I find it ironic that the US which was largely founded by people who left their home because of entrenched economics and limited opportunities and who used to have some of the highest taxes for the top brackets and strong eversion to the development of a new aristocracy have after Reagan developed into a nation of defenders log the superrich.
Well... that's stacking the deck somewhat. We were talking about how to add nuance. Nuance would be "what do we expect the economic result to be" or "this is a matter of right and wrong, not money."
>I find it ironic that the US which was largely founded by people who left their home because of entrenched economics
This gets abstract, but... The individuals most influential in the Revolution itself were mostly high ranking colonial officials from British nouveau aristocracy families of the empire. Granting voting rights only to property owners was the default position. "Universal" suffrage limited to european males was the radical position.
Not a criticism of them. Just... we can't solve these things with history. If you think billionaires are harmful, why? Equality? Economics?
This is mirrored at smaller scales -- good leaders of healthy teams want newcomers to grow and learn and surpass them. Bad leaders are afraid of failure and don't want their people to fundamentally grow and change. Likewise good parents want their children to surpass them; bad parents harass and belittle and shame.
When Apple makes it painful to build sizable businesses on their platform, this is intentional stagnation to maximize profit.
When billionaires run think tanks, fund political campaigns, and rig laws to increase their power at the expense of the common good, this is intentional stagnation to maximize profit.
IIRC, this common refrain is based on a study that required wealthy participants to self-report whether they made their money or inherited it.
Every "millionaire" seems to think they're self made, after all.
22% inherited up to $1m.
12% inherited between $1m and $50m
7% inherited more than $50m.
21% inherited enough for that alone ensure they are on the Forbes 400 list.
The first bucket is clearly self made. The last two buckets are clearly not self made. Depending on your definition of "self made" that would leave somewhere between 35% and 69% of these people as self made.
https://ips-dc.org/the_self-made_hallucination_of_americas_r...
It costs at least 20k a year to live (rent and food). You can gamble if you have 100k of funding, but that's setting you back a lot on things like 401ks and property ladders. If you have security from your family then shoot for the stars, great.
Same applies in many cases, it's not always as simple as how much wealth has been transferred from one generation to the next.
One example want to get a traditional 'good job' in London, lawyer, jouranalists, finance, etc, you need to take an unpaid internship and low paid start to your career for 5 years, all while maintaining London expenses. If you live with parents in commuterville you can do that, if you 're from Newcastle you're screwed. After 5 years of rent free living with parents you're £60k better off even with no cash injection, that's enough buy a house which means you're paying far less than renting, you start building your wealth.
But taht assumes you get the entry level jobs on merit, and not because of parental contacts, which happens a lot. Work experience at your Dad's squash partner's firm will get you rolling, yet wouldn't factor into your 'self made' list.
No man is an island, no man is self made. Those who 'succeed' do so through grit and luck and are often blind to their own advantages. Those that fail do so despite working hard.
The American dream of 'work hard and be rewarded' is bollocks. So much relies on advantages you don't even realise you've had.
It is indeed bollocks, because it is "work smart and be rewarded". You have to work on the right things. Working hard at digging holes and filling them in again will get you nowhere. Looking around for an unfilled need, then starting a business to fill that need, will get you everywhere. Preparing yourself to become a valuable employee is another path.
Many successful entrepreneurs had a series of failures before success.
You'll never get lucky by doing nothing.
Just to provide a little more clarity. Those numbers are from 2012. In 1997, 31% were in born "in the batters box"
However, there is a wide range of circumstances in the batter box. Defined as: "individuals and families whose parents did not have great wealth or own a business with more than a few employees."
Perhaps we differentiate on self-made, but some of those 35% I would not consider self-made either.
The numbers vary by year as people enter or drop out of the Forbes list. However generally speaking you can probably divide that list into rough thirds. One third is the first generation experiencing any wealth. One third was born into enough wealth that they likely would never have to work a day in their life, except they decided to work and were able to compound that wealth into a obscene amount of money. The last third was already born with that extravagant wealth and may or may not have done anything to increase it.
Back to the topic at hand, a wealth tax would not have prevented those first two-thirds from earning their fortune. It would only negatively impact the starting position of that last third. The primary impact of a wealth tax would be to decrease generational billionaires which serves to increases the meritocracy.
[1]: https://www.cnbc.com/2019/05/10/wealthx-billionaire-census-m... [2]: https://www.wealthx.com/approach/methodology/ [3]: https://www.pewtrusts.org/~/media/legacy/uploadedfiles/pcs_a...
[1] https://www.pewtrusts.org/en/research-and-analysis/reports/2... [2]https://www.pewsocialtrends.org/2020/01/09/trends-in-income-...
Rich founders who get pushed out often start new companies (Pixar, SpaceX, Square, etc..)
Rich founders who stay waste their talent & access to capital on moat digging.
Why did Gates, after inventing personal computing, spend the 90s killing Netscape and stagnating browser standards?
The trend of wealthy founders leaving their companies to become mentors/investors for the next batch of startups is likely the biggest contributor to the ongoing success and prosperity of Silicon Valley.
Not hardly. Gates just astutely got on the bandwagon that was already moving.
A tiny rotating ruling class is no different from a hereditary one from the point of view of everyone else in society.
They already answered that:
> The existence of billionaires clearly undermines the core principles of democracy which is that all people have essentially the same political power. The existence of many laws which clearly aim to benefit billionaires only is enough evidence that this power balance does not exist when there are billionaires.
AOC, as a party firebrand, has more political power than Jeff Bezos, although it manifests differently. You can argue that the power was "earned" (in the sense that AOC won a primary), but how is the power that Bezos has any less earned? The same argument applies not just to politicians, but literally any influential public figure (artists, authors, journalists, actors, etc.).
No, there will never be absolute equality of power. Certain people will always have a louder voice in the culture than others. But cultural power is fickle and comes and goes easily unlike wealth.
As mentioned upthread, this is the difference between democracy and rule by wealth.
So if Amazon can't even control local elections, I wonder where all this supposed political power is?
Also, AOC was instrumental in preventing Amazon from establishing a second headquarters in NY. As a freshman Congressman.
Plenty of companies take a hit on their wallet when the CEO has political agendas the customers don't like.
You're welcome to take a hit to your wallet when you don't want to enrich a certain business leader. What you shouldn't have to do is take a hit to your wallet because you don't want to politically empower a certain business leader. This is especially true as there's less and less competition, and a few huge players control a disproportionate amount of the market (which is an issue on its own, albeit a separate one).
The idea behind a democracy for better or worse is one individual gets one vote. When you start having to figure out how you're voting by proxy through the leadership of each company you do business with, I'd wager, that wouldn't be within the spirit of the system.
Companies should compete for individual walletshare by merit, and it really should be apolitical. It won't always be, of course, but I think we're better off if we try and limit it. Conflating the two weakens both imo.
This is almost never the case. Power corrupts.
The primary source of political power Jeff Bezos has is his control of a very large employer. Employing lots of people gives you some power over local politics in the areas where you employ those people, and it gives you some level of influence with politicians who might be interested in ensuring you continue to employ lots of people, because it's good for the economy.
Your run of the mill billionaire heir/heiress that doesn't really do any useful economic activity doesn't have a huge amount of political power, in general. They probably have more than you or I do, but not a ton more. Certainly not more in (linear* proportion to the wealth difference.
Once you realize that the relationship between wealth and power is logarithmic, it's not really a super concerning relationship. There are other sources of power that are much more important, and much less transparent.
It does in both instances. They're not orthogonal.
What about the power newspapers have over shaping the national dialogue? what about tv stations? What about unions? What about film makers, authors?
How do we limit their power? or is it only money that we're concerned about?
Also I note that the strategy to paint the political class (as opposed to e.g. the business class or some "new" political class) as all corrupt is a common strategy by totalitarians to undermine democratic processes.
A capitalist-ish economy is designed to create winners. If it wasn't Bezos, it would be someone else. What matters about Bezos' wealth (in this context) is not that this specific person controls it, but that we live in a society/economy where there will always be people who accrue this level of power and wealth. The problem isn't that Jeff Bezos is this rich, it's that we live in a society designed to concentrate money in this way.
ps. I was the 2nd employee at amazon, and worked closely with Bezos for 14 months.
REF: https://ballotpedia.org/New_York%27s_14th_Congressional_Dist...
But that's just a minor point, overall.
His tax avoidance policies have a significant impact on the budgets of the larger Western countries.
AOC has a media profile, but - so far - almost no influence at all on US policy. That may change in the future, but given that the Dem Establishment seem to consider her a dangerous extremist, it's possible she'll be sidelined into becoming her generation's powerless token left-leaning icon.
> the Dem Establishment seem to consider her a dangerous extremist
They invited her to speak at the Dem convention. That makes her mainstream.
It's possible to use the same wealth efficiently to pay individuals to study the problem of which individuals to contribute to in order to acquire increasing and undue influence.
Your argument is that you shot at someone five times and failed to injure them thus guns doing kill people.
And that's just an example :-)
Activists do it as their day job, for billionaires it's just one of the many side effects of their wealth.
Meanwhile, Amazon was gifted to Bezos by God himself at the age of 15.
Bezos had to work to found a successful business. Which came with a ton of benefits.
Political power is a (un?)intended side effect of owning that successful business. That side effect is the problem.
I argue money is power in a free market society. I'm not sure there is a way to fix the first part of that sentence without completely modifying the latter.
[1] https://www.scientificamerican.com/article/is-inequality-ine...
People borrow $300,000 all the time to buy a house.
Anyway, I hope I'm wrong.
Enforcing civil laws and contractual obligations, court system, police, and army.
They pander to wealthy and influential because they will receive donations in unlimited amounts for such pandering. If they don't, they'll be primaried out by that spending being directed toward another candidate willing to pander.
I'm very pro-democracy; but that isn't a principle that has ever shown to have massive success at scale. There are a lot of fools out there.
Notably, some of the most successful experiments in democracy (British, American & Indian traditions) all have pretty clear principles of not having people with equal political power. Eg, a judge simply has more political power than an ordinary person. Britain and India have appointed members of their upper houses and the US has several safeguards to stop power defaulting to a majority.
Democracy hasn't achieved success due to some rosy concept of equality, it achieves success because the insufferable can't hold power and it provides an excellent method for different interest groups to negotiate and play mock-battle to work out who is stronger. There is plenty of evidence that dictatorship would be a better model if there were some magic method of keeping the dictator focused on good results - and indeed the US political system has tendencies in that direction. The creation of billionaires as replaceable aristocracy is a potential strength.
Plus most of the top US billionaires are self-created. It isn't really comparable to aristocracy either.
That's just a function of accretion. The pearl has just begun to be produced. Do you think that the kids of the current top billionaires will not be at least middling billionaires? The US has lower social mobility than most European countries. Considering the fact that Europe is part of the "Old World", that's a worrying fact in my opinion.
Just looking at https://en.wikipedia.org/wiki/List_of_Americans_by_net_worth I don't see a lot of hereditary names. There is the Mars family I suppose. I don't see names like Getty, Bruce, Mellon, Carnegie, Rockefeller or Vanderblit. There is a Hunt.
The wealth doesn't look like it accretes faster than family growth divides it at that level.
1. There's a very specific reason for that: the computer revolution and the monopolies created by it.
Wait a few years to see what happens to teh children of the people on that list.
2. Look at the Waltons -- The only reason Bezos is the richest person in the word is because the waltons share the inherited wealth between them.
Look at a list of families, for a more accurate view of the Aristocracy:
https://www.investopedia.com/articles/insights/070116/top-25...
Most of these are ~100 years old.
Walton, Koch, Cargill-MacMillan, Cox, SC Johnson, (Edward) Johnson, Hearst
The odds of breaking in to that list are something like 1 / 300,000,000 but evidence is anyone can do it. MacKenzie is also my subtle counterargument to "Look at the Waltons". Breaking up the wealth ain't always voluntary.
Those are about the same odds as breaking in to the House of Lords.
Would the explanation that "while it is statistically impossible, it is strictly speaking plausible for an extremely devoted and lucky regular person to join the club" be a good enough excuse for re-introducing a landed aristocracy to American government, in your estimation?
Seems to me where the system is fair is unimportant, first we know it's not. Second is it designed to create disparities and a negative experience for most people. From a societal point of view that probably bad. And as I like say, the needs and wants of a couple of super wealthy people shouldn't be anything society cares about.
This is called recency bias. "This time is different." as opposed to all the other times they said "This time is different."
200 years ago> There's a very specific reason for that: the cotton revolution and the monopolies created by it.
150 years ago> There's a very specific reason for that: the industrial revolution and the monopolies created by it.
100 years ago> There's a very specific reason for that: the oil revolution and the monopolies created by it.
Etc.
I'm not sure that this is actually true, wrt. "old" wealth. Mostly, because Europe's high income taxes and broadly business-hostile environment makes it very hard for new wealth to compete with old wealth, and especially unattractive for "old" wealth to get involved in riskier, more innovative ventures of their own as opposed to just kicking the can down the generational road.
Worse the portion of wealth from true merit is cover for just how much is graft, rent, and corruption.
The end point of any system whereby power gives one the ability to further consolidate power needs to be balanced with redistribution else all power naturally concentrates in a shrinking few.
No man is self made. Billionaires are generally the children of lesser wealth.
We can also acknowledge that we are incapable of making such systems optimal and take from all to give to all in terms of public works, education, health.
This insures that even if capitalism doesn't properly reward all participants aptly for their contributions to society all get a chance to live and contribute. If you look at true believers in capitalism one would suppose that the market is the only guide to worth and how we should allocate capital. Neither is true.
I think the main difference is that aristocracy was zero sum and rent seeking where billionaires aren’t necessarily (and with recent tech ones not) zero sum. Bezos having a billion dollars doesn’t limit anyone else from having a billion dollars.
Only the king was allowed to hunt in the king’s forest. Aristocracy owning 50% of land (or whatever) means no else could own it and more land wasn’t (usually) created.
If someone is king, then that means no one else can be.
There’s some similarities with aristocracy, especially with generation after generation. But theoretically we have estate taxes and laws against perpetuity that help some and could be prevented.
Perhaps half of billionaires are “self made” [0]. I don’t like that term, but I wish we had “how many billionaires weren’t born to millionaires?”
But Bill Gates being born to a middle class lawyer and making billions is very different from Bill Gates being born to the Earl of Orkney and selling all the potatoes in Ireland to make billions.
[0] https://www.cnbc.com/2019/05/10/wealthx-billionaire-census-m...
His biography is quite clear on how lucky he was and how much his parents contributed to his success. Denying it is perpetuating a myth of a self made billionaire that simply isn't true.
She was on United Way's executive committee with the IBM CEO.
But the IBM deal wasn't a corrupt insider affair either.
How can you look at companies like Google, Apple and Facebook and conclude they aren't rent-seeking? Google's entire business is essentially renting space on the most valuable real estate in the world. Apple routinely shuts down or replaces apps that compete with theirs. All of these companies seek to just barely toe the line of not being subject to anti-trust laws. Of course these are companies rather than individuals, but the nature of capitalism is such that rent-seeking happens via corporations controlled by the wealthy.
> But Bill Gates being born to a middle class lawyer and making billions
Other people can litigate the specifics of Bill Gates or others, but the US has poor income mobility compared to other wealthy countries, largely due to the capture of our political system by the billionaire class.
Google created its market and it is still expanding. Same for Apple, Facebook, etc.
Monopoly or market dominance != rent seeking.
> If someone is king, then that means no one else can be.
Obiously not true. Each king is only king on the king's property. Much like Ellison and Gates and Walton have their own property.
> Theoretically we have estate taxes and laws against perpetuity that help some and could be prevented.
And maybe if they were practical and not purely theoretical, the democratic populace would be mollified.
> But Bill Gates being born to a middle class lawyer
Bill Gates was born to a multi-millionaire.
> different from Bill Gates being born to the Earl of Orkney and selling all the potatoes in Ireland to make billions.
Bill Gates signed deals with IBM and Dell to sell almost all the OSes in the US, to make billions. Even people who installed other OSes had to pay Bill Gates first.
Typical viewpoint on HN is that a $600k a year is average for someone in their early 30s, therefore there's nothing non-average about a multi-millionaire parent.
Billionaires are in effect about the only means to challenge the political machine that runs each country. They only occur in countries that protected property rights to the point people could amass sufficient wealth so as not be subject to all the pettiness of the political class.
Their power is their mobility but only if they have staged their wealth in such a way it cannot merely be confiscated with a single action. Billionaires who come into effect outside of those created by the armed forces of countries being used to enrich their leadership are signs of wildly successful economies that others want to be part of. Yes there is disparity between them and the bottom rungs of the society they are part of but those bottom rungs are usually as far apart from those in nations with no respect for property rights.
America isn't suffering from a lack of tax on the wealthy, their wealth or income. America is suffering from misuse of the money taken from all sources used to prop up two political parties so that they are immune to their own actions.
When we talk wealth we need to understand how the political class is fleecing America. All this talk of fair wages, $15 an hour, while they lavish pensions on their public employee buddies to the tune of a 100k or more per year, while they gain seats on various commissions and committees paying them 200k a year for part time work all on our dime.
The real money issue is the theft by the political class. However they have the best marketing and are adept at playing people against each other.
Many of the problems with democratic government are in fact caused by the power of the billionaire class to shape society to their whims. I remember reading a paper that compared people's policy preferences to actual implemented policy. They found no correlation. Instead what they found is that the policy preferences of the wealthy were quite well represented.
> America is suffering from misuse of the money taken from all sources used to prop up two political parties so that they are immune to their own actions.
This makes no sense. Both political parties are in fact propped up by their wealthy and corporate donors. If you look at the establishment of both parties, you will find that they are indeed quite cozy with your beloved billionaire class. Paul Graham has given hundreds of thousands for example: https://www.opensecrets.org/donor-lookup/results?name=paul+g..., and he is a fairly mild example.
> All this talk of fair wages, $15 an hour, while they lavish pensions on their public employee buddies to the tune of a 100k or more per year, while they gain seats on various commissions and committees paying them 200k a year for part time work all on our dime.
Why shouldn't ordinary workers have retirement benefits? It used to be part of the deal: you devote your life to the company, and get to have a decent, comfortable retirement. In the private sector, unions are so weak/nonexistent that these benefits are gone, but why is that a good thing to you? Similarly, if you refuse to pay politicians a good salary, then only the wealthy will become politicians. I guess to you, that would be a good thing, but most of us would prefer having more ordinary people in power, not fewer.
it's not an enormous power, it's economical power to create new things. It's a productive force, unless there's a bad incentive to influence politics. No billionare is capable of dictating you how you should live your life. Politicians are. Separate government from economics and make lobbying and interference into economics illegal and punishable, and you will never see these two groups of people seeking favours from each other.
Like how the waltons use their great creative power to extract taxpayer money in the form of underpaid workers on assistance? (1) Like how bezos' amazon exploits the generation forced out of retirement by the 2008 crash as an underclass of temporary seasonal workers (2)
Billionaires got there by exploiting loopholes and viscous cycles that drain money from many people, to consolidate it in the hands of a few. There is an inherent problem with any society that allows the existence of billionaires, while some of their citizens starve as a result.
(1) https://www.forbes.com/sites/clareoconnor/2014/04/15/report-...
(2) https://www.wired.com/story/meet-camperforce-amazons-nomadic...
That's mostly returning, not extracting, taxpayer money, since employment by WalMart reduces those workers’ eligibility for means-tested, and where it doesn't (e.g., moving up EITC eligibility) the recipient of additional taxpayer money is the worker, not WalMart. Calling this extracting taxpayer money by WalMart, the Walton family, etc., is ludicrous in the extreme.
Are the Waltons’ under taxed, sure. But if they were taxed more to provide broader aid, that would increase the share of their employers receiving some kind of public benefits. Which is a good thing, not a problem.
Thereby reducing the scope of jobs for which they can hire to ones that return sufficient value for that, sure.
Of course, that will add to the public welfare burden, not reduce it, since it will reduce employment.
There's a very good argument for some minimum wage in the absence of better of minimum support policies like UBI (that is, while it may not be the ideal minimum support mechanism, there's plenty of evidencie that, to a point, minimum wage is a net gain compared to not having it.)
There's also probable a decent argument for “living wage” (sufficient for independent support) as a floor for certain kinds of labor in government contracting, etc.
There's not really a good argument for living wage as the minimum wage floor; making everyone whose most valuable labor is not sufficient valuable to support them independently unemployable rather than employable at a level from which they can gain experience and advance is good for neither the unskilled nor the broader society.
> to solve THAT one, just make them pay a living wage. Nobody working full time should be below the poverty line, nobody working half-time should require food stamps - otherwise it is exploitation not employment.
This argument is equivalent to: “No one whose full time labor returns less value to the employer than would merit pay above the poverty line should be employed at all; nor should anyone whose half-time pay would leave them eligible for food stamps.”
Making the relatively unskilled completely unemployable isn't helping anyone. (Also, food stamp eligibility limit is generally 130% of the poverty line, so aside from the general outline being bad, the specific details you've chosen would set a minimum hourly wage for half-time work at 2.6× the minimum for full-time work.)
It's much better to tax capital income and increase the minimum support floor independent of employment than place increasing demands on employers, which just promotes automation and reduction in employment. You want to improve conditions for workers, especially at the low end? Tax capital income equal to labor income—both the basic income tax and the payroll/self-employment tax employed to labor income (this also includes uncapping the social security portion of payroll taxes.) Use the added income tax equivalent revenue to fund broad, unconditional minimum support (it won't be anywhere close to a mature UBI initially, but that's okay.) Use the added payroll tax equivalent revenue to (1) provide SS and Medicare eligiblity based on qualifying income that isn't labor based, but with (for SS) additional high income “bend points” beyond those in the current formula so that the marginal additional benefit for additional income continues to drop with income, (2) provide additional security for payroll tax funded programs, (3) beyond what is actuarially needed for long-term program security, transfer the excess to fund additional broad, unconditional minimum support. After indexing minimum wages to inflation, reduce the by $0.01/hr for every $40/yr of the minimum unconditional support (that is, full-time minimum wage would be reduced by half the unconditional benefit.)
Workers are, in net, better off. Those unable to find work are better off because of the unconditional benefit. Taxes paid are fair, income is income. There's less incentive to reduce employment, and indeed more people can be employed.
The fact that they are BILLIONAIRES seems to indicate there is a decent amount of headroom to their business model.
> This argument is equivalent to: “No one whose full time labor returns less value to the employer than would merit pay above the poverty line should be employed at all; nor should anyone whose half-time pay would leave them eligible for food stamps.”
No. My argument is: if your business model can't sustain people at a living wage, then YOUR BUSINESS SHOULD NOT EXIST. Remember that walmart put a lot of small shops out of businesses - many of those shops paid their employees enough to live without needing food stamps. They sucked up all the air, if they can't sustain their workers, they need to stop sucking up the air and make room for businesses that can.
edit: for details. the article I linked suggested that walmart employees receive $6.2 billion in gov assistance (2014) - wikipedia suggests that walmart made $14.8 billion (2020). Seems like they DEFINITELY have the headroom to pay their employees that difference. Why are we even arguing about this? Walmart would have made $8.6 billion and government would have at least 6.2 billion more for schools, PPE, covid relief, etc. nobody needs to lose their job, NOBODY EVEN NEEDS TO STOP BEING A BILLIONAIRE to at LEAST get people off food stamps.
Does it? If you multiply a small per-labor-hour surplus by 1000+ hours per worker per year and lots of workers, you can accumulate lots of money per year and become a billionaire, but that doesn't mean you have lots of headroom, just lots of scale.
> No. My argument is: if your business model can't sustain people at a living wage, then YOUR BUSINESS SHOULD NOT EXIST.
Sure, and when you kill all the businesses that can't pay every entry level employee enough for a comfortable independent life, who is going to pay the additional public benefit costs to give even minimum poverty support to the much wider pool of unemployed and unemployable? Your plan is lose (for the people who would be employed but now won't)-lose (for the people unemployed in either case for whom there is now less revenue to provide support)-lose (for the capital owners who are now prohibited from employing people whom they otherwise could, mutually profitably). Taxing capital gains fairly and using the proceeds to provide better universal support while reducing employment friction is win-win-mixed for the same groups.
> the article I linked suggested that walmart employees receive $6.2 billion in gov assistance (2014) - wikipedia suggests that walmart made $14.8 billion (2020). Seems like they DEFINITELY have the headroom to pay their employees that difference.
Their 2020 net income was more than double their 2019 net income, of $6.67 billion. Tax net capital income more, and you don't ever switch a profitable business into a losing one by your policy, increase employment costs and you make profitable decisions to employ people into unprofitable ones.
https://www.macrotrends.net/stocks/charts/WMT/walmart/net-in...
Again, by describing the choice as bad job (walmart) or no job, you are ignoring the fact that walmart did not CREATE jobs - they merely consolidated jobs from many small businesses.
It’s not a choice between walmart or nothing. It’s a choice between an exploitive business model, or non-exploitive business models.
Driving up the minimum cost of labor isn’t going to bring back smaller, less-efficient businesses, it will make them less viable, too. Higher minimum wage actually reinforces the advantages of scale, since smaller acheivable average returns means the importance of being able to internally diversify (e.g., against regional problems) becomes more important to survival.
> It’s a choice between an exploitive business model, or non-exploitive business models.
It's a choice between a government model that chooses to actively harm the employed, the unemployed, and employers irrespective of business model to express moral outrage at certain business models and one that wants to use the power of taxation and spending to reduce the power of business models to be oppressive.
Perhaps that would be reasonable if everyone were paid enough income to handle all their expenses and save for retirement. Of course, that's not the case for probably 30-40% of the population. As things stand now, it's just cruel to lecture those people that they "should have done a better job of saving" (and I hear that a lot these days).
Not at all. The aristocracy was a legally special class of people based on your ancestors. The end of aristocracy, especially in America, meant for a long list of rags-to-riches stories, and lots of politicians who came from very poor beginnings. The end of aristocracy also meant the end of officers being drawn solely from the aristocracy, which made for a far more effective military, as talent was not related to your parents.
Yes, you can cite whatever exceptions you like - the statistics are clear.
Most billionaires are born to other billionaires (or at least extraordinarily wealthy people compared to median wealth). As such, they represent an ancestral inheritance just nearly as much as the aristocracy.
There is almost no evidence of de novo great wealth being correlated to great talent. It may (or may not) be a necessary component, but it certainly is not necessary, even if it was possible to quantify precisely what is meant by "great talent".
In a capitalist-ish society, there are always going to be great winners in the competitive economy. Pointing them out as if they are special is absurd: the system is designed to generate such cases.
I expect its far more than that with Amazon.
Also, US$1M is not what it used to be (even though it's more than most people will earn in 20 years).
Without Amazon and Microsoft and their billionaires, Seattle wouldn't be the wealthy city that it is. Not even close, and that wealth has filtered out all over the area. For example, there are all Paul Allen's initiatives and developments in the area, and that's only a tiny bit of what has happened.
Be careful what you wish for in getting rid of billionaires. A lot of very nice things we all have will go away with them.
Which is why I can have some understanding of how unimaginable 1000x that really is, let alone 100,000x times that.
I'm all for nice things, but I'm not for Paul Allen deciding what's nice or what we get.
The thing is, Allen didn't take anything from you to give those things. He didn't raise your taxes. He didn't impose any levies. They were gifts you could ignore if you chose.
Me, I liked his flying WW2 aircraft museum very much. It's a little thing in the grand scheme of things, but I've enjoyed it a lot. If you read his autobiography "Idea Man" you're sure to find a number of things that have benefited you - without costing you anything.
Musk has given us a space program. Carnegie gave us public libraries. Gates has saved millions of lives through his foundation.
BTW, you don't get to decide what nice things government does for you, either. A vote is not the same thing as a choice. I've lobbied my Congressmen. Did they do what I wished? Absolutely not!
A significant chunk Paul Allen's share of the GDP would have been in the hands of workers had he been economically active during the period 1949-1978.
That's what he "took" from people to be as wealthy as he is.
I am flabbergasted that you feel that the "lack of choice" over what your government does is the same thing as the "lack of choice" over what rich people do with their money. In fact, I feel sorry for you in that you live in a country fundamentally built on formalizing this difference and creating a nation based on a belief in government "of the people". You don't believe that - you're not alone. But I still feel pity for you that you've been forced to give up the dream that this country was built on after just a couple hundred years.
As for me, I prefer having a choice on what's for dinner than a vote on that. The US was founded on the principle of individual rights and liberty, not communal purpose.
No need to pity me, we are living in a golden age in the US. I have little doubt future historians will see it that way. I have no fear of billionaires. I don't buy that money buys elections. Hillary outspent Trump 2:1 and still lost, Bernie outspent Biden by some huge amount, and lost. Bloomberg flooded money into his campaign, and was completely eviscerated. I confess I daydream sometimes about what I'd do with a billion dollars that I'll never have, but that doesn't translate into any desire to tear down existing billionaires.
I missed several forks in the road in my life that could have led to billionaire status, but my taking the wrong fork each time was entirely my fault. I simply didn't see what in hindsight was obvious.
I'm missing something right now that could make me a billion dollars, and in five years I'll be able to tell you what it was :-)
Bill Gates does high risk speculative, investments for causes such as eradicating diseases.
Elon Musk is attempting to colonize Mars. Because Presidential administrations are a maximum of 8 years and it takes longer to achieve a big goal in space, such as moon or mars colonization, Nasa has had a hard time sticking to a long term goal for space.
Inflation changes this detail daily. A billion is just a number of units of an arbitrary currency.
The real issue goes beyond the number and is more about generative assets vs liability / depreciating ones.
IMO the real problem is money in politics. Fix that and many of these issues with billionaires will sort themselves out as the system corrects itself.
EDIT: By "money in politics" I mean big money that overwhelms small distributed money. (ie money that does not look democratic) . Obviously it's always going to _take_ money to run campaigns
Almost the only thing that could get money out of politics is to make holding money the most shameful thing imaginable, and even that would just force the flow of capital/power underground, not actually curtail anything.
As I get older, I realize more and more that the thirst for power will never go away, and these cycles of accumulation and overthrow will be the overall flavor of human existence for the foreseeable future.
Unless we figure out how to shame people out of wanting power, maybe?
Most countries do not have strong protections on speech. The US does. There's no way to distinguish Fox News Media, a for-profit news organization with a distinct partisan slant, from One America News, a money-losing, overtly partisan news organization, from Citizens United, a political action committee trying to air a political documentary critical of Hillary Clinton on Pay-per-View.
You can't donate unlimited sums to candidates, but you can spend as much as you want on political media, including advertising. I'd love to hear how we can overturn Citizens United, but maintain things like Fahrenheit 9/11, a different political documentary critical of George W. Bush, and released right at the height of the 2004 election campaign.
Lawrence Lessig has a proposal to offer political donation vouchers to each and every private citizen. I think this is a great take on public financing that would help to level the playing field, while maintaining this country's strong protections on speech.
The facts of the case were this: Citizens United wanted to run ads for its documentary . But it was within the window of time set for increased restrictions on political ads. Citizens United crucially was not a political action committee, but just a non-profit corporation. As such, it could only run the ads by either making a PAC or using money from a segregated fund (you've seen this if you've ever signed up for a union) collected specifically for political activity. Note that the lawsuit was over the ads, not the documentary itself.
Before the ruling, Citizens United was allowed to spend money on political activity. They were allowed to spend money on political activity close to an election. They were allowed to spend money, close to an election, to broadcast issue-based political advertisement (e.g., for or against a ballot initiative) on TV. They were allowed to spend money distributing their documentary in any way other than broadcasting it on TV. They could show it in theaters. They could put it on the internet. They could print DVDs and mail them out. They could distribute it to PACs and campaigns for them to spend their own money distributing it, including broadcasting by on TV. They could pay money, close to an election, from a segregated fund, to broadcast their documentary on TV. All they weren't allowed to do was spend money, close to an election, on broadcasting something expressing views for or against a political candidate, on television or radio, to an audience of at least 50,000.
The courts argument hinged on the unacceptability of "identity-based" restrictions on speech. But there are such restrictions elsewhere. See you, for example, prisoners, or executive branch employees.they just invented a first amendment principle out of thin air and selectively applied it to corporations.
To reach their decision, The court rejected numerous opportunities to rule on narrower grounds. They did no factfinding to determine whether or to what extent the restrictions chilled free speech, substituting congress's research for their own opinions. They gave no opportunity for the government to do their own fact-finding. And they would have if Citizens United hadn't dropped their attempt to overturn the law (until Scotus revived it) while the case was still at the District court. Scotus could have kicked it back down to do that fact-finding, but they had already made up their minds.
I don't think any country has the same laisezz-faire approach to buying politicians... certainly not in the name of free speech. I don't think the argument has even been made.
That said, even in the US there isn't a real constitutional barrier to doing something about money in politics. You could make candidates wear sponsorships on their jerseys, like racecar drivers. No free impediment. That's a joke example, but you see my point. That particular ruling is not an actual barrier, the barrier is a legislative majority.
I'll less interested in sound byte-like fixes like "wear sponsorships on their jerseys" and more with what you can realistically change without overturning Supreme Court precedent or ignoring the Constitution entirely.
I think the joke/soundbite example demonstrates a point: The Jersey Rule would be ok constitutionally. Even with that ruling standing, there is plenty of room for legislators to fix "money in politics" practically, without contradicting the SC. Laurence Lessig has some of the best known proposals.
The problem, as I see it, is status quo bias within any congress/parliament. Actually removing money from politics crashes their industry, puts all their friends out of work, and challenges their power. Every unsuccessful candidate, campaign manager, staffer, and such makes their living this way. Every successful candidate was successful at this way of doing politics.
It's a similar problem to legislation (or even customs) that would enable 3rd parties to succeed. It's against the interests of the Republican and Democratic parties, so it won't happen.
Not addressing the actual question that's being discussed here, but you can always amend the law
What about people writing books about politics?
in the UK political donations over £500 have to be registered and be by someone on the electoral role.
the Brexit Party was funded by millions of donations of £499 from Russia and US sources via paypal.
America needs to go through a revolution of thought, like the one that lead to the 'Separation of Church and State' principle. For many of the same reasons, we need a 'Separation of of Economy and State' movement. Only then will you get money out of politics.
You can't. Economic and political power are the exact same thing: the ability to direct other people to do your bidding.
The idea that you can separate them has always been a fiction, and it's a fiction that is perpetuated for exactly one purpose, to support oligarchic capitalism by keeping people distracted by their engagement in the hunt for the “one weird trick” to make politically egalitarian democracy work without dismantling the radical economic inequality of capitalism.
I've been CTO for a dozen startups, and this sort of thing would almost certainly deter me from exerting the effort required to go through the always-grueling startup process. It's hard enough not getting screwed over as a founder without wealth taxes!
Assuming that you are incredibly successful, you may need to contribute a bunch of money (mostly from interest, not principal) back to the common good.
I really don't see Mark Zuckerberg (as an example) deciding not to create Facebook because if he was incredibly successful he'd have to pay a wealth tax. It just doesn't strike me as likely at all.
This is (sadly) Paul Graham taking a valid argument and turning it into a reductio-ad-absurdam.
It's not like he believed he was gonna end up a billionaire when he moved FB to California.
Replacing a singular dictator with multiple agents that concentrate power is not necessarily more efficient. The biggest inefficiency with disproportionate wealth/resource accumulation is that the incentives/competence of the wealthy doesn’t match up with the money they sit on. Note that I am not talking about only billionaires, rich corporations that employ the smartest of humanity is equally culpable. Although venture capital tries to cure this problem, it is only a small percentage of the outbound money of the wealthy.
Think it this way, Apple sits on billions and only innovation we get year after year is slightly thinner devices. Google has tons of billions and machine learning PhDs that work on classifying your cat’s pictures. Elon Musk’s puer aeternus dreams fixate on getting out of the planet instead of fixing it.
For all the power they hold, the innovation and improvements in society we get is abysmal. This is not that different that dictatorial central planning, in which a narcissistic entity thinks they can have the wisdom and competence to manage our collective resources and potential as humanity. (Yes, that is exactly what money is, it is being owed other people’s goods and service should you choose to transact it)
Why do we have to be capped by the best these people can think of? Accumulating wealth and using it wisely turns out to be very different skills, just like getting elected and governing wisely has been.
So billionaires are a source of inefficiency and a part of the market, not a consequence of it because they don’t get out of the market once they are rich. If anything, the more rich they get the larger their participation gets, with all its downsides.
Please do tell what you would do differently.
Having billions of dollars is not a magical measure of how much societal good one did or can do. If anything, I would trust anyone who could make billions much less than the average person to use it for good and wise causes.
Are you comparing billionaires of today, with dictatorships and monarchies of yesterday? Where people can be killed, jailed, sent to work camps, etc. at will? Are people today working for "the man" essentially indentured servants?
> The existence of billionaires clearly undermines the core principles of democracy which is that all people have essentially the same political power.
I don't think this is a core principal. Every person should have the same voting power, and the laws should apply to everyone equally. But the president and representatives clearly have much more political power than any average citizen.
> Essentially strong wealth imbalance leads to unstable societies.
This is a big claim, and would have to show some sort of evidence to support it.
Ask yourself this: if they are paying their employees so well, where are they getting all that money?
The cause for wage growth stagnation isn't immigration. Immigration is a net positive for society. Emigration is the real harm. That much is settled in Economics.
The cause for wage growth is, perhaps, the offshoring of labor to cheaper economies. Better for Nike to pay minimum wage in China than in the US.
Meanwhile, capital gains remain domestic as business owners don't relocate
Supply and demand applies to jobs and workers as much as any other part of economics.
Immigration indeed lowers wages for competing workers, but it also increases wages for complementary workers and generates surplus to owners of capital – which in the long-term constitute a net gain to all of society, but at a minimum does constitute a net loss to workers at large.
Research suggests negative wage effects are concentrated among low-skilled workers.
Immigration can indeed have disruptive effects, but it can be managed, and its net gains for the whole of society are fairly well established.
In the example of immigrants doing hard manual labor, especially agricultural work, who are the complementary workers? I'd infer it's workers like the people who transport crops around or operate the machinery to plant / grow the crops, etc.
Is that close to the meaning you intended?
It is ultimately a race to the bottom when you have a globalized economy, but do not have standardized worker protections across said economy.
Immigration has plenty of benefits on society, and we should not use wage stagnation relative to productivity growth (which can be stopped) justify isolationism and protectionism. Whether we like it or not, we live in an increasingly globalized economy and we should fight to have broader labor protections and give more power to workers to be able to protect themselves and fight for fairer wages. The alternative is, as I previously stated, a race to the bottom.
If they are motivated by the desire to build, they would still build. If they are motivated by the desire to beat their peers in a game of "Who Has The Most Money," they would still compete. The winning number would just have fewer digits. If they are motivated by the power money buys, well, maybe the rest of us are better off not playing that game.
[0] https://www.forbes.com/sites/rainerzitelmann/2019/07/08/chin...
Let's start at people who's net worth are > 1 billion then. That's 607 people in the USA. IMO worth it, considering their outsized political power.
Why is this axiomatically good, though? We should not be maximizing adherence to some theoretical democracy, but to a more abstract idea of how to best organize a successful society.
The comparison to aristocracy is absurd. The US was founded abolishing the class system because the wanted equal opportunity, not equal outcome.
Enough with the blanket statements, Sure bill gates is ok but just yesterday the front page had a story of the Sackler family and how they amassed billions by pumping the united states with opiates. They literally killed thousands and ruined the lives of millions, while destroying American society. Billionaries are people, some evil some good.
Also, the point of a government is to provide for it's citizens (with taxes) not to hope that in a 100years we can settle on other planets. And btw, in that scenario we would not be the ones who end up on Elysium. As much as SV programmers like to think they can be part the billionaire class you are not and will never be an oligarch.
I this this is objectively incorrect for the USA.
I also thought the demand was a result of political policies that didn’t provide support for communities who were impoverished by the globalization of manufacturing and other industries.
Yes, the Sackler’s profited, and were irredeemably bad actors in this, but they are just one part of the story.
Isn't this a sort of oxymoron? The taxes come from other citizens. The ones who are paying a majority of the taxes are not provided for by the government. Government should seek to provide everyone equal protection of their rights.
Who knows how many other good things he's delayed indirectly because he delayed the internet so much?
You could just as easily say that Gates advanced the progress of the internet by driving the price of PCs down so that more people owned them.
It’s also reasonable to say that these decisions were a major reason why Microsoft lost their dominant position.
Gates is rich, but he lost his power over the software industry over this.
I would rather have the sackler family than the drug cartels.
You believe the point of govt is to provide for its citizens, that doesnt make it a fact.
Others believe the point of government is to protect us from each other while letting us make personal choices for good or ill.
This argument really doesn't hold water.
For a start it implies that becoming a multi-planet species would be impossible without Musk or Bezos holding vast personal wealth. There is no reason to believe that.[1]
It also implies that Bezos couldn't possibly fund Blue Origin if he was worth (say) a paltry $100 billion, instead of his current $190 billion.
[1] You could, for example, use some of the money from a "billionaire tax" to fund NASA.
There is 50+ years of evidence that we will not become multi-planetary without private funding. The only reason NASA was funded enough to get to the moon in the first place was because of the cold war. Very unlikely it would have happened otherwise.
It's ridiculous you could even bring up the cold war without acknowledging the major scientific and engineering breakthroughs done by communist societies.
I'd say there's significant argument that it is indeed impossible. Democratic governments as a rule do optimize for cost where currency is created by fiat. Private capital generally does in order to stay in business and not go bankrupt. There's tons of recent evidence showing that existing space business is incredibly inefficient in cost.
Alternatively, you could allow billionaires to donate some of their billions, untaxed, into non-profits which they control and which have humanity-benefiting goals like space colonisation or clean energy or medical programs.
There could be problems, however, with these non-profits hoarding vast amounts of resources long after the billionaire dies, at which point a wealth tax on the non-profit's unused assets might make sense.
he doesn't pay income tax cuz he usually have income, no salary. he just has stock, and he lives off debt against the stock. he will be forced to sell stock to pay a wealth tax. he will have less control over his companies.
Presidents come to office, scrap the previous adminstration's space goals, create their own new goals and then their's are scrapped by the next admin before they come to fruition. It takes more than 8 years (the max a president can serve) to really follow through on an ambitious vision for space.
Billionaires can stick with it longer.
George HW Bush wanted to go Mars then scrapped it when he got the price tag. In 04, George W Bush wanted to go to the moon by 2020. Obama scrapped the moon 2020 plan and planned to go to Mars by 2030. Trump is sending them back to the moon then Mars.
Bezos may be contributing to the privatization of space, but he's doing it by exploiting the ones who keep the merchandise flowing through the cash cow. 19th century robber barons honed some of that machinery, Amazon has capitalized on and honed to a fine sharpness that blade.
The US was founded with an extreme class system -- slavery, and aristocratic-only male-only voting. The founders judgement is not sacrosanct.
The US is the story of a country that is constantly struggling to live up to its founding ideology. Slavery was widespread globally at that time, and ended up fighting its most deadly war to end it. Over time its flaws were sought out and eradicated to give way to the most prosperous and free country in human history, all within a couple hundred years.
The founders were not perfect (no one is), but did realize the evils of slavery and some did end up releasing their slaves.
There's another problem which I'm surprised PG didn't address. Liquidity. A wealth tax means valuing property before it's even perhaps practical to sell it, and while the government might take your last 409a valuation as the means to valuing your net worth, they aren't accepting your shares as payment, only cold hard cash.
If you have a large private holding, now you are forced to find ways to throw off cash against that notional value, e.g. by arranging loans against your holdings to pay the tax man. Shares that ultimately never sell could end up being taxed for more then they are ever even worth.
There aren't any wealth taxes of this nature on the books in the US, so assuming that they will only take cash and not shares is premature.
But I think you raise a good point that payment in shares is far more tenable, and likely probably, for highly illiquid economic assets.
This avoids all the problem incentive structure, and even worse tax code structure dealing with the fact that some years you make a return and in other years you make a loss.
Liquidity is solvable, if we're actually talking about a super wealthy tax with a floor of $50m and above. At that point, you are dealing with people individually.
In terms of "reducing the portion left which has to justify the risk/return proposition..." I don't think this applies. You have $1bn. You owe $10m in taxes. You owe that tax regardless of what you invest in, conservatively or otherwise.
It even solves some of that problem, if it replaces CGT. A CGT without loopholes (doesn't exist, and won't) disincentivizes risk. If you win big, you pay big. But of you lose, the IRS doesn't pay you. That incentivizes playing it safe.
IRL tax credits exist, and those more than compensate big CGT payers. In some famous example (eg Trump) derivative policies are big money generators. IE, invest for tax credit, not market gains.
But since this is really a "should" question (aka about values), theres not really a right answer. We can mostly just talk about fairness, of which there are many different conceptions.
My take: Society has to work hard to preserve the billionaire's wealth. You can't be king without an army, and billionaires exist because of laws, police and a social fabric that lets them keep owning so much stuff. You would otherwise have to be a warlord to keep your hands on so much, and that has its own costs and risks.
Perhaps we could look at it as a fee or compensation for the aggregate social guard labour required to preserve the social order that ensures the safety of the billionaire's assets.
Billionaires are still people. If they become too unsatisfied with their treatment, then they will do something about it. Just like everyone else.
Since I assume you're not literally suggesting that billionaires will arm themselves and I dunno, patrol their golf courses and beaches with rocket launchers, I suppose you are suggesting they buy some island and hire private forces, and I dunno, next they have to move their factories or offices there, and presumably hire workers and provide healthcare and education and retirement...
I guess if billionaire island seems like a really good deal, workers might move there. Without knowing more about (and assuming it doesn't just get annexed) it kinda sounds like Dubai.
Or sure they could try their luck in some other country if they feel safer there. Maybe somewhere that's happy to provide "inequality services" / free guard labour for them.
Re: billionaires taking over government so it works in their interests, this has basically already happened and these kinds of wealth tax proposals are a way to balance billionaires existing with the effort needed to sustain them.
And seriously when you look at the alternatives 0.5% (say) doesn't seem like such a bad deal.
Having startups that grow profitable, useful things at a healthy pace and that give back a small slice of their overall growth sounds like a pretty stable business model.
It has long been my impression that eliminating or reducing billionaires is the primary goal of wealth tax advocates other than those whose advocacy primarily consists of sharing memes on social media. Raising revenue is largely a red herring.
Let's say that there was a 1% wealth tax on all wealth over $1b. So Bezos would have to liquidate say $1b each year for that tax.
Yes, he'd have to sell Amazon stock. That would feed into the stock price of Amazon in terms of increased liquidity of the stock, but it has zero effect on the operations or growth or income of Amazon itself.
Arguably it would have little or no impact on Bezos' activities. He would still be running Amazon, he would still be working to make it grow etc.
What would change is that over time, the wealth would be distributed via the items funded by that tax.
This is highly questionable - the idea that a dollar of tax is equivalent to a dollar of wealth distributed rests on the assumption that elected officials can deploy the money efficiently.
I’m not claiming that government can never do this - clearly nation building has been done before.
This is what the article disingenuously(?) leaves out.
If a society wanted to deplete billionaires, it could put a wealth tax on just the dollars above and including the billionth dollar that an individual nominally owned.
The idea is that anyone who isn't a billionaire wouldn't be affected. Making this tax rate be 1% has the added advantage that you can call it "the 1% tax", because it would only apply to (a small subset of) the top 1% of richest people.
I don't know how many Americans became multi-billionaires by founding companies in their twenties, but here is a list of billionaire founders of internet companies:
Reducing billionaire wealth, or limiting its growth is st stated aim. Piketty and like minded economists argued for it directly. The political proposals (eg Warren's) were also straightforward.
It is a red herring, but money always is when it comes to politics. They all have stuff they want to fund.
By Picketty's math, 2%-2.5% is roughly break-even. That is, average billionaire wealth will grow in proportion to the economy & wages. Less, they will grow more slowly relative to the economy. Above 2.5%, millionaire wealth will decrease, relative to the size of the economy.
Then a wealth tax boils down to a punitive tax on interest income. Which means billionaires will be incented to save or invest a lot less, and consume a lot more of their wealth since they're going to lose it either way. (See, e.g. Larry Ellison's yachts as an especially obvious example of billionaires' consumption.) That's an "economic policy tool", alright. It's not as clear that it's a sensible one.
That's the goal. The idea is that society doesn't need billionaires, so you force them to get rid of their wealth. Either through taxation, or by spending it on things that benefit others.
I don't think that's a useful question, though the answer is generally no. Yachts, or more generally pleasure craft, are a form of entertainment. The owner spends large and ever-growing amounts of money, funding other people's lives, in exchange for some kind of fun for themselves and their immediate circle.
Larry Ellison could certainly make them benefit others by, say, using them to provide housing for the homeless, but that's not a part of the primary equation.
> We should always keep in mind that opportunity cost is a thing, and that investment involves plenty of "spending" and economic activity of its own.)
The economic activity of moving around vast sums of money benefits very few people, and those are generally not the people working multiple jobs just to make ends meet. That's the reason people want a wealth tax: concentrating wealth to such an extent benefits almost nobody.
so when was the vote to declare that the line in the sand? what about millionaires? Let me guess, there are enough millionaires now that it's too big of a group to make an enemy out of. You can't say society doesn't need millionaires because there's enough that maybe someone's friend or family is a millionaire and will think "..wait a minute, that doesn't seem right".
Flip it around and give the 0.01% poorest people the same treatment, society certainly doesn't need the poorest of the poor either. It makes about as much sense.
Again, that's the goal.
There was no vote to declare a line at 1 billion, because nobody cares about the exact number. The goal of measures like this is to reduce inequality.
A "punitive tax on interest income" is popular with the left because it is, on paper, very progressive and avoids taxing the poor. But in truth, I don't think people actually want fewer billionaires, they just don't want aristocratic billionaires.
It also doesn't help that it's so unclear what the money would be spent on.
[0] https://today.yougov.com/topics/politics/explore/public_figu... [1] https://today.yougov.com/topics/politics/explore/public_figu...
1. $1000 per month to those with zero income, phased out at 20c / dollar extra income, financed by 20% tax on all income above $60k 2. Transfer of $1000 per month to everyone, financed by 20% flat tax on income
Apparently a group of Harvard students he asked were strongly in favor of the former, without realizing that the two plans are equivalent. It's all about framing.
Practically everything a billionaire could spend money on "at scale" is just another asset. Although again, "yacht" is a terrible asset class.
To actually get rid of enormous wealth you have to either waste it (throw a huge party? own assets that depreciate a lot? shoot it into space?) or give it away somehow.
But there's other stupid crap you can waste money on that doesn't count as assets. Spaceship rides, political donations... Maybe you can sell your yacht to some yacht company and lease it back from them?
Their reputation shattered.
I was just using the bruhaha to demonstrate a point. A millionaire tax and a billionaire tax are totally different in practice, both operationally and socially.
In seriousness, I did have a number of French clients fleeing to California after France proposed a wealth tax. One of them famously said (of California): "I love it here! Your taxes are so low!"
The downside of a wealth tax compared to other taxes is that it drains a corpus every year. It creates "financial anxiety" in the people it would target, similar to range anxiety in EVs. Even if the target could afford to pay the wealth tax and live comfortably for the rest of their lives of their children's lives, they are suddenly terrified that they will be taxed into the poorhouse if they misspend their money, and that anxiety drives them toward places without a wealth tax.
Switzerland isn't a good example of why a wealth tax would work, since it's openly acknowledged that nobody actually pays the correct tax on their wealth; it is the same reason that Swiss banks were the financial institutions of choice for criminals and dictators for decades. (If I was being too subtle: the Swiss are notorious for under-reporting financial assets, and their banks are even more notorious for hiding the assets of account holders.)
Capital flight in the US is logistically much more difficult than in europe I would imagine.
>"are billionaires bad for the rest of us?" That is the premise of a wealth tax, at least the currently popular one.
I don't think that's very accurate.. the wealth tax is saying "billionaires have so much excess money that they should be contributing on another layer than the rest of the population". While you can ALSO say "there should be no billionaires / they are bad", that is not what the wealth tax does.
Perhaps the core question is, "do billionaires owe a larger portion of their success to society at large than regular people do?"
Suppose we impose such a tax. How will that affect wealth formation and accumulation by not-yet-billionaires, and how will it affect existing billionaires? As you say, Bezos and Buffet would continue being billionaires, but if new billionaires became an impossibility, then such a tax will essentially be creating barriers to competition with existing billionaires! That would be a billionaire protectionist measure disguised as a populist measure!!
If we see existing billionaires support such a measure, then we'll know they likely don't see it hurting them. Kinda like when Buffet advocated for higher income taxes knowing full well he has no taxable income (all his "income" as most people imagine it is just unrealized -and therefore untaxed- capital gains).
Also, the biggest problem with any new tax is that without a hard cap on rates it's difficult to predict what it will be in the future. When the income tax was proposed in the U.S. it was said it would never rise above 5%, but marginal income tax rates in the U.S. have been north of 90% (yet, of course, these never reach the super rich as explained earlier). A wealth tax might come with "it will never be higher than 0.2%!" claims, then rise to 5% anyways. If it comes with such a claim, that limit needs to be baked into the Constitution.
Besides the intended political and economic effects of a tax, its unintended economic impact, there's the question of how much revenue it will raise and what that shall be used for. Leviathan never shrinks, so a decision to enlarge it should not be made lightly.
The US is also the only major country to demand citizens file US income taxes even though they may never visit or earn in the US for the entire year.
Taking ever more capital from the most effective/productive allocators and giving it to one of the least effective doesn't strike me as a good strategy.
A case like the Walton heirs is another story. I suspect we'd be better off taxing most of that wealth.
That doesn't affect the capital that either Space X or Tesla have to invest. It also doesn't affect whether or not Musk is still in charge of those companies.
Yep, what has the government ever done for anyone!
I don't imagine tax take would double, however many billionaires got fleeced, but the premise that the government would necessarily be worse at disbursing the funds than private individuals is laughable.
Nobody is talking about "leftist politicians."
I am suggesting something that might actually get the middle class, or those aspiring to join the middle class, to support and vote for the idea. I think it's pointless to talk about more radical concepts like a wealth tax or UBI without considering how such a thing could be made appealing to a majority of voters.
First, most european wealth taxes (including recently defunct ones) have much lower floors than US proposals. $1m instead of $100m. That changes a lot. France did experience "capital flight," famously Gerard Depardieu.
Second, "capital flight" has always been present in Europe. There's a long history of it, and practical realities make it relevant.
I do agree about depth though. One point that PG does address which is often skipped over is that a wealth tax is a "deplete billionaires" policy... or a "curb billionaire growth" policy. The premise is that the very wealthy are too wealthy and that this is bad.
A wealth tax is not like a VAT, corporate or personal income tax. The tax revenue is secondary, and relatively small. It's more like a tariff, tax as an economic policy tool.
I agree that considering a 2% wealth tax as a 70% depletion of wealth over 60 years is... not nuanced. The most important nuance being that you control most of this wealth for most of this time and will be paying your taxes out of interest. If you apply the model to actual examples (say Bezos or Buffet), you'll find that their wealth will still have increased... just at a reduced rate.
But, to be nuanced we also need to address the core question: "are billionaires bad for the rest of us?" That is the premise of a wealth tax, at least the currently popular one.