Modern debates about wealth start in the wrong place. They begin with the fortune. They should begin with customers and their time. Mr. Bezos is worth roughly $275 billion. That number offends many people because they assume wealth must have been taken from someone else. But Amazon didn’t become valuable by force. It became valuable because hundreds of millions of people chose to use it.
Consumers weren’t forced to buy books, batteries, diapers, cables, razors, tools, groceries or printer ink from Amazon. They did so because Amazon saved them time, money, effort or uncertainty. Sellers weren’t forced to use Amazon’s marketplace. They did so because it gave them access to demand. Firms weren’t forced to use Amazon Web Services. They did so because renting computing power was cheaper than building and maintaining their own information-technology infrastructure. That is capitalism: People get rich by creating something others value enough to buy.
The Bezos fortune looks large because it is visible. The value Amazon created is harder to see because it is dispersed. A mother who doesn’t drive to a store to buy diapers doesn’t appear in an economic headline. A small business that reorders supplies in two minutes doesn’t make the evening news. A rural customer who gains access to goods once available only in cities doesn’t receive a subsidy check with Amazon’s logo on it. Yet each transaction saves time, and time is limited.
Consider the arithmetic. Suppose an hour of labor is worth about $64, roughly the average gross domestic product per hour worked in the countries in which Amazon operates. If Mr. Bezos’ fortune corresponded to the total value that Amazon created, his $275 billion would represent about 4.3 billion hours of saved time. Divided among Amazon’s more than 300 million active customers, the saving comes to about 14 hours per customer over Amazon’s life. That’s nothing. Many customers save that in a month.
But entrepreneurs don’t capture all the value they create. The Nobel Prize-winning economist William Nordhaus estimated that innovators keep only a small share of the social value—roughly 2%—produced by their innovations. Under that assumption, Mr. Bezos’ $275 billion fortune implies that Amazon created about $13.8 trillion in total value for society.
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None of this means Amazon is perfect. No large company is. Amazon can make errors. But that doesn’t cancel the basic fact: Amazon created enormous consumer surplus.
The moral case for Mr. Bezos’ wealth doesn’t require blind admiration of his business acumen. It requires arithmetic. If Amazon saves each customer 22 hours a year, Mr. Bezos’s fortune passes the Nordhaus test. If it saves more than that, society receives far more than he keeps.
It is easy to resent the billionaire. It is easy to ignore the saved hours. But the hours matter because time is limited. It is our most precious resource. Count the time saved, and Mr. Bezos’ fortune becomes less mysterious and much more defensible.
Taxes on the rich were notably higher in the past than they are today, but the government was also a lot less involved in transferring funds to transport, education, and health care among other income support and transfer programs. Perhaps most importantly, American families today enjoy substantially higher living standards than families did during the era of confiscatory marginal tax rates.
Even if, contrary to fact, trade deficits necessarily need to be ‘fixed,’ tariffs are a poor tool for doing so. (HT Scott Lincicome)
Last week, Representative Jamie Raskin explained earnestly in Congress that the Supreme Court must be expanded to 13 justices because “there are 13 federal circuits in America, and traditionally, the Supreme Court has been made up of the number of justices equal to the number of circuits, and we got 13 circuits, but we only have nine justices, so that means that under the best of circumstances, for entire federal regions, four federal circuits will be left out completely.” Which sounds like a problem that ought to be fixed pronto until one recognizes that Raskin’s heartwarming concern for the “four federal circuits” that are “left out completely” is wholly subordinate to his desire to pack the Supreme Court with his friends. If, tomorrow, President Trump were to announce that he, too, is deeply concerned about the four orphaned federal circuits and that, to right this terrible wrong, he intends to add four justices to the existing nine, I daresay that we would not count Representative Raskin among the eager “ayes” in the House.
Later in his diatribe, Raskin was more candid about his motivations. “The Supreme Court,” he lamented, “has been a profoundly conservative, reactionary institution for the vast majority of our history.” Alas, this isn’t quite true. But it damn well ought to be, oughtn’t it? The act of writing down a set of laws is, in and of itself, a conservative act. Constitutions, like the statutes that exist under them, are bodies of law that remain operative until such time as they are formally changed. Courts are merely the institutions that have been charged with enforcing those laws. A “progressive court” is thus a preposterous oxymoron — especially, as in Raskin’s case, when the thing that one hopes to “progress” away from is the integrity of written law itself.
Howard Husock reveals the high costs of artificially low rents.
John Stossel is correct: “250 years later, Benjamin Franklin’s warning is still relevant.”
