By proposing to tax large incomes at a higher rate and to tax the wealth of the very rich, progressive politicians such as Rep. Alexandria Ocasio-Cortez and Sens. Elizabeth Warren and Bernie Sanders are forcing a long-overdue re-examination of what billionaires actually contribute.

Are billionaires and other “people of means” (billionaire Howard Schultz’s preferred phrase) the main engines of social progress and economic growth, as many on the right say? Or, are they “vampire squids” sucking the lifeblood of the economy, as a few on the left believe?

Are billionaires the greatest makers in the economy, or the greatest takers?

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My own view is that most billionaires do create some value, but they generally take more than their share of money and power. Their wealth far exceeds their economic contributions. Plutocrats don’t deserve the guillotine, but neither do they deserve billions of dollars.

Plutocrats are, above all, rentiers.

The rentier class

Most wealth is created, maintained and sustained by extracting unearned rents from the rest of us. The wealthy take advantage of monopolies, asymmetric information, network effects, regulatory capture, artificial scarcities created by patents, licenses or trademarks, bailouts, subsidies, protectionism, financialization, and globalization.

In economics, “rents” is a word that means “leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth,” in the words of economic historian Rutger Bregman. The concept dates back to Adam Smith and David Ricardo, who argued that owners of land or natural resources could demand payments in excess of what’s required to bring their land or resources into production.

The classic example of a “rent” is a landowner who controls both banks of a river and charges a toll on anyone who wants to sail through. The rentier did not create the river, but collects the rent anyway.

More recently, economists on both the right and left have championed the theory of “rent-seeking” behavior (or cronyism) by those who want to profit from patents, subsidies, licenses, bailouts, protections, or just having the authorities look the other way.

It’s not just wealth that they take, but political power as well. Do you think that Donald Trump, or Howard Schultz, or the Koch brothers, or Mike Bloomberg, or Warren Buffett, or George Soros, or Kanye West could get anyone to pay any attention to their political views if they weren’t already rich and connected?

What upsets the ruling class most about Warren, Sanders, Ocasio-Cortez and others isn’t the threat to their wealth — they would barely notice the level of taxes now being proposed. Rather, it’s the threat to their political superpowers. Don’t these mortals know better than to challenge the gods?

Who’s who in the rentier class

Enough theory. Let’s look at some facts.

Forbes, Bloomberg News and others try to quantify how much wealth the very wealthy have. It’s best to think of these billionaire rankings as rough estimates, because so much wealth can be (and is) hidden. Others lie about their wealth to make them seem much richer than they are. Wilbur Ross and Donald Trump are good examples of this.

Didier Jacobs, senior economist for Oxfam America, estimated in 2016 that about 75% of U.S. billionaire wealth is derived from rents.

Jacobs looked at the Forbes billionaires list to see which industries produced the most billionaires. Not too surprisingly, the rentier sectors produce almost the billionaires.

Bezos, Gates and Buffett

I’ll go through the current Bloomberg Billionaires list for some specific examples.

At the top with $135 billion sits Jeff Bezos of Amazon AMZN, +5.69% . No one can fault his work ethic or his business instincts. He deserves to be rich, but his status as the richest human is bolstered by the monopolies that Bezos has created in retailing and cloud services. Amazon knows what you want before you do.

In addition, Amazon is hyperaggressive about evading taxes and it has received billions in favors from local governments.

Next up, Bill Gates of Microsoft MSFT, +2.40% with $96 billion. Gates (and No. 18 billionaire Steve Ballmer) built a suite of monopolies based on copyrights and network externalities. The bigger Microsoft got, the more powerful its monopoly became.

In third place, Warren Buffett of Berkshire Hathaway BRK.B, +0.53% with $86 billion. Unlike Bezos or Gates, Buffett didn’t invent or perfect any technology or company. His one big idea was to invest ruthlessly in companies that have “moats” that protect them from competition. In other words, the world’s third largest fortune is based entirely on investing in monopolies.

And so on. No. 4 billionaire Bernard Arnault “earned” $77 billion by integrating a number of luxury-goods brands into one company, LVMH LVMH, -0.87% . High-end brand names are able to command much higher prices than competing goods, throwing off billions in rents to Arnault and others, such No 12 billionaire Françoise Bettencourt Meyers ($48 billion), who inherited the L’Oréal OR, +1.03% fortune, and Giovanni Ferrero at No. 32 who inherited the chocolatier and Tic Tac maker worth $24 billion.

Others have made their fortunes by going down-market: Phil Knight (No. 26) got $32 billion by selling the only sneakers you can buy that have a swoosh NKE, +3.08% . The Walton siblings (Nos. 13, 14 and 17) inherited the retail giant Walmart WMT, +0.90% that delivers everyday low prices to the masses by leveraging its monopsony power.

No. 5 Mark Zuckerberg of Facebook FB, +2.66% ($67 billion) and No. 8 Larry Page ($55 billion) and No. 9 Sergey Brin ($54 billion) of Google GOOG, +2.39% GOOGL, +2.07% invented dominating online platforms that suck in more than half of all online advertising, without creating any appreciable content of their own.

No. 7 Carlos Slim earned his $60 billion fortune the old-fashioned way: He got an exclusive license from the Mexican government to run the mobile phone network AMXA, . Mukesh Ambani (No. 11) and the Koch brothers (Nos. 15 and 16) got rich selling hydrocarbons that nature so thoughtfully laid down a few hundred millions of years ago.

Except for the ones who inherited a fortune, these people work extremely hard for their money. They deliver goods and services that consumer love and depend on. There’s no doubt that they produce value.

They also capture a lot of rents, which means they really haven’t earned everything they have. Nor do they deserve the political power they use to protect and expand their rent-seeking behavior.

The problem we have with billionaires isn’t that they have wealth, it’s how they got it. An economy based on collecting rents is inefficient and unfair. It’s the rent-seeking we need to eliminate, not the wealth. More on that in later columns.

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