By: Jeff Pethokoukis, American Enterprise institute
There’s never been a trillionaire. If you fiddle with the numbers — adjust for inflation or compare wealth to GDP — the best you can probably do is oil tycoon John D. Rockefeller. His vast wealth was maybe equivalent to $300 billion to $400 billion or so in modern terms. So Amazon founder and boss Jeff Bezos, currently the world’s richest person, would need to at least double his current fortune to take the top spot.
And as it happens, many people are oddly worried that Bezos someday will be a trillionaire, a social media phenomenon I write about in my new The Week column, “Three cheers for the world’s first trillionaire.” (Bernie Sanders does not approve, by the way.) It’s all due to a click-bait press release that assumed Amazon stock would perform as well in the next seven years as it has done over the past five. If that happened, Bezos would become a trillionaire sometime in 2026.
Of course, past performance is no guarantee of future results. A simple compounding interest calculation ignores the challenges and churn of business. But if not Bezos, at some time in the future some other super-successful American — maybe a biotech entrepreneur or space commerce titan — will become a trillionaire.
And that’s OK. Actually, it’s more than OK. The first American to become a trillionaire would almost certainly have reached that lofty level of wealth by starting and building an immensely valuable company. That’s how Americans get crazy rich. (The US has 3-4 times as many billionaire entrepreneurs per million citizens as other large advanced economies.) And that company would have grown large within the context of a growing American and world economy (versus, say, some pandemic-ravaged wasteland). Successful advanced economies generate lots of rich people. Countries with lots of billionaires per capita also tend to have high levels of well-being.
So why does the notion of a trillionaire upset some people? Indeed, many of those folks also take the “every billionaire is a policy failure” view toward the rich. Here’s are some of the common concerns I gleaned from many hostile Twitter comments, as well as my responses to those concerns:
— Some Americans are poor because some Americans are rich. Well, not really. Poverty in the US has fallen dramatically since the 1960s and 1980s, and poverty is almost exclusively concentrated “amongst single, childless households rather than families,” notes The Economist. Now, one might like a larger safety net, but there is no evidence that such a thing is incompatible with wealth inequality and having lots of billionaires — both of which exist in the social democratic Nordic nations. It’s also my impression that people making this zero-sum argument are unaware of both the Great Enrichment and the truly massive decline in global poverty in recent decades.
— The existence of billionaires only helps billionaires. Well, not really. Set aside the jobs created by the companies founded by eventual billionaires, such as the tech titans. Most of the highly valued benefits of innovation are passed onto consumers rather than captured by the billionaire innovators themselves. Even if you can’t parse a technical study, this just seems intuitively true when you think about companies like Google, Amazon, and Apple.
— If we confiscated superwealth or prevented people from becoming superrich, there would be no downsides. Well, not really.Even a cursory examination of this argument shows its weakness, including how the recycling of vast wealth fuels our entrepreneurial ecosystem, which is the envy of the world. And as one Silicon Valley investor told me: “Starting a company is essentially a lottery – the odds of failure are incredibly high. You need to be somewhat irrational to start a company, but you might do so because the magnitude of win in the success case is so high relative to the likelihood of success that the expected value payoff still makes sense. The more you constrain that upper limit, the lower the expected outcome and thus the fewer attempts at startups you will have.”