The moral economy of mega-yachts

Jeff Bezos owns one. Mark Zuckerberg owns one. Also Jerry Jones, David Geffen and Larry Ellison. In multibillionaire circles these days, if you don't own a mega-yacht you might as well stay on the dock.

Critics of American capitalism cite the big boats as evidence that wealth has become obscene. No one needs a 400-foot vessel costing a million dollars a foot.

Do the critics have a case?

They're certainly right that no one needs a boat that expensive. But no one needs ice cream after dinner, either. If I like ice cream and can afford it, I don't want someone telling me I can't have it. Bezos can certainly afford his boat. If he wants it, by what right does anyone say he shouldn't have it?

The question is actually broader than this. Implicit in the criticism is that the billionaire boats have a negative effect on the lives of others.

This might be true psychologically. I might feel deprived because I can't afford what Bezos can afford.

It's definitely true environmentally. If Bezos wants to travel from Seattle to Acapulco, almost any other method has a smaller carbon footprint.

But my feelings needn't be Bezos's concern. And the environmental impact is part of a different argument.

What the critics are really saying is more in the vein that Bezos's ownership of a superyacht represents money taken from the pockets of Amazon workers. The corollary is that if Bezos didn't have so much money his workers would have more. Or that if he paid more in taxes other people could pay less.

Is this true?

The part about taxes is true, barely. Higher taxes on billionaires could permit lower taxes on the less wealthy. But because there aren't many billionaires and there are a lot of the rest of us, any benefit to us ordinary folks would be minimal. Any meaningful redistribution would have to raise taxes on a much larger group than billionaires. And the larger the group the more difficult the politics of a redistribution scheme.

How about some method of capping executive pay? In Fortune 500 companies CEO pay currently averages more than 250 times average worker pay. What if a limit were set at 50 times? Meeting this would have to be accomplished primarily by reducing CEO pay, but raising worker pay would help close the gap.

Assuming this could done politically and legally — a large assumption in America — would it have the desired effect?

In many cases, no. The great fortunes in America derive not from salaries but from ownership. Absent an unthinkable shift in American law, one that would allow large-scale confiscation of property, Bezos and Zuckerberg and the others would remain as rich as ever.

Another strategy is to enhance corporate competition by antitrust action, especially against the big tech firms. Breaking up Amazon would diminish its profitability and value and thereby Bezos's fortune.

But a less profitable Amazon would be unlikely to pay its workers more. On the contrary they'd probably get less. So while Bezos would be forced into a smaller boat, they’d drive crummier cars.

Egalitarians have advocated bolstering the bargaining power of unions. This would allow workers themselves to improve their lot without involving government directly. The era to emulate is taken to be the 1950s, when industrial unions ensured that their members got a greater share of the pie than they do today.

But this golden age for unions depended on factors that don't exist today. The manufacturing sector was much larger as a portion of the economy. America's economy was less integrated into the world economy. The American standard of living was much lower.

Today's reformers, led by President Trump, are striving to dis-integrate the American economy from the world. So far they've made little progress. They talk about reviving American manufacturing but fail to acknowledge that as economies get richer the balance naturally shifts from manufacturing to services. None of them are willing to admit that restoring American self-sufficiency will greatly increase prices, effectively making Americans much poorer.

How many Americans today would willingly be transported to the 1950s, before television, jet airplanes, computers, mobile phones, vaccines, cancer treatments, contact lenses, fresh produce in winter, and the thousand other conveniences we take for granted?

The American economy has changed in ways that made all these things possible. The changes also made possible mega-yachts for billionaires. It's not inconceivable that the trophy boats and other displays of conspicuous consumption could be banned. But it's hard to see how this could happen without dismantling the institutions and practices that produced the other changes.

John Kennedy liked to talk of rising tides lifting all boats. Some of the boats are big ones.