Ending inequality - a wealth cap
One of the most banal and deceptive examples of socialist thinking relates to the constant calls for heavier taxes on the wealthy. Apart from the fact that the super wealthy have already exploited loop holes to escape paying high taxes, the wealthier classes are already paying the great bulk of income taxes. In the U.S. the top 10% contribute something like 50% of the tax take, while the bottom 50% contribute next to nothing. Increasing income tax on the wealthy will do nothing to solve the problems of poverty and power-wealth inequality. The western elite’s accumulated wealth already exists so taxing future wealth at higher rates would have no practical impact. Real wealth sharing has nothing to do with taxation. It has been under rigorous graduated tax systems that gross wealth inequality has arisen, because the wealthy have engineered a financial system that enables them to accumulate vast wealth at the expense of everyone else. This is the perennial problem of human history.
President Trump may reduce business tax rates to encourage economic growth but it will do nothing more than tinker with the power inequalities in the system overall. Equality of this sort can only be explained by the liberal’s blind faith in its Marxist, dominant state, dogma and its dependence on corporate support. Also, taxing the wealthy and redistributing it through government programmes, that do little to change the poor’s circumstances, is a waste of time and a terrible waste of a necessary resource. We know that because trillions has been poured into that black hole across the western world for decades with no appreciable affect.
The real solution to inequality and the un-democratic power wielded by the wealthy has to lie in a suite of measures that tackles wealth accumulation – past, present and future. It is possible to meld what are commonly regarded as socialist and capitalist principles; giving the lie to the belief that one has to go in one ideological direction or the other. People generally get very wealthy in two main ways. They speculate successfully on the stock and money markets, without actually producing or providing anything of any real or direct value to society. The wealthy classes may also sell products and services at prices that allow the accumulation of vast profits. They can only make those profits (principally) by paying the workers, who actually produce the goods and services, much less than they could and charging far more for their product, over and above all their costs, than the consumer really needs to pay. Excessive profit taking is also possible even if a producer is selling at a relatively low price - providing they do so in large quantities to achieve monopoly market share. History is replete with examples of entrepreneurial businessmen who have heartlessly exploited workers, treating them little better than slaves, to amass wealth, even under relatively low price conditions. They have always treated it as a zero-sum game where the many have to be short-changed, exploited, hurt or killed to make a few far richer than they need to be.
No one, should be allowed to get very wealthy by exploiting a system weighted against good and just social outcomes. Money and stock market speculation is merely gambling. The whole money market circus must be dismantled. It saddles society with huge volatility, debt and the risk of depressions that rob innocent, hard-working people of their living and assets, while allowing a privileged class to reap huge wealth and manipulate the whole economy. The stock market is a qualified exception. It allows companies to raise capital. All we need to do is dampen down its use as a forum for speculation and exploit the success of ‘crowd funding’ systems. The second method of accumulating wealth is over-pricing, or unjustified profit generation well beyond the real needs of any corporation or individual. Bill Gates got ridiculously wealthy because Apple was charging way more for its products than it really needed to. This is all as morally bankrupt and as socially unjust as the first. No one really needs to be super wealthy. To that end a total wealth cap on individuals needs to be introduced.
If most of us had [say] ten million dollars in savings and assets we would, if we acted responsibly, find it difficult to spend just the annual interest on this sum. A wealth cap at ten million dollars, or some other figure decided by people’s referendum, in total assets would respect the right of successful people to get wealthy without allowing them the unlimited ability to do so at the expense of consumers, employees and markets and balanced political influence. Inequality based on merit would still exist, but without the hegemonic hording of wealth and the consequential exercise of covert economic and political power. The drive to maximise profit for individual wealth would also decline.
Any system controlling excessive wealth accumulation must not stifle free enterprise. The freedom to pursue opportunities in commercial liberty and reap substantial rewards cannot be unduly inhibited. If there was a cap on wealth accumulation it can be set at a level that would still encourage entrepreneurship, innovation and enterprise. Keep this in mind: a wealth cap would only affect about 2% of the West’s population, as very few soar above ten million in personal assets. When people are still able to accumulate millions in personal wealth the incentives to strive for success in any field will not be sacrificed to some grey common socialist denominator. Businesses of any size should not be subject to the cap, providing individuals cannot access business wealth as a surrogate pool of money. If workplace democracy, discussed later was introduced profits would be shared with workers and not just stockholders. Balanced healthy social outcomes can be achieved if the other measures, found in Part Four were introduced. They recognises success is a partnership between entrepreneurs, owners, managers and employees.
The implementation of the Part Four measures, aimed at excessive wealth accumulation, would not deal with the existing problem - the vast wealth that has already been accumulated by the super wealthy. How is that to be tackled? The obvious and most direct solution, given that some of them laud philanthropy, is to require, by law, that they divest themselves of their liquid, fixed capital and tax haven wealth, by giving to worthy causes over a fixed period, until they have reduced their total wealth, liquid and fixed, to the cap. In a TED talk on ‘Effective Altruism’ a Beth Barnes claimed if the world’s richest 10% gave 10% of their yearly income to charity some four trillion dollars would go into alleviating poverty. Given that the amount needed to do so is estimated at much less than that it becomes self-evident how wicked it is to continue to allow so much wealth to be accumulated by so few.
he approach I am recommending is certainly dramatic, but I can see no other way of remedying a situation that has arisen under conditions created by wealthy financial institutions for the wealthy to exploit cravenly and ruthlessly. Society is justified in being equally ruthless in putting the whole travesty to rights. The expropriation of unjustified wealth by the super wealthy is steeped in equitable social justice. Unless a concrete step like this is taken the poverty, corruption and injustice entrenched in western culture and across the globe, will never be resolved. Unfortunately, middle class conservatives are likely to receive this idea with about as much dismay as the super wealthy, given their stubborn belief that getting wildly wealthy is some sort of natural right. It isn’t. They harp on about a limitless inequality of outcomes as if it is some sort of vital co-requisite, for the operation of free enterprise. Equality of opportunities, not an inequality of outcomes has to be the real driver for correct social and economic policy.
When society allows an extravagantly wealthy class to develop that class inevitably ‘gate’ themselves away from general society, but their social position leaves them able to influence governmental decision-making over the very people from whom they have distanced themselves. This is aristocracy in action. The self-serving temptations in this situation aside, their distance from the common weal makes it impossible for them to empathise with, or even comprehend, the real requirements of society generally. Complex interrelationships across modern societies will be of little concern to them. Thus, society is saddled with a multiplier problem. Unjustified wealth accumulation creates chronic class divisions and inequity, which is almost impossible to counter with our existing under-developed democracies. Poor government decision-making, threatening western culture is perpetuated because those able to influence the process are disconnected and unconcerned about the common person. Charles Murray describes this phenomenon as it developed from the 1960s to now (Murray, 2012). Unfortunately, Murray sees the current super-wealthy problem as intractable and best left alone. Paradoxically, he advocates a campaign of civil disobedience against state over-regulation, but denies it is possible to rein in an already vast wealth accumulation by a few at the expense of everyone else.