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The Morality of Wealth

There isn’t anything inherently evil or morally wrong with wealth.

The political philosophy and systems of the past have all been from the perspective of privileged classes in specific minorities that held the power. We will not find our answers for an equitable future there. We have to come up with our own ideas. We have to be the architects of our own future.

Let’s start with the memes.

There have been a lot of anti-capitalism memes and a lot of frustration against billionaires. I think these anti-billionaires have correctly identified a problem, the problem of poverty and inequity, but their solutions aren’t quite correct. The take down of billionaires, the idea of burning it all down, is going to increase the problems, not fix them. The remedy to poverty isn’t taking wealth from other people, it’s increasing access to it.

It’s not going to help a man at a homeless shelter at all if you take a billion dollars away from Jeff Bezos. What’s going to help is giving them a home. And giving them the starting point for upward mobility. Getting them out of poverty. That should be the focus.

To be clear: I’m not against the redistribution of wealth. I’m against the distribution of hate. The fruit of these memes is hopelessness. They’re telling people they have no control over their life because a billion dollars is unattainable. What goes along with that is the guilt of success. They’re saying there’s automatically something wrong with you if you figure out who you are, figure out your place in this world, and get rewarded for that.

Speaking of memes, all the posts about how many years it would take to earn a billion dollars are missing a fundamental understanding of compounding interest.

It’s a bit ironic the criticism of billionaires is they do not earn their wealth, coming from people who do not believe labor should define your worth.

It only takes an average ROI (return on investment) of 19% over 80 years to become a billionaire from investing $1000 and not ever adding anything to that original investment. Ya, that’s a really high ROI but it’s not nearly as high as you probably thought. It’s called the time value of money. You can calculate your own compounding interest with a handy calculator here. Here’s a chart:

They don’t think through compounding interest, so they say capitalism is the problem.

Let’s run their stupid meme math into the actual math equation that is actually how reality actually works.

The amount of money you would have if you invested that $5,000 per day every day for 528 years would be so astronomically high that you would have more money than there has ever been. The number is so big that the free online calculators can’t process it. The math of basic compounding interest is as simple as multiplying 1 x 1.08 and hitting enter on your calculator over and over again. Or in this specific case multiply $5000 per day by 365 (the number of days in a year) and multiply by 1.08 and then hit enter on your calculator 528 times. But this doesn’t include the continuing addition of $5,000 per day.

So, I calculated it in google sheets using 8% interest compounded each year (a conservative estimate of the average yearly return on the US stock market) and this is the number I came up with: $10,948,119,632,552,000,000,000,000.00. So you’d actually have the equivalent of 60,486,848,798,629.80 Jeff Bezos’s. This seems unreal because we lack fundamental understanding of the exponential power of time.

Are you starting to understand how building wealth works? How it is possible for you to become wealthy enough to never have to work again in your life only by spending less than you make and investing the rest in a target retirement fund and your friendly neighborhood online brokerage firm?!?

The presentation of numbers in memes like this is so fundamentally wrong it's no wonder they reject capitalism. The oversimplified horrible math in this meme ignores the greatest force in the universe: time. It’s like believing the earth is flat because you can’t see it’s curves.

The final sentence in this meme is correct though: no one works for a billion dollars. You just let time and the suckers that don’t understand compound interest work for you. You do not need a lot of money to become wealthy. You just need to spend less than you earn and invest the rest.

We need a society where this is a realistic choice for everyone.

There is a ceiling to the amount of wealth a single person can amass. And that is the size of the global economy. This means that the more wealth you have, the slower it will grow. So it is actually possible for you to catch up to Jeff Bezos overtime. This is the beauty of the law of compounding interest. It will overtime equalize wealth if it is universally utilized and if everyone has the opportunity to save more than they spend. This information should not be privileged, it should be taught as commonly as look both ways to cross the street or the sky is blue.

This is the piece of the puzzle that separates the wealthy from the rest of us. Having a billion dollars is not nearly as difficult to achieve as people realize. Having a million is a great deal more attainable. I’m not saying it's not hard, though it is achievable for most Americans to become millionaires, and I believe we should, as a society, work to remove the barriers in place rather than put more up. Barriers that only help those who are already rich stay rich through the oppression of opportunity.

What, then, is capitalism?

Capitalism allows for the accumulation of wealth. Perfect capitalism would allow that for everyone. We do not live in perfect capitalism. Legislation, corporations, and bad actors spend tremendous resources to put up gates for entire classes of people often based on race and gender, limiting access to opportunity. This is the problem that moves us away from capitalism towards oligarchic, class-based fascism.

There isn’t anything inherently evil or morally wrong with capitalism. The injustice arises from those who take advantage of others. The problems with capitalism are the problems with people, and those problems will persist and exist in any system we choose to adopt. So it is the role of government to protect its people from these injustices.

One of the arguments against capitalism is that it requires an oppressed labor class in order to function. This is wrong. This is white supremist patriarchal oligarchy disguised as democracy. A perversion of the free markets of capitalism. Just because we haven’t seen a perfect form of capitalism doesn’t mean it can’t exist.

The great lie about capitalism is you must work to justify your existence. Labor is exchanged for money which is exchanged for property. What most people don’t understand is you can buy income-producing assets, which will eliminate your need to work. Your most valuable commodity will always be your time, but you can exchange the money you receive for your time to pay someone else to work for you (and they in turn should be able to do the same).

There will always be someone else. We do not need a system of oppression to ensure cheap labor. The laws of supply and demand dictate there will always be someone willing to work for less than you can earn from their labor. If there isn’t, then your business has failed and that’s fine. We don’t need to artificially influence market forces to ensure cheap labor (in fact we should have minimum wages equal to minimum cost of living to ensure the markets don’t drive the price of labor too low). It is the role of government in a capitalist society to protect its most vulnerable, those who haven’t built (or are unable to build) wealth.

In our current society, the demand for employment has outpaced the supply of jobs. People need work and employment to live. We have the resources to pay them, but it is all concentrated at the top. So the workers are demanding a reallocation of those resources, but because of the motes wealth has built around it, the markets aren’t working as intended, or at least it seems as though they are not. The time it takes for the markets to react is often too slow so people are left behind and suffer the consequences of inequities as market forces are trying to correct themselves. We are living in a time of inequity as market forces seek to efficiently divide the economic pie.

This situation has been compounded through decades of bad legislation concentrating power in those with wealth and weakening the power of those without. We must be allowed to demonstrate. We must be allowed to voice our grievances and be heard or the only recourse will be revolution.

It is possible to equitably build wealth.

The greatest equalizer of the 21st century is the democratization of the stock market. Never before have people been able to buy and sell stocks without fees that created a barrier to participation at lower levels of wealth (but private equity investments are completely locked out to people that aren’t already millionaires by regulation, and that needs to change).

A case for human-centered capitalism

All of these memes and language around anti-capitalism makes me feel like I’m calling capitalism something that it’s not—because it makes fundamental sense to me. It feels like what I support is democratic, regulated free-market, human-centered capitalism. This is why I voted for Andrew Yang in the primaries. (But if you think what I’m describing here is something else, please let me know in the comments)

I believe in equity of opportunity. I believe that you can make the pie bigger and divide it fairly and efficiently through the free markets regulated to ensure human centered capitalism (with protections and fundamental rights in place—healthcare, a living wage, UBI all of which the Poor People’s campaign is calling for).

I believe that the collective voices of humankind, if heard in an equitable platform, will work out all of humanity’s problems. No one person should have the power to make these decisions. The closer we can get to having more voices heard, the closer we’ll get to the perfect division of resources. The reason democracy has failed in the past is because it wasn’t true democracy. It was “democracy” for a single ruling class of rich men who owned slaves (this is true going all the way back to the Greeks). We have never seen a society where everyone is represented equally. We have a chance to build that for ourselves for the first time in human history.

Ok, Nick, but what about the billionaires?

Jeff Bezos is infamous for his extreme wealth, but the problem with Jeff Bezos isn’t his wealth in and of itself, it’s how he created and preserves it.

Amazon became one of the biggest companies in the world by redefining how we shop. It eliminated the inefficiencies of retail and did it in an extremely low-cost way. That is how Jeff Bezos became a billionaire (that and he was given $250,000 of seed money from his parents).

It’s what Amazon did after that that’s problematic.

Amazon’s warehouses began focusing on extreme productivity without the pay to match. They aggressively fought against unionization and placed their warehouses in right-to-hire (or right to work) states. They moved into the web hosting sector, cornering the market and making it virtually impossible to sell anything online without either paying Amazon for your domain or selling on Amazon itself. They use the data they harvest from these smaller businesses using their platforms to engineer specific products for specific markets using economies of scale and the ability to sell something for a loss to gain market share and drive the competition out of business. The consumer benefits from this by experiencing lower prices so Amazon has been left largely alone (the recent Congressional hearings notwithstanding). Once they gain market dominance there is little stopping them from raising prices.

It’s how Jeff Bezos continued to chase after absurd returns (≥20% year-over-year). It’s the pressures of Reaganism and 80s winner-takes-all, corporate profit-driven economies that caused this. Not the accumulation of capital, but the extreme accumulation of capital at an extraordinary rate beyond providing value through innovation. Increasing profits by lowering the bottom line and exploitation of labor forces is the problem.

It’s the power these billionaires and large corporations have over democracy that allows them to solidify their market shares and act as gatekeepers in a large number of market sectors that’s the problem. Not being a billionaire.

It has been my personal experience that in the U.S. small businesses (less than 50 employees) exploit their workers the most since they fall into regulatory exceptions. These are the locally-owned businesses that pay minimum wage (sometimes legally pay less than minimum wage) and don’t offer any benefits. No healthcare, no 401k, no ownership incentive programs, no clear paths for advancement. These are the businesses that can get away with fudging their numbers and not pay overtime or miss paychecks or pay below minimum wage. These workers usually don’t have the power to organize against their employer (because the employer can just fire and hire someone else or they have ingrained into their employees a weird sense of family) and often feel like they can’t just quit, so they endure the abuse. These workers are usually the most vulnerable besides undocumented immigrants and migrant workers.

We don’t need less billionaires, we need more.

We need a greater diversity of race, age and gender. If we fight against the ability to be a billionaire we are just putting up more gates against the accumulation of wealth and solidifying the dominance of those currently occupying the space.

A wealth tax won’t stop Jeff Bezos from becoming a billionaire, and it won’t stop current family dynasties from being wealthy. It will only slow the progress of those in the labor stage of capitalism. It will ensure that we will all have to continue tying our value to our labor.

The only reason generational wealth is problematic is because it was built on the backs of slaves. The problem is that there is not equal access to it. The markets must be reset. We need reparations. We need debts forgiven. We need antitrust legislation to break up the tech Giants— the new Rockefellers. We need limits on political contributions, we need limits on lobbying. We need restrictions on employment after serving in Congress or any other form of office.

Let me be clear: I’m not against taxation of the wealthy. I just believe they will find ways around it no matter what we do since they are in control of legislation. This is why I support Andrew Yang’s plan for UBI (Universal Basic Income) funded by a VAT (Value Added Tax) so corporations and billionaires can’t avoid taxation, since every transaction is taxed and people who spend less than $100,000 a year still net benefit from the UBI.

If we eliminate billionaires completely (we can’t) we will deliver all that power not into the hands of the many, but into the hands of the government which has historically been the seat of both wealth and power.

Governments are already trillionaires, they control the power to make money. Why would we want to give them even more power?

Nobody says, “I love billionaires.” Who is caping for billionaires? Why are you caping for governments? Why are you caping for tyrants?

Balance the levers of power. Limit the power of the dollar on democracy and decouple productivity from individual value. If we empower everyone with the ability to become a billionaire, then we dilute the power of any single billionaire. If we limit the power of the dollar on the government, we empower the oppressed to get politically active, breaking the cycle of oppression. We need a government by the people, for the people, not by one class of people for one class of people. This can be achieved through peaceful legislative reformation, not violent revolution (please don’t stop peacefully protesting). Get out and vote.

The problem isn’t in the accumulation of wealth. It is in the creation of poverty and the limits put on upward mobility—in the expansion of the wealth gap. We should be raising the bottom up not pushing the top down.

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