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January 21, 2014 8:32 AM   Subscribe

The 85 richest people around the globe equals the assets held by half of the world's population. Ahead of this year's Davos World Economic Forum (and the premier of Rich Kids of Beverly Hills), Oxfam released a report on inequality.
“It is staggering that in the 21st Century, half of the world’s population own no more than a tiny elite whose numbers could all sit comfortably in a single train carriage,” said Winnie Byanyima, Oxfam’s executive director, who will be at the Davos gathering.

“In developed and developing countries alike, we are increasingly living in a world where the lowest tax rates, the best health and education and the opportunity to influence are being given not just to the rich but also to their children.

“Without a concerted effort to tackle inequality, the cascade of privilege and of disadvantage will continue down the generations. We will soon live in a world where equality of opportunity is just a dream. In too many countries economic growth already amounts to little more than a ‘winner takes all’ windfall for the richest.”
Inequality is often cited by scholars, historians, etc.. as a major cause of the vast majority of problems in human society. New York Magazine takes it further: Here's What Oxfam Should Have Told the Billionaires of Davos. Or watch the film Inequality For All.
posted by stbalbach (89 comments total) 26 users marked this as a favorite

 
As Kevin O'Leary tells us though, this is fantastic news.
posted by knapah at 8:37 AM on January 21 [1 favorite]


Well, yes, in the sense that "fantastic" means extravagant, irrational, absurd, incredible, unthinkable, so extreme as to challenge belief…
posted by Longtime Listener at 8:50 AM on January 21


Weird that the Oxfam report is not being used to justify expropriating the wealthy to give to the global poor, and is instead inspiring the desire to expropriate the wealthy to give to the middle-class.

Consider that the top 50% have 99% of the world's wealth, for instance.
posted by anotherpanacea at 8:52 AM on January 21 [4 favorites]


"... a tiny elite whose numbers could all sit comfortably in a single train carriage tumbrel"

There I fixed it.
posted by panglos at 8:53 AM on January 21 [16 favorites]


What baffles me is that the reaction to this seems similar to all the news that we are rapidly approaching a devastating period of climate change -- no one seems to care much. To me this news is yet another way of saying that human freedom and opportunity and health is accelerating backwards.

The more we know the stupider we are.
posted by bearwife at 8:55 AM on January 21 [16 favorites]


The New York Magazine piece references a Washington Post blog post citing a single academic paper to suggest that all patents be outlawed forever. While a bold proposal, that seems like rather thin evidence.
posted by Going To Maine at 8:55 AM on January 21


It is staggering that in the 21st Century, half of the world’s population own no more than a tiny elite whose numbers could all sit comfortably in a single train carriage,

Not really. Train carriages in standard class tend to hold around 76-80 seats. Conceivably therefore 5 members of the elite would either have to stand or sit on the floor. Added to the shock of taking public transport this would incommodious in the extreme, to put it mildly.
posted by MuffinMan at 8:57 AM on January 21 [13 favorites]


Bill and Melinda on the foreign aid and global poverty in last Saturday's WSJ
posted by IndigoJones at 8:57 AM on January 21 [1 favorite]


There's one big issue I have with all such reporting: how do we deal with corporate assets which don't lead to either significant double counting or massive distortion of the results?

A lot of assets aren't actually owned by individuals at all. For instance, even relatively small insurance companies can sit on hundreds of millions of dollars in assets which they use to support their underwriting operations. State Farm is sitting on about $45 billion right now, which would make it the third richest individual in the world according to Forbes. Hell, CalPERS is currently sitting on $260 billion in assets, more than three times Bill Gates' net worth.

Here's the problem: how do we count those assets? Ultimately, State Farm is owned by its shareholders. But they're already getting credit for the value of the stock they own. Attributing State Farm's assets to its shareholders would seem to be an exercise in double counting, as the stock itself is predicated in no small part on State Farm's capital position. Further, State Farm shareholders don't actually have any ability to use or control State Farm's assets. They're State Farm's, not the shareholders'. And CalPERS is a government pension entity. Attributing those assets to the 1% seems downright backwards.

But not counting corporate and government assets at all doesn't really seem right either, as corporations and governments own an unbelievable amount of stuff. If the top 1% own 50% of the assets owned by private individuals, how does that number compare with the total value of the world's assets, including corporate and governmental assets? If the top 1% owns 50% of all assets, how are we accounting for corporate and government ownership?

I read the report and I cannot see where this issue is addressed. As such, I cannot help but think that it's massively misleading, to the extent that I don't even know what direction it's being misleading in! Things could be a lot better than the report suggests, or a lot worse! I have no way of telling! Gah!
posted by valkyryn at 8:58 AM on January 21 [7 favorites]


pitchforks etc.
posted by lalochezia at 8:58 AM on January 21 [3 favorites]


Of the riders in the tumbrils, some observe these things, and all
things on their last roadside, with an impassive stare; others, with
a lingering interest in the ways of life and men. Some, seated with
drooping heads, are sunk in silent despair; again, there are some so
heedful of their looks that they cast upon the multitude such glances as
they have seen in theatres, and in pictures. Several close their eyes,
and think, or try to get their straying thoughts together. Only one, and
he a miserable creature, of a crazed aspect, is so shattered and made
drunk by horror, that he sings, and tries to dance. Not one of the whole
number appeals by look or gesture, to the pity of the people.

posted by Teakettle at 8:59 AM on January 21


What baffles me is that the reaction to this seems similar to all the news that we are rapidly approaching a devastating period of climate change -- no one seems to care much.

I don't think people don't care. It's simply that people have come to the point where they don't feel there's any way to correct the problem. That they are powerless to enact any meaningful pressure on the powers-that-be to correct this course. They're resigned to the idea that they and their voices don't matter.
posted by Thorzdad at 9:01 AM on January 21 [34 favorites]


Why would the 85 wealthiest people all crowd into a single train car when they can each afford their own train?
posted by plastic_animals at 9:04 AM on January 21 [2 favorites]


Today, Mexico City is mind-blowingly different, boasting high-rise buildings, cleaner air, new roads and modern bridges. You still find pockets of poverty, but when we visit now, we think, "Wow—most people here are middle-class. What a miracle." You can see a similar transformation in Nairobi, New Delhi, Shanghai and many more cities around the world.

Nairobi at least _has_ a middle class, which is growing, but it's still a tiny sliver of the population...
posted by kaibutsu at 9:06 AM on January 21 [1 favorite]


Why would the 85 wealthiest people all crowd into a single train car when they can each afford their own train?

Or railroad.
posted by Kirth Gerson at 9:06 AM on January 21 [2 favorites]


Forbes' list of the world's top billionaires. The minimum amount of wealth for the top 85 seems to be $11.7 billion.
posted by ZeusHumms at 9:09 AM on January 21 [1 favorite]


.0000000122% own 50%

Horatio Alger my fucking ass.

the top 1% have $110,000,000,0000,000 ($110T). It's estimated that over twenty years it would take 3.5 trillion to end extreme poverty worldwide. So 1/3 of the income of the 1%.

We have never really given up having Kings have we? We just call them by a different name nowadays.
posted by edgeways at 9:21 AM on January 21 [21 favorites]


Nairobi at least _has_ a middle class, which is growing, but it's still a tiny sliver of the population...

Most African countries have a middle class of some kind. Kenya, funnily enough, is not one of the leading countries in Africa for middle class when you factor in risk, growth, size of the country. By my estimates*, it is somewhere around 2/5 down the list of African countries. Most of the leading countries are in Northern Africa. Most of the ones at the bottom continue to suffer unrest. Some of the interesting ones nearer the top, like Angola and Mozambique, have overcome significant wars and have had now developed on the back of extended political stability.

If you use the World Bank definition of the middle class, it has almost doubled in size in Africa since 2000, which is the good news. But this is a low bar: $10 per head per day at 2005 purchasing power parity. The bad news is how many Africans remain poor, and how many are susceptible to unrest and disruption in their country: most risk analyses identify only one truly low risk country in Africa: Botswana. Wealth hoarding and inequality are terrible things. However, many Africans haven't got to a point where this is an issue: they're more concerned with stability and security.

* Just launching a business looking at the middle class in Africa, by sheer coincidence.
posted by MuffinMan at 9:22 AM on January 21 [5 favorites]


no one seems to care much

All who swim will eventually tire as the ship sails away, glittering against a darkened horizon.
posted by aramaic at 9:28 AM on January 21 [5 favorites]


Say hello to the new global capitalist politburo.
posted by srboisvert at 9:31 AM on January 21


I'm gonna listen to Todd Snider's "In the Beginning" about 12x now. I would suggest you do the same.

Until one day this one guy said to this other guy, he said:
Hey, have you seen that guy over there?
He's got more than everybody else has got
To me, that don't seem fair
Well, the second guy agreed with the first guy
Everybody else did too
Til they all got so worked up, they figured
there was something they just had to do:
Divide his things up among each other
After they killed him of course
They could see no real good reason not to just
Take what they wanted by force
When they found him he said:
Hey, wait a minute fellas, I wouldn't kill me just now
You can see that I've got more than any of you
Have ever got, wouldn't you first at least like to know how?

posted by DirtyOldTown at 9:36 AM on January 21 [1 favorite]


the top 1% have $110,000,000,0000,000 ($110T). It's estimated that over twenty years it would take 3.5 trillion to end extreme poverty worldwide. So 1/3 of the income of the 1%.

uhm, one THIRTIETH.
posted by Benny Andajetz at 9:53 AM on January 21 [8 favorites]


Perhaps the top 85 are actually slaves to the world capitalist system of which we are all apart, like an ant queen is in some ways the slave of her colony. Unhappy, bloated, but kept around for their irreplaceable capital-allocation skills.
posted by fraxil at 9:53 AM on January 21 [1 favorite]


So we have the potential to double everyone's wealth and standard of living by inconveniencing and redistributing the wealth of 85 people? I have no moral objections. Think about how much greater good we could do by performing this same exercise with say... the top 850 people!

Honestly, this one is a no brainer.
posted by Nanukthedog at 9:53 AM on January 21 [7 favorites]


It's hard for me to understand what the arguments would be against capping wealth. Like, say, after a billion dollars, maybe you have all the wealth you can have.
posted by prefpara at 10:06 AM on January 21 [3 favorites]


What baffles me is that the reaction to this seems similar to all the news that we are rapidly approaching a devastating period of climate change -- no one seems to care much.

You're thinking about this the wrong way. People don't care because when they read about sociopathic assholes who won't cough up the money for malaria research or pay an extra 1.5% on their unimaginable capital gains to fix crumbling infrastructure and feed starving people, they are reading about gods. Beings to both worship and aspire to. The prevailing morality in the US is that wealth is a natural byproduct of Doing Things Right. Thus, these people are not only able to curry favor with every level of politician necessary to prevent anyone from taking their wealth from them; they are divinely touched, the favored pantheon of capitalism. Who are we to question their might?
posted by Mayor West at 10:26 AM on January 21 [1 favorite]


Perhaps the top 85 are actually slaves to the world capitalist system of which we are all apart, like an ant queen is in some ways the slave of her colony. Unhappy, bloated, but kept around for their irreplaceable capital-allocation skills.

Ehhhhh... nah.
posted by Pope Guilty at 10:27 AM on January 21 [5 favorites]


It's hard for me to understand what the arguments would be against capping wealth. Like, say, after a billion dollars, maybe you have all the wealth you can have.

You commie pinko you
posted by Melismata at 10:29 AM on January 21


You commie pinko you

Hilariously, my growing approval of redistribution is really uncomfortable for me because of all that my family suffered under Communism before we escaped Soviet Russia.
posted by prefpara at 10:32 AM on January 21 [4 favorites]


It's hard for me to understand what the arguments would be against capping wealth.

Well, for one thing, does that billion dollar limit apply only to individuals, or to corporations too? Because as I've observed upthread, there are a ton of corporations who own several times more assets than the richest individual in the world. Limiting individual wealth and limiting corporate wealth are different things, I'd suggest.

Second, particularly with respect to corporate wealth, just like you can do things with $1 billion that you can't with $1 million, you can do things with $10 billion that you can't with $1 billion. I'm not talking just doing more of the same stuff. Amazon and Google could not exist with a "wealth cap," because the organizations they run are worth more than $1 billion and couldn't do what they do if they were broken into smaller segments. Same goes for Wal-Mart, power utilities, oil companies, hell, even auto manufacturers. It takes more than a billion in equity to a lot of things on a national or global scale.
posted by valkyryn at 10:44 AM on January 21 [1 favorite]


I was just talking about individual wealth.
posted by prefpara at 10:48 AM on January 21


The system works!
posted by Hiding From Goro at 10:50 AM on January 21


Same goes for Wal-Mart...

I think most people arguing for a personal wealth cap would be happy to see Wal-mart broken into a thousand or 10,000 shards. Like maybe into the thousands of locally-owned stores which provided better jobs than Wal-mart ever did
posted by tyllwin at 10:53 AM on January 21 [3 favorites]


I was just talking about individual wealth.

That's a bit different.

I think the main issue there is that that would require a major restructuring of the legal system in most modern countries. For instance, the US has the Fifth Amendment, which says that the government cannot seize private property without paying for it. Imposing some kind of "wealth cap" would amount to seizure, requiring the government to pay for all of that. But, of course, that would leave the people with just as much cash as they had before, so that's not really a solution.

Further, the right to property is one of the most basic in Western legal systems. In feudal times, the king was the ultimate landowner, and everyone else owned property at his sufferance. Today, everyone owns their own property, free and clear, and the state has no more claim to it than any other party. So arbitrarily saying that no one can own more than a certain amount of stuff would violate some pretty fundamental liberties in ways that the courts would probably interpret as a violation of due process.

Other countries may have slightly different doctrines involved, but the basic idea is the same. As currently constituted, most democratic governments don't really have any legal basis for imposing something like this.

Another possibility might be the imposition of some kind of "wealth tax" that hits 100% above a certain threshold. Unfortunately, that would probably constitute a "direct tax," which has its own Art. I. Simply put, the government can't impose taxes directly on individuals* unless those taxes are proportional to the census. It would probably take a constitutional amendment to pass a wealth tax.

Morally. . . I dunno. I'm not sure I have strong feelings either way. On one hand, I hate the idea that the government should be allowed to say "You have enough stuff, we'll take the rest." On the other hand, a billion dollars is a lot of money. Meh.

*Income taxes are authorized by the Seventeenth Amendment, which was required to get around the apportionment requirement in Art. I.
posted by valkyryn at 11:04 AM on January 21 [1 favorite]


Drastic and massive inheritance taxation. No person can inherit more than the equivalent of 1 million USD a year for their lifespan.

No person can inherit in excess of 5 million USD in assets such as property.

Income in excess of 5 million a year is taxed at 85%

All income made from xyz country is subject to taxation within that country regardless of residency regardless of location of headquarters.

fiddle with the numbers as needed

etc


We can fix issues but $ is speech and power if 85 people have 1/2 the individual global resources there is jack all that would actually be done.
posted by edgeways at 11:08 AM on January 21


In 1944, the top marginal rate in the United States was 94%. It wouldn't go below 70 until Reagan cut it to 50% in 1982.
posted by DirtyOldTown at 11:12 AM on January 21 [5 favorites]


Drastic and massive inheritance taxation.

One can easily avoid that with trusts, and outlawing them would be really problematic.

Income in excess of 5 million a year is taxed at 85%

I'm actually in favor of that, but I don't think it would do what you want it to do. Rich people didn't get rich by paying lots of taxes. One can always find ways of avoiding income taxation. People like to talk about this:

In 1944, the top marginal rate in the United States was 94%. It wouldn't go below 70 until Reagan cut it to 50% in 1982.

But they forget that the 1950s to 1970s were era of the fantastical corporate expense account. You think Sterling Cooper et al provided its employees with such fantastic perks and paid for so many lavish dinners out on the town because it was in the company's best interest? It was really a way of funneling compensation to its employees and directors without having it show up as income. Well, those rules were tightened about the same time the income tax was cut. Suffice it to say that if you try to impose some kind of tax which will prevent people from getting paid more than you think they ought to, they'll find some way of getting around it. Why do you think the tax code is tens of thousands of pages anyway?
posted by valkyryn at 11:18 AM on January 21 [1 favorite]


We will soon live in a world where equality of opportunity is just a dream.

Is this like how we will "soon live in a world" where warming above 2 degrees will be an irreversible certainty?

That world is here. "Equality of opportunity" is a lie and always has been. There is no way it could ever be a fact, not even if every cohort of children were raised by identical robots in identical facilities far from the corrupting influence of society or parents. It is utterly impossible to achieve.
posted by Steely-eyed Missile Man at 11:24 AM on January 21 [1 favorite]


So, we shouldn't raise income taxes because the rich will find away around it? Maybe if, instead, we eliminated all taxes on the highest incomes, they'd spend the extra in ways that benefit the rest of society. Their wealth would "trickle down," so to speak.
posted by bradf at 11:25 AM on January 21 [6 favorites]


prefpara: "It's hard for me to understand what the arguments would be against capping wealth. Like, say, after a billion dollars, maybe you have all the wealth you can have."

FREEDOM!
posted by symbioid at 11:26 AM on January 21


So, we shouldn't raise income taxes because the rich will find away around it? Maybe if, instead, we eliminated all taxes on the highest incomes, they'd spend the extra in ways that benefit the rest of society. Their wealth would "trickle down," so to speak.

Adding snark to your proposal does not improve its merits.
posted by valkyryn at 11:34 AM on January 21 [1 favorite]


bradf: "So, we shouldn't raise income taxes because the rich will find away around it? Maybe if, instead, we eliminated all taxes on the highest incomes, they'd spend the extra in ways that benefit the rest of society. Their wealth would "trickle down," so to speak."

You're not going to find anyone here to disagree with the underlying sentiment, but there are people here with an understanding of how laws and governments work that are saying "yeah this is going to be tricky to actually do effectively".

Unless all you want to do in this thread is repeat "eat the rich" a hundred times, in which case, well, c.f. every past thread we've ever had about wealth inequality.
posted by danny the boy at 11:34 AM on January 21 [1 favorite]


I realize there are practical issues with implementing a wealth cap in the real world (to put it mildly). I just don't see why, ex ante, we should prefer not to have a wealth cap. In general. From a moral perspective as well as from a practical one.

That said, I'm not sure it's necessary to get into the Fifth Amendment when the government could just tax wealth at a higher rate. Saying people will find ways around that doesn't seem like a strong argument against passing the law. There is always someone, somewhere, breaking the law. Only in rare cases (e.g. Prohibition) has lawbreaking on a large scale actually led to legal reform. I'd also add that laws have many functions, and one of them is to signal values. I find attractive the notion of signalling, as a society, that we think after a certain amount of wealth, it's more important to invest in society than to allow individuals to continue to amass. Even if the taxation scheme is not perfectly enforceable.
posted by prefpara at 11:40 AM on January 21


What baffles me is that the reaction to this seems similar to all the news that we are rapidly approaching a devastating period of climate change -- no one seems to care much.

Someone says this in every thread about every massive human stupidity/injustice in the world.

I care plenty, but what am I supposed to do? I vote Green Party. I recycle. My next car is going to be a hybrid. I don't shop at Wal-Mart. If I win the lottery, the majority of my money is going to certain causes I believe in, because me and my family only need so much to live on comfortably for the rest of our lives. I make donations to things like Oxfam, Doctors Without Borders, and Water.org. I've written to my useless Republican millionaire climate-change-denying homophobic misogynistic embarrassment of a Congressman. I've read books on income inequality, critiques of capitalism, transition to a post-scarcity economy. I've written long-winded statements about what I believe the top issues in the world are -- as part of a withdrawal from political news because that shit is just toxic. Helpless, spluttering, white-knuckled red-faced anger is toxic.

If you have any suggestions for ways that people who care about income inequality and the environment, as well as other important issues of the day, can do something positive that we are not already doing, and can snatch victory away from the rich and powerful and the influence they wield over people who vote against their own best interests... I'm open to suggestions.

Meanwhile I cross my fingers and hope for "conservatism" to die, while trying to maintain my own peace in what seems like an accelerating dystopia.
posted by Foosnark at 11:43 AM on January 21 [12 favorites]


"Tax the rich! Cap their wealth!" are not solutions. Why would they ever increase taxes on themselves? Who is going to take their wealth away? "Our" representatives in Congress are largely bought and paid for, so they're not going to make any significant difference. I don't see any realistic routes for redressing the problem.

Throughout history, has income inequality ever gotten better through peaceful, democratic means? (Not a rhetorical question.)
posted by desjardins at 11:51 AM on January 21 [1 favorite]


I just don't see why, ex ante, we should prefer not to have a wealth cap. In general. From a moral perspective as well as from a practical one.

Well for starters, unless this is a proposal I don't understand, you are going to have to have a marginal tax rate of 100% at some income level to accomplish that. That's clearly not the government-revenue-maximizing rate--even Saez and Diamond, who are very concerned with inequality, only come up with 76% in an ideal no-loopholes situation (IIRC), and that's with some strong assumptions about income elasticities. In other words, to support a 100% rate, you have to believe that it is so important to prevent people from becoming very wealthy that it's worth the government actually having less money for schools and transit and whatever (NOT less relative to today's tax rates, but less relative to a theoretical maximum).
posted by dsfan at 11:52 AM on January 21


So it's really not about the 1% so much as it's about 100 individuals.
posted by five fresh fish at 11:53 AM on January 21


A problem with our tax structure is that while wealth accumulates exponentially, taxation does not.

A problem with our currency is that we use the same dollar to buy a loaf of bread as we do to measure the net worth of billionaires.
posted by five fresh fish at 11:55 AM on January 21 [1 favorite]


I'm not sure it's necessary to get into the Fifth Amendment when the government could just tax wealth at a higher rate.

Umm. . . currently that rate is 0% for several reasons having to do with the federal constitution, including the Fifth Amendment. Inheritance tax is only possible because it's an excise tax on a transfer, not a wealth tax per se.

Again, it would probably require a constitutional amendment to get around the Apportionment Clause in Art. I before a wealth tax would be constitutional.
posted by valkyryn at 11:56 AM on January 21


So it's really not about the 1% so much as it's about 100 individuals.

And bear in mind always, they don't have incomes so much as they have assets.
posted by IndigoJones at 11:56 AM on January 21


Is there an actual LIST of the 85 somewhere?
posted by scolbath at 11:58 AM on January 21


And bear in mind always, they don't have incomes so much as they have assets.

Important, that. Income and assets are very different things, both economically and legally. Almost everyone has at least some income, and income disparity isn't nearly as great as asset disparity for that very reason.
posted by valkyryn at 11:59 AM on January 21


If you have any suggestions for ways that people who care about income inequality and the environment, as well as other important issues of the day, can do something positive that we are not already doing, and can snatch victory away from the rich and powerful and the influence they wield over people who vote against their own best interests... I'm open to suggestions.

So am I. I care myself, and your list of things you do sounds similar to mine. I'd also love to know how to solve my bafflement about why others don't and how to address that.
posted by bearwife at 12:02 PM on January 21


I haven't proposed a specific taxation scheme, so I think you may be arguing against a ghost. It does seem unlikely to me that there is simply no way to structure taxes so as to dramatically increase the amount paid by the wealthy as compared to the present day. But that was never the question that I found interesting. I was just bringing up a question of general principle.
posted by prefpara at 12:03 PM on January 21


Is there an actual LIST of the 85 somewhere?

Here you go.
posted by Kirth Gerson at 12:17 PM on January 21 [1 favorite]


It does seem unlikely to me that there is simply no way to structure taxes so as to dramatically increase the amount paid by the wealthy as compared to the present day.

There may be, but if that change involves a direct tax on assets, i.e., a "wealth tax," you'll run into the problems I discuss above.

There's another problem though. California has historically had a higher percentage of its taxes paid by the wealthy than the federal government. What that meant is that during the financial crisis, when the wealthy had a pretty crappy few years all things considered, California's tax receipts tanked. That's the thing about these people. Their incomes are large in the aggregate, but very spiky. A guy might make $1 million this year, $10 million the next, and come in at a $50k loss in year three. That's still a lot of money any way you slice it, but the taxes based on that income vary drastically Individuals can afford to save up and float themselves on past savings, but governments can't. Or at least they don't in practice, as every cent that comes in the door is already spoken for, and then some. So leaning to heavily on the income of the rich, which does go way up and way down, has its own problems.

Also, I think we're starting to find that for progressive taxation to be effective, the curve needs to rise a lot earlier than most people think. The ACA is already starting to do this. Subsidies cut out at a "mere" $95k for a family of four. That's not poor by any means, but it's nowhere close to being "wealthy." But that's what they had to do to make the numbers work. A million people making $95k each represent $95 billion in taxable income. Even at a 100% tax rate for incomes above $5 million, that's a lot to try to get from a much, much smaller number of people. As the whole context of this post is the concentration of wealth and income on a shockingly low number of people, you can't get around that problem when talking about progressive taxation.
posted by valkyryn at 12:20 PM on January 21 [1 favorite]


If you think I'm getting on a train with the Walton family, or heaven forbid, the Kochs, you people better think again. Larry and Sergey and I will be in the self-driving car, thank you very much. We might let Zuck tag along, but that guy can be such an ass.
posted by monju_bosatsu at 12:22 PM on January 21


What that meant is that during the financial crisis, when the wealthy had a pretty crappy few years all things considered, California's tax receipts tanked.

Is it the kind of income they're invested in that creates risk here, or something in the nature of the wealthy?

Because if the result of taxing the wealthy is to create a more financially stable and solvent middle and lower class, it seems like neither "rich people's income being variable" nor "taxing the middle/lower class" are problems in the same way that they are before redistribution.
posted by tychotesla at 12:25 PM on January 21


Thanks, Kirth Gerson - I missed that they just used the Forbes list.
posted by scolbath at 12:37 PM on January 21


I don't know that they did, but I have faith that Forbes knows who its idols are.
posted by Kirth Gerson at 12:40 PM on January 21


That's the thing about these people. Their incomes are large in the aggregate, but very spiky. A guy might make $1 million this year, $10 million the next, and come in at a $50k loss in year three.

Yeah, I'll take it.
posted by Steely-eyed Missile Man at 12:54 PM on January 21 [2 favorites]


Is it the kind of income they're invested in that creates risk here, or something in the nature of the wealthy?

Both, actually. If you look at any given person who brings in more than $5 million annually, most of that income isn't going to come in the form of wages. A lot of it is going to be "unearned" income of some sort, i.e., returns on equity/capital. Once we're in that realm, the idea of a "paycheck" with the regularity that implies goes right out the door. We're talking about people who find it convenient to engineer losses because the tax situation means they'll come out ahead. But investment income is really spiky and very, very sensitive to things like market gyrations.

I mean, I'm self-employed, and barely breaking even (if I hit $50k this year it'll be a miracle), but because it's from a business instead of a salary, it's really irregular. One week I might bring in nothing. The next it might be $500. And if one of the cases I'm working on settles the way I think it's going to, I'll deposit a check for something like $5,000. But probably nothing for at least a week or two after that. Take that idea and multiply it by a thousand and you get some concept of how wealthy people's passive investment income really works. Dividend payments are awesome, but (1) they're usually only quarterly or less, (2) they're somewhat dependent upon corporate profitability, which is variable, (3) they can be reduced or eliminated at the discretion of the board,* and they're not taxed like wages anyway.

Capital gains, you say? Yeah, even worse. You get the idea.

*A lot of UK pensioners took a real hit in the wake of the BP oil spill, as the company had to reduce its dividend payments to deal with the costs of defense and clean up.
posted by valkyryn at 12:55 PM on January 21 [1 favorite]


Why would the 85 wealthiest people all crowd into a single train car when they can each afford their own train?

It's a Veblen train.
posted by benzenedream at 1:17 PM on January 21


valkyryn, it was the 16th amendment that gave us income tax. the 17th amendment was for direct election of senators.
posted by bruce at 1:22 PM on January 21 [1 favorite]


Fair enough. My mistake.
posted by valkyryn at 1:22 PM on January 21


Just return the tax code and the marginal brackets (adjusted for inflation) to where they were in the 1950s. You know, that period of near-uninterrupted prosperity and growth?
Surely that wouldn't require a massive overhaul or constitutional amendment?

And while we're at it, return labor laws and union protections to where they were back then, too.
posted by rocket88 at 1:52 PM on January 21 [7 favorites]


Why would the 85 wealthiest people all crowd into a single train car...?

A rumour went around that somebody lost twenty bucks in one of the seats.
posted by turbid dahlia at 2:12 PM on January 21 [4 favorites]


I've been toying for a while with the concept of defining tax rates using a bounded curve that approaches but never reaches 100%. Technically the increase in net income will always be greater than zero for any given increase in gross income but at a certain point the required increase in gross income makes it pointless to even try and squeeze another buck out of the total.

This approach would make it possible for a society to determine at will at what level stability and maintenance should be favored over growth and growth could be limited to where it makes most sense. Protection against any entity growing too large and the emergence of monopolies would be built into the system.
posted by Hairy Lobster at 2:16 PM on January 21


Divide his things up among each other
After they killed him of course
They could see no real good reason not to just
Take what they wanted by force
When they found him he said:
Hey, wait a minute fellas, I wouldn't kill me just now
You can see that I've got more than any of you
Have ever got, wouldn't you first at least like to know how?


I'm thinking that if the rich guy honestly admits how he came to own half the planet the others will decide killing is too good for him.
posted by straight at 3:23 PM on January 21 [1 favorite]


We really need to move the Overton window on this one. It would be nice if, after a few years, status quo defenders at least had to say, "Well yes, there is no moral argument why it's better for billions to starve than have 85 people forcibly reduced to one-billionaires, but the practicalities are so infeasible." It's still a long way from that to actual policy (let alone constitutional amendments), but we've rapidly gotten to the point where very few in the center explicitly defend extreme inequality any more (though of course doing something about it is so practically infeasible...). Similarly, moving the Overton window on the wealth tax discussion might actually be possible right now. Defending the paramount right of the second billion is a hard part to argue -- as long as people are out there making them actually argue it.

[That said, I have no idea what it would even mean to take, say, $10 billion from 100 people and redistribute it. How are those assets made liquid, and what does that do to the firms and other entities those assets are invested in?]
posted by chortly at 4:35 PM on January 21


These people are living lavish lifestyles so they must have liquid income. Tax it. And there's no reason why investment income should be taxed less than earned income. They can't be spending stocks and bonds so there must be income that can be taxed.
Next, tax all inheritance as income to whoever receives it. Make $1M tax free for spouse and children and tax the rest. If that means selling shares or making private corporations public to raise cash for the tax bill then so be it.
posted by rocket88 at 6:40 PM on January 21 [1 favorite]


Many rich people hide their wealth so the Forbes list is a fun house mirror emphasizing countries with transparency.
posted by stbalbach at 8:11 PM on January 21 [1 favorite]


I recall reading that we'll soon see trillionaires. I rather suspect there have long been a few trillionaires, and they've been very good at remaining invisible.
posted by five fresh fish at 8:34 PM on January 21


The Invisible Trillionaire. Next on Fox.
posted by telstar at 8:55 PM on January 21 [1 favorite]


Invisible, but still susceptible to torches and pitchforks.
posted by five fresh fish at 9:03 PM on January 21


Invisible, but still susceptible to torches and pitchforks.

Honestly, it's very unlikely that this is true.
posted by IAmUnaware at 10:54 PM on January 21 [1 favorite]


The Invisible Trillionaire. Next on Fox.

I did think that Murdoch's ranking is a bit suspiciously low...
posted by Apocryphon at 12:11 AM on January 22


Just return the tax code and the marginal brackets (adjusted for inflation) to where they were in the 1950s. You know, that period of near-uninterrupted prosperity and growth?

Unless you were a woman or racial minority. How much of that "uninterrupted prosperity" came their way, eh? The fact that such people are mostly better off now than they were then suggests, to me anyway, that tax codes do what you seem to want them to do.
posted by valkyryn at 3:46 AM on January 22


Are you suggesting that higher marginal taxes are bad for women and minorities? Or that Reagan's trickle-down tax cuts are what made things better for them?
posted by rocket88 at 5:23 AM on January 22


I'm not sure I like this statement because many people, even in rich countries, have zero or negative wealth (debt) -- wealth accumulation is really hard, even if you have income! So you could say "I have more wealth than the bottom 1 billion people" but that's not actually interesting if the bottom 1 million people have $0 collectively.

Not that the top 85 aren't really filthy stinking rich. But the statistic is misleading.
posted by miyabo at 8:00 AM on January 22 [1 favorite]


Marx Is Back: The global working class is starting to unite -- and that's a good thing
[I]t is exactly because the rich and poor will look increasingly similar in Lagos and London that it's more likely that the workers of the world in 2030 will unite. As technology and trade level the playing field and bring humanity closer together, the world's projected 3.5 billion laborers may finally realize how much more they have in common with each other than with the über-wealthy elites in their own countries.

They'll pressure governments to collaborate to ensure that their sweat and blood don't excessively enrich a tiny, global capitalist elite, but are spread more widely. They'll work to shut down tax havens where the world's plutocrats hide their earnings, and they'll advocate for treaties to prevent a "race to the bottom" in labor regulations and tax rates designed to attract companies. And they'll push to ensure it isn't just the world's richest who benefit from a global lifestyle -- by striving to open up free movement of labor for all, not just within countries but among them. Sure, it's not quite a proletarian revolution. But then again, the middle class has never been the most ardent of revolutionaries -- only the most effective. The next decade won't so much see the politics of desperate poverty taking on plutocracy, as the middle class taking back its own. But it all might put a ghostly smile on Karl's face nonetheless.
i mentioned this in the gates foundation thread, but i thought it'd be worth repeating here again too :P

cheers!
posted by kliuless at 9:00 AM on January 22 [1 favorite]


Democracy vs. Inequality
posted by the man of twists and turns at 3:04 PM on February 2


How When Harry Met Sally Explains Inequality

The Middle Class Is Steadily Eroding. Just Ask the Business World.
posted by the man of twists and turns at 8:15 AM on February 3 [1 favorite]


Omnivore: Get serious about rising inequality
posted by homunculus at 1:32 PM on February 3


Omnivore: The Vicious Circle Of Income Inequality
posted by the man of twists and turns at 12:18 AM on February 14


We All Know That Inequality Is Growing, but What Should We Do About It?
posted by the man of twists and turns at 5:02 PM on February 17


Robert Reich: America’s “We” Problem
America has a serious “We” problem—as in “Why should we pay for them?”The question is popping up all over the place. It underlies the debate over extending unemployment benefits to the long-term unemployed and providing food stamps to the poor.

It’s found in the resistance of some young and healthy people to being required to buy health insurance in order to help pay for people with preexisting health problems. It can be heard among the residents of upscale neighborhoods who don’t want their tax dollars going to the inhabitants of poorer neighborhoods nearby.
posted by the man of twists and turns at 7:33 PM on February 17 [2 favorites]


As Gary Wills put it, "The proof that we live in a plutocracy is not that the wealthy get most of the prizes in our society, but that majorities think that is how it should be."
posted by Going To Maine at 7:44 PM on February 17


Lawrence H,. Summers: America risks becoming a Downton Abbey economy
The share of income going to the top 1 per cent of earners has increased sharply. A rising share of output is going to profits. Real wages are stagnant. Family incomes have not risen as fast as productivity. The cumulative effect of all these developments is that the US may well be on the way to becoming a Downton Abbey economy. It is very likely that these issues will be with us long after the cyclical conditions have normalized and budget deficits have at last been addressed.

President Barack Obama is right to be concerned. Those who condemn him for “tearing down the wealthy” and engaging in un-American populism are, to put it politely, lacking in historical perspective. Presidents from Franklin Roosevelt to Harry Truman railed against the excesses of a privileged few in finance and business. Some have gone beyond rhetoric. Confronted with rising steel prices, John Kennedy sent the FBI storming into corporate offices and is widely thought to have ordered the authorities to audit executives’ personal tax returns. Richard Nixon used the same weapon in 1973, announcing tax investigations “of the books of companies which raised their prices more than 1.5 per cent above the January ceiling.” All were reacting in their own way to a phenomenon that Bill Clinton has described best: “Although America’s rich got richer . . . the country did not . . . the stock market tripled but wages went down.”
posted by the man of twists and turns at 8:38 AM on February 19


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