Rothbard on Billionaires
Zohran Mamdani, a self-identified democratic socialist, was asked directly whether “billionaires have a right to exist” and he responded to Kristin Welker on Meet The Press: “I don’t think we should have billionaires because frankly it is so much money in a moment of such inequality.”
Meanwhile, the stock market is so en fuego, the last hot stock is the IPO of a company called Bullish (BLSH). The name says it all. Joe and Jane Lunch Bucket are borrowing and punting on stocks attempting to get rich. “Guess what the biggest driver of this stock market rally has been? Leverage. For the first time ever, margin debt has topped $1 trillion and has ballooned +25% over the past year. Fully one-fifth of all the leverage supporting the stock market has been built up just in the past year alone; almost half of the outstanding margin debt has come in the past five years alone. That is quite an achievement. It’s also pretty scary,” posted David Rosenberg on X. What could go wrong?
Mr. Mamdani must be dismayed by the latest from CNBC, “AI is creating new billionaires at a record pace.”
“Going back over 100 years of data, we have never seen wealth created at this size and speed,” said Andrew McAfee, principal researcher at MIT. “It’s unprecedented.”
But is it wealth really?
Back when a billion dollars was something, not just inflated stock prices and depreciated currency, Murray Rothbard told us in class “billionaires are kooks.” He had just visited Forrest Mars (at Mars’s invitation) and complained of having to listen to the billionaire’s crazy ideas.
In a piece about Ross Perot for the Rothbard–Rockwell Report (RRR), Murray wrote, “the billionaire becomes a candid and independent crank, often a crackpot, a monomaniac rattling off his cranky views to those who are paid to nod sagely at his greatness. And thus, the billionaire allows himself to get cut off from reality, and his yes-men feed into the problem. So now we get: the billionaire with ideas, with social views.”
What Murray describes may remind you of someone or various someones.
He continued,
Being masterful entrepreneurs, they are supremely confident in their own ability to tackle tough tasks and to conquer them. But like all tragic heroes, they suffer from the failings of their very virtues. Bright and independent, they tend to scorn advice, a particular problem when they apply their entrepreneurial expertise to new and unfamiliar fields. Worse, they tend to become arrogant and thin-skinned, and brush away all criticism as the flea bites of lesser men. And being billionaires, they suffer from the same problem as the Emperor Caligula or, often, the President of the United States.
According to Statista, there were 66 billionaires in the US in 1990. That number grew to 748 in 2023. Over the same period the value of the dollar fell 59%. To candidate Mamdani’s point, Ludwig von Mises wrote, “Inflation and credit expansion, the preferred methods of present day government openhandedness, do not add anything to the amount of resources available. They make some people more prosperous, but only to the extent that they make others poorer.”
The divide between rich and poor will grow to unprecedented levels And more candidates like Mamdani will appear with an unworkable solution that doesn't address the real problem.
