Does a cap on enrichment make sense?

[Nik]

That's a bit of a philosophical question, but its simple enough for anyone to voice his/her opinion.
Let's say you are a genius and a shrewd businessman and a lucky SoB and you managed to make unimaginable fortunes of billions of green crunchy US dollars. Nobody does it, but I'll take it to the extreme: You bought a private jet (50M each) and yacht (50M each) and 3 cars (1m each) and 3 mansions/apartments (20 M each) to each of your family members and spent 500M on these. Unfortunately you can't ride 2 cars simultaneously or fly 2 jets, so you don't need that many for yourself. Let's say you are an active businessman (and that would be true for most tycoons, as opposed to how they are portrayed in movies, they are much less engaged in spending on luxury than in doing business) and continue investing into start ups and acquisition of companies and businesses. But there are only 24 hours a day and you can't invest each day into something new, because any purchase takes time for due diligence, negotiations, etc.. And even then what most/some do, they use leverage money for that, not so much their own. Thus most super rich would still have billions of dollars stashed away somewhere sometimes managed by funds or wealth managers, so to ensure these extra funds don't depreciate and accrue their 3-5% annually.
Isn't it a huge waste having trillions of dollars sitting somewhere frozen, doing nothing useful when there are so many states, cities, organization, projects and fellow citizens that have immediate and justified needs but lack the funding? Enormous amounts are out of active economics. If latest info showing that the wealth of 62 richest families is more than the wealth of half of the world is roughly correct, we might be talking about huge numbers.
Although equal opportunities are declared, it doesn't look to me that we can seriously speak about equality in a capitalist society. But we can speak of fairness maybe. Doesn't it look fair to have a cap of let's say 100M or 1B beyond which the excess amounts would be redistributed? According to some political theories one of the functions of a state is to provide for a redistribution of resources.
There are few billionaires that imply something similar by giving up on most of their wealth. Latest example would be Zuckerberg's letter to their daughter that they intend to spend 99% of their shares worth 45B for achievement of purposes they describe. Don't know whether it's a PR move or a truly noble intent or both, but that's some similar thinking, I guess..
What do you think of a really high cap or is it something unthinkable?

[Nik]

With so many economically inclined members joining since the last year, I guess we may see some feedback here.

[Scout]

You know what I think, Nik, as I brought this up in another thread. These millionaires/billionaires made their money because this country made it possible; therefore, they owe something in return. Money is a game to them, and that's OK. They get recognized for their net worth and get on some list of the most wealthy, which is their reward. But they can only spend so much money. Decide what that amount is, and then tax exorbitantly the amount above that. What do they have to lose?

[Avnish]

Human wants are unlimited, so any cap on richness does not make any sense. When today's poor will get such an opportunity to become rich, it will also behave the same way - purchasing more than required cars, housing, jets and all that. Anyway, the money spent on all these items provide employment to many people and revenue to exchequer.

[Nik]

Scout wrote: "You know what I think, Nik, as I brought this up in another thread. These millionaires/billionaires made their money because this country made it possible; therefore, they owe something in return. ..."

Some seem to understand the same thing and they want their wealth to matter, hence - Giving Pledge initiated and spread by some of the uber rich.
I'm looking at it more from a utilitarian point of view: big money often serves to solidify and perpetuate the leading position to buy out competitors, politicians and opposition (reduces competition and closes off the market) and/or to keep it safe and distant, while many lack funds for something productive or for survival. Doesn't make sense. With 0.5 or 1B one can afford virtually anything, so an excess I wouldn't even suggest to tax, but would make it mandatory to spend/invest/give away to let them make their own choice

[Nik]

Avnish wrote: "Human wants are unlimited, so any cap on richness does not make any sense. When today's poor will get such an opportunity to become rich, it will also behave the same way - purchasing more than req..."

A big portion of laws and rules is dedicated to limiting human wants that the society believes are unwanted. One is not allowed to steal, rape, punch, not pay taxes when due, openly drink beer outside, smoke in the cafeteria or on the air plane and so much more. One more, one less limit, doesn't bother me..
Poor has the a little higher chance to become rich than winning a lottery. All the slum dog billionaires are on the Forbes. How many are there? 100? Not that much I would say on global scale...
Agree though that the positive side of say: employment, spending on technological innovations, new biz should be preserved and encouraged

[Ian]

Once upon a time (and yes it was actually a relatively dark and stormy morning) I attended a Labour Party policy forming meeting, with about two hundred delegates. I had a submission: an optional tax. The concept was, once you reach a certain level of richness (and that was fairly high) an additional 15% would be added to your tax bill. You had the choice of paying that to the government, OR of investing it in new or expanded business that had to involve new employment (i.e. putting in robots to fire workers would not qualify). There were obviously more details, but the interesting thing was this got zero support. Why? Because as one put it, that would mean the rich got richer. The idea that everybody might be better off did not rate against the idea that those wretched rich might get richer instead of spending their wealth on super yachts, etc. It is rather hard to get some people to realise when they could be better off.

[Avnish]

There are and there should be laws to see that nobody can amass wealth through illegal means. But when somebody start a venture and becomes rich through permitted means, there can not be any upper limit on wealth. There are a number of recent examples of people starting ventures such as Microsoft, Google, Facebook and becoming billionaire. Also there is a system of progressive taxation on personal income in every country.

[Avnish]

Nik wrote: "Avnish wrote: "Human wants are unlimited, so any cap on richness does not make any sense. When today's poor will get such an opportunity to become rich, it will also behave the same way - purchasin..."

All these acts - drugs, forced sex, punch - disturb order in the society. Civilized society has been created to bring order in human life. Does amassing wealth bring disorder? Moreover everybody has got opportunity to learn skills, start new businesses and earn to the extent possible.

[Nik]

Avnish wrote: "But when somebody start a venture and becomes rich through permitted means, there can not be any upper limit on wealth. There are a number of recent examples of people starting ventures such as Microsoft, Google, Facebook and becoming billionaire. Also there is a system of progressive taxation on personal income in every country. ..."

The process of concentration leads to amassing everything in a smaller number of hands. We see it happen in aviation industry, in car manufacturing and now in telecommunications and high-tech.
We, as societies, I believe are interested in strong companies, but not in monopolies. We need competition, not winners.
That's why Bell System was broken up: https://en.wikipedia.org/wiki/Breakup...
But that happens what: once in a century?
If you look at these estimates (where btw some companies you've mentioned star) : "In just those four categories, that's some $9.25 trillion in available cash doing nothing." http://www.cnbc.com/2016/09/20/us-com...
Just a waste in my opinion, when so many vital, good programs lack financing.
And btw, progressive taxation of income is dominant, but certainly isn't applied 'in every country". This is the list, where the tax is flat:
https://en.wikipedia.org/wiki/Flat_ta...

[Nik]

Avnish wrote: "Does amassing wealth bring disorder? .."

Laws reflect a societal understandings as to norms and organization of a country/a community. It's not necessarily about order or disorder. Does abortion bring order/disorder? Not necessarily. Unchecked amassing of wealth though can result in disorder though, if the number of unprivileged grow and a polarization between them and a few of very privileged intensify. I believe the growing gap may be one of the internal dangers to the system.

[Ian]

In my opinion, the huge accumulation of wealth in very few hands has the problem that that wealth is not doing anything useful for the vast majority of people, and it is debatable it is doing anything for the very rich either. Stacking billions in tax havens is hardly useful to anyone.

[Nik]

Ian wrote: "You had the choice of paying that to the government, OR of investing it in new or expanded business that had to involve new employment..."

It was an excellent idea in my opinion

[Ian]

Thanks Nik. Maybe one day I can find a way of resurrecting it for a novel :-)

[[deleted user]]

Frankly, how many super-yachts or private jets does one need to be happy and comfortable? On the other hand, you have tons of honest, hard-working people in the USA trying to raise a family on a middle or low income, who are one catastrophic health crisis away from bankruptcy and lifelong debts. If anything would be worth raising extra taxes on the super-rich once past a certain level (say, one billion dollars), it would be using those taxes to finance a decent health coverage for everybody.

[Scout]

I like that idea

[Avnish]

The discussion invokes a thought – why somebody can earn to that extent of being super rich while many others can’t make both ends meet.

[Nik]

Avnish wrote: "The discussion invokes a thought – why somebody can earn to that extent of being super rich while many others can’t make both ends meet."

Indeed, and we have some threads running of necessary flairs to make it big time and whether less successful are to be blamed. I'll be bringing them up.
Some general thoughts for discussion:
Moneymaking is an art, where virtuous flairs are more detrimental than handy. However, just this one talent is not enough and other tail winds, including luck, are needed to gain an escape velocity and reach financial stratosphere. That's why slum dog Bills are only a relatively small fraction of a tiny number of Bills, where the most are hereditary...
With poor too: the stereotype is if one is poor s/he is lazy, while in many cases it's far from being true. Unfortunately, even a hard working couple may have hardships with financing reasonable subsistence for their families.
Now if someone believes that super rich work harder than a steel worker or miner, or that a school teacher's work is easier than that of a secretary/minister, in most cases it would be a fallacy..

[Scott]

The biggest problem in our country today, imo, is the wealth disparity. Someone once said that taxes were the price that the wealthy pay so that the "less fortunate" don't rise up and kill them in their sleep or publically by guillotining them or something. Even Adam Smith says that the wealthy should pay taxes not in proportion to what they earn, but somewhat more.

It's all about keeping score in my view. The only reason to continue accumulating the kind of wealth that some are accumulating is for bragging rights. No matter how much taxes many of the most wealthy would pay, they'd still have plenty left over to live lavishly and without worry about their health and their future, not to mention the future of their families.

Once those folks get everything there is to get, then who's going to buy their businesses' products?

[Scout]

Well, that second sentence made me laugh out loud. And I agree with you about the rest.

[Avnish]

One explanation of being super rich: Many people organise businesses to produce certain products and services in demand. Some people can produce these in the way people like it. So their sale and business grow more than others on the same line. Just as there are so many actors working in movies and TV shows. People start liking a few of them making them stars. These actors demand higher fees and become rich. Same way successful businessmen become richer and richer.
Now about the poor: People learn new skills and shift occupations in an industry where they can command better remuneration. But the poor do not have that courage to shift occupations with shift in technology.
How we can make everybody to look for better opportunities and remuneration so that people fall in middle class and not in poverty.

[Nik]

Avnish wrote: "Same way successful businessmen become richer and richer...."

I have no problem with rich people at all. Moreover, I believe most of them deserve it, by taking risks, where others wouldn't and investing efforts into making things happen. I'm thinking about the cap from two aspects mostly: 1) that business is very productive and progressive in its thrust to win over the competition, but once it's won and one player becomes very dominant in a certain industry, the effort and creativity go into keeping the market closed and derailing even potential competitors from challenging the winner; 2) stashing away and blocking money somewhere at off-shore accounts, doing mostly nothing, while so many programs are underfunded. It's ineffective, it's polarizing, it's having most brilliant businessmen engaged in destructive activity, rather than constructive.
I argue that a cap in between 100mil and 1bill doesn't harm the winner, as they can afford practically anything multiple times, if they wish. Not saying - the excess should be taken or taxed. Active constructive utilization thereof by the Bills themselves is good enough, I think. The similar understanding might exist among the Bills themselves, that declare their support of the Giving Pledge - an initiative undertaken by some uber rich to bequest or spent most of their wealth on different purposes.

Avnish wrote: "Now about the poor: People learn new skills and shift occupations in an industry where they can command better remuneration. But the poor do not have that courage to shift occupations with shift in technology...."

I argue we need not demand upward mobility from whoever works and no one working full time job should be poor.
If I enjoy repairing cars, I need not necessarily strive to become a car shop manager, then open a chain and so on. If my spice of life is carving the wood, why should I aspire to have others carving the wood for me, to become richer, but unhappier? There are people who enjoy the business side of developing a bigger biz and making money and there are those who enjoy their work, as it is. Any work should provide for a reasonable subsistence in my opinion.
And those, who can't work for various real reasons - deserve a helping hand too.

[Nik]

Scott wrote: "The biggest problem in our country today, imo, is the wealth disparity. Someone once said that taxes were the price that the wealthy pay so that the "less fortunate" don't rise up and kill them in their sleep or publically by guillotining them or something. ..."

I also regard the gap as the major entropic factor

[Nik]

Does a cap make sense or should the sky be the limit: what do you think?

[Ian]

I see no reason for a cap on wealth, but I do see the need for higher taxes to reduce the disparity, and more importantly, a cap on ownership of assets. This is more for control, to stop anticompetitive acts. Some of the other problems of competition can be overcome with standardization.

[Scout]

I believe in capitalism, rewarding hard work, but I like the idea that once one accumulates a certain excessive (to be determined) amount of wealth, then one should be required to put excess wealth back into the economy instead of putting it into tax shelters or offshore accounts where it's out of circulation. The rich guy should be required to come up with some strategy for giving back to the system that allowed him/her to make those billions.

[Nik]

Both your suggestions sound reasonable, Ian and Scout. Moreover, most bills themselves would likely agree if commanded to ‘use’ an excess to promote some important issues under their discretion

[Nik]

Corona and unprecedented printing of banknotes, were a wonderful tailwind for the richest dudes on this planet, whose wealth skyrocketed, while that of 99% population of the planet (if to believe Oxfam) shrank.
As the economic game accelerates to near escape velocity, prospective space exploration is being commercialized shall some assets/land/planets/fruits/whatever be preserved for current/future generations or shall the winner/few winners take it all?

[Ian]

Another question is do you want everything owned, and hence you be controlled, but the likes of Bezos, Zuckerburg, Musk, etc. I don't mind their being rich, but I am less enthused of being a serf to them.

[Barbara]

You can always come up with a "better" way to spend other people's money, but if someone earned their money legally - heck, even if they won the half billion dollar lottery - it's their money, and what they do with it, as long as it's legal, is none of my business. If they spend it on 100,000 dollar cars, millions in jewelry, a private jet, just let it sit in a bank, buy 20 houses, it's theirs, not mine, and I don't have the right to tell anyone else what they should do with their earnings.
I think we all don't like it when there is legislation that lets extremely rich people have loopholes and advantages that an average business or earner can't take advantage of, but that's a different issue.

[[deleted user]]

Ian, I like what you say. I am not against owning things but there are certain items that are off limits.

When I see the uber rich buying parts of the moon, etc, I automatically think of Caligula. Or was it Nero?

[Ian]

Beau, not sure what you are referring to. That Caius Julius Caesar (AKA Caligula) was not especially rich, largely because he kept spending money to be popular. He was probably the origin of the "bread and circus" reference, but he has not been fairly represented by history. For example, he has been called a tyrant, but in his imperium he had four attempts to assassinate him. The records can only attribute 13 executions to him, and most of those were the guys involved in the assassination plots. His big mistake was to exile Seneca for plotting. Had he executed him, Seneca would not have been able to write all the drivel that led to Caius' bad name in history. Of course, he was not exactly a good leader either. He kept wanting to demonstrate he was so much better than anyone else, and this has not helped his record. However, he could be quite reasonable. I found a first-hand transcript of a meeting with him and recorded by Philo of Alexandria. C. unmercifully teased the applicants, but the final decision was actually quite reasonable. [I couldn't resist putting that meeting in one of my novels :-) ]

I don't think Nero bought parts of the Moon, and he didn't fiddle while Rome burned as he wasn't even in Rome. He rushed back and made his properties available for the victims of the fire, and he fed them, and given the resources, his response to the fire was commendable, until his opponents started blaming him for it. He needed scapegoats, so he picked on the Christians. Nero was the guy who fancied himself as an actor, and would execute those in the audience who dared to fall asleep during the performance. Not a good guy at all.

[[deleted user]]

Fascinating post, Ian. I think I'm your new biggest fan.

I'm probably a victim of believing high-quality fiction over fact. I once saw a superb TV series called 'I Claudius', based on the book by Robert Graves (can't see how to post a link as I'm on my phone).

I'm sure Caligula was shown claiming ownership of the moon :)

[Ian]

Yes, the "I Claudius" series was overall excellent. I don't recall C. claiming ownership of the moon but in some ways it would be in character. He used to say some totally outrageous things, challenging people to disagree with him. People usually started studying their cushions, or something else and very few responded. The funny thing is, he seemed to genuinely want a debate. He probably would never admit he lost, but he also never seemed to do anything to those who might have beaten him in the debate, as long as they didn't claim to be superior to him. C. had to end up superior.

[[deleted user]]

After a quick search online, I think my memory might have been playing tricks on me. I saw references to Caligula talking to the moon and being in love with it, but not claiming to own it. That said, my quick search reminded me of something else that I'd forgotten - his declaration of war on the sea :)

I wonder if Jeff or Elon will ever get to that stage? Elon seems reasonably - reasonably - grounded so my money would be on Jeff doing it.

Perhaps a cap on enrichment might benefit these guys by taking away any excessive illusions of grandeur? We wouldn't want them to go the way of Caligula, would we?

[Ian]

The "war on the sea" is another example of people not getting it right. It all started with rebellious legions near the German border. Caligula went there, arrested the commanders and then decided the troops were just plain lazy so he imposed disciplinary methods that were quite normal for Rome, and were more or less those described in the book on military discipline written by Gn. Domitius Corbulo.

Then he decided to emulate his previous namesake, C. Julius Caesar, by invading Britain, so he marched two legions to the coast and ordered them to board ships. They refused, so with his usual imaginative "smart" way of getting what he wanted, he said they could either board the ships or declare war on the sea. The troops immediately voted for the latter, so a stunned C. ordered them to go and thrash the sea, collect shells as evidence, then he ordered them back to Rome, to march through the streets as a "Triumph" showing the people of Rome what they had achieved. It was a brutal exercise in humiliation. Had they refused, there would be a decimation and a repeat of the orders. Refusing orders in the Roman army was not an option.

[[deleted user]]

Excellent stuff, Ian. Now you've mentioned it, I'm pretty sure that was the story told in I Claudius.

Was Caligula really a great emperor who has been misunderstood? You paint quite a positive picture of him.

[Ian]

No, he was not a great emperor; he just wasn't as bad as usually pictured. He was over-egotistical and wanted everybody to like him. Accordingly, he almost ruined the Roman treasury with bad and excessive spending. He did have some good ideas, but he seemingly had to ruin most of them by not being practical about them, and his public relations with those who counted in Rome were awful.

As an example, you have probably heard that Rome taxed its subjects. You may not realize that those in Rome and the senators had exempted themselves. To raise money, Caligula imposed taxes on everybody, including the Roman rich. (The taxes were in the order of 2%). This was considered grossly unreasonable by the senatorial class, and Rome had a very unequal wealth distribution. The difference in relative wealth between, say, Crassus and the guy selling takeaway pork chops would seriously exceed the difference between Bezos and you. Crassus could personally raise and fund four legions (equivalent to four army divisions), set off on an expedition for a couple of years, and not notice any particular difference in his wealth.

[J.]

Caligula was an Emperor who, to this day, is still known by an embarrassing childhood nickname. I think it's safe to say that he had a chip on his shoulder.

[Ian]

Actually, the Romans would have called him Caligulae - after all, he had two feet. It was quite common for Romans to be nicknamed, and often the nickname stuck down later generations. Thus Caesar seems to mean "hairy one", which is superficially odd because the various Caius Julius Caesars tended to be bald. I think some called C. Caligulae, even when he grew up, was because Caius was not particularly identifiable (although Caius Secundus Plinius always referred to him as Caius, or C.) and they probably thought C. did not warrant being referred to the same way as the most illustrious Caius Julius Caesar.

However, it is true that C. hated that nickname, and it was not a good idea to refer to him to his face that way. Notwithstanding that, I have seen a bust of him, with "Caligulae" inscribed on the neck.

[J.]

When was the bust inscribed?

[Ian]

I assume at the time. It was the typical coarse Roman capitals that got inscribed on stone, chiseled, while the bust itself was very finely done. I suppose one can't rule out a later forgery, but if it were, having gone to those details, the forger would presumably have got the spelling right.

[J.]

Or an official imperial portrait was vandalized after the emperor's assassination?

[Ian]

I doubt it. If they were going too vandalise, surely the would do something to the face? The ancient Egyptian pharaohs had this habit of cutting off statue noses of previous Pharaohs. There was apparently a number of statues of him that were vandalised, and they made a job of it.

[Nik]

Gotta look for Caligula's descendants to exact an overdue inheritance tax. Romans would need to move their missiles and catapults back, Vladimir Macedon the Great is in the house

[[deleted user]]

Very interesting information, Ian and J.

Nik :)

Ian, Jeff might have more money than me but I've got more hair than he has.

[Ian]

Ha! Beau is a Caesar :-)

[Scout]

Cool that women don't have to compete in the hair wars :-) I agree with your point, Barbara, that the rich should have to pay their fair share (although I don't think that will happen, given that they have tax lawyers who find all the loopholes that ordinary mortals have no access to. And the fact that many in the government are very rich and don't want to see change.) I do think that when someone gets to the point of having billions of dollars, more than they could ever need or spend, they should be required to give back to the economy and country that allowed them to make those billions. They should get to choose, but a certain fair percentage should be given to pay for the advantage gained by living here under a free capitalist economy.

[Lizzie]

Nik, my impression is that you are against money being hoarded to the point it is of no use to individuals or the economy as it is sitting in a bank account offshore or buried in the basement.

Consider, if we were hoarding anything from food to toilet paper, we would be perceived negatively. Why are dollar bills different? In some ways they are the equivalent of xxx numbers of rolls of TP and xxx pounds of beef.

Considering the general American public's view on healthcare and the masses, I suspect the only was we will ever get healthcare for all is through a realistic tax rate for those who are rich beyond ever having to worry about living well, together with a tax code that doesn't provde the rich with so many breaks.

A method that caps the excesses would be nice, but I don't think it would ever fly in America.

[[deleted user]]

I agree with you, Lizzie. While I believe in incentives and the free market, and disagree with aiming for financial equality, I can't help thinking that things have gone too far. How can it be right that so many people live in poverty (developed and developing world), while others have multiple mega yachts and homes that they never live in. I particularly feel this way when I see the homeless on the streets of the world's 'richest' countries.

(Note to market forces guys - even the best things in life, when taken to an extreme, lose their benefit.)