pinkerton
police, and there certainly weren’t criminal charges filed against him.
Rockefeller found his oil deposits had an explosive component called gasoline,
and he had no idea what to do with it; so his company’s scientists created the
internal combustion engine we still drive today.

From FDR’s reforms including 'social' security to the FDIC to protect our bank
deposits, we enjoy the benefits of the socialist aspect, and it is not a dirty
word here.

We used to not have the socialism of free public education for our children,
and the addition vastly improved society including economic mobility. Today,
one doesn't have to be a land owner enjoying hand-me-down wealth to have
economic opportunities. Even law had to deal with this, with the passage of
negligence laws, and preventing inter-generational wealth. (See the rule
against perpetutities
[https://www.law.cornell.edu/wex/rule_against_perpetuities](https://www.law.cornell.edu/wex/rule_against_perpetuities),
the question you're always told to skip on the Bar exam.)

Unbridled capitalism without the social component is not a place most people
would want to dwell in. On the other hand, the socialist component, yang to
the ying of capitalism, and I am a capitalist myself, has been an enormous
feature of civil society.

In short, if you like the life that you have, and you live in the democracies,
you live in and enjoy socialism as much as capitalism.

As someone older than I guess the average age of most hackers, the fact that
these techy folks have these views, question whether we should even have
billionaires, and 'socialism' is not a dirty word for them, makes me think
makes we will have a brighter future.

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whb07
Ask yourself why most of the world is poor and bad at creating things, and
what that correlation is to where the billionaires live.

What’s with the anti-capitalism and socialist mentality of techy people? In
theory this board is generally “smarter” and yet they lack original thinking
and common sense.

~~~
advocateone
Respectfully, I have the opposite view and left my comment at the top.

