Socialist Billionaires

Yesterday I argued that, in a free-market, entrepreneurs become billionaires by giving three groups of people what they prefer over what they have to give up. 1) Investors get an ownership share in a successful enterprise, 2) Suppliers get money for the plant, equipment, and labor they provide, and 3) Consumers get goods and services for the money they pay.

I have also argued earlier that, in many respects, our economic system has more socialist characteristics than capitalistic. So, what socialistic processes contribute to undesirable characteristics attributed to billionaires?

I will discuss three general socialistic processes that give billionaires an advantage over the people with whom they transact business:

  1. Monetary Expansion
  2. Regulation
  3. Taxation

Money Expansion

A close up of text on a white background

Description automatically generated

The expansion of the money supply amounts to a very complex topic all by itself. I will touch on just a couple of the effects of monetary expansion that benefits billionaires—investment markets and supplier trades.

First, the expansion of the money supply inflates the prices of investment assets. The inflation of market prices for investments makes the “market values” of the billionaire’s investments increase artificially.

Second, monetary expansion allows billionaires to pay suppliers with money that has a reduced value before those suppliers realize it. Lower prices for capital goods increases profits, which helps drive investment asset prices higher.

Regulation

A close up of text on a white background

Description automatically generated

As much as big businesses and billionaires squeal about them, regulations tend to work to the advantage of larger businesses. Large businesses generally have more resources than smaller businesses with which to pay the cost of regulation. Because the high cost of regulation creates a relatively more substantial burden for smaller businesses, large businesses find it easier to expand their market share.

Taxation

A close up of text on a white background

Description automatically generated

The burden of sales and income taxes ultimately get shifted, either directly or indirectly, to consumers. Taxation causes a redistribution of resources that works to the relative advantage of billionaires over consumers—although it helps no one in the long run.

I will discuss the topic of the tax burden more tomorrow.

Conclusion

Socialists implement monetary expansion, regulation, and taxation for the benefit of lower-income people. They want these policies to hamper the unfair advantages they attribute to rich people—specifically billionaires.

These socialist policies, however, help only two classes of people: the political elite and billionaires.

Shouldn’t we subject billionaires to the regulation of the free market?

 

You May Also Like

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: