Billionaires don't exist without a state. Nobody toils for years in grad school and invests time and money in a new enterprise without the panoply of legal protections created by the state. Moreover, since the system of property rights enforced by the state is, like any other system of law, completely arbitrary, the specific people that get rich under a certain system owe their wealth to that arbitrary choice.
So the phrase "artificially limited" is a deep distortion of the underlying situation. It's not a matter of more versus less limitation in the legal framework. The income would not exist without all of the limitations that exist on other people in that framework. Rather, we're simply talking about points in a design space: one arbitrary set of choices versus another arbitrary set of choices.
Assuming that the laws are uniformly applied (which may not be true), they are irrelevant to the differences between people's incomes.
If Person A invents hoverboards and everyone buys them, creating billions in economic value, and Person B works at a gas station and creates a few thousand in economic value, they both reap proportional rewards.
No, Person A couldn't have succeeded without laws protecting him/her from theft and arson. But Person B also has that protection, so clearly the difference between them lies somewhere else.
If Person A has gotten billions in government aid through political connections unavailable to Person B, there's a problem. But a non-corrupt legal system is impartial, and therefore you can't attribute success or failure to it. If the system is corrupt, the solution is reform, not income redistribution.
The point is that, the particular rules of the system that reward person A with wealth is arbitrary. They essentially reward the genetic lottery and luck. Person A was able to invent hoverboards because of a million things in his lifetime lined up exactly right for him to be in the right place for his invention, most notably accident of birth and genetic lottery (genius, work ethic).
In a different time the rules would have rewarded the best hunter, still largely based on the genetic roll of the die. When you strip away the fallacy of the self-made man, you realize everything is arbitrary; who makes it big is greatly dependent on the rules of the system. Thus is makes sense for the system to have an in-built limit to how much it rewards any given individual.
> Assuming that the laws are uniformly applied (which may not be true), they are irrelevant to the differences between people's incomes.
That's not true at all. The law has huge impacts on how things are distributed. You're making an assumptions premised on how our existing system of property law works. E.g. "If Person A invents hoverboards and everyone buys them, creating billions in economic value..." Our current system is, of course, completely arbitrary.
Say Person A invents hoverboards, then Person W00001-W10000 engineer the production design, mine the raw materials, assembles them, packs them, transports them, and sells them. Say $4 billion in economic value is created as a result.
Objectively, all we can say is that the $4 billion in economic value is the product of that combined activity. If nobody transported those products to the market, there would be $0 of economic value. Apportioning "credit" for the resulting economic value, and thus income from the proceeds, is a completely subjective process. It is no less subjective just because we do it indirectly, through a system of arbitrary property rules that leads to a particular allocation.
Our system of property and contract law gives very strong protections to: 1) people who originate the last 5% of a valuable idea; 2) owners of capital. The "inventor" of the hoverboard almost certainly had 95% of the research already done for him, he just took the idea the last step forward. Assigning him 100% of the credit in the form of a patent is, of course, completely arbitrary. Moreover, in a capital-intensive business like manufacturing it won't be the inventor of the hoverboard that makes all the revenue from it, it will be the investor that supplied the production capital. Again, that's a completely arbitrary allocation.
That is not to say that there are not utilitarian reasons to prefer a set of rules that yields one allocation rather than another. Maybe giving the patent monopoly to the 5% guy yields more overall productivity than giving it jointly to the top 5 researchers who did the other 95% of the work. Or maybe we just do it that way because its the easiest system to administer. Either way, we're mired in utilitarian arguments, and whether its "fair" to "restrict" someone is wholly irrelevant to the discussion.
No doubt there is plenty of room to argue about the best system. But to say that our current system is COMPLETELY arbitrary, and that fairness is WHOLLY irrelevant to the discussion is dangerous hyperbole.
It would certainly be unfair, even cruel, to restrict everyone's income to the exact same amount, regardless of what they do. It would also lead to extremely low productivity. The fact that we don't do that isn't arbitrary.
Our current system has evolved, imperfectly, from common ideas about rights and incentives held by various thinkers throughout human history. Let's not talk as though it were the first thing vomited out of a random law generator.
That's like arguing we shouldn't oppose Internet censorship because censorship is just a kind of regulation and other regulations make the Internet possible.
Besides it's totally possible for billionaires to exist without a state or regulations. It's just that they would look more like feudal lords than the relatively benign fellows we have today. So it is a matter of limitations in the legal framework. It's just an issue of which limitations are appropriate and which are excessive.
Feudal lords were the state. They created and enforced laws, in a form that is quite recognizable to us today: http://en.wikipedia.org/wiki/Magna_Carta (this is an 800 year old document created in feudal England). Our system of property law can be recognizably traced back to laws of feudal England more than a thousand years old.
What you're thinking of is more along the lines of a warlord in a stateless place. Such a warlord would have a lot of relative wealth, but because such a society would produce very little wealth, would not be wealthy in absolute terms.
People who have a billion dollars wealth of wealth, in absolute terms, only exist in this country because you have 300 million people working in a highly organized system of divided labor. Without a state you'd have a society of peasant farmers and hunter-gatherers that had a fraction of the population (how many hunter-gatherers can you support in a territory of a size a single warlord can reasonably defend?) and produced a minuscule fraction of the wealth. The state enables, in a very fundamental way, the social concert of action that creates the wealth that billionaires reap.
My point is, in a stateless society, the rich and power become the state. If they have good sense, they will encourage order and economic growth but they will be the wealthiest members of their respective societies and above any laws they make.
You're right however in pointing out that in current society wealthy people depend on the state and so must support it, somehow. I just find your logic confused.
I don't see how the rules of society are an "arbitrary set of choices." The process of making law is not arbitrary; it's a conscious, directed process.
So the phrase "artificially limited" is a deep distortion of the underlying situation. It's not a matter of more versus less limitation in the legal framework. The income would not exist without all of the limitations that exist on other people in that framework. Rather, we're simply talking about points in a design space: one arbitrary set of choices versus another arbitrary set of choices.