The efficient market hypothesis lasts right up until you examine the wealth of billionaires in aggregate, apparently.
Yet when Bill Gates or Bezos want to sell off their stock to fund their various hobbies they have no problem doing so.
And if it is true for a non neglibile number of billionaires, so what? If we tax their wealth and a lot of it turned out to be smoke and mirrors that will, if anything, aid price discovery and lead to more efficient markets. Maybe the middle classes will buy fewer of their crappy assets as a result.
That's because they don't actually spend that much of their wealth. If Bezos and Musk spent their entire fortune on their space companies, rockets technology would improve, but not to the scale of $300+ billion. Once they approach a certain level, every rocket scientist is working at maximum capacity our pipeline of training becomes bottlenecked.
>If we tax their wealth and a lot of it turned out to be smoke and mirrors that will, if anything, aid price discovery and lead to more efficient markets
I would agree if I could trust politicians with that amount of responsibility, but I don't. The majority of them don't seem to understand basic supply and demand or are intentionally pretending not to so they can pander to their voters.
From what I remember Bill Gates is on track to spend almost all of it.
I've always found the idea that billionaire wealth isnt "real" because liquidating it all simultaneously is impractical to be unconvincing in the extreme, verging on dishonest.
>I would agree if I could trust politicians with that amount of responsibility
Politicians are not actually restrained by taxation as decades of persistent deficits prove.
I find it helps to consider a thought experiment: what if every dollar taxed was burned to a crisp and every dollar spent by government was printed?
The answer is nothing. Taxation exerts a deflationary effect and spending exerts an inflationary effect.
The question I ask when I consider if a higher tax is necessary is "are inflationary pressures too high?"
I think it's clear that inflationary pressures in housing and asset markets is off the scale.
Is he? He's wealthier than he has ever been.
> I've always found the idea that billionaire wealth isnt "real" because liquidating it all simultaneously is impractical to be unconvincing in the extreme, verging on dishonest.
Of course it's real. My point is that it isn't really as much wealth as people make it out to me. Much of it is simply a consequence of the mega-rich already having everything they want. Therefore, it requires a lot of goods and services to "buy" the wealth of the mega-rich.
> Politicians are not actually restrained by taxation as decades of persistent deficits prove.
Of course they're restrained. They're just choosing to stretch these restraints as much as they can. If they raise more in taxes, they can delay the eventual problems that arise from our deficit.
> I think it's clear that inflationary pressures in housing and asset markets is off the scale.
I'd agree that we can use a land value tax and higher capital gains tax, but that's not what the Democrats seem to want. Instead, they'd rather punish the productive upper-middle class with higher income taxes (admittedly, this where I am). Meanwhile Prop 18 is going strong in California, and NYC's most expensive apartments have the lowest property taxes as well.
You can use your net worth to get astronomical loans to reinvest and multiply your income. You can use your shares in too-big-to-fail companies as a leverage to blackmail governments into doing your interest, and so on.
I think in the end it comes back to comparing capital. Which sounds a bit familiar...
1. Start a company 2. Issue 1_000_000 shares to yourself 3. Find a friend who owes you a favor, then issue another share in the company and sell it to them for $1000
This is an extreme example, but most of the people on the world's richest list have been able to similarly inflate their net worth through illiquidity. Market caps are a misleading way to measure wealth. To take another example, the market cap of Tesla is based less on the company's physical assets than the anticipation of earnings over the next 20-30 years. My own net worth would look a lot better if it was calculated using the same methodology.
I'm not trying to argue that inequality doesn't exist, but I think this obsession with the paper value of the 1-percenters is a distraction from the fact that reducing inequality needs to ultimately involve the redistribution of physical assets and labor. If we get obsessed with confiscating the abstract financial assets of billionaires, we will likely find out they don't have much buying power when being traded for real things like housing or energy.