Those Dastardly Billionaires, or Something
If you asked who, you should not feel too bad. Staffers for freshmen members of congress are not usually known outside of the feeding frenzy of applicants every two years and the hardest of hardcore politicos. But when you land the gig of being the legislative director to Rep. Alexandria Ocasio-Cortez (D-NY-14) you get noticed. When you break with the tradition of staffers being seen and not heard, and are legislative director for AOC, then you really have a platform.
And he is not shy or subtle about it. His Twitter handle proclaims “Every Billionaire Is A Policy Failure,” and he is more than happy to expound on the idea.
“It needs to be pointed out how insanely greedy” it is to be a billionaire, Riffle said. “We have to comprehend the scale of $1 billion — just the amount of money we’re talking about. Five million dollars is a lifetime’s fortune; you can live off the interest of that and still be in the top 1 percent. Five million dollars, times 100, is still only halfway to $1 billion.
“It’s a systemic failure on society’s part. On one part of the city, we have people with helipads and yachts that they park inside of yachts, and on the other side we have thousands of people who are homeless and children without health care or food. Those things should not exist simultaneously in a society.”
Setting aside the argument that the one directly corrolates to the other for a moment, I would be curious as to how Mr. Riffle would have us “comprehend the scale” of $7.8 billion, not just $1 billion.
Because that is how much the top 50 philanthropic givers of 2018 donated.
America’s biggest donors gave a total of $7.8 billion to nonprofits in 2018. Foundations received 39.5 percent of the $7.8 billion, college and universities $1.7B, donor advised funds $638M, hospitals and medical centers $431B, tech research $175M, community foundations $140M, science $125M, museums $120M, religious groups $70M, homelessness $57M, international groups $50M, zoos $50M, schools $27M, libraries $10M, and the list goes on. This is just the top 50 according to The Chronicle of Philanthropy of reported and registered giving.
“But wait” some might correctly point out, “the top 50 giving was only half as much as in 2017. Those greedy….”
That might sound bleak, but it’s actually more of a recalibration. In 2017, the numbers were boosted by the fact that many tech titans invested heavily in themselves, giving huge lump sums to their own philanthropic efforts or enterprises. The top three givers were Bill and Melinda Gates, Mark Zuckerberg and Priscilla Chan, and Michael and Susan Dell, all of whom gave gifts in the billion-dollar-plus range to their own organizations.
This year, the Gateses, Zuckerberg/Chan, and the Dells dropped to 12th, 7th, and completely off the list, respectively. The overall level of generosity dipped accordingly, but still beat the 2016 total of $5.6 billion.
“That giving is just for tax purposes and to assuage their guilt over having so much money in the first place,” the more revolution-leaning among us might protest. “It’s $7B more in giving than we would have had given, whatever the reason,” retorts the defenders of unabashed capitalism. As much fun as it might be to have all that hashed out again for the billionth time, the fact remains that for the foreseeable future, as it as been in the past, railing against the richest among us will bring political and cultural debate. Good, old fashioned envy and strife make attacking the billionaires effective politics to some, but the truth is much more complicated. Billionaires, as it turns out, have the same spectrum of good folks to bad folks as the rest of us, just with a whole bunch more zeroes involved. Billionaires, like the population at large, are complicated. Because people are complicated, rich, poor, or in between. And more than a few of them didn’t start out rich. At all.
Jeff Bezos, current boogieman par excellence to many folks who feel wealth is inherently a sign of evil, didn’t start that way. The first Amazon boxes where delivered out of his garage shortly after he quit his lucrative investment job. He’s done ok for himself since. Howard Schultz, of late Starbucks fame and more recently deciding the middle path to electoral success means angering everyone on every side, grew up in the Bay View projects of the New York Housing Authority. A poor girl from Mississippi received a scholarship to Middle Tennessee State, became a TV correspondent at 19, then moved to Chicago in 1983 for a gig on AM radio that evolved into The Oprah Winfrey Show. Larry Ellison dropped out of college when his adoptive mother passed away, and knocked around listless doing odd jobs for the better part of a decade before founding a little company called Oracle. Shadid Khan spent time in college washing dishes for $1.20 an hour before turning a car bumper business into billions and now owns an NFL team, an EPL team, and one of the world’s finest mustaches. John Paul DeJoria spent time in foster homes, homeless, and in a gang before joining the military, but you’ve heard of John Paul Mitchell hair care products, which he at one point sold out of the car he was living in, and perhaps Patron Tequila. Clerking at Brooks Brothers, a young Ralph Lauren contemplated maybe there was room in the men’s fashion market for more variety. The list could go on and on.
There are also truly evil billionaires. Not just “those greedy SOB” Twitter-evil, but real life monsters. Jeffery Epstein managed to avoid serious prison time by cutting a deal that is now under review by the DOJ. The suspicion has long lingered that his network of trafficked and sexually used underage girls, if fully revealed, would be a bi-partisan headache to some of the most powerful people in the country. It is inarguable that Epstein used his power and great wealth to perpetrate his crimes and cover them up.
This is not even including the dictators, drug lords, crime syndicates, and various other sundry characters that officially and unofficially make it to the level of being a billionaire at the expense of their fellow man. It may very well be true the richest man in the world is not on any list, but might actually be Vladimir Putin. The former KGB man has risen to be the ruthless dictator of Russia, holding the title of President of a country while using the trappings of state and politics to enrich himself and his band of oligarch friends while functioning in practice like a criminal cartel. The just-concluded trial of drug lord Joaquín “El Chapo” Guzmán brought not only a conviction on 10 counts of drug trafficking, and a one way ticket to “Supermax” prison ADX Florence, but also detailed information on just how lucrative such a trade is. Estimates of his personal wealth vary between $1B and $14B.
Even the billionaires that are controversial public figures, come with questionable ties, or are outspoken about their political motivations have complicated stories. Very complicated.
George Soros, if you listen to enough right-wing talk radio, is everything from the financial backer of everything wrong in the world or the anti-Christ of politics. His Open Society Foundations is the second largest philanthropic institution in America and is explicitly progressive in it’s support of causes. He also is old enough to remember actual Nazis in his native Hungary, which can either be taken as “he should know better” when he uses that terminology on American politics, or he truly fears what he sees like he did as a boy when the Gestapo was a very real threat, depending on perspective.
Sheldon Adelson grew up the son of an immigrant cab driver, dropped out of college, lost almost all of his first fortune in a recession, then earned that and more back owning the largest casino corporation in the world. He is also one of, if not the, largest political donors in America, topping the list of all donors for the 2018 election cycle by giving $127M to various campaigns and PACs. Such giving came under even more scrutiny when President Trump award Miriam Adelson a Medal of Freedom, ostensibly for philanthropic endeavors, but certainly with many raised eyebrows.
Our current political discourse is awash in using terms that manage to be at the same time overly broad and penetratingly emotional. “The media” has become nomenclature for any outlet you may not like, not the multilayered, multiplatform reality of information gathering available to the general public now. Political terms like ‘liberals” and “conservatives” are used more as insulting connotations than descriptors, little knowing or caring of the vast shades and internal spectrums people with those beliefs might hold. “Evil rich” and it’s slightly more polite colloquial cousin “greedy rich” are very old – and occasionally true – stereotypes, and will never go away. But we should not accept them on face value, and we certainly should not be making wide-ranging and binding policy based off it.
Policy is a word originating from the Greek politeia, and was used for such words as “state, government, citizenship, administration,” all words used to broadly categorize, all words that put a façade on the fact they involve people. Real life people. Even obscenely rich ones. But it’s easier to deal with abstracts. Vilifying Jeff, George, Sheldon, David and a hundred others just doesn’t have the scope and verve of spitting out “billionaires” through righteously gritted teeth as you punch out a like-minded tweet on your smartphone. Never mind you wouldn’t have that smartphone as we know it, except for a billionaire, but that’s too much nuance for most folks.
There are real life people behind those billions, underneath the lists, and represented by all those zeros. Good people. And bad people. And a whole bunch of people somewhere in between those two. Then there are even more that make their own livings and fortunes because of those billionaires, or become recipients of their giving.
Non-billionaire people. “Normal” people, whatever that might mean these days.
People like us.
And the Gates Foundation does a whole lot of actual good around the world. It’s not like the place is merely a tax Haven for Bill & Melinda.Report
While Larry Ellison and Charles Wang bought themselves himself islands and the Islanders respectively. Gates is an outlier.Report
Eh. Paul Campos at LGM has done some work showing that Schultz could be exaggerating his own humble origins. Why go to Northern Michigan University and pay out of state tuition expenses? If he was truly from that poor a background, CUNY or SUNY would have been a much cheaper option especially when Schultz went to school.
Also lots of charity is bullshit and seemingly more of a tax dodge and ways to pay out high lucrative salaries to cronies. The Gates Foundation does good work. The Susan G. Kormen foundation seems like a massive fraud and right-wing affinity scam. They raise massive amounts of money but spend very little on actual research.
I think there is a lot of rebellion against what was called the Winner Take All economy this year. A lot of these billionaires are hated because they think their fortunes makes them capable of solving all the problems in the world. What they really dislike is anyone raising taxes on them. Dell basically said this at Davonte this year. The old elites including Bill Clinton are stuck being dismissive of the idea that public action can do everything. They want us to rely on billionaire charity to solve everything. People like AOC are saying no to this.
Howard Schultz is not socially liberal but fiscally conservative. He is more like socially indifferent. He is basically saying “Get gay married. Have an abortion. Lock up kids in cages. I don’t care. Just don’t raise my taxes.”
The NIH does a lot of great with advancing medical research. I don’t see why that should be starved and foundations fed just for the fee fees of billionaires and their knee-jerk contrarian lickspittle lackeys in the pundit class and online comment sections.Report
Who cares whether their story is “rags to riches” or “born to riches”? The problem isn’t how they got where they are, it’s that there exists a “where they are” at all. It’s that they’re dragons sitting on a horde of wealth that could be benefiting humanity but isn’t because there’s a dragon on top of it.
And who cares if they do some philanthropy? They’re still billionaires at the end of that philanthropy, so it wasn’t enough.
“But what about all the good Bill and Melinda Gates do?” someone says. But what about all the good that didn’t get done with their money while they amassed it?
In the best possible case, the billionaire is exceptionally benevolent like the Gateses, and spends all their money on good works by the time they die, leaving any offspring with a small fortune of just a million or two. Which is merely no worse than if they hadn’t become a billionaire at all. And that’s not the average case.Report
“It’s that they’re dragons sitting on a horde of wealth that could be benefiting humanity but isn’t because there’s a dragon on top of it.”
Where do you think the money is?
What do you think it is doing?Report
In terms of the actions of investment vehicles? It’s doing largely the same things it would be doing if it were distributed much more evenly across the world’s population. Probably if it were distributed more evenly, more of it would be invested in things like water treatment facilities and small-scale farm equipment. But largely the same things. So, merely not much worse than the alternative.
In terms of the actions of the money when withdrawn from investment vehicles? If it were distributed more evenly, it would buy a lot fewer Basquiats and Picassos for the second yacht and a lot more diarrhea medications for the second child – actual life saving measures.Report
How many people who think of themselves as social liberals or even libertarians are actually “socially indifferent” instead? I’d guess that most people who, say, don’t favor persecuting gays or [fill in the blank] are that way because they don’t think there is anything more morally problematic about homosexuality than there is about a taste for South Carolina BBQ sauce v. Alabama BBQ sauce. How many people are hands-off on principle about things they think seriously wrong?Report
Possibly a lot but I think the big thing about being socially liberal is that it requires more than mere tolerance. It requires supporting laws that help advance social liberal views and equality. The issue with people like Schultz is that they are basically saying that they don’t care what government does as long as taxes remain low so that gets quite evil. All the polling data shows that Schultz is wrong that America wants someone who is socially liberal but economically moderate/conservative. Schultz’s internal polling shows that it would help Trump win. At this point, Schultz is at least implicitly saying “I don’t care if you put kids in cages. Just don’t raise my taxes.”Report
The problem with billionaires is not that they’re a particularly evil group of people. The problem is that they are people like us, but by virtue of hard-to-comprehend amounts of wealth, they’re vastly more powerful.
When they do good things, like Gates [1], that’s awesome. It’s just that most people aren’t gonna do great things with huge amounts of power. To be fair, most people will just do kinda short-sighted selfish stuff with it, and at least the more self-made billionaires are probably going to be less short-sighted than average, but maybe not a lot less selfish. And the ones who are terrible people have a ton of power with which to do terrible things.
So much of our political discourse revolves around the problems of unchecked power when it comes to state actors, to the point that even socialists like Riffle focus on supposedly unusual character flaws of billionaires (like greed) rather than the fact that their perfectly ordinary human foibles tend to be hugely magnified by all those extra digits in their net worth.[2]
Most billionaires are just people. Since when do we trust people?
[1] Is the Gates Foundation perfect? Of course not. But it’s much more good then bad.
[2] To me this is sort of a “YOU HAD ONE JOB!” moment for socialists.Report
You get dudes like Elon Musk, who provide endless comedy relief, you know, through his unchecked narcissistic dipshittery.Report
And Elon Musk isn’t particularly pernicious as ultra-wealthy people go. At least he is spending is money on legitimately cool and potentially useful technology. There have been worse ways billionaires spent their money than private space exploration.Report
The power that billionaires have is peanuts compared to the power that politicians have. I mean, how many families could Bill Gates tear apart even if he really wanted to? I fear power in the hands of politicians way more than I do in the hands of Jeff Bezos.Report
Politicians, hell. A decidedly middle class DA has way more power to destroy people than Bill Gates does.Report
I dunno about this. I think more libertarian-leaning folks somewhat underestimate the power employers and vendors of certain critical services have over our day-to-day lives [1]. This is not really an inherently a bad thing; it’s probably a mostly-necessary corollary of having private enterprise be the primary provider of services in our economy, which is Good, Actually. But there are tens of thousands of people Gates could fuck over with particular ease, and he almost surely has more of that kind of power over more people than, say, his Congressman.
[1] And on the other hand local law enforcement officials are in some ways probably the champs of having a good “unrestrained power to dick over an individual they don’t like” : “having broad governmental authority” ratio.Report
Thing is, the chances that I will somehow be on the vengeful radar of a billionaire is pretty slim, and if I find myself the target of billionaire ire, I can make a phone call to a wide range of media outlets and they’ll just love to chase down that story and throw a big spotlight on the whole sordid affair.
In short, there are other powerful orgs that are eager to act as counters to the economic power of billionaires (Hollywood tropes notwithstanding).
The media has, of late, been a lot less willing to confront the organs of state power, particularly law enforcement, unless it’s a pretty clear case of abuse of authority. And even then, they are all sorts of deferential.
I’m all for finding a way to severe economic and political power, or at least severely limit the connection. But I still fear the local PD and DA way more than I fear the local billionaire.
Or perhaps we should look at it another way: The local billionaire is likely to do damage to some institution/organization/service I value, rather than to me personally. Local LE is way more likely to target me or mine, personally, and go after everything I have.Report
I mean you’re right about the media, but the media isn’t exactly independent of billionaires. Billionaires own lots of it.
Also, I don’t think I’m selling the potential malice of local LE short if I wonder if they haven’t done as much damage to people as the Sacklers.Report
One problem here is that “billionaires” are a bit of a shakey category given the essentially arbitrary cutoff at $1e9.Report
And yet, LE owns ~zero media, and gets glad handled at nearly every turn.
But your toss away reference to the Sacklers makes one of my points above. Sackler didn’t directly cause the OD death of any one person, as a targeted attack. He just (as Chip alludes to) used his economic power to alter the environment such that death abounded in the wake of profits.Report
An institutional critique of how bad things happen is academic *unless* the electorate is willing to leverage its power against bad actors at specific pressure points at the local level.* The more general the policy proposal, the more platitudinous the complaint, the less likely the effort will result in any real change.
* all politics is localReport
That said, I totally understand why reformists resort to national-level policy solutions (and shouting!) to fix local problems: local problems are real hard.Report
It’s not so much that local problems are hard as the fact that there are so damn many of them. Fixing a local problem in Chicago doesn’t fix the same problem in NYC or LA or Atlanta or Buttscratch, WY. At best a local solution somewhere can provide a template but that has to implemented over and over and over and over….Report
but that has to implemented over and over and over and over….
Exactly my point. Is there any other way?Report
Yes. For a lot of reasons. One of them being that they don’t cause much trouble for billionaires.
And I’m not sure I particularly see a strong reason to distinguish between misery caused as a side effect to making a profit vs a side effect of consolidating power or anything else. It’s not particularly worse, but nor is it particularly better.
Dead is dead.Report
As I suggest to Saul down thread, no one says we should necessarily distinguish the cause of misery as a moral question. But we do.
Let’s pose a hypothetical. Assume we didn’t have something like Narcan in every ambulance and squad car. If police roll up on a person suffering an overdose, they are powerless to help beyond trying to get them to an emergency room ASAP, and even then, the chances of survival are very slim (< 1%).
If the police just decided to shoot every such person found, rather than hopelessly trying to save them, do we distinguish the method of death?
Yes, we do. Even though the person is as good as dead, and the body just hasn't figured it out yet, we still concern ourselves with the manner of death.
So stepping away from the hypothetical, while Sackler has some liability towards the multitudes he's helped to kill, he isn't directly responsible, because at some point, we still hold that the person who OD'd had a choice to stop taking the narcotic, or to refuse to take it in the first place (I know it's not that black and white, but society still pretends that the grey between is very limited). Whereas the DA has to make the decision to go after a specific person, or an officer has to make the decision that their fear is more important than the life of the person at the other end of the gun barrel.
So it actually does matter. Tragedies and statistics.
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Dead is Dead. Parts is parts. Dead guys is parts.
-Quote from Cyperpunk 2077, the old tabletop RPG from Steve Jackson Games, your last line made me think of it.Report
OK, first and most important thing first: CyberPunk 2020 was from R. Talisorian, and 2077 is the forthcoming and extremely tantalizing video game spin-off. 😀
SJG had a different game that was also called Cyberpunk because of course they did.
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As for the stuff we were actually talking about, like I said it’s a matter of resiliency. Yes, a lot of the harm is done by influencing state actors (politicians, regulators, LE), but placing the entirety of one’s focus on those state actors is probably a mistake. Especially because I think there are some real upper bounds on how much they can actually be limited.
A state that’s doing just the minimum kind of “night watchman” stuff has more than enough power to really screw up your day, and kind of has to in order to protect your person and property. And it’s not hard to find huge atrocities that were perpetrated by states that barely merited the name in terms of wealth or sophistication.
We should do what we could to protect ourselves more directly through strong norms around the rule of law and due process, and we, uh, well, we try. Sometimes.
But there are a lot of reasons why that breaks down and, “Because some guy with a boatload of cash wanted it to,” is an extremely common one.Report
Personally, I am not a fan of Night Watchman. Like a lot of libertarian ideas, it appeals a lot more than it actually works. This is why I try to think of libertarian as more of a philosophy of caution with regard to power, than as a political party with concrete policy ideas.
When it comes to discussions like this, where there is an element of ‘something must be done’, it irks me, because we have a long and sordid history of granting government power to go after those with economic power, and the government then turns around and uses that power to go after everyone but.
So do the economic elite hold too much power and use it in damaging ways? Yes, certainly they do.
Should we give government the power to do something about it (that they can’t already do, but choose not to)? Yeah, I’m pretty sure that is not going to work out the way one hopes it will.
ETA: You are totally right about the games. Too many running around, got them all mixed up in my head. But I had a lot of fun playing CP2020, back in my misbegotten youth, and boy howdy if there was ever a cautionary tale about letting private power grow unchecked…Report
Well if you’re asking me how we should go about this, I suggest we just use the powers that the government will inevitably have, specifically levying taxes and spending money.
As for the Night Watchman state sure. It’s just something I know is going to be familiar and is sort of the minimum fit-for-purpose state, and already (because it can enforce the law and perform national defense) is plenty dangerous enough that you have the problem of deciding who is going to, uh, watch the Night Watchman.Report
The problem of libertarianism is that it assumes that the culture in question is one steeped in Western Civ/Enlightenment Culture and is dealing with people who are somewhere between 1 and 3 standard deviations to the right when it comes to stuff like intelligence.
It’s pessimistic utopianism.
It’s the pessimism that lets you know that it’s kinda realistic.
It’s the utopianism that lets you know that, really, it’s not.Report
Not you personally but I suspect that a lot of Trump’s frustrations at being President are because he doesn’t have quite the unlimited power to hire, fire, budget, and command that a CEO does.
I just don’t get the libertarian tendency to constantly downplay private power and money power.
Corporations do all sorts of things that make life difficult for individuals and small businesses especially in contracts of adhesion with binding arbitration and class action waivers.Report
It’s not a downplay of private power. Libertarians concern themselves with private power just as much as they do political/state power.
Think of it like this: It’s winter, and you can catch pneumonia or the flu. Both of them suck, and both are survivable, but one of them is much more concerning of an illness than the other. So much so that if I was given a choice between an inoculation for one or the other, I’m going to get the shot for pneumonia over the flu.
So libertarians worry about ALL forms of power, we just worry about state power a bit more than private power, because the state can kill a citizen and basically shrug it off, whereas private power has to be much more careful and circumspect about such things.Report
Speaking of libertarians, the IJ just won a victory at SCOTUS.Report
Libertarians say the worry about private power but I really tend to overlook a lot of shady stuff that corporations or business people have done in the search of profit. Many argue that corporations and business people needed to rely on government to do these shady things and in a true Night Watch men state these would be impossible to pull off. Yet the night watch men states of the 19th century really had no problems using general law enforcement to crack down on organized labor. General law enforcement is seen as a proper role of government in the night watch men state.Report
Private actors are going to try and get away with whatever they think they can get away that doesn’t shock their own conscious. Unfortunately, what shocks is a wide and varied thing. This is why we have laws in the first place, right? So private actors with a faulty moral compass, or one that tends to be overpowered by financial concerns, are still required to stick to the rules, even when they’d rather not.
The problem is not the human nature of private actors, the problem is the human nature of politicians who willing tie the hands of their own agents in order to gain favor with wealthy private actors. But even that is a minefield of an issue, because not every act of economic power influencing political power is a bad thing. A wealthy or famous person using their wealth to bend the ear of politicians in order to lessen the disparate impacts of the Drug War is a good thing, right?
How do we make sure that only just causes pass from those with economic power to those with political power? If we utterly sever the link, do we further insulate the political class from the public?Report
There’s this whole left-wing mythology built around violent suppression of innocent union workers, but it falls apart upon closer inspection.
As a rule, employers don’t really need to use violence against unions, because they have the collective action problem on their side. It’s hard to hold a truly voluntary cartel together, so unless the workers have highly specialized skills (and workers who do generally don’t unionize), employers can just tell the union to go fish themselves, fire the organizers, hire some replacement workers, and tell the striking workers that the first N workers to come back can keep their jobs.
This is where the real incentive for violence is: Unions need to stop the replacement workers (generally referred to by the dehumanizing slur “scab”) in order to maintain their cartel, and frequently employed violence and intimidation to do so.
When you look into specific incidents of alleged anti-union violence, you’ll typically find that this is how it started. For example, in the Homestead Strike, the Pinkertons were called in to protect replacement workers from union violence, not to intimidate the striking workers into going back to work. Why the Pinkertons? Because when the local law enforcement officers had tried to keep the peace, the union thugs had forced them into a boat and sent them down the river.Report
I’ve tried for a long time to come to grips with the type of facts (as far as I know, all or mostly true) you relate in the last paragraph. I come to the conclusion that we really need to distinguish between protecting strikebreakers and the extra-legal vigilantism we saw, for example, in the Colorado “Labor Wars” in 1903-1904 and again at Ludlow and actions to protect replacement workers.
I also think that labor historians have not really come to grips with that distinction, and that fact (assuming I’m right) distresses me. Many of them are people I know personally and until they come to grips with that distinction, they come off as sounding like apologists for violence. [ETA: I mean violence against replacement workers.]Report
Doesn’t this then, demonstrate the fundamental absurdity of viewing labor as a market?
Is there any conceivable scenario in which the purchasers of labor fight amongst themselves for the scarce commodity called labor?
Why is that?Report
Is there any conceivable scenario in which the purchasers of labor fight amongst themselves for the scarce commodity called labor?
Yeah, but immigration acts as a release valve.Report
To get back to the union analogy, immigrants are, effectively “scabs” who are merely doing the work that striking workers “just won’t do”.Report
If immigration were to cease absolutely, would companies start fighting each other over the precious laborers?
Or would they increase automation and outsourcing?
Again, can anyone construct a scenario in which an Amazon fulfillment center manager begs his employee not to quit, and promises to behave better?Report
I was around in the 90’s during the tech boom.
You know what companies did when they needed people, like, TONS of people, overnight?
They competed on wages and benefits.
Now, true, this *DID* lead to the outsourcing megatrend, and I’ve told stories before about how outsourcing was one of those things that worked really well at first but then stopped working well when all of the really good overseas pre-trained people were hoovered up and they started demanding more money (it was funny to watch our outsourcing companies jump from Singapore to bussing in Malays to moving to India).
But I have seen corporations fight with each other for talent.
It’s just that, when they can game the system, they will.
And they’ll probably game it in such a way that they look “woke” doing it to get social cover for hiring scabs.Report
Were there any cases in the tech sector in the last few years of companies colluding behind the scenes to suppress wages and lessen the power of workers?Report
Do you mean stuff like this?Report
Yeah that seems like a thing that fits somewhere in here.Report
That doesn’t address the question, but just emphasizes the point.
Labor shortages are a freakish phenomenon compared to labor surpluses. The Lebron Jameses or odd tech worker with a specialty skill are the exceptions that prove the point.
Immigration is a red herring.
If a company can’t import Mexican workers, it will outsource to Mexican workers. If it can’t outsource, it will import Mexican robot workers.
No matter what though, labor will never be an equal negotiating partner with capital. So why pretend otherwise?Report
Chip, I am saying that I was *THERE* during a period where companies were fighting with each other for talent.
Like, I was a recent graduate with a degree in Philosophy from a *COMMUTER* college and I was making good money because corporations needed people with a lot of skills and if they couldn’t get those they needed people with middling levels of skills and if they couldn’t get those they were willing to hire humanities graduates and do On The Job Training because that’s how badly they needed workers.
You can say that this is rare and, sure, maybe it is… but saying it at the same time as demanding more competition for workers is misunderstanding the dynamics.Report
I don’t really understand what point you are even proposing here.Report
Do you remember asking this question?
Report
And we agreed that this happens only very rarely, and even then, only to a tiny fraction of the laboring population.
So why do our laws and regulations assume this is the typical scenario?Report
Well, when you’ve got corporations colluding with the government to bring in more and more and more workers, I don’t know why you’re surprised that the supply/demand relationship is acting like there’s more supply than demand.Report
It will not be an equal negotiating partner under socialism either. When the power of the state is added to the power of the firm, the worker has even less power than when it is just the power of the firm. But at least under capitalism, especially when unemployment is low and there is a reasonable safety net, the difference in power between labour and capital is not so severe as to be worrisome.Report
If only there were some alternatives to those two choices!Report
Chip, i challenge you to find a more equal negotiating model than the owner-operator model.
(I think this solves the cucumber-grape dilemma also)Report
Joe Business (either specifically or in general) starts to hire those workers for more. Amazon responds by raising their pay. Which happened last year.
One assumes Amazon is still as heartless as ever, they just couldn’t hire people for what they wanted to pay.
Does that fit your victory conditions or no?Report
Yes, when there is no minimum wage, the ease of doing business is high etc. Then the demand for labour increases. Certainly, businesses will not be falling over themselves trying to hire the scarce commodity called labour. I suspect that about 2% of the adult population is not employable under almost any circumstances*. So, if you can get your unemployment rate down to about 2%, you’re effectively at full employment. IIRC, this used to be a socialist goal.
*About 2% of the adult population have an IQ below 70. Employers are unlikely to hire these people unless they are desperate. They often will be the first to be let go as well. Obviously a welfare safety net is needed for the intellectually disabled.Report
Has this ever happened, in history?
Is there any plausible theory as to how it could happen in the future?
If not, why do we continue to frame policy around something that is fundamentally absurd?Report
2% is way too low.
My lifetime unemployment is something like 4%. It takes something like 10 weeks to find a job and jump through the hoops to actually start getting paid. Only once have I walked out the door on Friday at one company and started Monday morning at the next.Report
Its 2% in Singapore. There’s no minimum wage in Singapore. There’s also no capital gains tax in Singapore.Report
It’s called “bidding wars” when companies do it. It’s so common that I’ve done it myself (for myself) and it only makes the news when actors or baseball players do it. It can happen both for individuals and for labor in general.Report
I agree with what Lee said below. I don’t dispute that government entities can overreach and abuse their power but I am a firm believer that anything created by humans is not perfect and needs counter-balance.
My view on the Nightwatchman state is that you would still have contracts of adhesion with even worse binding arbitration clauses. You need government to counterbalance the worst acts of corporate greed.Report
The power that billionaires have is peanuts compared to the power that politicians have.
Sure would be great if there were a clean separation between political and economic power.Report
Right. People with tons of money are often pretty good at hiring other people to do jobs they aren’t very well qualified for, and that certainly includes outsourcing violence and human rights abuses to state actors.Report
Classic example: United FruitReport
This is true, but that just makes the focus on billionaires more bizarre.
If there is any group that manages to bend the policy arc to their benefit and others’ detriment, it’s the upper middle class. The reason that there’s a wrong side of the tracks, is to keep things nice for those on the right side.
The ultra wealthy don’t really have to care about this scrum for good public services, because they can buy everything they need. Even in the most malign view, the ultra wealthy are busy finding ways to squeeze a few extra percentage points of profit margin by lobbying for small tweaks to laws and regulations. That’s bad, but that’s not the reason that we have housing shortages and bad schools and over-incarceration and on and on.Report
That is not really true..but as Chris said, sometimes it feels like we live in different worlds.
Politicians are the cheapest ROI billionaires have. For a state legislator, it can be spending pennies and getting concessions worth millions or tens of millions of dollars. Sometimes much more.Report
The power that billionaires have is peanuts compared to the power that politicians have. I mean, how many families could Bill Gates tear apart even if he really wanted to? I fear power in the hands of politicians way more than I do in the hands of Jeff Bezos.
We need better politicians, not better billionaires.Report
There’s something to this, but we also:
1. spend way more time worrying about the power of politicians than billionaires, rightly or wrongly;
2. attribute a lot of the abuses of billionaires to the state actors that do their dirty work, again rightly or wrongly.
Simply relying on politicians to be better may not be adequate. Systems should be resilient, which generally requires redundancy and overlapping safeguards.Report
Of course, we don’t want redundancy, because that costs money, and overlapping safeguards just slows things down, and we need to make X happen right the hell now!Report
We have the best that money can buy.Report
Not really. If you paid your politicians as much or more than you pay your CEOs, you would see a very different dynamic.Report
Two candidates vying for a $30 million/yr salary would certainly make general elections more exciting, and even more corrupt.Report
If your congressman earns $30 000 000/year he’s going to be very difficult to bribe. Its especially going to stop the revolving door where politicians do stuff for wall-street so that they can get a lucrative job after they retire from congress. They are probably going to never want to retire from congress.Report
If your congressman earns $30 000/year he’s going to be very difficult to bribe.
*After* he’s elected.Report
I suppose that’s the rub. But it seems to work out in Singapore.Report
Maybe Singaporans are less avaricious and corrupt than Americans. 🙂Report
This is our national trait
https://en.wikipedia.org/wiki/KiasuReport
You need to pair high salaries with strong accountability. If the job pays a lot, and you will be punished swiftly and harshly for corruption, then you have a strong incentive to keep your nose clean.Report
This was the argument for Trump, right? I remember the relatives of mine who voted for him saying he was so rich that he couldn’t be bought off, so they knew he wouldn’t be corrupt like Hillary.Report
HehReport
Well, Trump is different right? For one, he is not as rich as he claimed. Secondly, all his money is tied into his businesses so he leverages political power to boost his businesses by taking corrupt deals. He has not divested himself from his businesses. Someone who draws their salary from the government and someone whose income comes from their private holdings have very different incentives.Report
Trump is also a huge bright orange tally mark in the “billionaires actually are that bad” column.
Unless he isn’t a billionaire.
Which he might not be.Report
#notallbillionairesReport
This highlights the problem with speaking of the U.S. system as corrupt in the traditional sense.
The U.S. has lots of competent, incorruptible technocrats. But we also have a fractious political layer sitting on top, which is meant to represent 330 million people who happen to be split along a whole bunch of ideological and demographic lines. Paying politicians and technocrats more money doesn’t really solve that problem.
Singapore largely avoids these problems by virtue of being a small, wealthy, one part state. And Singapore is diverse, but there are an evolved set of norms as to how things get split between ethnic groups.Report
This makes me think of the definition of politics: poly, meaning many + tics, meaning blood sucking parasitic insectsReport
Or we could go with the other definition of “tic”: An unthinking, habitual twitch or utterance, the latter of which forms the bulk of political discourse. Just as accurate, with no need to fudge the spelling.Report
Or we could say that the opposite of progress is congress and the opposite of constitution is well…
#politicaldadjokesReport
We have the best that money can buy.
Garbage in, garbage out.Report
The average person does not generally have to worry about a billionaire taking a malicious eye towards them but as Peter Thiel’s war against Gawker established, good luck when they do. Politicians, law enforcement, and civil servants are more capable of making life miserable for most people. However, while billionaires might not have that much power over individuals in their private capacity, they do have a lot of power to cause abuse in their corporate capacity.Report
Gawker pretty much deserved everything that happened to it. It is really hard to get people to worry about the power of rich people when their victims are so completely unsympathetic.Report
To quote @jaybird quoting Outkast, don’t pull that thang out unless you plan to bang.Report
Don’t even bang unless you plan to hit something.Report
Theil has his privacy violated for no better reason than a gossip column, and the way he decided to get his revenge was by looking for other people who had legitimate cases against Gawker but who couldn’t afford to fight them in court, and then helped them get justice.
Oh yeah, Thiel’s a monster.Report
The same thing appears to be about to happen to the National Enquirer. I can’t say that I am deeply saddened.Report
I still don’t understand what happened there. If Hogan wins but gets a normal-sized award, Gawker is at most chastened, and probably not even that. How in the world did he get > $100 million?Report
punitive damages? Its like a John Grisham novelReport
Juries.
The thing the Warshington Post needs to avoid *AT ALL FREAKING COSTS* is a jury trial. Sandmann is likely to take them to the cleaners.
Not necessarily because of “the law” (whatever in the hell *THAT* is) but because it’s close enough to libel to be worth betting on being able to get over the 50 yard line and because people not smart enough to get themselves thrown off of a jury have a different attitude towards the Brave Journalists Who Make Honest Mistakes than people who don’t understand why a jury might give Hogan that much money.Report
Its more than juries. If Hogan was paying his lawyers via contingency fee or an hourly fee out of his own pocket, his lawyers would have acted rationally and settled the case. Since Thiel was paying Hogan’s lawyers, they could pursue what seemed liked an irrational strategy of going for jury judgment rather than settling the case.Report
Well, let’s hope that everybody involved in this one is rational.
In the pre-Gawker Lawsuit sense of the word, I mean.
Post? “Rational” seems to have additional interesting information that might change the calculus.Report
Besides what Lee said, there was forum shopping (suing in a rural county state court where Gawker gets played as out of touch and “not real” city kids compared to a “real American” like Hogan), plus they did say some really unfortunate things in their depos because they did not take it seriously enough.
Plus the Hogan suit was about Invasion of Privacy and not libel/defamation so constitutional protections from Sullivan were not applicable.Report
I’m using Thiel as an example of the power a billionaire has against other people that most of us lack. Who is right and who is wrong is irrelevant to whether power or not exists.Report
A more direct example might be that each and every one of us is going to pay higher taxes, this year and for decades to come, because last year a handful of billionaires picked up their phones and ordered their Senators to cut their taxes.Report
That’s not even close to how tax policy or the US budget works.Report
Thiel is a monster, but that’s not why.Report
And of course it’s pretty easy to find similar abuses perpetrated by billionaires who didn’t have a grudge rooted in being genuinely wronged, and were still very costly for their targets despite ultimately losing.Report
The problem with billionaires is not that they’re a particularly evil group of people. The problem is that they are people like us, but by virtue of hard-to-comprehend amounts of wealth, they’re vastly more powerful.
I’ve made that the point before, and a lot of people seem to sorta ignore it: A lot of the problems with wealth inequality are not, in any manner, malicious. They’re just normal human behavior magnified upward.
A good deal of it is the wealthy being, well, just wasteful.
I’m wasteful in a lot of ways, but I don’t have the economic power to, for example, purchase extremely expensive ‘vacation houses’, driving up prices somewhere, for a house that sits empty most of the year. Nor can I own half a dozen houses as ‘investments’ that I don’t even bother to try to rent out, because…well, they’ll eventually go up in value even if I don’t do anything, right?
And I can run the fountains at my house during a drought, right? I mean, I can afford to pay for it.
And that’s just the obviously wasteful stuff. Just the basic rules of supply and demand mean that prices go up when there is higher demand, and no, the market can’t _always_ correct for that (See my housing example), or at least not at any reasonable speed.
In fact, the market really won’t correct if there are rich people randomly spending money on dumb things. It will always chase wealthy people instead of actually meeting the needs of poor people.
A lot of extremely risky economic behavior is caused by this, also. It’s only when there are trillions of dollars sloshing around in extra money that people run around inventing nonsense investment schemes. Because wealthy people are willing to risk hundreds of millions of dollars…and _somehow_ their investment is happening in the same place that the elderly guy whose saved $400,000 for his retirement is.
This is because, and let’s be clear here: It is literally impossible to want something in your personal life that having a billion dollars in assests can’t get you. There is no object or experience that is for sale that cannot be bought with the interest from that. (You can, of course, spend all that money on absurd crap or very bad attempts to make more money. *cough*Trump*cough*)
And thus there is no reason not to be wasteful, there is no reason _not_ to build dumbass investment vehicles, there is no reason to care at all. There is literally no possibility that you will ever, under any circumstances, run out of money, assuming you’re not an idiot. You’ve basically playing the game on the Infinite Money cheat at that point, and you can do anything you want.
And often, in this world, we price things with…money. (That sounds weird now that I’ve said it.) And thus, people running around with Money That Cannot Run Out cause…problems. Even if they aren’t malicious in any manner.
The wealthy people are giants, stomping around with their giant wealth, playing on a scale that is somewhere around 10,000 times our size. It is not actually possible to create a system where we do not get stepped on. Yes, there are fences, and reinforced tunnels, and all sorts of stuff, but most of that was designed when they were just 100 times bigger. 100 times, and progressives placing rules, that was doable. Stopping them from crushing people at their current size…simply is not.Report
I love this comment!
A malign ignorance, if you will.
People like Warren Buffet, on the other hand. Someone who seems keenly aware of his wealth and it’s impacts…Report
We’re just lucky we’ve segregated the rich in a lot of ways, by creating products just for them. For example, they don’t really drive up food prices, or at least not as much as they could, because we invented _really expensive_ food to sell them, that gets sold to them in different places and in different ways.
I mean, everything I said is a pretty basic truth, and somewhat obvious if you just work through it.
1) Under capitalism, value is basically the same as market price. Sometimes this is only important within capitalism, but it is _also_ how we ration goods, and how we tax social ills, or try to make sure that everyone can get access to something they need.
2) As money has no inherent value, people care about money they spend only to the extent their money will run out.
3) A billionaire, which for 99% of their behavior cannot run out of money, will not care about spending that money.
4) Thus they are completely immune to any societally-assigned value.
By ‘immune’, I don’t mean they are ‘willing to ignore it’. Plenty of people ‘ignore’ pricing. There was a story about a used care salemans here a while back, and someone had a store of some elderly couple that kept buying a new model van every year, until they were so far in debt they couldn’t afford it. They ignored the cost society imposed for a new van…but obviously that is only workable for so long.
I mean that billionaires are literally immune to it. They might know, intellectually, how much things cost, but at a certain point it has entered their brain that ‘there is no point in not spending money, because I cannot run out’. All possible spending is…under their mental threshold into the area they see as ‘free’.
And while I suspect that some very poor people have a very low threshold, most people have a…reasonable threshold of below which they ignore costs. Most people don’t care about a $1.50 toll, actually stopping to pay it is more annoying than the cost. Or a $1.25 cup of coffee. Or $10 dollars at McDonald’s. But there’s a place where spending money requires some actual thought. Some people it’s $5, some people it’s $50.
Even a single or double-digit millionaire has some point where spending becomes painful. Triple-digit millionaires rarely, but they might hesitate at…super-expensive houses or something.
Billionaires don’t have that point, functionally speaking. Not in the personal realm.
And once things get into the ‘mentally free’ classification in your head, you start treating them differently. Your use of ‘free things’ is basically only subject to other societal pressures. Like if someone made everyone some free coffee, you wouldn’t take the coffee pot and pour it down the sink. Yes, it’s ‘free’, so you could, in theory, claim it all was yours, and then throw it away, but who the hell would do that?
But, fun fact about billionaires….they do not actually operate in ‘society’. They operate in a constructed universe where they are surrounded by people who want to collect some of the money they are shedding. And outside of that, all their interaction is with other extremely wealthy people.Report
I second what Pillsy says here. From a policy standpoint, the problem with billionaires is the exceptional freedom they have and power they wield, both within their individual worlds and over our shared social institutions. Equality before the law is a nice story we tell ourselves, but it’s not true.
There’s also an old moral and religious argument against possessing great wealth that interests me. Basically the idea is that the earth exists for the use of all, and to take (or hold on to) more than what one can use is to steal from everyone else. A number of early Christian theologians, for example, argued that the unused coat in your closet belongs to the poor, and that your unused coat belongs to them as a matter of justice, not charity. Failure to give your unused things isn’t just a lack of generosity, but an occasion of theft.Report
The problem is those ideas from the early Christian theologians did not last very long and it sounds like Seeger utilitarianism.
I think the libertarians I’ve met here are generally sincere in their beliefs. I don’t think this of most libertarians but what the sincere ones seem to believe is that wealth and markets are the only things that decrease want/need and increase happiness. To a certain extent, I think they are right. But we need counterbalances to combat and constrain the worst of greed and poor decision making in the name of profit.
Plus I’m not a Christian and can’t get on with any set that believes in end times.Report
A number of early Christian theologians, for example, argued that the unused coat in your closet belongs to the poor, and that your unused coat belongs to them as a matter of justice, not charity.
That’s unsurprising, because early Christian theologians were Jewish.
In Judaism, tzedakah refers to the religious obligation to do what is right and just, which Judaism emphasizes is an important part of living a spiritual life. Thus, unlike voluntary philanthropy, tzedakah is seen as a religious obligation that must be performed regardless of one’s financial standing, and is considered mandatory even for those of limited financial meansReport
Sometimes I realize that some of us live in very different worlds.Report
And then some.Report
“It’s a systemic failure on society’s part. On one part of the city, we have people with helipads and yachts that they park inside of yachts, and on the other side we have thousands of people who are homeless and children without health care or food. Those things should not exist simultaneously in a society.”
This was the central thesis of Henry George in Progress and Poverty. This was in the 1890’s and vast fortunes were being made in land speculation. Then, as now, the real issue wasn’t so much that the uber-wealthy existed so much as how their fortunes were made. At the time he focused on ground rents, that the owners of land enjoyed an unearned privilege that simultaneously enriched those owners while locking others in poverty and was economically inefficient to boot. At roughly the same time you had Marxists focusing on the relationship between Capital and Labor, Distributism from the Catholic social theorists complaining of the concentration of Capital in large concerns, and the Social Credit crowd examining the role of money (current incarnation MMT).
They all had useful things to say and are largely compatible if you squint the right way. But they all suffered from the One Weird Trick Syndrome: just fix this one thing and all will be wonderful. In any case the notion that binds these together is that the real problem isn’t wealthy folks per se so much as the social/economic structures that allow such wealth to accrue to individuals in the first place.
It’s great that folks like Gates throw billions at philanthropy, perhaps realizing late in life that, unlike the dude with the Bitcoin passwords on the encrypted laptop, they actually can’t take it with them. But one of the popes said it best, that Charity is no substitute for Justice.Report
-“They all had useful things to say and are largely compatible if you squint the right way. But they all suffered from the One Weird Trick Syndrome: just fix this one thing and all will be wonderful. In any case the notion that binds these together is that the real problem isn’t wealthy folks per se so much as the social/economic structures that allow such wealth to accrue to individuals in the first place.”
This is a awesome paragraph.Report
Nice comment. You know where I stand… 🙂
My quibble might be that it isn’t that Distributism thinks there’s one thing, its that its a Social notion that is many things… too many things. If only we had just the one thing to flog, then people might be aware of what we were flogging.Report
I am dispositionally inclined to Distributism, but have a hard time grasping how we would get from here to there, especially in a secular society with so many fragmented household groupings.Report
Well, if I knew how to do that…
I suppose if I had to distill it down to “the one thing” it would be to argue that broad distribution of wealth/ownership at the point of creation is better than confiscatory taxation and redistributed income.
I personally think that this means revisiting corporate charters and recognizing that Labor is unjustly excluded from the wealth that is created… and there are a myriad of ways to remedy this from simple profit sharing to worker owned businesses to (my personal favorite) fractal earned ownership, and other ideas.
Could we spontaneously change some business practices to accomplish this without politics and laws? Sure. But we haven’t, so I expect we’ll have to build a solidarity movement that’s broadly based around Labor (including lower- middle- and upper-middle class) capturing a portion (not all) of the wealth (not wages) created through the collective efforts of the enterprise. And with that ownership comes seats on the boards… which would also alter the trajectory of various business decisions.
I think the appeal is (potentially) broad and incremental… it is better to broaden capitalism than to try to kill it.Report
Eventually we will have a king who is not wise enough to say “wait, that’s the real mother”.Report
Or cooks that prefer goose to eggs.Report
Per some of the conversations we’ve all had here, its probably easier to just ditch the term “capitalism” itself, since there isn’t any “un-capitalism” by which to define it.
The idea of solidarity itself I think provides a powerful tool for social organization, beyond even economics, so I find that really appealing.
Then again, I’m the guy who dreams of a William Morris craft shop in the Shire, so consider the source. 😉
What I think most political theorists haven’t discussed much, is the changing shape of households. When the current Capitalism/ Socialism divide was formed in the 19th century, the formation of households and social structure was very different. Solidarity I think had a different ring to it when households were larger, containing extended clans and the individual had a pre-existing grasp of themselves as part of something larger.
Today we have small splintered fragmented households, where people are much more likely to find themselves alone either by choice or chance.
I really don’t know how to create a group solidarity out of this.Report
I disagree. I think there are plenty of things that are “un-capitalism” to compare capitalism to, just not nearly as many things as people who advocate for and against capitalism think there are.Report
Robust welfare states funded by progressive taxation? Not un-capitalist.
Wise regulations that advance a clear public good? Not un-capitalist.
Dump regulations that should absolutely be scrapped? Also not un-capitalist.
And so on.Report
I like the sentiment, the lift is changing the laws regarding how we structure corporate charters (theoretically, it’s of course possible; politically…).
I’d much rather distribute the wealth at that point, than confiscate it through taxes and grant that power to government. God forbid we give them enough money to make the F-35 look affordable.Report
For charity skeptics, it doesn’t matter that billionaires give a lot to charitable foundations. During the First Gilded Age, billionaires like Rockefeller and Carnegie gave a lot to charity. That great American anarchist Theodore Roosevelt thought that they were just trying to look good for the public. So did many Americans.
Charity skeptics believe that government agencies would be more effective at providing relief and solving problems than charities because they can get more money via taxes, can be held accountable, and reach more people. Like Saul noted, many charities end up spending a lot more on salaries and administrative costs than their mission. They have been abused by grifters. There is a convincing argument that government can do charity and research better than many private foundations.Report
Some charity enthusiasts (generally libertarians) like to point to the Catholic Church back in the day as the dispenser and organizer of charity. What they neglect to mention is that when that was true the Church effectively had taxing authority with enforceable tithing, as well as the fact that they owned about 1/3 of the land. For all intents and purposes the Church was as much “the government” as the Crown. Really just a separate branch.Report
Before the Protestant Reformation, the Church was a kind of E.U. of its day and in the case of the Papal States, was the government totally. They also played a large part in the government and nobility of many countries.Report
Exactly. The English government found itself forced into the charity business after the break of Rome and the Dissolution of the Monasteries because for all their faults, it was the Catholic Church that took care of the more vulnerable members of the national community.Report
The accumulation of a billion dollars in wealth is in fact, evidence of a policy failure.
We have this moral intuition that wealth should rightly flow from labor, but it isn’t possible to accumulate a billion dollars through any amount of labor.
That amount of wealth can only be concentrated in a single entity by a complex network of rents and political favoritism.
I question whether there is any moral theory that justifies the claim over that much wealth.Report
Why do you think there has to be complex network of rents and political favoritism?
From what I have seen in looking at social constructs, these don’t have to be highly networked or complex. There may be some complexity in keeping the connections hidden, but even these have few degrees of separation.Report
Morality is nice and all but people have different notions of what’s moral and what isn’t.
Perhaps a more fruitful avenue of thought is system dynamics. A stable dynamic system incorporates negative feedback loops, systems that apply the brakes when the machine is running too fast or hot or whatever. Applied to economics such a negative loop would make it increasingly more difficult to acquire wealth as an individual’s wealth increases. So it’s difficult to accumulate a million $ but even more difficult to accrue the second million, much less a billion. That’s really the opposite of what we have now.Report
If everyone was blind to each others wealth, (and no one could game a social construct for ‘power’) what do you think the upper threshold of wealth accumulation would be?Report
Very low, because it seems like it would be extremely difficult to have an effective market without information about other people’s wealth. How can I set prices for my goods if I don’t know how much money anyone has?Report
I would put a price on it based on my subjective value of what I put into it (product/service). If it sells it tells me one thing, if it doesn’t, it tells me something else.Report
Yeah but modern vendors (especially the big ones that get those lovely economies of scale) don’t just do that. They do a ton of market research, and it seems to be helpful for the whole “creating wealth and improving efficiency” part of capitalism.
Which is kind of what you’d expect.Report
So in the market research, are they looking at peoples wealth, or what they are willing to pay for similar product/service?Report
Both! The two are hard to separate.
I mean your willingness to pay a given price for a good is strongly dependent on you having at least that much money.
And yeah, some goods you will go into debt to buy, but the amount you can borrow is tied to what you have pretty closely.Report
I think we may be talking past each other a little bit on what we are assuming wealth is and what it does.
If a person sets up a ice cream stand on billionaires row, and another sets up in a average-ish suburb, is there a way to predict which stand will be selling the most ice cream (by wealth)?
Just because some one has the wealth, doesn’t mean their subjective values will align to want to buy that particular product/service.Report
Could be. I mean “rich people pay more for stuff” is actually a pretty common phenomenon, and makes some measure of sense. It’s one reason that grocery stores send out coupon circulars, for instance.
And the products might not be identical. Sell gold-leaf and white-truffle-oil ice cream for $500 a cone in a middle class suburb and you probably won’t get a lot of takers.Report
I wouldn’t even make a bet on the $500 a cone sell.
😉Report
Is it really so varied, that there isn’t a commonly held consensus about a Just Claim?
I’m thinking of how our literature always presents the idle heir as a negative, but the industrious inventor as a hero, the way even this essay uses Jeff Bezos instead of Paris Hilton as its example.Report
Is it really so varied, that there isn’t a commonly held consensus about a Just Claim?
From the polling I’ve seen the consensus is that billionaires should be allowed to, you know, *exist*, but that they should be taxed at a higher level than they currently are. Eg, Warren’s wealth tax.Report
Assuming we don’t need to re-write the Constitution (one of the problems listed in wiki for this idea), a wealth tax creates issues with capital flight, problems with implementation/valuation/regulation/cost, has significant economic effects, has a seriously disproportionate effect on seniors, and creates a ton of bad incentives.
Other countries experiences have shown it’s a bad idea. Not just a bad idea in that it does a lot more economic damage than normal, but a bad idea in that England gave it up because it’d cost more to administer than money they’d collect.
I hope Warren isn’t serious but if she needs to swing this far left to be a mainstream Dem then it looks like I’m voting for Trump as the lesser Evil.Report
I hope Warren isn’t serious but if she needs to swing this far left to be a mainstream Dem then it looks like I’m voting for Trump as the lesser Evil.
Republican voters support Warren’s wealth tax at a 50% clip. How far left is she when half the folks on the right agree with her?Report
Your link doesn’t work.Report
Try using Google.Report
https://www.vox.com/2019/2/4/18210370/warren-wealth-tax-pollReport
Paris Hilton might be a bad example because she actually learned to monetize herself quite well. But there is a part of me that prefer idle rich who just spend all their money on pleasure than trying to influence/change society. The dilletantes are largely harmless and leave the rest of us alone.
I don’t know how universal the claim is. There is something inchoate and not true about it to me. The world has always had finance and banking and interest. The idea of a barter and trade economy seems like one that will get rid of all of our modern tech, has William Morris esque fantasies, and probably never existed. It is all very smurf village.Report
There are no known examples of a barter and trade economy. That is where somebody trades wheat for linens. What really happened was that a merchant would put down in his ledger that Farmer John gave Merchant Tim sixty dollars worth of wheat and exchange got sixty dollars worth of goods back.Report
Possibly the reason we have no records of a barter-and-trade economy is that money predated writing. Written history only goes back about 7,000 years, whereas humans have been around for hundreds of thousands or millions of years. All we know about prehistoric humans is what we can infer from archaeological artifacts, so it’s entirely possible that primitive barter economies existed prior to the invention of money.Report
I agree and disagree.
“We have this moral intuition that wealth should rightly flow from labor, but it isn’t possible to accumulate a billion dollars through any amount of labor.”
This is where I largely disagree. Who is this we? I think a lot of people do have this idea but I also think a lot of people have very inchoate ideas on the economy overall and this includes people on the left and right. What I’ve noticed on the left and right when you get to more extreme edges (and you don’t have to go very far) is that economic complexity scares people and what they want is a kind of Smurf Village or Shire based economy. We all live in picture-perfect villages and towns where everyone practices a trade of some sort and everyone gets what they want/need. The problem is that people also want their to be the Hobitt whose trade it is to develop sprawling and expensive video games and/or Pharmaceutical Scientist Smurf.
Basically, they want all the creature comforts of the modern economy with none of the alleged and/or actual backsides. This reminds me of one of a quote from a British aristocrat explaining why they hated Jews so much. It boiled down to “Jews understand finance and we don’t.”
If you want modern medicine and modern entertainment, that is going to require big corporations.
All this being said, I’m a skeptic of the idea that private charity can provide all the necessary services and research. I’d rather have taxes and funding for the NIH than donations to the Susan G. Korman foundation and billionaires often deserved to be booed at loud, long, and hard for their arrogance and belief that they can solve all the world’s problems because they got very rich. There should be more estate taxes, stronger use of anti-trust laws, and a firm prohibition on bribing corporations with tax incentives like there is in the E.U. Tax breaks and write-offs like the ones for Amazon HQ2 or Foxxconn should be illegal and unconstitutional.Report
Yes but this is a bad intuition and we should try to dispense with it.
I don’t really an objection to someone making a billion dollars per se. I’d just prefer that they kept less of it hanging around.
And if someone makes a modest income on investments instead of working, well, good for them.
The Right spends too much time worrying about poor people making money without working and the Left spends too much time worrying about rich people making money without working.
They aren’t by any means equally serious errors, but that doesn’t mean either one is correct.Report
If we dispensed with it, wouldn’t that also dispense with the outrage over an unjust taking?
Isn’t the most foundational premise of a society, the settling of who owns what?Report
Probably not.
“This person has a ton of money,” simply isn’t a good enough proxy for, “This person unjustly took this money,” to use it that way.
If you think they have too much money now, fine, tax it. If you don’t necessarily think that, but need revenue, there are good reasons to try to derive as much of the revenue from people with lots of money as possible.
But I’m extremely skeptical of the underlying moral argument.Report
If I proposed that all wealth over one billion be confiscated, would the counter argument be on grounds of morality or utility?Report
The two are not distinct. That a system of property rights creates lots of utility for everybody is a moral reason in favour of that system.
There is a freedom relevant case to be made as well (though it need not be as crude as Nozick’s or Locke’s)Report
I agree. This was part of the argument for private property in Rerum Novarum, that even though the world’s resources belong to all, a system of private property rights served a utilitarian purpose.
Which is how I also argue that a billion dollars is sufficient utility, and society can justly claim everything in excess as our own.Report
For one, everyone with money will simply leave and you’ll collect almost nothing from them every again. This happens at the state level all the time. Another thing they’ll do is split their wealth into a bunch of foundations, each conveniently less than a billion dollars. You always see such foundations sponsoring shows on PBS.
Third, since most of their wealth is likely in real estate, how is the government going to make any money off it? Places like Biltmore House look like they’re worth a fortune, but in fact they have to rely on tax breaks just to stay afloat because they don’t generate enough revenue to pay for normal property taxes. Good luck finding a buyer to unload those white elephants, and if you did, what exactly was accomplished by stealing a mansion from one multi-millionaire to sell it to another multi-millionaire, and do you have to then seize it from the second multi-millionaire? If not, why not?
And of course the billionaires would be unloading the money they hold in stocks, causing massive sell-offs, which would destroy tons of wealth that everybody else is holding in their IRA’s and such.
Saudi Arabia is careful not to raise oil prices too high because they’d actually lose money because it tanks all their Wall Street portfolios.
Seizing wealth can be like that. You end up with less money that you had before you decided to massively shrink the economy by making most assets virtually worthless.
For example, Elizabeth Warren’s proposed wealth tax would hit capital at a higher rate than the returns on government bonds, by which I mean the interest on the bond is less than the tax rate on the bond. Thus, if you hold bonds, you’d be seeing your capital shrink every year. So absolutely nobody with a lot of money would hold a bond. The same would be true of most stocks. People would be better off stuffing cash under their mattresses. That would cause a severe depression and middle class people would be standing in soup lines.
But other than that, it’s a peachy idea.Report
Utility.Report
As a thought experiment, see what happens if we’d done that to Gates back in the 80’s.
Amazon still exists, and is still as big, it’s just in another country or countries(*). So those 25k jobs that NY passed up? They never would have been offered because no one would be crazy enough to build a company that large in the US.
Effectively we’d have forced him out at gunpoint… because just like NY, we don’t want those jobs, or that growth, or that economic activity.
(*) Unless there are trivial ways to side step all this in which case it’s pointless. I’m assuming we’re serious about taking 90% of Bezos shares in Amazon and three fourths of Trump’s hotels and so forth because clearly the gov knows how to run that stuff better than they do.Report
Those 25K jobs wouldn’t have gone to New Yorkers, though. They would have gone to people who *MOVED* to New York! From someplace else!Report
The programming community in NYC is bigger than at Silicon Valley. Not as a percentage of course, but in raw numbers. That was one of the big attractions of moving to NYC.
https://www.quora.com/How-many-software-engineers-work-in-Silicon-Valley-and-NYCReport
Fishing
immigrantsgentrifiers!Joking aside, an increase in demand for software engineers in New York City will drive up wages for software engineers in New York City. This will attract more people to New York City, but not enough to drive wages down to where they were before. The extra high-paid workers will also increase demand for retail and service-sector workers, increasing wages in those sectors as well.Report
The Right spends too much time worrying about poor people making money without working and the Left spends too much time worrying about rich people making money without working.
They aren’t by any means equally serious errors, but that doesn’t mean either one is correct.
What do you mean by ‘correct’?
Rich people do, in fact, make a lot of money without working. Basically, anyone with an income over a million dollars a year is almost certainly making more money from investments than anything that could logically be called ‘work’.
So this assertation is ‘correct’ in the sense it is factually true.
I think what you mean is that we shouldn’t…care about it? Which is an entirely different argument.Report
That’s exactly my argument.
In neither case should we worry about it. People will do it, or try to, and it’s fine.Report
Michael Jackson and Mike Tyson each made roughly $600 Million and each could have turned that into a Billion if they hadn’t been screw ups and/or if they’d wanted to. One of the Kardashians is a billionaire through what is effectively a one woman sales job.
Lower the goal posts to “100 millionaire” and we’ve got dozens of high level actors, models, athletes, and media personalities who have incomes north of 25 million and can get there in a few years.
Now mishandling money to the point of self destruction is an issue, but it’s more an issue with data selection than lack of opportunity. At a WAG I’d say there are significantly more of people who could go this route.
And yet most of our Billionaires are self made with new products and companies.Report
Can you describe one of these “self made” billionaires, who produced the billion without economic rent, or the network of favorable laws and regulations that privilege capital over labor?Report
By that standard the income of every laborer (and everyone in general) is zero.Report
or the network of favorable laws and regulations that privilege capital over labor?
This is pretty much the opposite of what exists in reality.Report
We have this moral intuition that wealth should rightly flow from labor
People used to have a moral intuition that white people had a right to own black people. Moral intuition is kind of crap.Report
“People used to have a moral intuition that white people had a right to own black people. Moral intuition is kind of crap.”
It would seem they had a moral intuition that wealth flows from labor.Report
If I was a billionaire, the hell with charity per se. I would be funding competing urban planning programs in several different cities. I’m increasingly convinced that encouraging migrations through smart housing and development policies would create a lot of change.
More broadly-speaking I have zero problem with billions earned legally and ethically.Report
The greatest problem with wealth in the U.S. is the overreliance on the largesse of others. There are certain things that should never be funded through charity which is fickle at best and can be discriminatory, inefficient, and much more prone to grift. Any program that needs to be virtually universal such as basic health care or welfare, policing and fire, or utilities, needs guaranteed availability and funding. Universal systems also benefit from economies of scale, reducing inefficiencies and, with proper oversight, are far less likely to generate grift.Report
This somewhat leaves out the notion of competing constructs. If a social construct becomes a monopoly of goods or services without competition, it will become inefficient, grift being only one subcategory of inefficiency.Report
I disagree that it will become inefficient. If the social construct is simple, generally unchanging, and properly overseen the threat of inefficiency and grift is low.
A good example would be government funded health insurance (I’m a Canadian btw). The basic concept is very simple; everyone pays into a pool and costs are reimbursed directly to the billing provider. Actual implementation is a bit more complex but not much.
The idea is so straightforward, there is little room for innovative changes. It is easy to audit and provinces are desperate to save money on health insurance as it is such a huge part of their budgets, so it is always under a microscope. Statistics on health costs, health outcomes, and personal bankruptcies in most developed nations bear this out.Report
That’s interesting, how long has this construct been running? I only know of a very few cases that are exceptions, and would gladly admit I could be wrong about this one.Report
Ah, I think I found it, 35 years is a pretty good run. The efficiency will eventually show up in the general economy as the taxes will eventually negatively impact the velocity of money, and individual capital formations. There is no unregulated doctors market so the average salary of the doctors cannot be compared to a competitive mean.
It will be interesting to see where this is in 60 years and if the unchanging part is truly unchanging.Report
It’s more than 35 years actually.
cf https://en.wikipedia.org/wiki/History_of_medicine_in_Canada#The_beginning_of_coverage – it was a gradual development that started with Saskatchewan and was in place in all 10 provinces substantially as is by 1966.
The 1984 act was a “okay, this basically runs how it should, allow us to tweak some things to prevent abuses” measure, not the instantiation.
So… 53 years.Report
Thanks for that information, so there should be some trouble on the horizon in the next three decades. As I read more about the system it appears ques/wait times are increasing considerably as time marches on. It is holding quality relatively well.
We have a lot of doctors defecting out of the system here, how are they doing up there?Report
We have had problems with both wait times and a brain drain. Changes made to the system some time ago (I can only really speak for Ontario) have corrected both.
It is important to note that any universal system will employ some sort of rationing and this is not a bad thing. Most medicine is a trade off between competing parameters such as cost / time / various risks / rewards. Refusing to pay for a test that is not warranted is an acceptable rationing of resources as is refusing to purchase a new and very expensive diagnostic tool that will reduce most wait times but will only see a 20% use.
The other important point to consider is that in Canada, every province and territory needs to contend with economies of scale. In order to ensure quality health care to all citizens, provinces need to distribute as much resources as possible across vast geographic areas. Providing almost every person in Ontario access to a CT scanner within a mere 90 minute drive means installing these devices and their very expensive staff in places where they may not get full use. Personally, I am amazed that we are able to produce comparable outcomes to that of the United States with insurance costs that are about 2/3rds that of America.Report
I don’t think philanthropy is the right way to argue for the merits of billionaires – as others on this thread have pointed out that just leads into ideas of taxing away the money and using it for government policy.
A better argument, is William Nordhaus’s paper on the welfare economics of innovation:
https://www.nber.org/papers/w10433
In this paper Nordhaus shows that innovators capture approximately 2.2% of the benefits of their innovations. In other words, if a tech billionaire made $1 billion dollars for themselves, they created about $45 billion in gains for others. That is not a problem that needs to be solved.
That said, not all billionaires are tech billionaires and just because tech billionaires did a lot of good getting to where they are doesn’t mean that wealthy individuals can’t cause political distortions or other problems. But the solution is to identify the sources of the distortion and deal with them directly, not by trying to abolish rich people.Report
Thinking like only an economist can do and ever learn to love!!
There is still an issue of where most of the gains from that wealth has gone and it is perfectly reasonable that the 45 billion in gains for others are still concentrated in too few hands. Mainly the hands of early angel investors or other VCs. Or the gains that normal people get also have more social drawbacks. We all have smart phones but they also create the culture of always on for work….Report
You’re right, its so unfair of me to judge the effects of things based on what the effects of things are. Clearly we should just do is indulge our prejudices with no regard to the evidence. After all, Trump has been so good for America that we should unleash the electorate’s id more often.
And Nordhaus identifies the gains as accruing to consumers, so the gains are probably widely distributed.Report
I don’t think philanthropy is the right way to argue for the merits of billionaires
Right, it should be caloric value.Report
@james-k But doesn’t Nordhaus’ paper only address the benefits/gains and not the net effects?
If there were 45 billion dollars worth of gains and 46 billion dollars worth of harms, wouldn’t your hypothetical billionaire still be 2 billion dollars in the red?
Without some kind of balancing sheet that looks at harms, benefits on their own mean pretty much jack squat as an argument.
No? And if not no, what is the plausible basis for only looking at benefits?Report
What harms are we talking about here? Simply suggesting the existence of offsetting costs is insufficient. In any case it would be very unusual for the externalities from a technological advance to be high enough to outweigh the entire benefit of the technology.
And even if they did, you still deal with that by taxing the externality directly, not by expropriating the income or wealth of the inventor.Report
Lets say that the innovation gives the inventor 2.2 billion, 45 billion for others, and causes 60 billion in environmental damage that will take years/decades to repair. Would that be worth it?Report
To repeat the exact thing I just said:
I have discussed how to deal with externalities on this very blog in detail in the past. You will note that “tax away the wealth of the inventor of the technology” did not appear on my list. This omission was not accidental.
And I can’t help but notice a bit of a shift in the goalposts happening here. The proposition we started with was “all billionaires are policy failures and they should be heavily taxed on general principle”, and I argued that some billionaires might be policy failures but most aren’t, especially those in tech (which I provided academic work to back up incidentally). And now apparently I have an obligation to conclusively prove that no billionaire has ever produced negative externalities, as if that would even justify the policy proposal we started with.Report
James,
I agree, indeed I would suggest you are understating the value of billionaires.
As a general rule, within a reasonably free market, an entrepreneurial billionaire (most of the ones in the US), became rich by creating massive consumer surplus. They created new ways to shop and save money (Walmart and Amazon), new distribution systems, new technology (Apple and Microsoft) and so on. The entrepreneur, investors (hundreds of thousands of them), workers (ditto) and suppliers gained by the producer surplus.
I agree that the entrepreneur got only a few percent of the total prosperity created. The lion’s share went to the hundreds of millions of consumers, investors and workers.
In summary, a free market billionaire is someone who has created tens or hundreds of billion in net wealth. The billionaire gets rewarded (for their insight, risk and effort) with a small piece of the created wealth.
The path to more prosperity and higher living standards is MORE free market billionaires. Indeed, what we need next are free market trillionaires. They will produce an order of magnitude more value.
I am fine with billionaires giving their money away to charity, but the wisest thing they can do is invest it in new technology, institutions, organizations and economic problem solving. That is the source of human prosperity.
Obviously, it is also possible to get wealthy in zero sum ways via exploitation and rent seeking or by means of creating negative externalities. And these are detrimental to human prosperity. But the problem isn’t with billionaires, it is with rent seeking and poorly defined property rights.Report
Of course not. We should and would shut down the company in that case. There are Billionaires who inflict vast amounts of collateral damage in their creation of personal wealth, they’re called drug kingpins and we’re already actively trying to shut their empires down.
Note personal wealth and success really doesn’t matter here. Whether it’s a single billionaire drug kingpin or 1000 millionaire drug kingpins, it’s still a serious problem for society.
So what is the claim here? Are you suggesting Windows/Amazon/whatever are inflicting tens of Trillions of dollars of damage on the economy?Report
Are you suggesting Windows/Amazon/whatever are inflicting tens of Trillions of dollars of damage on the economy?
Why did you suddenly switch to ‘The economy’ as the only thing that can be harmed in that last sentence? Drug kingpins don’t do any damage to ‘the economy’ either. They just harmed people. It is entirely possible to hurt people while being ‘good for the economy’.
There are plenty of people both Amazon and Microsoft has harmed.
Microsoft has repeatedly harmed the software industry in many ways in their monopolistic practices. They’ve violated the law repeatedly to get a monopoly position in OSes, and then abused that monopoly position to kill a hell of a lot of _other_ software. They literally are the reason that there are not web browser companies. They are the reason all the other office suite companies have folded.
Amazon, meanwhile, has hurt all sorts of local businesses. They’ve also taken advantage of externalities they don’t have to pay the full price of by causing a _lot_ more transport of goods, or rather much more inefficient transport of individually boxing things up instead of shipping in batches to local stories. They also also abuse their workers, and have _repeatedly_ be sued for, and lost, violations of their labor. (Which…say what you will about MS, but at least they actually pay their damn employees well!)
And, in fact, Amazon did the exact same abuse of its market position that Microsoft did on the way up. It, like Microsoft, got hit with lawsuits, and lost, but the thing about lawsuits is they don’t change the _actual market position_ that the violations of laws got the company to.
If a company cheats and lies and illegally takes out their competitors on the way up, yes, eventually those competitors might win a lawsuit, but by that point, the competitor is functionally dead and just take the money and leave, and meanwhile no one _else_ entered the market because they saw what they would be up again. Both Microsoft and Amazon basically did exactly the same thing to get to where they are!Report
Why did you suddenly switch to ‘The economy’ as the only thing that can be harmed in that last sentence?
The original question was: Lets say that the innovation gives the inventor 2.2 billion, 45 billion for others, and causes 60 billion in environmental damage that will take years/decades to repair. Would that be worth it?
The implication is that there are vast amounts of damage being created by allowing Billionaires to exist, or by these companies. That the economy and/or society would be far better off if we simply erased them. Stalin has been presented as a comparison.
However making Stalin/Hitler analogies showcases just how weak the argument is here unless the Fortune 500 have been engaged in mass murder without my hearing about it.
Drug kingpins don’t do any damage to ‘the economy’ either. They just harmed people.
Even if you ignore the murders (mass murder collectively) there’s a strong case that the drug trade/war is a drain on the economy. However this is very much wandering off topic.
Amazon, meanwhile, has hurt all sorts of local businesses.
The vast bulk of that “harm” is better termed “competition”, and it’s legal (and a good thing) to offer a superior product. Local businesses want me to pay $10-20 a book for my kid’s school competition, Amazon wants me to pay $4.
There are plenty of people both Amazon and Microsoft has harmed.
Yes, I’m sure you can find various problems, they’re big companies, but the thing about creating economic problems is we need to start worrying about the total effect. I.e. is the US (or even the world) better off for allowing the existence of Bezos/Amazon etc?
Note the bar here is set EXTREMELY high. If we’re talking about problematic big companies, big oil should be at the top of the list and the world is still probably better off for allowing the existence of big oil. Of course no one has mentioned big oil because although they’re really nasty from lots of points of view, the real problem is inequality.
You pointing to Netscape as someone they hurt is problematic on multiple counts. First it’s legal to create a rival browser, others have done it (Chrome!!!). 2nd the bulk of Netscape’s injuries were self inflicted, when they were the dominant browser they decided to recreate their entire code base from scratch. By the time they were done studying their naval they’d lost so much market share they never recovered. 3rd even if we consider the creation of Microsoft Internet Explorer a heinous crime, the number of people victimized is less than a thousand while the number helped by the existence of Windows is vastly more than that.
Microsoft has repeatedly harmed the software industry in many ways in their monopolistic practices.
Yes, and that’s a problem, less so since the gov sued them and came so close to tearing them apart. However the standard here isn’t “has anyone been injured”, the standard here is “is society better off for having allowed Bill Gates to have existed?”
The solutions on the table are very nasty, the problem is very small compared to both the solutions and the benefit from ignoring the so called “problem”.Report
The problem with billionaires is the problem with the monkey in the cages.
Economists know that the labor theory of value is bunkum in reality, the problem is that the brain doesn’t much care about reality. It cares about stuff like “fair” and “just” and you can tell, just by looking, that Bezos doesn’t deserve a billion dollars. Certainly not if his workers have to pee in jars to meet targets. Certainly not if they are forced to clock out *BEFORE* being scanned by the machines making sure that they haven’t stolen anything rather than after.
It’s so amazingly stupid, on his part. He could have relaxed the numbers requirements enough that people could pee at their leisure. Maybe even poop at work from time to time. (Fridays, maybe.)
He could have paid a buck or two more per hour for some of the drones.
He could have included the being searched for contraband as part of the workday rather than being part of the price of being an Amazonian.
How difficult would it have been for him to be good enough to his workers for him to not come first to mind when we are discussing evil billionaires? How much would it have cost him? 2%? 3%?
Let them come for him. I would throw several cucumbers at him just to see one grape ripped from his hand.Report
This confuses Bezos personal wealth with Amazon’s cash flows. Do we know just how tightly those are coupled? Is Bezos making those kinds of decisions? If he is, what are the incentives he’s operating under to make those choices? Amazon is a public company with (IIRC) a great many investors, large and small. Those large ones can apply a lot of pressure to maximize profitability. How much can Bezos resist such people? Even if he’d prefer to pay people more, if he gets a lot of push back on that from others, perhaps he’s just not willing to die on that hill.Report
I do not know how much of that 133 billion (according to Google, anyway) is technically his vs. part of the pulse of the company but I’m pretty much willing to stand by every word of what I said anyway.Report
That’s exactly the point.
It’s not that Bezos is necessarily evil. It’s that without the policies that let Amazon get away with corporate tax avoidance, stiffing and underpaying employees, undermining unions, etc., he wouldn’t be a billionaire.
Think what you will of his being a billionaire, without the above failures of policy, he wouldn’t be one, the US would have more general revenues to carry out programs or pay down debt, and thousands of Amazon employees would be better off.
Every billionaire is a symptom of policy failure. The corrective policies can target the symptom (because there is certainly some good to be done by that alone) but it would be even better if they targeted the causes of billionairism.Report
Or more aggressively prosecute wars, or build stupid-ass walls along the border, etc.
ETA: But yes, it’s not Bezos fault Amazon pays little in taxes. It pays what the government demands it owes.Report
Speaking of Amazon taxes…
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There’s a contradiction in this view. Jeff Bezos is rich because he started a company that grew into a behemoth in a very short amount of time. Because of how short and because of the nature of the industry, he still happens to own a lot of equity in that behemoth. This is an exceedingly rare situation, not the behemoth part but the founder still owning so much it.
An Amazon probably wouldn’t have happened in Europe, because European markets are way more dominated by older, larger firms. So, if behemoths are what’s keeping us from social democratic paradise, why does Europe have so many more relative behemoths? It’s got to be more than just who owns the shares.Report
Nothing you say here actually supports your claim that the existence of billionaires is a symptom policy failure.
Let’s start with the obvious: Bezos has a net worth of over $100B, to the best of my knowledge essentially all in the form of Amazon stock. For Bezos to have a net worth of less than $1 billion, the government would have to tank Amazon’s stock price by more than 99%. I guarantee you that any policy that could do that without specifically targeting Amazon would be economically disastrous.
Even if we weaken your claim to a less obviously wrong form—Bezos being is as rich as he is is a symptom of a policy failure—you still provide no actual arguments for this.
Yes, if the IRS got a bit handsier with Amazon, it would be worth less money. Conversely, if the IRS backed off a bit, it would be worth more. All you’re saying is that tax policy affects stock prices. It’s not obvious that higher tax rates are better policy than lower tax rates. The government would have more money to spend if it jacked up middle-class taxes to 70%; that doesn’t mean it should.
Incidentally, despite attempts by sleazy journalists and politicians to imply that Amazon is engaging in nefarious tax shenanigans, the tax deductions that allow them to save on federal taxes are deductions for legitimate expenses like reinvested profits and employee compensation, working exactly as they should. Note that Yglesias is incorrect to say that Amazon paid no corporate income taxes last year; they did pay several hundred million in state and international income taxes. Also, in 2016, Amazon paid over a billion dollars in federal income taxes and an effective corporate income tax rate of 42% on their global profits.
Yes, if the government passed some laws making it easier for unions to form and enforce labor cartels, then sure, Amazon would probably be worth less. That doesn’t mean that not doing so is a policy failure.Report
This article and thread made me think about a recent monologue from The Andrew Klavan Show. It’s about a different subject, and I could edit around it to make it apply better to the above, but it’s just so good that I have to present it in full:
“You know, political correctness was designed to make conservative beliefs unspeakable; that’s its whole purpose, to define Constitutional liberty as somehow inherently bigoted, racist, and wrong, and yet this week in Virginia we’re watching a semi-hilarious debacle in which Democrats, the party that weaponized political correctness, find that weapon blowing them up like a torpedo that turned around and sank the sub that fired it. It’s reminiscent of the way “#metoo” charges, which were inspired by women’s dislike of Donald Trump, ended up taking down so many Trump adversaries, from Harvey Weinstein to Al Franken.
“Why do so many leftists find themselves getting tangled in charges of racism? It’s because leftism and racism are two stupid philosophies that share the same central mistake: the idea that some people are good. They’re not. None of us is righteous; no, as the Bible says, not one. The concept of original sin is not just a central truth of Christianity, it is *the* central truth of any honest, happy, forgiving life. Think of yourself: are you who you want to be? Are you the best possible version of yourself? If you answered “yes”, congratulations: you’re a sociopath. Sane people wake up in the middle of the night, full of a sense of moral inadequacy and regret, because they are morally inadequate and have done things worth regretting.
“The lie that some people are good leads racists to feel that other groups of people are somehow worse than themselves. Every group – whites, blacks, Jews, women, men, Christians – every group with anything in common can be condemned for its characteristic flaws, including your group. Why? Because no one is righteous; no, not one.
“The lie that some people are good leads leftists to believe that government power should be infinite; that, given the chance, righteous left-wing leaders will spend our money, direct our actions, and even dictate our speech better than we can ourselves. They won’t; they’ll become tyrants. Why? Because they’re people, and people are full of sin.
“If there is one thing the Founding Fathers knew, it’s that all people suck, and none should ever have too much power. Leftists and racists have forgotten that, and that’s why it’s increasingly difficult to tell them apart.”Report
My lack of god. People will still peddle that carp that liberals want infinite government power. Ugh facepalm.
People get pulled down by racism because, as lefties/ POC/ liberals/whatever else, because this country has a long history of racism that has seeped into everything. I’ve been reading that from the left for , literally, decades. That completely explains why the Virginia stuff came out.
He’s calling out people for being righteous, then condemns others as sociopaths !?. That is really quality silliness.Report
The problem with evaluating US created Billionaires by how much they give to charity is they became billionaires by doing massively good things for society in the first place. They created jobs, economic activity, shareholder wealth, etc.
Amazon is successful because it adds a lot to the American market and empowers the American consumer. My youngest child needed 6 books last year for a “battle of the books” elementary school thing. I went to Amazon and got all of them for 25-ish bucks including shipping. Doing the same in a store would have been somewhere between expensive and impossible.
We collectively shop on Amazon because they offer products that I’d never be able to find otherwise at prices that I’d never expect. Amazon’s marginal profit is 4% so one dollar of that went to Amazon itself. If my $25 purchase put a few pennies into Bezos pocket, well he earned it.
More broadly, it’s a problem if Billionaires use their powers for evil, those pennies add up. However it’s a much larger problem if we prevent them from existing, that’s trading a problem with those few pennies for me spending $100 or the transaction simply not happening. In terms of economic damage the later situation is the bigger problem.
Further I’m not sure what “use their powers for evil” even means in this context. The number of murders done by billionaires last year was zero, probably the total amount of illegal violence was also zero. We had one Billionaire become President recently but that wasn’t because he spent his own money. There’s regulatory capture, but that’s getting pretty darn vague and also is a problem no matter who runs/builds the Fortune 500. The usual illegal things are still illegal, even for the rich.
So… what is the problem we’re trying to solve here? If it’s “my life should be better” then I’m clearly better off with Amazon existing. If it’s “people affording housing” then Amazon is hardly even involved there, they’re just a scapegoat politicians use to distract from their own culpability. If it’s “the poor should be better off” then we come back to the problem that enabling and/or making cheaper economic transactions is better for the poor than the rich.Report
That is the orthodox view among a certain group of people, certainly. I don’t think it is universally agreed upon.Report
True. The most common view is the rich are all Scrooge McDuck clones with huge bags of money around just waiting to be put to greater use.Report
Billionaires create jobs but so did Stalin. Say what you will about him, there was always plenty of work that needed to redone under his regime. It is not just about creating jobs, it is about the working conditions, wages, and other factors. Free market and capitalism advocates do themselves no favors when they outright ignore the more ethically challenged practices of business people and the tendency of many of them to be at best bullies.Report
Eh, I think that Stalin should be more celebrated for thinking outside of the box when it came to dealing with the problems of too much demand and not enough supply.
Broke: increase supply
Bespoke: reduce demandReport
The Soviets would have been much better off by killing Stalin. Clever of you to compare them like that, but the underlying reality is I, personally, am better off for the existence of Amazon and most of its ilk.
Straw Man. My position isn’t that various abuses shouldn’t be addressed.
However the opinion on the table is that the existence of the Rich is an abuse. That like Stalin the country would be better off if they were killed or destroyed. That we, as a country, don’t benefit by the creation of their wealth.
This is economic lunacy.Report
Just a note that everyone keeps talking about how great Bill Gates and his foundation are, but not many folks talk about how he basically broke the back of American anti-monopoly law and contract employment law in the 90s/early 2000s, at least as regards the computer industry, in order to accumulate all that wealth in the first place. In a real way, other harms of billionaires that result from that track back to Gates as well.
One can definitely argue whether those harms (both Microsoft’s, and the larger marketplace’s) were worth it, or not, but to argue one side without acknowledging the other seems a bit misplaced.
(And apologies for leaving such a slapdash comment but I’m pretty much away from the comment section due to personal / work matters – didn’t have time to elucidate properly.)Report
Yeah, as someone who’s been involved in the computer industry for quite some time, and even before that paid attention to it, I’ve always find it funny that Bill Gates is an example of a ‘good’ billionaire.
Tell that to the people who worked at Digital Research, for the most obvious example off the top of my head.Report
The same thing was true of Carnegie as Lee pointed out. There were lots of communities that refused Carnegie libraries because they saw it as “blood money.”Report
To be fair too Gates, Carnegie and his associates were a lot more exploitative of their workers than Gates could ever be.Report
@james-k
From Wil W.Report
I largely agree except that I think a lot of people in the Democratic Party don’t think there is much welfare state in American “neoliberalism.” Neoliberalism is associated with Clinton’s Third Way and the Gingrich set that cut America’s already skimpy welfare state to the bone in the 1990s and early aughts.
The GOP is still keen on doing so.
I think AOC is right to be skeptical of neoliberals and incrementalists who hem and haw at grand plans.Report
Cool, if Denmark’s social welfare system doesn’t stop billionaires from being created, then all the moderates here will have no problem raising the taxes and creating the programs that Denmark has, right?Report
I love the dance:
“I suggest a modest social welfare program.”
“That’s Socialism which never works!”
“No, look at the Nordic countries which are doing this.”
“They are not socialist, they are capitalist!”
“OK, lets have a Nordic style social welfare system.”
“That’s Socialism which never works!”Report
That’s a fun dance, but it’s not mine. I prefer more concrete criticisms of social welfare programs in other countries, rather than just vacuous claims of “Socialism!”.
I mean, we probably could have a lot of the programs that the Nordic countries have, if we weren’t constantly answering the expectation of “World Cop” and sending out military to every corner of the globe. But then, the Nordics would have to cut their programs and spend more on military build-ups, because Putin can’t be trusted to stay in his own damn yard.Report
You skipped a step.
“OK, lets have a Nordic style social welfare system.”
Fine. That’s lots of economic freedom, monoculturalism, and resource (i.e. oil) extraction. It’s also private ownership of capital.
No, I don’t want any of that. I want command and control Socialism but let’s call it Nordic style anyway.
“That’s Socialism which never works!”Report
No man, lets do the full Monty.
Lets have economic freedom, plenty of resource extraction, and private ownership of capital along with the cradle to grave social welfare.
I’ll leave it to others to figure out why monoculture is somehow the magic ingredient.Report
I’ll leave it to others to figure out why monoculture is somehow the magic ingredient.
Does it have to do with “is” being very different from “ought”?Report
I think the general argument is that your given electorate will be pretty generous when they view the recipients as being “us” rather than “them” which a monoculture lends itself to and but they get mighty stingy when they view the taxpayers as “us” and the recipients as “them”. Even the Scandinavian societies are having some serious difficulty with “them” immigrants.
I don’t know how much weight I’d put into that argument myself- the Canadians manage the issue pretty well but then again Canada is more a neoliberal market society than social democratic society. I think the bigger ask for lefties is to be as light handed on business regulation as the Nordics are.Report
What is interesting is to see how the demand for conformance to the norms of a dominant culture was at one time the bedrock of conservative thought, and now it is the thing they yelp about the loudest.
ETA: Which is to say, a monoculture has no need for “classical liberalism”.Report
Well yes but that is a knife that cuts both ways; once upon a time classical liberalism, individual freedoms and the like were the bedrock of social liberal thought and now it’s the social leftists (I refuse to call them liberals) that yowl the loudest about offensive or degenerate behavior, expression and thought. Which isn’t to say social conservatives don’t do the same, they just have a different set of taboos and bugaboos.Report
See, the whole problem with the “we need a monoculture for a welfare state” is the part of the white population that’s most supportive of the welfare state is…white people who live in multicultural areas.
So, the problem isn’t the multicultural areas where the non-white people are, but the non-multicultural parts that are scared of the non-white people.Report
Yes, but still those regions exist and would/do in any multicultural society. In America they happen to be advantageously located and situated vis a vis the political structure as compared their European counterparts.Report
So, in other words, people are in favor of money flowing into their area and being used to help the people they know.
And “multicultural areas” is itself a culture. My expectation is you mostly all feel the same about lots of things, guns for example.Report
Yeah it’s like when people talk about universal health care they actually mean…..strokes chin….well universal health care for everybody not just people like them.Report
Healthcare reform means you paying for my bills, not me paying for someone else’s.Report
No, it means wealthy(er) people pay for poor people’s health care. So no different than what we have right now.Report
I think it would be a pretty massive win for the American left if they brought their social policies in line with Canada or Austrialia, two countries that definitely cannot be said to be anti-immigrant or monocultures.
Some people might claim that Canada is more monoculture than America and thus has greater ability for social cohesion. These people are laughably ill-informed, a quarter of Canada not only speaks a different language but watches their own domestically produced television. The internal cultural gap is massive compared to anything Americans experience domestically. Seriously, you dudes have no idea what a pain in the butt Two Solitudes politics are to deal with.
If what they say that the real issue is Americans have to deal with the White/Black divide, then congratulations. They’ve proven a lot of people’s point that one of the big problems in America is racism and maybe you should pay more attention to fixing that problem so you can have the nice things social cohesion gets you. It also goes to show that this isn’t a problem that gets fixed by lower immigration rates, the issue would be entirely based on the animosity of the existing population towards itself.
There’s an even further point that American social spending in total is pretty comparable to Australian or Canadian levels, its just targeted generally less effectively and thus doesn’t create things like affordable mass post-secondary education or health care. Lower American tax rates in comparison are more due to greater propensity for deficit financing rather than lower spending.
If we really, really want to get wild, we can point to how immigrants generally subsidize social spending due to their age profiles, so a big reason why Canada and Australia afford the things they afford so comfortably is their much higher foreign born population compared to the States. So there is a point to be made that if you want to afford to open the social spending spigots, you should open the skilled immigration floodgates that Washington has so foolishly kept tight.Report
Culture does a LOT of heavy lifting in terms of all sorts of things, including the degree to which social benefits are used and abused. It’s the really high minimum wage problem on steroids.
Culture “A” responds to unmarried pregnant couples by putting them under tremendous pressure to get married and benefits-for-single-mothers are only used in an emergency. The same benefits for Culture “B” create unwed mothers because we’re paying them to not get married.
The result then becomes that Culture “A” sees large numbers of Culture “B” on the dole and politicians get elected to stop this.
We can take it multiple steps further. Culture “B” may legitimately have less opportunities and therefore a lower median income and much higher usage of social welfare.Report
Then people like Kevin Williamson suggest we abandon these people to their fate.
But time was, when urban people were willing to spend tax dollars for rural assistance, everything from electrification to roads to dams.
The idea that a multicultural society is incapable of solidarity is empirically false. It’s happened before.Report
It’s not that a multicultural society can not do it, it’s that a mono-culture has an easier time doing it.
Now if we had a multicultural society where various factions were not always assuming that other factions are getting unearned rewards or not paying their fair share, we might not have such an issue…Report
Now if we had a multicultural society where various factions were not always assuming that other factions are getting unearned rewards or not paying their fair share,
Well, one faction anyway. All it takes is one.Report
The problem is only partly with the assumption. Another problem is with the reality.
Paying my drug dealing cousin to get high and bear children out of wedlock is enabling dysfunctional behavior. Her having a different culture doesn’t change my evaluation, it just means she’s has exposure to other dysfunctional people.Report
[Moved to the correct place]Report
Sure, that’s true… but there’s different levels of solidarity.
How much money will this take as a percentage of the national income, how much suffering will I personally need to absorb, how long will this effort take, how much concern do I feel for these other people, etc?
For the foreseeable future we’re looking at HUGE tax bills just to not break people’s pensions and the existing healthcare. Those additional tax bills, by themselves, will be a heavy lift if indeed we have the political will for it. So there’s not a lot of extra money left in the system and the next few tax increases are already spoken for.
Some of the ideas floated on how to pay for stuff (wealth taxes, taking 99% of Amazon) are shockingly bad ideas which are only mentioned because “someone else” needs to be taxed.
Good ideas for how to pay for “cradle to grave” would be massive tax increases on the middle class. If the basic concept is so repugnant that no one can mention it then that says a lot about what level of “solidarity” is expected.Report
This is that dichotomy I spoke about.
We are so flush with revenue that we could easily afford to give billions back to the billionaires in last years tax bill.
We didn’t need that money in the Treasury! It could just be returned to them, no problem!
But…strangely..at the same time…we are in such dire straits that it is a lifeboat situation, where we have to decide whether or not to let elderly people starve.We’re broke! The Treasury is empty!
We do live in interesting times.Report
Starve? No, no one starves.
The rest of your argument is like saying that since we have the money for an icecream cone we must also be able to pay off our mortgage.
We don’t need Billions for the elderly and our various social programs, we need Trillions.Report
I think that could work. I’d a have a look at what could be recovered from existing spending first (your military budget could do with some heavy pruning), and there’ll be implementation concerns, but yeah I think that could work fine.Report
Part of the Denmark model for programs is they’re mono-cultural. What the EU calls countries we’d call States so making a social welfare program which covers Italy, Denmark, Germany, and Poland is something they mostly don’t do.
So the Denmark model suggests we should devolve social welfare programs to the states.
Another part of Denmark is having a very wide tax base, i.e. they have something called a “skatteloft” or “tax ceiling” where the sum of municipal and national tax percentages cannot exceed 52.05%. Note that our federal(37%)+state&local taxes(max of 22%) is already pretty close to that for the rich and over in some areas. If we’re going to copy Denmark we should make the tax base much broader and drop the whole “tax the rich” thing. For capital income, there is a separate, lower maximum tax rate of 42%.
(wiki Taxation in Denmark)Report
The EU’s been around for 20, the US has been around for 250.
So, I’m actually going to guess by 2240, if we haven’t baked the planet, most social welfare programs will be EU-wideReport
The EU will be much richer then, and the social programs will be correspondingly cheaper. 250 years ago we wouldn’t have been able to afford much of anything.Report
@Oscar Gordon
Indeed, no big surprise that Will Willkinson understands this.Report
See above. I think he largely gets it but there are lots of people on his side in the United States that basically don’t get it and freak out about it:
1. Lots of people freak out at AOC’s “socialism” even though it seems self-evident to me that she is calling for Swedish style social democracy and not the 4th International as Jesse pointed out;
2. Lots of people (including people whom I think should know better) really do think she is calling for the 4th International;
3. There are a lot of people who claim to be for the welfare state in theory but are bad-faith actors who will sell it out as quickly as possible or vote against it to decrease the state/taxes/regulation.Report
AOC looks like a mixed bag in that regard to me. On the one hand things like a UBI fit well inside Wilkinson’s ideas. The Green New Deal is another thing entirely.Report
She’s a card carrying member of the Democratic Socialists of America. That includes opposition to private ownership of capital, opposition to letting the market set wages, opposition to the existence of companies, statements that true socialism has never been tried, gushing statements about Venezuela before it was fully clear just how bad it was going to get.
She’s deeply opposed to pay-go rules (i.e spending needs to be somewhat balanced by tax increases or cuts) and claims we need a great depression style (presumably on the scale of the entry into WW2) massive increase in social programs. Presumably she’d fund this by nationalizing industries but that’s me reading between the lines.
I don’t see any statements or positions from her in favor of expanding economic freedoms, the very concept seems to not be there.
So she’s proclaiming herself to be a socialist in the classical “East Block” sense, not the “Swedish social democracy (SSD)” sense. Trying to map her and her views onto SSD is either a misunderstanding of her or a misunderstanding on what the Swedish model really looks like.Report
This is not a real thing that ever happened.
https://www.cbo.gov/publication/43934Report
I recall a post a while back about taxing luxury homes. Some of the commenters whose homes might technically qualify under some definitions of “luxury” were saying (I paraphrase) “well, it’s complicated, and you really have to understand….” I haven’t read the comments in this thread yet, but I wonder how many of those will now make snarky comments about the evil rich.Report
I’m skeptical that this is a true number and that the gov isn’t changing the common sense definition somehow. Or alternatively there are cultural things going on.
Most people only leave jobs when they have another lined up? After you “fire” someone you keep him on the payroll long enough for him to find work? Senior executives, if let go, face such social pressure to be working that they take what we’d call min wage work while they’re searching for real work? Or maybe all of Singapore is like a boom town?
But just the friction of finding a job should make things higher than 2% (admittedly that’s a feeling and not a number), and that’s assuming we’re ignoring the long term unemployed, incompetent, etc.
But thank’s for pointing that out. Singapore’s numbers run really low for this.Report
The weird thing about minimum wage is it produces some of the friction that we see in this country. Without minimum wage there is a near infinite amount of jobs.
There also are niches available for either low skilled or technically challenged.Report
Without minimum wage there is a near infinite amount of jobs.
Jobs that cost zero in materials supplied or supervision required? I’m dubious.Report
There are niches where I have seen a person straightening used carpentry nails and reselling them at fraction of the cost of new ones.
In Cubas black market, they refurbish butane lighters.
There is always work that can be done, it’s a matter of aligning preferences to niches that appear to be a problem. Along with elevating the floor of the economy that blinds or makes illegal those areas.
I like you as a person, but in the framework of your political framework, i don’t think you would understand or maybe want to understand.Report
@Dark Matter
Small countries have fewer frictions. See for instance Lichtenstein, Gibraltar, Palau, Jersey and Guernsey. Someone in Sembawang (the north eastern part of Singapore) is not going to not take a job in Tuas (the south western part of singapore) just because it is on the other side of the country unless they are really spoilt for choice. Also the commute is at most 1.5 hrs by public transport and about half an hour by car (add 10-15 min if there’s traffic).
The service and retail sectors are huge and there is always or almost always some low level retail job available for someone who is newly out of a job. I’ve met a lot of cab drivers who used to be mid-level managers.
One of the things the state has done is reduce the employer’s CPF contribution (our equivalent of the payroll tax) during recessions. Keynesians take note: this is what countercyclical policy should look like. This creates a cushion for employers. Otherwise, there is a lag time when employees are laid off and then hired again when the economy recovers which contributes to unemployment figures. I know the gov spends on retraining and skills upgrading programmes. I don’t know how effective it is, but it can’t hurt.
Regarding the numbers, I think they are accurate enough. Unemployment went up to 4% during the 2007/08 recession. And the numbers seem to make sense given the fundamentals of the economy. The numbers that look more obviously massaged are Cambodia or Thailand (which have them at 0.3 and 0.7% respectively. Though I suppose if you can’t get a regular job, you take up farming and foraging and that counts as being self-employed)Report