This is a very interesting article. The author basically makes the case that there are 2 distinct kinds of billionaires, crony and generally non-crony. And he argues that though non-crony billionaires have little if any impact on growth (I haven’t looked at his data but this doesn’t seem crazy to me.) the crony billionaires have a huge negative impact on economic growth.
Though the author implies that that non-crony billionaires are a neutral factor (in growth terms) in an economy is some sort of surprise to we free market types, it is not. Sub-billionaires (the non-crony version) are probably WAY more important to growth. They are still building fortunes, and businesses, etc. In other words Bill Gates might not have that much impact on growth now but he sure as heck did as he was building Microsoft.
What is a crony and what isn’t is probably a point of debate – the author puts Warren Buffett in the non-crony camp. This certainly certainly should not be, but Buffett isn’t a Russian oligarch either. That aside we generally agree.
And the most important point on which we agree is that cronies suck the lifeblood from the honest economy.
(From The Guardian)
We discovered that billionaire wealth that arises from being politically connected has a strongly negative effect on growth. In contrast, the effect of politically unconnected billionaire wealth on the overall economy is indistinguishable from zero. That means that billionaire cronies constrain economic growth, while billionaires who aren’t cronies on average don’t do so. Why are these findings important for the rest of us? They indicate that public policy toward income and wealth distribution needs to take into account the nature of wealth accumulation.
I know nothing of the author of the attached article but one gets the sense that he’s a little disappointed that non-crony billionaires didn’t show a negative growth effect in his data.