August 25, 2026
Dear Leland and Everett,
Today I want to talk about billionaires, and particularly billionaires in America. My last letter covered, at some length, my thoughts around inequality. Billionaires are part of that discussion, but felt like they deserved their own separate treatment.
Billionaires dominate headlines and political discussion these days. In my dream world, these discussions would be behind us by the time you reach adolescence and college (and begin wrestling with your own understanding of the world around you); unfortunately, we seem sufficiently far from achieving any sort of consensus regarding billionaires that I suspect they will continue to be a hot topic as you begin to explore current events. By the time you read this, you will be able to evaluate not just my comments on the topic, but likely your own personal journey regarding the evolution of your own beliefs.
Just to establish my current understanding of things, let me provide the types of arguments I see folks making. The most common, by far, is some version of “if billionaires just paid more taxes, we could fund x”, with x presumably representing the claimant’s preferred form of redistribution. I often see claims like “billionaires shouldn’t exist” or, more recently, “every billionaire is a policy failure”. Less commonly but still often I see folks attempt to make the argument that billionaires only exist due to some combination of greed, corruption, and outright theft. Generally I find these arguments bewildering; they strike me as seductive, to be sure, but blatantly populist, oversimplified, and directionally unhelpful. What has disappointed me is the degree to which these arguments have taken hold amongst Americans with college degrees – precisely the type of folks I once assumed were inoculated against conspiracy theories. To be clear, I don’t assume one need be a conspiracy theorist to object to extreme (and increasing) levels of wealth inequality; in practice, however, these arguments seem pretty clearly meant to appeal to our emotions rather than our intelligence.
I’m not particularly interested in directly refuting the claims outlined above, I include them just to provide a backdrop against which to compare my understanding. After I outline how I think of billionaires, I can add a few thoughts regarding what might be driving the current backlash.
First of all, let me introduce the fundamental building block of the economy as well as wealth creation: the individual transaction. When someone buys a good or service from another, I submit that 1) the purchaser values the good or service more than the money they pay for it, and 2) the seller values the money more than the good or service they are selling. Thus, I submit value is created in the individual transaction: the buyer experiences value by owning, consuming, or experiencing something worth more to them than the cost of the purchase, while the seller experiences value by receiving more money than the good or service was worth to them. When buyers and sellers transact willingly (e.g. not at gunpoint), these transactions add value to both the buyer and seller.
The American economy is effectively an accumulation of these individual transactions. In most of these transactions, because both the buyers and sellers benefit, so does society as a whole. There are exceptions; for example, we’ve all experienced buyer’s remorse. Moreover, while we might not be familiar with the term externalities, we are familiar with the concept: if a company pollutes while making a product, the buyer and seller might benefit while society as a whole suffers. There are other examples, but broadly I submit that individuals and societies adapt to curtail the frequency of transactions with negative social consequences.
If we can agree that, on balance, individual transactions create value for both buyers and sellers, doesn’t that suggest billionaires become rich because they provide lots of goods and services to lots of people that create lots of value? Yes, but with some caveats. Imagine a scenario: you see a flower in a park, and want to pick the flower to take home with you; someone standing between you and the flower learns you want the flower and decides to pick it and sell it to you. Assuming you decide to pay the person, you have still receive value from obtaining the flower (otherwise you would not pay for it), but did the person who picked it really provide value? You were there, you were willing to pick the flower yourself, and indeed intended to pick the flower. In this scenario, society benefitted (because you got the flower you wanted), but the seller doesn’t appear to have contributed much value that might justify their compensation. “Positional advantages” refer to situations where sellers earn excess profits by virtue of their location or some form of unearned preferential treatment. Personally, I tend to think of wealth accumulated this way, whereby someone becomes rich more because they leveraged positional advantages and less because they created value in the world, as “extractive wealth”.
Inheritors of billions are not necessarily extractive, but they represent another subset of billionaires that hardly seem to have earned their riches. My point is not to demonize inheritors of wealth; I’m simply interested in exploring the differences between what I will call “earned” and “unearned” wealth. Earned wealth, under this definition, is generated by creating products worth more to buyers than the cost of producing them; unearned wealth would be of the extractive or inherited variety.
I mean not to suggest unearned forms of wealth are evil, but merely to suggest a healthy society would look to tilt incentives toward earned wealth and away from unearned wealth. To this end I have, at times, attempted to form common cause with the anti-billionaires I encounter, because I see lots of room for policy improvements that might discourage unearned wealth. Closing the carried interest loophole would at least stop the practice of letting financiers pay taxes at capital gains rates rather than marginal income rates. Strengthening (rather than our multi-decade practice of weakening) inheritance taxes would limit the amount of unearned wealth we pass from generation to generation, hopefully preventing a type of aristocracy from forming. Finally, when someone borrows money against shares in a company, they should get charged taxes on the money raised to offset the capital gains taxes avoided.
I get little traction with those who hate billionaires when I recommend solutions like those outlined above as a way to find some common ground (and, thus, generate meaningful policy wins that might reduce inequality and make our tax policy more fair). My sense from those conversations is that my proposed solutions are insufficiently punitive, and have begun to wonder whether those who rail against billionaires are as motivated by a desire to punish as they are a desire to create a more fair and just society.
For one thing, conversations around taxing billionaires started with implications that we needed to increase the tax rates on their incomes, whereas lately those conversations are increasingly shifting to an argument that we need to be taxing billionaires’ wealth itself. The idea of taxing wealth chills me, because it seems to me to intimate that the state asserts the right to take people’s stuff, which strikes me as a terrifying precedent to set. For another, I sense that billionaire vilification represents a type of “othering”, where we define a certain group as inherently different and inferior from the in-group. Most people don’t know any billionaires, and for most of us it’s hard to imagine becoming a billionaire, so it’s perhaps easy to convince ourselves that billionaires are somehow uniquely evil and damaging to society.
Most concerning, at least to me, are the reactions I get when I try to draw distinctions between earned and unearned wealth. When I try to point out that some of our billionaires have pretty clearly made our lives better by building companies that meaningfully contribute to our wellbeing, I often get shut down. People can usually accept the idea that certain transactions create value for both buyers and sellers, but surprisingly often cannot make the leap to accepting the idea that some billionaires became wealthy by aggregating a huge volume of transactions that improved the lives of their customers. As far as I can tell it seems to be a mental block, because I haven’t encountered a particularly cogent counterargument. Perhaps most instructive of all, in my conversations people seem to reserve their greatest vitriol precisely for the types of billionaires who created value for their consumers and not the ones who amassed unearned wealth.
All of this leads to me the sobering possibility that people are angry precisely because billionaires have amassed earned wealth. I am starting to suspect that unearned wealth can be forgiven, because at least I can dismiss that wealth being unavailable to me. Perhaps earned wealth is more difficult to accept precisely because it brings my own shortcomings into stark relief. If I am a college graduate suffering under a load of debt while working a job that doesn’t require a college degree…perhaps the idea of taking accountability for my life situation and the consequences of my own actions is more than I can bear.
I am uncomfortably reminded of the story of Cain and Abel. In the story, Adam and Eve had two sons. Abel, the oldest, offered the choicest outputs of his ranch as a sacrifice to God. Cain also made an offering, but apparently withheld the best outputs from his farm. We are told God approved of Abel’s offering, but not Cain’s. Cain became angry and sulked. God confronted Cain, intimating that he should choose to do well, otherwise sin was lying in wait wanting to master him. Rather than master the sin God encouraged him to confront, Cain instead killed his brother Abel.
Think about the potential parallels in this story: a group of billionaires brought the best of their inherent gifts to offer. As such, God rewarded them with riches. Another group of folks did not offer the best of their inherent gifts and were thus not rewarded. Seeing the rich rewarded while they were not, the other group became bitter and sulked. And rather than confront their own inadequacies and adjust accordingly, they seem more interested in punishing the rich in an apparent attempt to eliminate the rich from existence.
To be fair, I do not mean to suggest that billionaires are more morally righteous than the rest of us. Indeed, I suspect it is very difficult to become so wealthy without becoming sufficiently attached to our wealth as to create false gods around money and riches. But I tend to think of that as being between the billionaire and God, and not really my business so long as the billionaire isn’t actively impeding on my ability to lead my life.
I’ve mentioned before that Marxism seems to fill a religious need for its adherents. I suspect this gets at another possible reason why folks object to billionaires. I find the anti-billionaire rhetoric tends to be laced with Marxist ideology. This might also explain why attempts to find common cause have failed: because the real goal is to eliminate earned wealth and the economy built on the individual transactions that create earned wealth. The presence of earned wealth, and the overwhelming evidence that individual transactions create prosperity not only for the rich, but also the majority of participants, might start to confront the (in effect) religious belief that capitalism leads to poverty and suffering. Perhaps the vicious rhetoric toward billionaires responds to a perceived threat to tightly held (de facto) religious beliefs. I hope I’m wrong, because history suggests people can go to great lengths (including horrific levels of violence) to protect their most tightly held beliefs in the face of contrary evidence.
I really, really don’t like to be in the business of attempting to peer into the hearts of others and divine their intentions, particularly in these letters. But I would be disingenuous if I pretended these observations and thoughts hadn’t occurred to me. What I do think is true: when people get this angry, the anger is typically the result of some genuine, unrecognized, unmet need combined with an ugly, confused, convoluted attempt to blame others for a surface frustration only tangentially related to the real problem.
What occurs to me as I write is that I don’t have a clear sense of the real unmet need behind the anti-billionaire sentiment (and, to the degree they are connected, the Marxist sentiment more broadly). This is an area where I want to spend some time going forward. Because my experience tells me that once we understand the real unmet need, we can begin to appeal to the better angels within the anti-billionaires, and hopefully redirect energy currently pointed in darker directions. Wish me luck.
I love you both.
Love,
Dad
Letters to Leland 