Is it ethical to be a millionaire?

Exploring a rational ethic for the boundaries of wealth

Disclaimer: I suspect few people will like all of the ideas I share on square one. If this one gives you discomfort, here’s what I ask you to do. Give it a few minutes, hours, days, or whatever you need until you feel the discomfort go away. Then read it again critically. I want to hear your initial reactions and I desperately need the kind of critique that comes from deeper reflection emotionally, intellectually, and spiritually. We all do. I don’t want my writing to merely confirm or deny what you already think - that’s not the spirit I’m trying to cultivate at Square One.

What a question

I encountered a thought-provoking question during a discussion with a friend, an artist and activist: “Is it ethical to be a millionaire?”

I’ll be honest my first reaction was that it was, but I couldn’t really explain why, so I responded that I didn’t know and wanted to think about it. Rather than try to convince her I paused to think, not just what is my reaction, but how would I actually explore the question to arrive at an argument? After all, I had never really thought through that question before. Have you?

In considering an argument I attempt to not only explore rationale but to propose a solution by reviving an old idea called “10 for 10”. But first I’d like to address the elephant in the room… if we’re questioning the ethics of having millions: 'What about billionaires?'

What about billionaires?

Is it ethical to be a millionaire? And what really ought to be the foundation of an argument that it is or is not ethical to be a millionaire? As soon as I started considering this question, it dawned on me how dramatic this finding would be for the concept of a billionaire. Maybe I would end up proving millionaires are quite ethical, but it seemed less likely I would justify 1000x more wealth by the same logic. Still I really wanted to explore the argument because there is a pervasive objective reality in which many people think that even billionaires have earned their wealth and deserve it. I’m not so sure, but I wanted to be thorough.

Acquisition vs. Possession

Why would it be unethical to have too much accumulated wealth in the first place? I mean, there’s nothing inherently evil about a number. After some exploration I landed on two plausible arguments: unethical acquisition vs. unethical possession.

An argument for unethical possession might look like this: once you have more than you need while someone else has relatively nothing, then it would be selfish to spend the extra on yourself, and to not lend a hand to the other person. Granted you may not be able to help everyone but it would be your choice of whom to help, when, and how, wouldn’t it?

Contrast that with an argument for unethical acquisition. Can you ever really acquire millions of dollars through nothing but your own two hands? Seldom, and even then only over decades of work. Realistically millions are created with leverage be that through technology, wage labor, established markets, or inheritance from a previous generation’s work and the compounding effects of time you didn’t even live through.

I tend to see both arguments as legitimate but I chose the former as my framework for this essay and here’s why: it’s simpler. If having wealth over a given amount begins to foster an unethical existence then it doesn’t matter how or where you got the wealth. In practice I think this makes it much easier to find a mutually agree standard and to do something about it. Trying to endlessly justify every combination of acquiring wealth as “good” or “bad” can be done, but it will end up being reductionist, divisive, and probably ineffective. So I kept going with the idea of unethical possession.

How much is too much?

Let’s be honest, it’s not just the wealthy who want to create “mailbox” money so that they can focus their time and attention on whatever they choose. I think that’s an obvious goal for anyone - for everyone. Why can’t the accumulated efforts of billions of humans over time create such abundance that we all have that luxury? We all desire freedom and the ultimate freedom to me is the choice of how to spend your time on this earth. I’d rather consider that the target of a new baseline for existence than the cap for wealth. So how much money is that?

There are lots of ways to get there. Divide your required annual income by an assumed rate of return, ideally above the rate of inflation, and you’d have one answer. Ah, so the annual income will be a factor as well. How much money is that?

Well, let us assume it ought to be enough to continue as a species. That ought to seem reasonable. In America we call that a living wage. I don’t want to get into a debate about how many kids people have or how they raise them, so let’s assume the basics. It takes two people to conceive a child and if they have two children they’ll replace their own population value without growth or shrinkage. Realistically raising kids is quite difficult, so lets say that their combined income or the income of one partner should be at least a living wage for a family of four. A quick search shows that in the US that number is between $75,000 and $180,000.

I’m an engineer so naturally I know there’s not one answer, rather I seek to first find the bounds of the problem. So lets use the rate of inflation and the lowest living wage of four as the baseline, and the rate of return in the stock market plus the highest living wage for four as an upper bound. Here’s what that looks like:

Ironically relying on inflation justifies a higher wealth than relying on investing. In the table we see a range of acceptable wealth ranging from about $1M to nearly $7M. In the grand scheme of wealth, this is a very small spread. If we expand this income chart up to $1M/yr just for kicks, we get this:

So even if we assume that it’s ethical to earn $1M/yr in perpetuity without adding any value to the economy other than through the financial engineering of your own money, it’s still only ethical to hold around $30M in wealth. But it’s worth noting that if you’re really able to get to that amount then you probably have a combination of luck and privilege that affords you opportunities to earn at least stock market returns on your money, and 8% is arguably a low figure for you. If I’m just throwing a figure at a dart board, it feels like $10M is a realistic cap, and you’d be hard pressed to justify over $25M which could realistically support a group of 10 people without working earning only 3% per year.

What to do about it

We’ve just arrived at a rationalization for having between $1M and $25M in net worth as a potentially ethical range. Some of you will be appalled by that much excess, and some will be appalled that anyone would suggest it’s unethical to earn whatever you can earn. No argument will make everyone happy.

Hopefully something we can agree on is that if there is an ethical limit to wealth, surely having $100M (4x the highest value) or north of $1B (40x the highest value) is absurd. At that point, it is in my opinion utterly unreasonable not to also evoke the second rationale, that whatever you’ve done to acquire that wealth is surely taking advantage of power imbalance. That kind of wealth doesn’t get accumulated without dubious forms of extraction. I won’t try to prove that point in this article, I’ll merely challenge anyone who disagrees with me to prove the inverse: that one can acquire $100M or $1B without relying on luck, pre-existing wealth, net job loss, wage suppression, gatekeeping of information and resources, etc.

A systemic response

These subjects have always been of interest to me. Back my early twenties I became aware through studying the psychology of money that earning more of it tended to result in more selfish behavior. Realizing that tax avoidance also became easier when you earned more, and that policy seemed to continually be moving in the direction of enabling wealth accumulation as evidenced by today’s record high wealth inequality, I knew the system of taxation would never provide such boundaries for the psyche. I desired to set controls in place for myself such that if I ever were to have such luck, I’d prevent myself from continually justifying more and more income and wealth for myself. I came up with a plan just by gut feeling called 10 for 10.

The idea was simple. You’d keep everything you earned up to $100k, at which point you’d start donating 10%, until your income hit $1M, at which point you’d swap donating 10% to keeping 10%. Hence the adage, 10 for 10. I tend to believe responsible investing can be a good thing, so I thought the donated amount could also be invested, but that the returns of that investment need to be reinvested or donated, never stacked on top of the individuals already ample earnings.

Now that I’ve done this analysis I’m reminded of that simple idea and struck by how well it aligns with the analysis. Perhaps that’s my own confirmation bias showing up in my methods. Regardless, I’m inclined to expand the idea to include a control for net wealth. The new system is as follows (note that the rates are marginal, like tax brackets):

Do I really think it’s the mark of a “good” person to have a $100k income and net worth of $1M and keep it all for themselves? Not really. But I wouldn’t judge you. However, for someone making north of that and having at least $1M in net worth? Remember that’s enough to feed a family of four without working if you invest very well… yea you ought to be doing something for your community.

Yes I know one could have that much wealth and still lose it all. I think that’s the dangerous rationale that tells us to keep hoarding more and more. Once we have, we become attached to having, and the fear of loss is magnified. That’s why I think it’s important to ground ourselves and our expectations in reality while we’re still living on wages.

Ethical Wealth

The question “is it ethical to be a millionaire” is an important one, but it really gets at a deeper question, “how much wealth can be ethically had by anyone?”. My progressive friends will surely want to eviscerate this argument while my conservative friends may think I’m now their enemy. Whatever. The approach here was to think through the question and arrive at some basic, possibly universal rationale to at least have a point of reference. This doesn’t have the be the truth. It’s a truth.

We will always have to contend with wealth. This is a good thing. I believe that humans over time create abundance for themselves and I’d like to see that bring more and more people into higher and higher existence over time. The idea that we must toil and suffer is insidious to me. Toiling and suffering will always exist without the need to work. If we’re not making life better for each generation - what was the point?

Impact of Technology

Especially now on the brink of AGI and autonomous humanoids, we have no choice but to think about these things. If you thought sitting around without laboring made you lazy, what do you call it when you are forced into such “laziness”? I also tend to believe we will find new ways of organizing, new roles to play. But with such a dramatic shift coming, will we be able to adapt quickly enough?

I tend to doubt that. OpenAI gave me some hope when they announced a profit cap and an experiment with UBI. They’ve since largely sold out to Microsoft, started a fund owned only by the founder, and haven’t made an announcement about UBI experiments in years. Not that I can find anyway. But this is no surprise. Our system is still designed and reinforced by a subset of humans who obsess over power out of fear, and today that manifests in the culture of business as usual. Business as usual is obsessed with efficiency which often looks like reducing work force numbers and applying upwards pressure to prices and downward pressure to wages. Several millionaire CEOs have foolishly bragged about such “achievements” in recent media interviews. There is little to no evidence to the contrary.

Tipping or Inflection

As real wealth inequality rises, we are reaching a point that could be described as tipping or inflection. If it’s a tipping point, I expect violence will be the result. I sincerely hope not to go that way, and hope instead to see an inflection point. An inflection point might look like a new generation of business owners deciding to say “fuck business as usual”. It might look like taking a 10 for 10 pledge. It might look like organizing for public benefit and instituting a profit cap.

One of these two points is coming. Do you want your own actions to lead to tipping or to inflection?