Billionaires, ultra millionaires, and major wealth inequality are a problem. Almost everyone reading this has heard this concept. However, aside from hogging levels of wealth that materially decrease the standard of living for everyone at the bottom, this also breaks the social contract and societal fabric in significant ways.
KMA Money
For people who work for a living, there can come a point where they realize they don’t need their job anymore. For career federal employees, it often happens around age 62 that they are eligible for a full retirement with a solid pension, and their retirement and social security would replace their take home income. It can also happen in an employee’s job market when someone realizes that they can get a similar paying job tomorrow, and only need to cover a month’s worth of bills until the new job catches up. At that point, they can tell their boss at any time to ‘kiss my ass’ and walk away from the job (hence the acronym).
When an employee realizes they’ve hit the KMA money point, the relationship with their boss fundamentally and permanently changes. Threats of bad performance appraisals or firing simply don’t work the same way. Imagine what that is like, and that is the tiniest taste of the billionare perspective.
To expand on this, let’s look at some of the specific corrupting influences that happen as one starts to get into extreme levels of wealth.
Freedom of Location
In a modern, industrialized world with easy availability of travel, where you live and where you play don’t need to have much bearing on each other. Don’t like the laws where you are? Just leave.
Normal people have access to some of this as well. Weed tourism to places like Colorado was a thing when they were the only option around. People regularly choose which town to live in based on any number of factors, often economic.
There is a key difference at the extreme top of the wealth spectrum. Billionaires can establish themselves in multiple places at once, simultaneously, spread out across an unlimited geographic area. While moving has a significant opportunity cost for normal folks, billionaires who already own a bunch of properties don’t have such issues.
In the extreme, billionaires can nope out of an entire country, and move comfortably to a place outside the reach of US (or Chinese, for another example) authorities, never to return, living comfortably as an expat. And it gets worse, since moving isn’t the only way to deal with laws or regulations one doesn’t like.
Fight or subvert the law
Let’s start with a basic fact. The budget of the city of Springfield MA has a budget of 727 million dollars. (www.springfield-ma.gov/...) Billionaires can approach cities of this size as peers, and smaller towns a patrons.
Billionaires can afford to lobby not on behalf of interests greater than themselves, but for their personal interests. It’s not bribery if you endow a school and then get an ordinance changed so you can build your mansion. Even worse, when you take into account that billionaires aren’t so location limited as normal folks, billionaires can engage with multiple places at once, playing them against each other to get the best deal.
That kind of power radiates a corrupting effect as well. If someone is rich enough to have the nicest everything, it is easy to cultivate relationships with local politicians. When someone like that also employs hundreds of people in the area and can easily pack up and leave, law enforcement will often think twice before investigating too closely.
If there is somehow a tangle with law enforcement, then there is enough money to hire entire blackshoe law firms to make the problem go away. And if the problem can be settled for some money, then it wasn’t really a problem at all. And as I’ll note below, it gets worse.
Transfer of Risk.
Don’t want to ever have to risk getting a traffic ticket? Never get behind the wheel of a car on a public road. Even better, create a transport services company, have the company lease the car and hire the driver, and then if something happens, the entity to sue is an LLC with a negative asset value.
At a certain wealth level, it becomes easier and easier to use intermediaries, services companies and even shell companies to take care of your personal business. This can cover anything from having a private driver for a car, to arranging delivery of drugs or prostitutes.
Once someone has enough money to hire discreet personal assistants or incorporate whatever they want, they gain an ability to transfer risk from any ‘society rules’ onto others who are willing to be paid to accept that risk. The problem gets even worse when someone can go to extremes to:
Buy Privacy
If all of the options to make something legal or get someone else responsible won’t work, those with extreme wealth can afford the privacy to do things anyway. This applies to large mansions and estates that offer a physical barrier, along with private yachts and jets, as well as staff selected for loyalty and discretion. What outsiders can’t see and doesn’t affect them can’t get you in trouble.
Corporate Billionares are Even Worse
By controlling a corporation and setting corporate HR policy, those with extreme wealth and power can exercise a level of control over people that a government in the US could never do. Company policies can control what people wear, who they associate with, what external activities they can partake in, and even their political speech, all under threat of job loss. Nondisclosure and non-compete agreements can haunt employees long after their employment is over. During an economic downturn, where equivalent jobs are scarce, employees are faced with an ugly choice, comply, or face a marked reduction in standard of living. Those conditions undermine the argument that any such arrangement is ‘consensual’.
Impact
If you consider the paired concepts of the Social Contract (en.wikipedia.org/...) and the Rule of law (en.wikipedia.org/...), it becomes clear that at extreme levels of wealth, the basic framework breaks down.
In a real and practical sense, billionaires aren’t governed like ordinary people. They’re simply not subject to most of the same laws as others. Laws they don’t wish to abide by can be bypassed, subverted, or compliance can be transferred to other people.
Now consider that in a democratic system, laws are intended to be made by those governed by them. And yet a small number of individuals with extreme wealth can wield an outsized influence on those laws without being governed by them in a meaningful way at all.
As wealth inequality becomes more and more extreme, the problem with billionaires in general is amplified. There is less wealth available for tax bases and the like, making it harder for cities and towns to avoid seeking out wealthy patrons and the corrupting influences that come with it. Look no further than the bidding wars across various states to attract major business investment for examples. Even worse, those with extreme wealth can begin to create separate ‘society within a society’ networks, effectively organizing against the governments purporting to control the area in which they reside, or engaging in capture of those very governments. For this latter effect, ask yourself, how many billionaires blew the whistle on Jefferey Epstein?