Economic inequality lies less in wealth than in consumption, at least for billionaires, and at least in the sense that consumption is what actually commands real resources. A pile of stock in productive companies, or even a pile of cash that never becomes spending, doesn’t directly divert today’s output away from anyone else.

And it isn’t inert. Being willing to sit on long-duration equity at a low required return bids up valuations and, at the margin, lowers the cost of capital. Likewise, keeping cash as a bid for liquidity means some money is being held instead of spent, so there is less immediate pressure on prices, and interest rates can be lower than they otherwise would be, even if that cash is literally just stashed under a mattress. Arguments about the assets being productive are a red herring.

What bites is spending that actually pulls on scalable capacity and scarce inputs. When billionaire wealth is spent on resource-intensive goods and services, productive capacity and bottlenecked inputs get pulled toward satisfying that demand, leaving less capacity for other uses. If big chunks of capacity are going into making yachts, they’re not going into healthcare.

Billionaires do obviously consume far more than most people, but they consume a much smaller fraction of their wealth, because there’s only so much you can buy. And even that spending is often positional and doesn’t translate cleanly into a large diversion of real resources. Buying a very expensive Renaissance painting doesn’t cause the economy to allocate more labor and materials to producing Renaissance paintings. It mostly reallocates ownership, with the real resource burn concentrated in intermediation, promotion, authentication, auctions, lawyers, security, and there are diminishing returns there. Same story with beachfront property and trophy assets, you’re bidding up scarce slots, not placing a production order.

Once you put those two facts together, low consumption relative to wealth, and a big chunk of that consumption being positional, the conclusion is pretty stark. If you look at the actual flow of goods and services the economy produces, very little of it ends up going to billionaires. Their lifestyle footprint can be loud and visible, but it’s a microscopic layer on top of a massive base of production that overwhelmingly serves everyone else.

People often get this exactly backwards and praise billionaire spending because “it creates jobs” or “stimulates the economy.” That’s the wrong frame in a mostly capacity-constrained economy, demand gets accommodated by reallocating resources and by prices moving. It’s also why trickle-down economics, in its popular form, is nonsense. The idea that letting the rich keep more money helps because they will spend it and “create jobs” is backwards, they don’t spend much relative to their wealth, and a lot of what they do spend is positional.

When the rich raise everyone’s standard of living, it is mostly through the opposite channel, saving and investment. A higher propensity to save lowers the economy’s cost of capital, and that makes it easier to fund new capacity, new technology, and new firms. Over time, that raises productivity, and in competitive markets the gains show up as better goods, lower quality-adjusted prices, and higher real wages.

The first implication is that there isn’t much to be gained by “grabbing the pot of money,” if what you do with it is just spend it. If that wealth wasn’t being turned into consumption, it wasn’t directly diverting real resources. Convert it into pure spending and you don’t magically increase the economy’s productive capacity, you mostly just push more demand through the same bottlenecks.

The second implication is that the recent obsession around the tax strategy of borrowing against appreciated assets is mostly a nothing-burger as a lifestyle-finance story. There isn’t that much billionaire consumption to finance relative to billionaire wealth to begin with. And if borrowing were treated as a realization, taxable event, I’d expect many to scale back consumption sharply. For people who’ve worked hard to build wealth, there’s something uniquely offensive about pissing it out to the government, plenty would rather cut down already-discretionary spending than hand it to the bastards.