by Walter E. Block

Until the recent past, Bernie Sanders would constantly inveigh against “millionaires and billionaires.” Then, he joined the ranks of the former, and never a negative word was heard out of his socialist, egalitarian mouth about these two evils. Instead, he now confines himself to bashing only the latter.

Ditto for his protégé the most likely mayor of New York City, Zohran Mamdani. According to this worthy, there should not be any billionaires. His exact infamous quote: “I don’t think we should have billionaires.”

How does one become a billionaire? There are only three ways. One, become a very successful robber. For instance, Idi Amin or Vladimir Putin or Lyndon Baines Johnson, who have been reputed to have attained this status via the political system (it is no accident that most of the richest counties in the US are clustered in the neighborhood of Washington DC). Or, they do it more explicitly at the point of a gun as for example the leaders of several criminal gangs, which amounts to much the same thing. Second, choose your parents wisely, and inherit this amount of money from them. Third, earn it through the free enterprise system.

We ignore the first option, since messres Sanders and Mamdani do not have that in mind at all. Further, if they play their cards right, they may attain this goal themselves, and then will have to confine themselves to criticizing trillionaires. We ignore the second, since it is derivative from either the first or third on this list. Moreover, pretty much everyone knows how the first two work. What, then, of the third?

The way to achieve such riches is not by exploiting customers. If you engage in fraud, you are still doing so under the first category, criminality, albeit of a white-collar version.

How, then, otherwise, amass such riches? Simple. You do so by benefiting others. Every voluntary commercial interaction benefits both parties, at least ex ante. A sells shoes to B for $100. At the point of this commercial act, how much did B value this item at? Not at $90, or he would have sustained a loss of $10. Not even at $100, for then there would have been no profit in the deal for himself. Why bestir himself to get off his couch and go out and buy a pair of shoes if he could not thereby gain anything for himself, not improve his economic condition? No, given that he did indeed make this purchase, he must necessarily have valued the shoes more greatly than the purchase price. Posit that this was at the level of $125. Then, he earned a profit of $25. To be sure, this is only ex ante at the point of sale. He usually also gains ex post, but not necessarily so. Perhaps the shoes are out of style, later on; or don’t really fit right. Then, all bets are off in terms of gains ex post. But the ex ante analysis still stands.

What of A, the seller of the footwear? A similar analysis applies. He, too gained, ex ante. To sell the shoes at $100, he must have valued them at less than that amount. Let us posit that he would have been happy to sell them, even, at $5. Then, he necessarily profited to the extent of $95. He had dozens of them lying around, maybe even hundreds, and was very anxious to get rid of them. He might have even valued them at minus $10. They were an actual burden, taking up expensive storage space. Then, he would have profited to the extent of $110! But this is true, too, only ex ante. We cannot make any prediction about ex post. Presumably he gained there as well. On the other hand, it might have been later on discovered that there’s gold not in them thar hills, but in them thar shoes. Then, in retrospect, he would have regretted his unwise sale.

How, then, do you become a billionaire? Maybe a trillionaire? Possibly a quadrillionaire or more? It is simple. Keep buying and selling things and making a profit each time. Do this often. Find a way to convert sand into chips and buy low and sell high. Are you exploiting anyone by so doing? Not a bit of it. Remember, all voluntary sales, purchases, rental agreements, investments, all entrepreneurial activity without exception, is necessarily mutually beneficial.

Do we need more very wealthy people emanating from this source? You are tarn tootin’ we do. For the richer they are, the more they uplift the rest of us. He who is the wealthiest amongst us has contributed to society, to the economy, to prosperity, to a greater degree than anyone else. There is a positive correlation, not a negative one, between free enterprise and a lack of poverty. It is no accident that the more economic freedom there is in a nation, other things equal, the wealthier is everyone else, the poor certainly included. East and West Germany, North and South Korea, are only the veritable tips of the iceberg in this regard.

Pegs:

Zohran Mamdani. ‘I don’t think we should have billionaires’ https://www.nbcnews.com/politics/elections/zohran-mamdani-says-dont-think-billionaires-rcna215821

Correlation: Gwartney, James, Robert W. Lawson and Walter E. Block. 1996. Economic Freedom of the World, 1975-1995; Vancouver, B.C. Canada: the Fraser Institute (308 pages);  http://www.amazon.ca/Economic-freedom-world-1975-1995-Gwartney/dp/0889751579/ref=sr_1_1?s=books&ie=UTF8&qid=1336605884&sr=1-1; http://www.fraserinstitute.ca/pdf/catalogue.pdf; isbn: 0-88975-157-9; http://www.fraserinstitute.org/researchandpublications/publications/7094.aspx; http://www.fraserinstitute.org/research/economic-freedom-of-the-world-1975-1995

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