Should Bloomberg Exist?

Source: AP Photo/David Goldman

“Should you exist?” the moderator at the Nevada Democrat debate asked Michael Bloomberg. The question might have been dangerous had the audience assumed the moderator was referring to Bloomberg’s Jewish heritage. But he meant Bloomberg’s financial status as a billionaire. Other Democrat politicians have stated that billionaires shouldn’t exist in the US. Bloomberg responded that he deserved the money because he worked hard for it and was giving it all away. The crowd booed.

Whether or not billionaires should exist is a complex question. The answer from a Christian perspective depends on how he earned it. If he stole it, then he should be in jail and making restitution instead of running for president. From pre-history until the advent of capitalism in the Dutch Republic of the 17th century, people who didn’t inherit wealth got it through looting the enemy in war, kidnapping for ransom, taking bribes as a government official, bribing judges to steal from others or all the above. That behavior birthed the idea that people or groups cannot increase their wealth except by stealing it from others.The Dutch outlawed the old methods for gaining wealth and left people with only commerce, thereby transforming what was once the most reviled profession into one of the most respected. Of course, Venice had paved the way centuries before. The change in the status of commerce caused standards of living to explode in what economic historians call the hockey stick of per capita GDP growth. For the first time in human history, poverty fell and standards of living rose and continue to rise.

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How did that happen? People who saved some of their earnings no longer had to hide it from the state or nobility who wanted to steal it. They didn’t have to give most of it to the Church to buy their way into heaven, thanks to the Protestant Reformation. So, they invested it in new technologies and expanding their businesses. Today, that is still the only way to grow standards of living. It’s how China and India lifted over 500 million people out of starvation in the past generation.

The Democrats who insist that billionaires like Bloomberg shouldn’t exist may be stuck in medieval economics where one can gain such wealth only by making others poorer. If so, they need to read an intro book to economics. Still, some people earn their wealth by making others poorer. I’m not talking just about bank robbers, but respected businesspeople. Economists call the method “rent seeking,” but it’s just plain old corruption. It’s plunder, but it’s legal.

The Federal Reserve creates many opportunities to steal from others. Economists refer to them as Cantillon effects, after the pre-Adam Smith economist who explained them. The general idea is that newly minted money isn’t neutral in its impact on the economy, as mainstream economics teaches. New money enters the economy at specific points and times and benefits those who get it first at the expense of those who receive it last because those who get it first can buy assets, such as shares of stock or real estate, before prices rise. Banks and financial service firms get new money first, followed by the state and large corporations.


As the new money spreads through the economy, asset prices rise. The prices of consumer goods rise as well. The last people to receive the money, the working poor and retirees, can’t afford either. Cantillon effects are a leading cause of growing inequality. Also, Bloomberg is a billionaire instead of a millionaire because of Fed money printing (credit expansion). A billion dollars today would have been worth just $38.4 million in 1913 thanks to the Fed’s destruction of the US dollar.

Another way that one group steals from others is through state regulation of the economy. As Bruce Yandle wrote in Bootleggers and Baptists, corporations bribe politicians to staff regulatory agencies with their people so that the agencies write regulations that protect the largest corporations from competition from smaller firms. Government regulations create cartels, or as they say in economics, “oligopolies.” With reduced competition, the cartels can charge higher prices, pay employees less and earn higher profits.

But the most obvious way to take wealth from one group to benefit another is through taxation. Those who work for the government benefit through higher salaries.

Bloomberg is probably guilty of some of the theft mentioned above, and since those are legal methods of plunder, he should give some of his wealth away. But when he mentioned that he is giving away his wealth, the crowd booed him. I can only assume the Democrat crowd thinks the state should have all of Bloomberg’s money. Very sad.

For the most part, Bloomberg earned his wealth by creating data and news services that saved others great amounts of effort and money to obtain for themselves. So they were willing to pay Bloomberg some of their savings in exchange for his services. In other words, he became rich through making others richer by saving them time and money.

Those who still think Bloomberg billionaires shouldn’t exist, and who aren’t stuck in medieval economics, must be motivated by envy. Envy powers socialism, even the democrat kind.

First published at Townhall Finance.