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In an age of deepening inequality, billionaires get a lot of attention, much of it negative, but the likes of Elon Musk and Jeff Bezos are actually a blessing for the US economy, according to a director at the American Enterprise Institute.
The center-right think tank's Michael Strain argues that billionaires produce many times their net worth in value for the economy through their innovations.
Strain's views differ from other political and economic commentators, who say billionaires are the face of America's wealth and income inequality problem, and that their existence is only possible because of failed policy that has hollowed out the middle and lower classes and redistributed money upward towards the richest people and companies.
But billionaire innovators — not billionaire heirs and heiresses — may be the exception to that, Strain said.
He pointed, for instance, to Amazon founder Jeff Bezos, whose net worth is estimated to be in the neighborhood of $170 billion, according to Bloomberg's Billionaires Index.
Yet, Bezos is responsible for creating around $8 trillion in value for the US economy, Strain estimated, extrapolating from a 2004 economics paper that found innovators only took home 2.2% of the value created by their technological innovations.
"These nationalists and progressives have it backwards: we should want more billionaires, not fewer," Strain said in an op-ed for Project Syndicate on Tuesday. "Billionaire innovators create an enormous amount of value for society."
Strain admitted there were areas that could be improved in America's capitalistic economic structure, but the solution to those problems lies in doling out economic aid to the poor, not by hating on billionaires, he said.
In fact, billionaire innovators should be considered "worthy of emulation" for children, Strain added, praising an array of business icons. He referred to Meta CEO Mark Zuckerberg as a "social-media pioneer," and LVMH chief Bernard Arnault — who is often neck-and-neck with Elon Musk for the title of the world's richest man — as a "skilled CEO."
"None of them are 'policy failures.' Rather than wishing they did not exist, we should be thrilled that they do. The value they have created for millions of people around the world dwarfs their net worth," he added.
Strain argues that economic inequality based on household income has actually leveled off or even been in decline for over the last decade, though it's worth noting other measures of inequality have actually worsened in recent decades.
In 2021, salaries grew at the fastest pace for the top 0.1% of earners, while the bottom 90% of workers saw their annual wages edge lower, according to a study from the Economic Policy Institute.
The top earners also appear to be taking a larger share of the pie. The top 1% of Americans accounted for 14.6% of all wages in 2021 — double the share that was recorded 45 years ago. Meanwhile, the bottom 90% of earners took home just 59% of all wages in the economy, the lowest level ever recorded, the think-tank said.
That massive wealth gap could be costing the US economy around $300 billion a year, according to a separate EPI study. That amount could be nearly made up by increasing the wealth tax on billionaires to just 2%, another group of researchers found.
