On Having a Maximum Wealth
A small thought experiment.
The single most ridiculous aspect of human history is how much of it has been driven by the goal of allowing a tiny portion of a large population to live in luxury. This is a theme found, to varying degrees, in society after society across the world: A lot of people with a low standard of living working in service of the goal of raising the standard of living for some sort of ruler or supreme leader and his family and allies. I understand that this is not some sort of revelation. “You’ve discovered class,” you are now saying in a mocking tone. Beyond the social and political and economic dynamics underlying this process, though—things that make up magisterial fields of inquiry—I think that every once in a while it is well worth taking a moment to gape at the basic ludicrousness of this fact. As societal goals go, an honest reading tells us that we are often not aiming for “better technology” or “philosophical progress.” No, the reality is that, thousands of years and around the globe, the primary purpose of all the work that everyone is doing is “allowing a few jerks and their unbearable kids to live lavishly.” Countless millions through millennia have suffered, dragging stones to build pyramids and losing fingers in dirty factories and getting black lung so that Some Guy Somewhere can sit on a soft pillow and enjoy delicacies.
What an absurd, idiotic goal to organize human society around. Wow!
The seed of all reform and revolution is planted simply by sitting and thinking about how fucking asinine this system is. Really, we all have to be peasants working in fields so the king can live in a castle? That’s the reason? We have to spend our days in coal mines so the CEO can have a grand apartment? We have to spend all day getting repetitive motion injuries in a warehouse so Jeff Bezos can buy a yacht so big that he asked for a historic bridge to be dismantled in order to sail it through? All of this sweat and toil and misery is arranged in service of that? What the fuck?
You can spend a lifetime studying to understand why this is the case, and another lifetime puzzling out how to fix it, and more lifetimes in the struggle to bring those fixes about. But before you do those things, if you want to do them with proper perspective and motivation, it is vital to enter into them fueled by the gut feeling of: “Are you fucking kidding me with this?” The rich employ armies of functionaries whose sole purpose is to convince you that that emotional reaction to how the world works is unsophisticated. It ain’t. Hold that disgust tight.
I say this as a prelude to a little discussion of the concept of having a maximum income. The idea that, in a world of scarcity, there is a level of wealth that is enough is both common sense and kryptonite to capitalism. The fact that there is not and has never been a serious discussion of capping wealth or incomes in America—despite the accompanying fact that even a child can understand that at some level, gaining additional wealth becomes unnecessary—goes to show how central the concept of unlimited wealth accumulation is to everything that happens here.
At Davos last week, AI was the hot topic of discussion. The business leaders there understand, as we all do, that the advancement of AI may automate and thereby eliminate millions and millions of jobs. For CEOs, this is a selling point: the main allure of AI today is, for most companies, its potential to lower labor costs. For this reason, it has been widely observed that AI has the potential to supercharge our already awful trend of increasing economic inequality. If nothing is done to prevent it, the gains of AI will accrue to a small pool of already wealthy investors and tech company executives, at the cost of countless normal people losing their jobs and becoming worse off. This is why the relevant discussion about AI is not really one of technology, but rather a political one: How will the gains of this technology be distributed?
This is the question that OpenAI CEO Sam Altman was getting at this week when he remarked that “there will be some change required to the social contract, given how powerful we expect this technology to be… the whole structure of society itself will be up for some degree of debate and reconfiguration.” For Altman and his peers on the winning side of this equation, the preferred outcome of the debate is that regular people are offered the operational benefits of the technology itself—better drugs available due to AI research, for example, or tools that make various day to day tasks easier—while the distribution of the direct economic benefits of the technology remain unchanged. This is the deal that we already have for the gains of the past 30 years of tech advancement, by the way. Jeff Bezos gets a hundred billion dollars and you get an easy way to order toothpaste. Elon Musk gets four hundred billion dollars and you get a neat car you can buy. This is the standard offer of capitalism. The population at large is supposed to be satisfied with the incidental benefits of the technology itself, as those who control the technology ensure that it is deployed in service of maximizing their own wealth.
I cannot predict what forms AI will take in the future, but one thing I can predict with certainty is this: As long as the people who control AI and its corporate underpinnings are allowed to make an unlimited amount of money from it, making a large amount of money for those people will be the underlying goal of the AI industry. That is the logic of capitalism, so fundamental to everything in America that it tends to disappear in the background. This is the default. This is why on the internet, for example, websites like Wikipedia and Craigslist, which operate with “usefulness to the public” as their goal, are the exceptions, and pop-up ads designed to rip you off and hidden scams to steal your data are the rule. It is easy to imagine Facebook as a useful public utility; instead, it is a trashy den of extremism and slop. That is because the company makes its decisions in service of making money rather than in service of being useful to the public. Despite the fact that Mark Zuckerberg has a net worth of more than $200 billion, far more than his descendants could ever spend in several generations, he continues to make his primary product worse because it will make him more money. This, though we do not always think of it this way, is the consequence of having no limit to the accumulation of wealth.
In 1930, John Maynard Keynes famously predicted that his grandchildren would only work 15 hours a week, because the gains of technological advancement and automation would make the 40-hour work week unnecessary. His predictions of great technological advancement were not wrong, but his predictions of those advancements easing our collective need to work were. Why? Because the gains of technological advancement were not socialized. They were privatized. In other words, these great technologies were allowed to make a few people spectacularly rich, rather than to remove burdens from everyone.
Progressives spend their lives fighting for laws and regulations and reforms to try to counteract this trend. I would argue that capping the accumulation of wealth would be the easiest and most direct way to achieve the things we are trying to achieve. Do a simple thought experiment: Imagine that no one could have a net worth of over a billion dollars. (You can debate what the appropriate maximum wealth should be, ranging from “the total amount of wealth divided by the global population” to “a billion dollars” and beyond. Debating the appropriate number is what happens after you accept the underlying premise that there should in a fact be a wealth limit. A common tactic for avoiding the discussion of the underlying premise is to try to make people focus angrily on disagreements about what the specific number should be. Please do not fall into this trap.)
Such a limit on net worth would eliminate the incentive of every single tech CEO, already rich, to get richer. By default, the AI industry would need another goal. The question guiding the evolution of the technology could be, “How do we use this powerful technology to make lives better?” The new drugs it discovered would be distributed with an eye towards the public good rather than towards the infinite generation of profits. The drudge work that it automates could be paid back to the public in the form of shorter hours for the same pay, rather than having those gains taken by CEOs and investors, while workers were stuck with fewer jobs. And on, and on. All I am suggesting here is that there is shortcut to the goals that communists were going for, that does not require full revolution. Simply capping how rich people are allowed to get could radically reorient the goals of society by removing the (insane!) thing that our mighty corporations now work towards like insatiable robots of doom.
The utter absence of this completely common sense idea is an indication of how twisted American society has become by unfettered capitalism. If you suggest a maximum wealth on, you know, Meet The Press, nobody, anywhere, in any position of power, will contemplate it in a serious manner for a single millisecond. Only letting people have one billion dollars is considered utopian and foolish. Allowing Elon Musk to have four hundred billion dollars is considered evidence of a well functioning economy. This is a sickness, a grand social delusion. The first step to fixing it is not allowing anyone to tell you that the way things are is more reasonable than the alternative.
Related reading: Enough Wealth to Warp the Universe; Demonize the Rich; Confiscate Their Money; Executive Pay Is the Skeleton Key.
Unfortunately I tortured myself by attending the presidential inauguration. You can read my piece on it for In These Times right here. I also wrote a piece on the People’s March two days before inauguration, which you can read here. If you are some sort of freak who likes to hear my voice, you can listen to me talk about this stuff on The Daily Beast’s podcast here.
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An often overlooked but well supported empirical finding is that preventing excess wealth from flowing to owners/investors/managers (namely through a reasonably high upper marginal tax bracket) is that it seems to *increase* economic growth- it's not just fairer, but more successful in an Econ 101 kind of way. If you, a manager, has the choice between taking the next million dollars out of the company as a bonus, but it will be taxed away to a pittance, or of letting it slosh around your company and turn into higher wages for workers or more R&D or the like, it's clear which one you expect to see produce broad increases in productivity and prosperity- and if all the managers are under the same tax regime, then there's no case of genuinely talented managers going to places where they get paid more. There's a solid evidentiary base that part of the Long Boom was actually that high end taxes were *high enough to drive broad growth*, a concept that is deeply foreign to the public conversation post-Laffer Curve but seems to be perfectly true.
I think basketball (at least 10 years ago) shows how this could work. The maximum salary an individual player could get was well under their market value. So what this meant is the second and third tier players got much larger salaries, and even the lowest paid players were well off. The NBA appeared to thrive during this period. The star players joined together to form super teams and made various concessions to make the team better as their incentive was now to win a championship rather now that their income was at the maximum it could be.