In the past decade, the world’s richest 1% added $42 trillion to their wealth. By contrast, only ~$1.1 trillion accrued to the poorer 50% of the global population over the same period. The five richest people alone have almost tripled their wealth from $405 billion to $1.29 trillion since 2020.

Many of us instinctively find extreme inequality disturbing. It doesn’t seem right that the richest few can buy multiple mansions, fly around in private jets or casually drop $600 million on their child’s wedding, while vast swaths of humanity lack basic necessities such as food, medicine and housing.

Those of us who decry inequality are not doing so out of mere envy. If billionaires were simply living extravagantly but leaving the rest of us alone, we might not care so much. Sadly, their vast fortunes grant them control over other people’s lives through politics and government.

Take the recent presidential election, in which billionaires pulled countless strings to get Trump back in the White House. Peter Thiel and his billionaire buddies got him to pick JD Vance as his vice president; which had disastrous consequences before voting even began. Jeff Bezos and Patrick Soon-Shiong, the billionaire owners of the Washington Post and the Los Angeles Times respectively, spiked editorial endorsements of Kamala Harris because they wanted to curry favor with Trump. And Elon Musk bought Twitter for $44 billion simply to make it a far right propaganda website.

Their decision to back Trump will adversely affect women, LGBT folks, migrants and other marginalized people for years to come.

A popular slogan these days is to “tax the rich”. While this sounds simple, it has been impossible to implement because of how politics works. For starters, the rich donate heavily to political campaigns, and in exchange politicians carve out numerous loopholes and tax breaks that let them legally avoid taxes.

This happens globally, and it is not enough to close these loopholes in only one country. If one government tries to seriously tax rich people, they have ways of moving their money to jurisdictions with lower taxes.

While various global agreements have been proposed to make taxes uniform, they run into a collective action problem. Although such agreements would be beneficial to governments as a group, each individual government has an incentive to cheat and keep taxes lower to attract investments into their respective countries.

Even if the international community miraculously overcomes all these challenges, the problem would still remain. Wealth would again get concentrated in the hands of the few because of how the economy is structured.

Extreme wealth disparity is not due to a lack of taxes, but rather a lack of competition. In a competitive market, profit margins are quite low. If any one company tries to set its prices much higher than the cost of production, rivals quickly undercut it. Unfortunately, large parts of our economy are blocked off from competition by laws and regulations. This allows monopolistic corporations to charge exorbitant prices.

To make things worse, fewer companies means they don’t have to compete as much to attract workers. This results in lower wages and worse working conditions, increasing the gap between the rich and the poor.

Therefore, it is important to understand how billionaires create and maintain these monopolies that allow them to amass such unfathomable riches.

One very popular tool for eliminating competition is patents. Pharmaceutical companies are the most notorious culprits here. The government grants them monopolies over vital drugs, allowing them to essentially hold people’s lives to ransom and extort large amounts of money from them.

While patents are supposed to last for 20 years, companies have ways to extend them using patent thickets. Instead of protecting a drug with one patent, they use dozens of patents filed at different times to stave off competitors. For example, the pharmaceutical company Amgen secured 68 patents on a drug called Enbrel, giving itself a 37 year monopoly which is projected to make $100 billion in revenue by 2029 when the final patents will expire. Similarly, AbbieVie protected its drug Humira with 130 patents and made off with $200 billion.

A common excuse from these companies is that developing and bringing drugs to market costs a lot of money, and they need patents to make profits. In reality, much of the research and development is funded by the taxpayer, and the resulting drugs are then monopolized via patents.

Technology companies also employ patents to keep competition at bay. This not only lets them charge higher prices for their products, but also double dip in customers’ pockets by deliberately making them harder to repair. They patent several crucial parts so that independent repair shops can’t obtain them legally, and pair parts with software so that the device does not accept “unauthorized” parts. When a device breaks down, the consumer must either buy an entirely new one, or pay the company to repair it for much more than it would cost to do it themselves or at a third party repair shop.

This is not only a problem with phones and laptops, but also with medical devices, tractors and other kinds of equipment, making life more expensive for the average person.

It’s not just hardware either. Software companies patent algorithms, features, and even the look and feel of a software. Amazon, for instance, patented its 1-click checkout feature in 1997. When Barnes & Noble dared to offer similar convenience to its customers, Amazon sued. For 20 years, anyone who wished to implement this feature on their website had to pay licensing fees to Amazon, and pass on those costs to end users.

Software patents hinder the development of free and open source alternatives. Richard Stallman of the Free Software Foundation lists several examples of free software projects that had to exclude features because of patents.

Without patents, consumers would enjoy a bounty of high quality free software. Instead, they are locked into a proprietary prison where they must pay regular subscription fees for everything from office suites to video games.

These subscriptions have now crossed over from the virtual world into our physical one. Manufacturers of cars and home appliances use software to lock certain features which consumers must then “subscribe” to use. Want to remotely start your Mazda? That’s $10 a month. Want to accelerate your Mercedes faster? That’s $1200/year. Companies thus make billions in revenue not by selling additional goods and services but by charging people to use stuff they already own.

People who try to modify or replace the manufacturer’s software are threatened with lawsuits, since they are violating copyright law. Like patents, copyright laws serve to enrich the few at the expense of the many. In his book Walled Culture, author and journalist Glyn Moody explains how copyright resulted in Amazon’s stranglehold over the e-book market.

In order to prevent users from copying and sharing e-books, vendors must lock them down using Digital Rights Management (DRM) software. Since each vendor implements DRM differently, e-books can’t be transferred from one platform to another. Thus most people stick to Amazon’s Kindle, forcing everyone to sell their books on Amazon. This in turn, causes more customers to stick to Amazon, because it has the largest selection of e-books.

Another example is YouTube’s near monopoly over video sharing. If users upload copyrighted material to a platform, the company is exposed to steep financial liabilities unless they quickly remove it and prevent it from being re-uploaded. Thus Google developed an automated filtering system called Content ID to protect itself from these liabilities. Since such filtering systems cost a lot of money to develop and maintain, YouTube does not have any meaningful competition.

Apart from funneling billions to giant corporations, copyright laws have put the livelihoods of most writers, artists and digital content creators at the mercy of opaque algorithms which make it harder for them to build and retain audiences for their works. They also result in them receiving lower revenue shares than they would in a more competitive market.

Protectionism is another tool governments use to shield corporations from competition. Through tariffs, quotas and other trade restrictions they raise the cost of goods and services for the many in order to line the pockets of the few.

For example, the Jones Act states that any ship transporting goods between two US ports must be built in the US and have Americans as the majority of its crew. While a few shipping companies profit handsomely off this regulation, it increases the cost of living for everyone else. Similarly, tariffs on steel and lumber result in higher prices and job losses in downstream industries.

A lack of competition allows billionaires and their corporations to not make, but take wealth from everyone else. It is not enough to merely tax them on their ill-gotten gains. We need reforms to ensure that they can’t exploit and fleece everyone in the first place.

That means getting rid of patents and copyrights, or at least severely narrowing their duration and scope. Instead of over a century, for example, a copyright could last five or even two years; with much more liberal criteria for fair use. In the case of patents, the criteria for granting them can be tightened so fewer inventions can be patented.

We would use other ways to reward creativity and innovation. For instance, only the top creators and corporations make money from licensing their “intellectual property”. The vast majority of artists earn a living through crowdfunding on platforms such as Patreon. In other cases, they connect directly with their fans, such as musicians who share their music for free online while making money from live concerts. Getting rid of copyright would level the playing field.

Similarly, a lot of research is already funded through grants at universities and non-profits, and we can simply expand these programmes. Much, if not all, of this work would be open source in order to prevent duplication of effort and keep costs low. It would reduce the barriers to entry and allow more companies to sell any product.

Companies will need to develop new business models; ones that rely not on rent seeking and exploitation but rather on serving consumers at competitive prices. More companies will also mean higher wages for workers.

Another good idea is to get rid of all tariffs, quotas and other protectionist measures to foster competition. The overwhelming consensus in the economics profession is that free trade is the best policy.

While these reforms might seem radical and daunting, they are actually much easier to implement than higher taxes. Taxing the rich effectively requires immense political will to exist globally, forever. Otherwise they will simply move money to low tax jurisdictions.

On the other hand, governments can unilaterally get rid of bad policies that prevent competition. Yes, that too requires political will, but only on a one-time basis. Once people get used to lower prices and an overall higher standard of living, it will be politically unpopular to go back. And if it happens in a large and influential place such as the US or the EU, politicians globally will face public pressure for economies that work for everyone rather than just the ultra-rich.

Rather than trying in vain to claw back some wealth from billionaires, we should strike at the root of the problem. Strip them of their monopoly powers, and let competition handle the rest.