Rethinking Soaking the Rich 4
Useful things only the superrich can do.
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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!
The Bottom Line
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!
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What does Chinese history have to teach America that Joe Biden doesn't know?
What a bunch of bullshit. You're no different from the micro-managing liberal busybodies who think they know what's best for everyone, especially the most important segment of our society: the producers!
What the hell gives you or anyone the right to decide what a billionaire does with his fortune when he dies?
My God...there is truly no hope for mankind with thinking like this coming from a conservative think-tank.
The idea of a dynasty is rather doubtful, as inheritance and divorce always dilutes an estate, and the heirs seldom know how to maintain its value.
To discourage inheritance with tax, is still social engineering. It violates the wish and intent of the original owner. Is that worth the penalties?
You don't like our conclusion; fair enough.
But if you argue that vast fortunes should be allowed to be inherited indefinitely, you argue against the strongly-held views of our Founders. The political history of all sorts of other issues shows that we do that at our peril.
We've tried to rule out the most obvious of pitfalls, and examine all alternative possibilities, but perhaps we've missed one. Does anybody else have any alternative ideas, beyond simply disliking ours?
One thing this article series has regularly failed to address (though it has been repeatedly brought upin the comments) is that the upper class usually *don't* form permanent aristocracies. Just a cursory search on the subject of income mobility brought up this article -- https://www.businessinsider.com/inequality-and-mobility-in-the-united-states-2013-7 -- which admits that only about 25% of men born rich make as much as their fathers who earned that fortune. The author simply has not shown the "problem" of inheritance to be a problem; he merely asserts that the Founders thought it would be and proceeds under the assumption that it is. The Founders were great thinkers, but their greatness lay in understanding truths about human nature and revealing it through writing. They were not infallable authorities; they could be (and sometimes were) wrong. Too often in this series Petrarch has made simple appeals to authority without examining the Founders' claim on its merits, which in this case are few.
Thank you for this series.
"all is vanity and grasping for the wind."
"For in much wisdom is much grief,
and he who increases knowledge increases sorrow."
Here's some education on this.
Read the book, God Bless You Mr. Rosewater, and watch the video Born Rich https://www.youtube.com/watch?v=km_JmxnzTvc
Great wealth is usually lost by the third generation, statistically u less someone works very hard to maintain and add to their wealth it dissipates effectively on its own so no real fear of lazy undeserving yet powerful people preying upon the masses.
this has been a thought-provoking series, and i thank U for that. nevertheless, i am very uncomfortable with the idea of the government imposing a confiscatory inheritance tax; as U point out, however, almost every other approach to disbursing the wealth after one's death has its pitfalls. perhaps this would go down better if it were part of a complete overhaul of the theft of our income by the IRS gestapo, and its replacement by a consumption tax. all by itself, this would encourage rich people to invest more of their "excess" wealth in the economy of the nation. this is usually what their money is doing, anyway, since most rich people aren't like scrooge mcduck, jumping around in piles of cash; they keep their money in the form of investments in businesses, not in their mattresses, or buried in boxes in the back yard of the estate. and of course, leftists *never* see investment as a good thing, because they don't understand that invested money goes to pay for working people's efforts.
innumeracy: the best "skill" of the left.
This was a very thought provoking series and very well produced! Thank you so much for it!
It actually leads me to explore what I need to do about my own will and life insurance. We have a disabled adult child who can't inherit our $ or she will lose her benefits and placement....a disasterous situation!
I believe the real angle to this question is that our Founders were all devout Christians, had great ethics, were excellent stewards of their worths and would, undoubtedly do the right thing with their assets upon death.
Today, we don't have that ethos! And, thus, we have the Paris Hiltons of the world, etc.
Thank you again for a very interesting series!
Thought provoking. In the end, though, the solution proposed here boils down to: Government/taxes will fix it!
But, as I said in the comment I made on the first article, the primary issue here is a societal one, not financial.
Society as a whole, and family/parents in the micro, has taught or has allowed to be taught the idea that the wealthy and powerful can do anything and get away with anything with their money. That they should not be questioned, that they should be given adulation and attention, that their lives are worthy of emulation. (As seen in all the rich people reality TV and such with your various Paris Hiltons.) Lack of personal responsibility is also a huge factor.
If you roll this up part and parcel with the Left's general agenda to lower the educational and ethical standards of the people, it makes perfect sense: You end up with a population that is stupid with their own money (thus easier to put on the dole), that hates and envies the non-celebrity/non-Left wealthy (thus is easier to encourage to vote for higher taxes), that wants more of something for nothing like those rich folks (thus welcomes social programs and free lunches), and that paradoxically permits and encourages the existence of such celebrity wealth (thus enabling wealthy PC elites and politicians to acquire the respect and power they deserve).
I don't want anybody telling any citizen what they may or may not do with their money, barring the obviously illegal, before or after death. How much do these wealthy folks already pay in taxes, as a percentage of the government's income? (And before you ask: Yes, a convolution of tax laws that allow the connected rich and powerful to weasel out of it by knowing all the cheat codes and hiring armies of accountants needs to be changed, updated, and simplified so that there are no loopholes, no do-overs, just a simple number that no one can wiggle around.)
As I said in my first comment, I'm here to better the lives of my kids and to pass what I have earned on to them. So what if they have more advantages already? They can still fail, or succeed, on their own management of what I have given them, based on what I have taught them. (If they turn into glory-hounding wastrels, society should not celebrate them on streaming video but turn away from their behavior, vote with their wallets, and let them fail; unfortunately, Rich People Drama sells, and the loudest celebs often have cronies in politics with reciprocal "friendships.")
I think that anyone who wants to be such a pillar of finance (or society) should also be subject to the same level of scrutiny. If the wealthy do shady things with their money and break laws, by all means bring down the hammer and don't let them buy their way out with a slap on the wrist. Fine them to Timbuktu and back, give them actual jail time, let committing crimes with that much money (which magnifies the effects) actually make them hurt. No double standards.
Same as if the wealthy person uses their money to have some kind of monopoly, just like a business. Same rules apply. Hit 'em hard.
I don't think certain political interests would allow the tax code or legal code to change that way, however, because if THIS rich baron can't weasel out of it, then neither can THAT rich politician.
I should end before my cynicism takes over. Be harsh but equal: If you wouldn't take it from the little guy, don't take it from the big guy. If you would not tax the "estate" of a middle class family that has finished paying off the mortgage and wants to pass the house to the son, then you should not tax the wealthy family that passes their mansion on to the daughter.
Or, if you must have your estate taxes to prevent any and all dynasties, at least take the same percentage from ALL citizens' estates and assets after death. You'll still get a heckuva lot of money for Uncle Nanny Sam to reinvest from a wealthy estate.
"Fair" is subject to opinion; "equal" is cold hard math.