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.
Based on the recommendations here, I remembered that I meant to look into the Limitarianism book. So I got an audible copy from my library through Libby and started listening … after listening a bit, I got so excited I took a $50 gift certificate for Barnes & Noble that someone gave me and went off to my nearest B&N —- when I went there, they said it was on sale 50% ($14). So wanted to share that with people here - you can grab that book cheap at least if they move quick.
Was coming here to recommend exactly this same book. I like that it actually fleshes out what an upper wealth limit would look like from both a political and a moral sense.
I agree, I posted my own reply before seeing this.
I've been following Robeyn's work since her original article in 2019 or so. I wrote a paper of my own applying her framework to corporations (could there be a corporation that is too large?) and did some research on how Americans view a wealth line and if they agree on where it could be (they do). I never published that second half though, but it is an extremely interesting topic.
yes, limiting dynastic wealth would actually only further streamline and increase capitalistic efficiency. Our current Gilded Age is not nearly optimal because it’s like that last half-hour of the Monopoly game where the one player who is going to win and drive everyone else into bankruptcy has been found but because of the vagaries of chance and dice, hasn’t done it yet. Everyone else quits caring and stops trying.
I forwarded your piece to my recommendations list but I said “He’s right, but I’d settle for a return to a real estate tax and an abolition of the workarounds so as to prevent formation of dynastic wealth” — that is, perhaps you would say it’s a tepid half measure, but I think it’s far more politically possible to shoot not for the establishment of a wealth cap but for a cap on the amount of wealth that can pass on to the spawn of the wealthy.
Excellent article. A first step would be overturning Citizens United and limiting campaign financing money. A second would be barring special interests from having direct representatives in the political sphere. Then we could start the debate about wealth caps.
For the record, if I recall correctly the last Socialist French president, François Hollande, campaigned on the promise of capping the maximum monthly income in France to something around EUR 40,000. I can't remember where this went (and the 2015 Paris attacks derailed his presidency anyway).
I’m not a Marxist, but he understood Capitalism better than we ever give him much credit for.
This is a partial quote from the book “The light Failed” by Ivan Krastev & Stephen Holmes regarding how the liberal ideal has been replaced by authoritarian kleptocracy elsewhere - and now in the US.
"Marx's final gift to the Soviet elites was persuading them not only that capitalism was designed for the predatory self-enrichment of a few but also that Western democracy was a shrewdly constructed system for maintaining class domination.
Democracy, viewed in this cynical light, had nothing to do with the accountability of politicians to citizens. On the contrary, the democratic illusion of accountability helped mask and preserve the autonomy of a political ruling class".
Substitute "pitiful billionaire technocrats" for "political ruling class" as you wish.
I love your writings, but in this case I think your whole premise about "maximum wealth" is flawed, in that you imply that folks are accumulating wealth just so they can swim through it like Scrooge McDuck or eat caviar every night. When you look past the big houses, yacht, private island (in other words, investment property), a lot of these folks live non-lavish lives. The ultimate use of money beyond basic need is to accumulate POWER, which is the ultimate drug for raging narcissists (which is most C-suite occupants). Even millionaires I've known contribute oodles of money to state and local politicians in hope of getting access and a chance to shape policy. None of the tech bros at the inauguration were wearing big diamond rings on every finger, which they could have bought with pocket change, but they had bought raw power and the ability to control and order millions of lives. If you want to disincentivise the accumulation of wealth you have to restrict the ways that money can be used to accumulate power. Australia's new limits on campaign donations is a good start.
If you can't donate more than a few thousand in an election cycle, politicians won't be inclined to cozy up to repulsive billionaires, and it will tend to reduce the path to power via finances.
Huey Long’s Share the Wealth campaign had a maximum income cap of around $100 million in today’s dollars. He was planning to run for President in 1936 and had a strong national following but was assassinated in 1935. Huey had his personal failings but his broad popularity shows that a cap on maximum wealth is not a concept completely foreign to US politics.
Real question here from a psychological point is are these people happy?
I cannot imagine having billions .........I would feel decidedly uncomfortable and give most of it away to help people more needy. I really can't get my head around this other than understanding that these people have POWER and yet........
'We have, I fear, confused power with greatness.' Stewart L Udall (Dartmouth College).
The psychological makeup required to acquire such wealth isn’t compatible with feelings of empathy.. You would feel uncomfortable because you own a moral compass. They’re cold blooded, possessed by an unquenchable thirst for power and control
'manic'...that's it...manic can LOOK like 'happy' but it isn't. It's a hyperenergized mindless state where one lives from moment to moment and not in the good 'Zen Buddhist' way...
The immediate impact of your idea in the United States would be a stampede of billionaires to find a country where they could continue to be multi- billionaires. I first encountered this concept when 1980s tennis star Bjorn Borg established his residence in Monaco to escape Swedish taxes.
Which would kind of be a wonderful thing, if for no other reason than it would prevent at least some from using vast sums of money to buy politicians, judges and justices.
As if foreigners can't use money for those purposes? Former Senator Bob Menendez of New Jersey was thoroughly bought by the Egyptians. Offshoring our billionaires would be likely to vastly increase the amount of foreign interference in our politics. Whether it would decrease the total amount of corruption is to be determined.
The very fact that Menendez was convicted (and mayor Adams of NY was indicted) illustrates that foreign interference in elections is, for now at least, still considered a no-no and prosecutable, while there are absolutely no effective limits on domestic contributions to, or purchasing of, politicians etc.
What a great observation (and prose) “Because the gains of technological advancement were not socialized. They were privatized.” Is that ever the cold hard truth. Not to mention mush of that technology is designed to distract us from what is really happening. I also can’t help but recall that in the former United States the vox populai were tolerant of wealth IF they also had a rising standard of living and equal opportunity to become wealthy. The former was certainly true between WWII and roughly the turn of the millennium - but all but buried now. And the latter still possible but becoming more like lottery odds. The real slight of hand has been convincing the working class and poor that immigrants, environmentalists and college grads are to blame.
"The real slight of hand has been convincing the working class and poor that immigrants, environmentalists and college grads are to blame."
It really didn't take much slight of hand...Pretty much ALL of MAGA came to the table hating immigrants, environmentalists and college grads...they just wanted an excuse to do so...'tricking' them was as easy as tricking a duck to respond to a duck call
Recommend Ingrid Robeyn’s book Limitarianism to dig further into this topic. She really highlights the fraudulence required to earn extreme wealth and makes a valid argument against inheritance.
With regard to the “aggrieved” millions who express their angst and their fear and their depression by buying into MAGA you have to hand to the messaging people and manipulators of public opinion . They have convinced the “aggrieved” that immigrants and “woke” culture (whatever they think that is ) are to blame. The message is don’t feel bad about yourself . The problem is the illegal masses . The problem isn’t capitalism and/or the “masters of the universe and tech bros “ and “finance “ people ———no it is the immigrants! The photo of Bozo’s yacht doesn’t upset them the way it upset the readers of this Substack. They admire these people. A little envy but mostly an admiring crush. It seems technology and financial manipulation have out paced the evolution of human understanding. They are taking advantage of all of us and we just keep in buying junk and accepting that we pay taxes and we fight and die in wars and they just get to live extremely comfortable lives.
."..technology and financial manipulation have outpaced the evolution of human understanding." That's what to deal with. Humanity needs a wake-up to its essential caring nature that late-stage capitalism has blinded us to. I think about educating humanity as possible to do!
As for blame, I can't help commenting that the prospect of the drag queen story hour at your local library probably led to a few Trump votes. Not to mention the idea that all white people are somehow irredeemable. (I'm "complicit"??!! OMG what do I do? How do I fix this?") Some parts of "woke" culture fed right into the fears and anger of the more conservative side of our society. Of course it was the bad guys who exploited these fears. But the matches were supplied by the left.
here's how it works...For YEARS and YEARS there was no noise coming from the right bitching about trans people and drag queens, even though both have been around a LONG time...Then the right starts attacking them...What choice do dems have BUT to respond to those attacks. Do we throw trans people under the bus to appease the right? of course not...But BECFAUSE the right has made so much noise about it, it suddenly BECOMES a thing when previously it WASN'T. They invent these crises out of whole cloth and then the media feeds it into the public sphere raw and unquestioned ..and there
is no choice BUT to counter it...
Also I have never ONCE heard the term Woke ACTUALLY used by the left...ever...While it certainly emerged from a black American meme, it had already been years out of use by the time the right turned it into a "thing" the 'left' had NOTHING to do with it
there is what liberals ACTUALLY believe and then there is what republicans tell OTHER republicans what liberal's believe...And the THAT narrative is the one the 'news' media runs with...
Dem leadership is guilty of a lot of things, but this isn't one of them
Herein lies the problem: My comment gets interpreted as “throwing trans people under the bus” when I’m talking about trying not to scare more conservative people by changing culture so quickly that they vote for Trump as an emotional reaction.
This would involve actually paying attention to and understanding the entire electorate and strategizing accordingly to target marginal voters. Single issue voting is nothing new, neither are backlashes. It’s a matter of consulting recent history or even us elders — Saw the same patterns with feminism & gay rights.
Of course the right exploits the fear, but the radical left seems to take a perverse pleasure in triggering it. (Since I’ve always been liberal I feel it’s my duty to criticize the excesses of the left.)
You either support minorities or you don't. There is no halfway point. And any support is going to be framed as extreme by conservatives. That's the way it actually works. And politics doesn't get to determine cultural trends and movements. Even if Republicans think they can control culture through force they can't. We should all know by now that appeasing fascists never works. They exist solely to be defeated
I find it very apropos to this post that the Dodgers offseason is making the general public crave a cap in the MLB. Their argument is that 'It's unfair that the Dodgers are (playing by the rules of the current CBA) making a team that just won the World Series even better.'
The solution being offered is that the MLB should limit how much a team is allowed to spend on their employees to "make it fair". Trying to limit the pay of employees, such as CFOs, in any industry besides 'Sports' would be immediately rejected though.
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.
Wonderful book on this concept: "Limitarianism: The Case Against Extreme Wealth"
https://astrapublishinghouse.com/product/limitarianism-9781662601842/
Based on the recommendations here, I remembered that I meant to look into the Limitarianism book. So I got an audible copy from my library through Libby and started listening … after listening a bit, I got so excited I took a $50 gift certificate for Barnes & Noble that someone gave me and went off to my nearest B&N —- when I went there, they said it was on sale 50% ($14). So wanted to share that with people here - you can grab that book cheap at least if they move quick.
https://www.barnesandnoble.com/w/limitarianism-ingrid-robeyns/1143402982?ean=9781662601842
Was coming here to recommend exactly this same book. I like that it actually fleshes out what an upper wealth limit would look like from both a political and a moral sense.
I agree, I posted my own reply before seeing this.
I've been following Robeyn's work since her original article in 2019 or so. I wrote a paper of my own applying her framework to corporations (could there be a corporation that is too large?) and did some research on how Americans view a wealth line and if they agree on where it could be (they do). I never published that second half though, but it is an extremely interesting topic.
yes, limiting dynastic wealth would actually only further streamline and increase capitalistic efficiency. Our current Gilded Age is not nearly optimal because it’s like that last half-hour of the Monopoly game where the one player who is going to win and drive everyone else into bankruptcy has been found but because of the vagaries of chance and dice, hasn’t done it yet. Everyone else quits caring and stops trying.
I forwarded your piece to my recommendations list but I said “He’s right, but I’d settle for a return to a real estate tax and an abolition of the workarounds so as to prevent formation of dynastic wealth” — that is, perhaps you would say it’s a tepid half measure, but I think it’s far more politically possible to shoot not for the establishment of a wealth cap but for a cap on the amount of wealth that can pass on to the spawn of the wealthy.
your monopoly analogy is (forgive me) on the money.
Excellent article. A first step would be overturning Citizens United and limiting campaign financing money. A second would be barring special interests from having direct representatives in the political sphere. Then we could start the debate about wealth caps.
For the record, if I recall correctly the last Socialist French president, François Hollande, campaigned on the promise of capping the maximum monthly income in France to something around EUR 40,000. I can't remember where this went (and the 2015 Paris attacks derailed his presidency anyway).
I’m not a Marxist, but he understood Capitalism better than we ever give him much credit for.
This is a partial quote from the book “The light Failed” by Ivan Krastev & Stephen Holmes regarding how the liberal ideal has been replaced by authoritarian kleptocracy elsewhere - and now in the US.
"Marx's final gift to the Soviet elites was persuading them not only that capitalism was designed for the predatory self-enrichment of a few but also that Western democracy was a shrewdly constructed system for maintaining class domination.
Democracy, viewed in this cynical light, had nothing to do with the accountability of politicians to citizens. On the contrary, the democratic illusion of accountability helped mask and preserve the autonomy of a political ruling class".
Substitute "pitiful billionaire technocrats" for "political ruling class" as you wish.
I love your writings, but in this case I think your whole premise about "maximum wealth" is flawed, in that you imply that folks are accumulating wealth just so they can swim through it like Scrooge McDuck or eat caviar every night. When you look past the big houses, yacht, private island (in other words, investment property), a lot of these folks live non-lavish lives. The ultimate use of money beyond basic need is to accumulate POWER, which is the ultimate drug for raging narcissists (which is most C-suite occupants). Even millionaires I've known contribute oodles of money to state and local politicians in hope of getting access and a chance to shape policy. None of the tech bros at the inauguration were wearing big diamond rings on every finger, which they could have bought with pocket change, but they had bought raw power and the ability to control and order millions of lives. If you want to disincentivise the accumulation of wealth you have to restrict the ways that money can be used to accumulate power. Australia's new limits on campaign donations is a good start.
https://thedailyaus.com.au/stories/political-donations-are-set-to-be-capped-under-new-govt-legislation/
If you can't donate more than a few thousand in an election cycle, politicians won't be inclined to cozy up to repulsive billionaires, and it will tend to reduce the path to power via finances.
Huey Long’s Share the Wealth campaign had a maximum income cap of around $100 million in today’s dollars. He was planning to run for President in 1936 and had a strong national following but was assassinated in 1935. Huey had his personal failings but his broad popularity shows that a cap on maximum wealth is not a concept completely foreign to US politics.
https://www.hueylong.com/programs/share-our-wealth.php
Real question here from a psychological point is are these people happy?
I cannot imagine having billions .........I would feel decidedly uncomfortable and give most of it away to help people more needy. I really can't get my head around this other than understanding that these people have POWER and yet........
'We have, I fear, confused power with greatness.' Stewart L Udall (Dartmouth College).
I don’t think they’re happy… just manic.
The psychological makeup required to acquire such wealth isn’t compatible with feelings of empathy.. You would feel uncomfortable because you own a moral compass. They’re cold blooded, possessed by an unquenchable thirst for power and control
Can so many people feel so 'cold-blooded?'
'manic'...that's it...manic can LOOK like 'happy' but it isn't. It's a hyperenergized mindless state where one lives from moment to moment and not in the good 'Zen Buddhist' way...
If they were happy, they wouldn't feel the need to keep acquiring more millions when they already have more than they could ever possibly spend.
The immediate impact of your idea in the United States would be a stampede of billionaires to find a country where they could continue to be multi- billionaires. I first encountered this concept when 1980s tennis star Bjorn Borg established his residence in Monaco to escape Swedish taxes.
Which would kind of be a wonderful thing, if for no other reason than it would prevent at least some from using vast sums of money to buy politicians, judges and justices.
As if foreigners can't use money for those purposes? Former Senator Bob Menendez of New Jersey was thoroughly bought by the Egyptians. Offshoring our billionaires would be likely to vastly increase the amount of foreign interference in our politics. Whether it would decrease the total amount of corruption is to be determined.
The very fact that Menendez was convicted (and mayor Adams of NY was indicted) illustrates that foreign interference in elections is, for now at least, still considered a no-no and prosecutable, while there are absolutely no effective limits on domestic contributions to, or purchasing of, politicians etc.
Charge them an exit tax (for using public goods) and sanction them if they don't pay up.
I have heard this claim many times in the last 30 or 40 years, but the funny thing is, that didn't happen when the top marginal rate was 91%.
The US had a top marginal rate of 91% back in the 50s when there was hardly another country worth living in post World War II.
They didn't leave in the '60s, either, when there were plenty of other nice places to live.
But they did learn to structure their income in terms of stock rather than cash to avoid all those nasty income taxes.
What a great observation (and prose) “Because the gains of technological advancement were not socialized. They were privatized.” Is that ever the cold hard truth. Not to mention mush of that technology is designed to distract us from what is really happening. I also can’t help but recall that in the former United States the vox populai were tolerant of wealth IF they also had a rising standard of living and equal opportunity to become wealthy. The former was certainly true between WWII and roughly the turn of the millennium - but all but buried now. And the latter still possible but becoming more like lottery odds. The real slight of hand has been convincing the working class and poor that immigrants, environmentalists and college grads are to blame.
"The real slight of hand has been convincing the working class and poor that immigrants, environmentalists and college grads are to blame."
It really didn't take much slight of hand...Pretty much ALL of MAGA came to the table hating immigrants, environmentalists and college grads...they just wanted an excuse to do so...'tricking' them was as easy as tricking a duck to respond to a duck call
I just finished Vonnegut’s ‘Galápagos’ right before reading this article. What an extraordinary punctuation to that journey.
Recommend Ingrid Robeyn’s book Limitarianism to dig further into this topic. She really highlights the fraudulence required to earn extreme wealth and makes a valid argument against inheritance.
With regard to the “aggrieved” millions who express their angst and their fear and their depression by buying into MAGA you have to hand to the messaging people and manipulators of public opinion . They have convinced the “aggrieved” that immigrants and “woke” culture (whatever they think that is ) are to blame. The message is don’t feel bad about yourself . The problem is the illegal masses . The problem isn’t capitalism and/or the “masters of the universe and tech bros “ and “finance “ people ———no it is the immigrants! The photo of Bozo’s yacht doesn’t upset them the way it upset the readers of this Substack. They admire these people. A little envy but mostly an admiring crush. It seems technology and financial manipulation have out paced the evolution of human understanding. They are taking advantage of all of us and we just keep in buying junk and accepting that we pay taxes and we fight and die in wars and they just get to live extremely comfortable lives.
."..technology and financial manipulation have outpaced the evolution of human understanding." That's what to deal with. Humanity needs a wake-up to its essential caring nature that late-stage capitalism has blinded us to. I think about educating humanity as possible to do!
As for blame, I can't help commenting that the prospect of the drag queen story hour at your local library probably led to a few Trump votes. Not to mention the idea that all white people are somehow irredeemable. (I'm "complicit"??!! OMG what do I do? How do I fix this?") Some parts of "woke" culture fed right into the fears and anger of the more conservative side of our society. Of course it was the bad guys who exploited these fears. But the matches were supplied by the left.
"But the matches were supplied by the left."
not true...
here's how it works...For YEARS and YEARS there was no noise coming from the right bitching about trans people and drag queens, even though both have been around a LONG time...Then the right starts attacking them...What choice do dems have BUT to respond to those attacks. Do we throw trans people under the bus to appease the right? of course not...But BECFAUSE the right has made so much noise about it, it suddenly BECOMES a thing when previously it WASN'T. They invent these crises out of whole cloth and then the media feeds it into the public sphere raw and unquestioned ..and there
is no choice BUT to counter it...
Also I have never ONCE heard the term Woke ACTUALLY used by the left...ever...While it certainly emerged from a black American meme, it had already been years out of use by the time the right turned it into a "thing" the 'left' had NOTHING to do with it
there is what liberals ACTUALLY believe and then there is what republicans tell OTHER republicans what liberal's believe...And the THAT narrative is the one the 'news' media runs with...
Dem leadership is guilty of a lot of things, but this isn't one of them
Herein lies the problem: My comment gets interpreted as “throwing trans people under the bus” when I’m talking about trying not to scare more conservative people by changing culture so quickly that they vote for Trump as an emotional reaction.
This would involve actually paying attention to and understanding the entire electorate and strategizing accordingly to target marginal voters. Single issue voting is nothing new, neither are backlashes. It’s a matter of consulting recent history or even us elders — Saw the same patterns with feminism & gay rights.
Of course the right exploits the fear, but the radical left seems to take a perverse pleasure in triggering it. (Since I’ve always been liberal I feel it’s my duty to criticize the excesses of the left.)
You either support minorities or you don't. There is no halfway point. And any support is going to be framed as extreme by conservatives. That's the way it actually works. And politics doesn't get to determine cultural trends and movements. Even if Republicans think they can control culture through force they can't. We should all know by now that appeasing fascists never works. They exist solely to be defeated
"It seems technology and financial manipulation have out paced the evolution of human understanding"
spot on
I find it very apropos to this post that the Dodgers offseason is making the general public crave a cap in the MLB. Their argument is that 'It's unfair that the Dodgers are (playing by the rules of the current CBA) making a team that just won the World Series even better.'
The solution being offered is that the MLB should limit how much a team is allowed to spend on their employees to "make it fair". Trying to limit the pay of employees, such as CFOs, in any industry besides 'Sports' would be immediately rejected though.
Your post was written right at the time deepseek set about to disrupt all of this