Close window | View original article
Some decades ago, when your humble correspondent was just starting out in life, he happened to anonymously cross paths with a successful and wealthy businessman. A moment's brief chat revealed that yours truly was just starting a business and desired to follow the well-worn path to the American dream. Having already achieved that himself, the other man was nothing but encouraging: "There's nothing easier than to get rich in America!"
Well... maybe he found it so, but not everyone is so fortunate. No doubt he has other problems, though, as we've been exploring in the previous articles in this series: it turns out to be extremely difficult to figure out a way to usefully dispose of a vast fortune once you've got one, given that none of us live forever to keep watch over it.
If you simply leave it to your heirs, after a few generations you get Paris Hilton or George III.
If you waste it on lavish overspending, you distort the economy and often look foolish yourself.
If you create a charitable trust, odds are after a few decades that trust will be using your money to support causes that are the exact opposite of everything you believed in.
And if you just give up and let the government confiscate it through estate taxes, not only is it all wasted, the general public is worse off. Government gets used to any extra spending and raises taxes on everybody else when your money runs out.
What's left? Bill Gates and Warren Buffet have added onto the charitable principles espoused by Andrew Carnegie: don't just give away your money to trusts, invest it in actual work that occurs while you are alive to make sure it is not wasted. That way, when you die, all the money will be well and truly gone, hopefully having accomplished something worthwhile.
Thus Mr. Gates has spent billions to eradicate polio, in theory accomplishing a permanent good for the world. This seems like an ideal solution: it is a clear problem with a clearly defined, albeit expensive, solution, which can be accomplished within Mr. Gates' remaining lifetime, and which will have permanent positive effects forevermore.
What's more, it's the sort of thing that only a super-rich person can do. No government can, because no government controls the whole world. No ordinary private individual can either, because an ordinary private individual has nowhere near the resources of a Mr. Gates. And even a charity or NGO will have a hard time with a goal like that, because if they ever actually accomplish it... all the NGO employees will immediately lose their jobs, so they'll find a way to make sure they're never quite finished.
The fact is, there are many things that would be great to have or do, but are wildly unlikely to be profitable in any reasonable time frame. No ordinary businessman could ever invest in them - and yet, if successful, would bring about tremendous benefits to mankind.
Eradicating disease is an obvious one, but how about, say, exotic research into nuclear fusion power generation? Nobody knows how to make it work although everybody thinks it can be done. The obvious and affordable ideas have all been tried long ago, with no result.
Any experiments that haven't already been tried require insanely expensive equipment that still won't necessarily do the job. It's hard for a government bureaucracy, much less an elected Congressman, to fund such a thing - but it would be easy for a billionaire who might just buy his way into the history books if he happened to hit on the right combination of magic and solve all our energy problems at one fell swoop.
Then there's space, as Paul Allen and Elon Musk show us every day. Their space companies may not make money yet, but they've already accomplished something very important: demonstrating that you don't need a government agency to get to space. Now that they've proved it can be done, the cost is inexorably coming down until, someday, maybe normal people will be able to get involved, which never would have happened if we'd left it to NASA.
A billionaire had to first show the way, and the easiest way to do that is if he, like Mr. Gates, no longer cares about the money. Indeed, it is his express intent to get rid of it all before he dies.
How about education? There are so many pilot charter-school programs funded by billionaires that teachers unions are going on strike to get rid of them. These schools are existential threats to the unionized way of doing things. If they work, they'll prove we don't need teachers unions or publicly-run schools at all. Billionaires have succeeded where politicians have failed - shocking!
So let's sum up: As our Founders warned, we cannot allow hereditary aristocrats in a democratic republic. When we do, in a few generations we end up with spoiled brats disconnected from the real world, yet with the financial and social power that ought rightfully to be earned through accomplishment.
It's wrong to take a fortune away from someone who has earned it, but if we just tax it away, it will at best be wasted; more likely, it will be used to grow government permanently, which is even worse than entitled overfunded spoiled brats.
If instead we encourage the successful to invest their riches in charities, a century of experience shows that not long after the original donor is dead, the charity will be taken over the by Left. Soon enough, all the money will be used to promote the exact opposite of what the earners would have wanted.
The only way around the problem is to use the power to tax to push successful people into spending their fortunes before they are dead, while they're still around to keep watch and make sure something useful is done with them. Sure, you'll still have the occasional George Soros - but you'll also have the Koch brothers, and Paul Allen and Elon Musk as well doing amazing and history-changing technological wizardry that's too far-out for the ordinary capitalist investment horizon.
Unlike normal taxes, the purpose of an estate tax as our Founders would view it, is not actually to collect revenue. It's to encourage the earners and owners of that wealth to instead dispose of it some other way, so it isn't still around to be taxed when they pass on.
By announcing a high estate tax up front, the intelligent and hard-working creators of the fortune would be incentivized to apply their intelligence and hard work to using that fortune for something else - something only an independently wealthy person can do. Their great wealth gives them the privilege to buy their way into history, to carve their niche on the edifice of time. Why not encourage this innate human desire, and harness it for the greater good with maximum freedom, imagination, and flexibility?
America has long been the world's leading hotbed of innovation, new technology, and new ideas. Let's add one more twist to the mix, encouraging the super-rich to take a flier on their choice of blue-sky project that might just change the world!