Owen Jones insists that billionaires simply shouldn’t exist. Because for everyone that does millions have been deprived of the value they create.
Dan Riffle, senior adviser to Ocasio-Cortez, says every billionaire is a policy failure. He’s right. A billionaire is someone who has concentrated wealth that is collectively created by the hard work and graft of others. A significant portion have inherited their wealth. But even the majority who haven’t are not “self-made” by any accurate use of that term.
Well, no, not really. We have the empirical research to show that it’s the other way around. Of the value created by innovation the entrepreneurs end up with perhaps 3%. The other 97% flows to others in society. Near all of that in the form of the consumer surplus.
Far from billionaires nicking it off the producers they’re picking up pennies of the value that arrives with all of us.
Owen then gives us the Mazzucato nonsense:
Here’s an example. When I defended Russell-Moyle’s argument, the former Ukip MP Douglas Carswell believed he had the perfect comeback: “What about the billionaire who created the smartphone Owen is tweeting with?”, he said on Twitter. But this was one of the worst examples he could have used. First there is the matter of iPhones being made by underpaid, exploited workers: no such company can make profit without relying on the deliberately undervalued efforts of their labour force. But it goes far beyond that. As the economist Professor Mariana Mazzucato notes, rather than being the ingenious personal creation of Steve Jobs, the iPhone brings together technologies created by the state at vast public expense. You name it: touchscreen technology, GPS, Siri, liquid crystal display, the microprocessor, the micro hard drive, signal compression, the internet itself – all were created by publicly funded research and development. Their workforces were educated by the state; their property is protected by a vast state system of justice.
It being a Mazzucato argument of course it is wrong. And even if it were correct we do hand over a third of everything to government. We’d like to get the odd bit of science and technology back.
But even if we accept those claims it’s still wrong. For what is entrepreneurship? No, it’s not technology, it’s not invention, it’s not science nor is it engineering. It is the taking of extant resources and their application in a new manner. Perhaps to solve a problem that could not be solved before. Perhaps to do an old thing more efficiently. But the very definition is to take things that are out there – land, labour, capital, technology – and combine them in a new manner which adds value.
What is combined, how, where it came from, that’s none of it the point. It’s the “What if we do this?” that is.
And was Steve Jobs responsible for that? Sure. He’s one of the very rare people who did it twice in fact. Thrice if we include Pixar.
Steve Jobs and the iPhone isn’t, as Mazzucato tends to shriek, as Owen is here dribbling, the exemplar of why no one does it by themselves. It’s entirely the opposite, he really did build that. Built it out of the blocks available to him at the time which is that very definition of being an entrepreneur.
As it happened, that third of his creations, the smartphone, is the fastest adopted technology anywhere, anywhen. Not bad for a man too stupid to go to hospital to get his cancer treated, relying upon the healing power of kale instead*.
*To start with that is.