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There are strong deontological and libertarian arguments that if somebody earns money, or creates something which is valued via money, via legitimate means, then they can do whatever they want with their own money no matter how wasteful you deem it, even if starving people elsewhere could use that money, because it's the owner's choice to do what they will with their own property.
I'm going to put those arguments aside, and argue from a utilitarian perspective. After all, what are they doing with their money if not spending it on themselves? If it sits in a bank vault as cash forever then it might as well not exist as far as the economy goes and thus helps counter inflation, at least until they die and a lot of it goes into death taxes and heirs. If they donate it to charity then hey, it's doing exactly what you want. If they're investing it to earn even more money, then it is being invested, not sitting around being useless. Again, if we're restricting our view to ethical billionaires who earn money by creating wealth, then they invest by giving money to ethical companies which create wealth, and then they extract some of that wealth as dividends while the rest disperses into the economy in the form of cheaper goods, more valuable goods, wages, and more buying/selling in interactions between their company and others.
So there are a number of reasons, from a utilitarian perspective, why billionaires might sometimes be good:
1: Charity
Scott makes a strong post arguing that billionaire charity is good because it can pick up blind spots that government charity misses: https://slatestarcodex.com/2019/07/29/against-against-billionaire-philanthropy/ Bill Gates in particular has devastated malaria, which was previously being underfunded relative to its value, because governments have systematic biases in what they do and do not fund. Such cases are not one person hoarding wealth that they can't possibly use on themselves, it's individuals choosing where to donate their own money that they created instead of the government appropriating it and then deciding for them. And they earn this right be creating the wealth in the first place.
2: Capital Allocation
I read a good argument (I forget where, maybe Paul Graham?) comparing investors to a natural selection process for determining what projects should be invested in. That is, people who are systematically good at telling the difference between promising companies and doomed failures can repeatedly invest in good companies that others underestimate, earn a profit, and have even more money. And then they repeat the process but more and bigger because they have more money to utilize. People who are bad at doing this will end up with less money and eventually be forced to do something else with their time. Therefore, smart investors will end up with more money, which they have demonstrated their ability to use wisely. And again, if they are investing in ethical companies then the more money they earn is a fraction of the wealth generated by the companies they finance, the rest going to grow the economy. Importantly, this process is brutal and unbiased. A bureaucrat trying to decide where to allocate public funding is going to have personal biases, conflicts of interest, and legibility concerns that they have to justify to others. A wealthy investor can chase hunches, whims, make their own plans based on their own industry knowledge, or just be unreasonably biased in favor of some industry that happens to be a good idea but nobody knows why yet. Evolution doesn't need to understand why the things it does works, it just has to kill the things that don't work and let the ones that do multiply, and eventually you have good things that work.
This second point demonstrates that how a billionaire spends their money is not necessarily decoupled from how they earned it. If they're spending it on making more money, and if they're investing in an ethical way (a big if) then they are creating even more wealth. And any limits or disincentives, soft or hard, will disincentivize this behavior and make some of them not try so hard. What genius business creator is going to super hard for a 10% chance of turning their 10 million dollar company into a billion dollar company, if you're going to cap them at 20 million dollars and they can just sell it now for a guaranteed 10 million? What $999 million dollar banker is going to risk $10 million dollars in a startup with a 2% chance of earning them another billion if you've capped them at $1 billion?
Poor people matter, it would probably help them in the short term if you snatched all of their billionaires wealth and just gave it to poor people, but you don't want to kill the goose that lays the golden eggs. There's a teach a man to fish versus feed a man a fish sort of thing going on here. Capitalism is a strange alien beast which, when carefully tuned, can/is/will lift billions of poor people out of poverty. And billionaires are mostly a side effect of that process, but in some cases a direct contributor.
There's a large extent to which all of this is just a rephrasing of trickle down economics, which is 90% bullshit. But it's 10% not, and I would argue that to the reason it mostly doesn't work is largely because a significant fraction of wealth people and companies aren't actually behaving ethically. There is a lot of rentseeking and exploitation and imbalance in bargaining power between labor and capital, which means that many companies create wealth and then keep 90%+ of it as profit for themselves rather than a more fair ~50%, and some companies actually destroy wealth via externalities but manage to extract profits that they didn't legitimately create.
But also, from a brutal utilitarian perspective, maybe 10% is good enough. Like, if a group of rich people have $1 trillion dollars, we could snatch that and give it to the poor, and then the rich people and all the economic potential they represent is gone, the goose is dead. Or maybe we take 10% today, so the poor people only have $100 billion and a bunch suffer in poverty (though not literally starving). And then the remaining 900 billion the rich people invest grows to 1.8 trillion, and then we take another 10% giving $180 billion to the poor. And then the remainder doubles again and then we take another 10%. And wealth inequality continues to grow as the rich get richer and richer and richer, and yet pretty soon the amount we've extracted for the poor has exceeded what even existed in the first place, and they're not so poor. Maybe in a hundred years we'll have billions of "poor" people living in luxury apartments with all of what we would today consider modern luxuries, while the uber rich fly to pluto for vacation in gigantic space castles that the poor could never hope to afford. And if the alternative is to snatch the trillion now and hope that it feeds enough people for long enough before the money runs out and they go back to how they were before, then maybe it's better to let them stay poor until the economy grows enough to lift them out organically via wealth creation.
this gets close to the joint of an issue, what exactly does it mean to create wealth. I'm not going to break out Das Kapital and start reading off lines to you but no man is an island and no man goes from nothing to being a billionaire by himself. Why is it morally acceptable that in a company of thousands all working towards a common goal, one among them reaps so much more of the fruits of labor? I can kindof see it being "fair" when its someone like Mark Zuckerberg who actually conceived of and implemented the technology that made him rich, but such cases are few and far between even in the super wealthy class.
This is conflating the value of a company with personal assets, but if they don't continue to grow that hypothetical business someone else could go and do what they are doing. A world with 1000 walmart clones instead of 100000 walmarts seems fine to me, even desirable. Now there are 1000 families "creating jobs" instead of just the waltons.
The whole thing is founded on mutual consent.
First, let's consider a small company started by one person, or a small group of people. They rightfully own all of the physical and intellectual property of the company, because it literally is their physical property that they pay out of their own pockets, and their labor that they use to increase it. There isn't much meaningful distinction, it's not conflation, it's literally their physical assets, they just use a technical legal ritual to officially make it a "company" for tax and liability purposes. If they hire an employee, they sign a contract with the employee that, in exchange for such and such labor and duties, the employee gets such and such wages and/or shares in the company. And the owners and employee can come up with whatever split of the profits they both find mutually agreeable. Like any purchase or sale of any other good, if one of the parties doesn't think it's fair they can opt out, the only difference is that the thing being bought is "labor".
For larger companies, not much changes, it's just that the owners are people who have purchased shares in the company, which represents a fraction of the physical and intellectual property of the company. That is, if I buy 1/1000000 of a company, then by all rights I own 1/1000000 of all of its physical assets in a moral sense as if they were my private property. There are nuances and legal distinctions, but ethically it's the same as if I bought some physical capital and hired someone to use it to produce stuff for me to sell. And the mutually consensual agreements to purchase labor are between employees and the collective shareholders who own the company assets. Yes, labor is an absolutely necessary ingredient in whatever process the company uses to convert labor into material goods, but fish is a necessary ingredient for a sushi chef to make sushi, there's no reason a priori that the corporate employee is owed anything different than what their contract states for selling their labor that the fisherman is not for selling their fish just because one is officially an "employee" of the corporation and the other is not, since the fisherman doesn't technically work for the restaurant they sell to.
Corporations are fancy coordination mechanisms that convert labor and goods into better goods that are worth more than the sum of the inputs combined. Thus the coordination mechanism itself creates value. If it weren't the case then skilled laborers would simply create the same wealth without signing an employee contract with any corporations, and thus would outcompete them by having less overhead, and could pay themselves better wages. And some people do this. But economy of scale is a thing, and investments are a thing, and they help create value. In theory, again there are a ton of exceptions and counterexamples.
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