Few ideas are repeated with more confidence and less sincere consideration than the claim that “billionaires are the cause of society’s problems.” From homelessness to hunger, student debt to climate change, the bad guy is always the same. The prescription, vociferously advocated by politicians like Bernie Sanders, Alexandria Ocasio-Cortez, and Zoran Mamdani, is similarly predictable: Tax the wealthy more and let the government solve their problems.
This story is emotionally powerful. It’s also economically dishonest because it never answers the only question that matters.
What actually happens to the money?
Let’s look at a simple and concrete example. Suppose there is $100 million. Let’s consider two paths here. It can either remain in private hands or be confiscated through taxes and handed over to the government. Despite what populist rhetoric suggests, the economic consequences of these two choices are not comparable.
What happens if $100 million falls into private hands?
Despite constant claims of “hoarding,” large private capital is not lying dormant. Capital that does not move loses value. They are forced to work through incentives.
First of all, save money.
Once $100 million is in the bank, it doesn’t go away. That is the basis of financing. Home loans, small business loans, equipment loans, and working capital will be created. Trust expands. Improves liquidity. Real economic activity follows.
The second is investment.
Private capital funds businesses, innovation, real estate, infrastructure, and productivity improvements. In this way, jobs are created before government programs are announced. Importantly, private investment is disciplined by failure. Bad ideas cost you money. Good things have a large scale. Capital is constantly reallocated towards things that work.
Thirdly, expenditure.
When the wealthy spend money, GDP immediately increases. Workers are paid a salary. Vendors can earn revenue. Taxes occur downstream of income, wages, sales, etc. Economic speed increases.
The fourth is charity work.
Serious philanthropy is targeted, evaluated, and relentlessly held accountable. Donors track results. Inefficient organizations lose money. What is effective grows. This feedback loop is important.
The common denominator is results. Private capital answers reality. Results matter. Failure is punished.
What happens when $100 million is donated to the government?
Now let’s send that same $100 million through the government. This solution is promoted endlessly by Sanders, Ocasio-Cortez, and Mamdani.
Allocation becomes political.
Funds are distributed by commissions, agencies, and legislative arrangements. Lobbyists are more important than results. Programs exist not because they work, but because they are politically protected.
Accountability collapses.
If a government program fails, it will not be shut down. Expanded. Failure is evidence that more funds are needed. Success does not free up capital for better uses; it permanently entrenches bureaucracy.
Administrative resistance explodes.
Compliance costs, procurement rules, reporting requirements, staffing, and delays consume a huge portion of every dollar. By the time the money reaches its goal, much of its value is already gone.
The economic multiplier shrinks.
Yes, government spending creates activity, but it does so slowly, imprecisely, and often by crowding out private solutions. Money circulates, but productivity hardly increases.
Government money doesn’t “work”. It is spent and disappears. This is the big difference that class war politicians never raise. And this is the basis for the dishonesty at the heart of class war politics. The rhetorical trick is simple. They equate spending with progress.
But spending is not progress. Creating value is progress.
This is why trillions of dollars in federal spending aren’t solving homelessness, locking in education, and holding down health care costs. These are not funding issues. These are incentive issues, and incentives are exactly what destroys centralized government systems.
However, politicians continue to argue that it is immoral for billionaires to allocate capital privately, while arguing that politicians and bureaucrats allocate funds more wisely. There is no historical or empirical evidence for this belief. none.
It persists not because it produces results, but because it feeds on envy.
unacceptable discussion
This is not a story about rich or poor. It is not mercy and cruelty.
It’s decentralized decision making and centralized control.
– Distributed system:
– Adapt.
– Reward competency.
– Punish failure.
– Evolve through feedback.
Centralized system:
– Calcifies.
– Protect against inefficiencies.
– Rewards access to power.
– Registration correction.
Private capital is imperfect but always tested by reality. Government capital is insulated from reality by politics, and that is the lie at the heart of modern class war economics. Unless we judge policies by results rather than slogans, we will continue to tax, spend and blame. And you’ll wonder why nothing improves.
