And “create” is a generous term there. If you and I start trading MSFT back and forth at a dollar above yesterday’s price, that’s $7.4B more wealth than there was yesterday.
You don’t need that explained, but other threads have proven that the notion that wealth is not summed production is mind-blowing to some readers. See also “I pay $500K, I get a house. Who gets the wealth created by that transaction?”
I agree with what I quoted above. But it’s side-stepping the issue that I am addressing: extreme wealth.
What is the purpose of wealth? It is deferred consumption: do something of value now, while deferring the use of that value until later. Once a person has enough wealth that they cannot reasonably consume it within their own lifetime, they have an immorally large amount of wealth. A moral person will find moral ways to use their excess wealth, until they no longer have excess.
I’m not sure there’s a precise threshold for which wealth becomes excessive, but billionaire seems clearly above it.
I too have an intuition that excess wealth is immoral, but I’m not sure it holds up to scrutiny.
“Comsumption” makes me think of something being used up, but not all wealth can be consumed in that sense. If I am wealthy, it means I own things of value. What can I do with those things of value? It looks like my options are:
If they’re the kind of thing that can’t be divided up, selling them or giving them away just transfers the immorality to someone else who now owns them.
If you’re just concerned with keeping any one individual from having excessive wealth, #4 looks like the most acceptable option; but it’s hard to justify something like running a company into the ground or throwing a rare painting on the fire as the morally correct option.
Not all consumption is moral.
Right—so what should the person who owns the wealth do with it?
It’s a burden. Conceptually, the easiest way is to give your excess wealth to those who will use it well. Practically, that’s difficult, but if you are a billionaire, you have access to resources and others who can help you.
I would have thought it was obvious in a discussion of the enactment of income tax that we were talking about its original enactment.
You forgot #5, use your wealth as a lever to get more wealth.
It’s not like people earn enough money to provide for their families needs and then stop, they earn enough to provide for the next generation, then 5 generations, then 20 generations, and use their power and influence to make sure the tap never stops.
People with generations of wealth stored away use that wealth to influence laws to ensure they have negotiating leverage over people who are trying to earn enough money to feed their kids next week. It has always been this way.
Agree with this. Wealth = security. If you are already secured for this lifetime, then you need more wealth for successive generations, right? So they wont have to work or worry, or ever have to confront insecurity.
Some investments are a zero-sum game. If you make money someone else has lost money (Futures do this).
But not all. E.G. Stocks can rise in value without anyone else losing money.
They’re “allowed” to keep whatever they want. And I’m “allowed” to believe they are morally bankrupt for keeping it. In the specific case of Amazon I’ll add that they’re morally bankrupt for ever making it in the first place. That was wealth built on the backs of the working class, under unfair and dangerous labor conditions, using business practices that have made it increasingly difficult for creators to get paid what they’re worth. As far as I’m concerned, Amazon owes me money. At the least, they owe me free Prime shipping for all the shit I now can’t buy anywhere else.
Nothing immoral about making investments that go up in value, either because of luck or your own research.
I think the capital gains tax should be abolished, but I won’t hijack the thread over it.
Abolished as in “capital gains should be taxed as normal income,” or “capital gains should not be taxed”?
I am wondering if the term “capital gains” in this thread has two meanings?:
Are we talking apples and oranges, or something, or maybe I am just missing something. It seems confusing that we are talking about how much money a company makes - isn’t that just profit? I guess I am not familiar enough with all the financial terms.
Yes, many people (starting with the OP) are equating “capital gains” with any sort of accumulated wealth. Since a 1% appreciation over more than one year on a modest family home is technically a capital gain, the answer to the OP’s question is clearly (IMO) no – capital gains do not screw the poor.
Perhaps the thread title should have been Do vast accumulations of personal wealth screw the poor?
ISTM the more pertinent question is “Does a lower tax on capital gains screw the poor?”
No, I think the OP was specifically asking about wealth gained from investments.
The issue is how you define security. It’s not just a matter of storing up enough wealth. Security often also means gaining political influence and ensuring that the government runs the country in a way that benefits you - even in situations where that doesn’t benefit the country as a whole.
I believe that’s generally referred to as a corporate income tax.
The error in all of this is thinking that, e.g. Bill Gates created all the value MSFT is worth. Nope. He had about 100,000 people doing that with him most years. And over the ~40 year total run, maybe 500K people have worked there. They all contributed to producing the product that caused Wall street to bid up the stock price to where it is today. But by and large Bill was the only guy who got much of the fruit of that part of labor’s labor.
If all forms of business had to pay their employees in not only wages but shares of ownership every year, there’d be less of an extreme inequality problem.
Of all the fat cats in the world today, Bill Gates is probably the one with the most legitimate claim to having done good in the world both as an entrepreneur, as the creator of genuine economic value in the larger world, and as a later philanthropist. So don’t interpret my comments as directed at him specifically. He’s just an instantly recognizable exemplar of the business founder who kept the vast bulk of the stock price appreciation his company ever created.
Isn’t this literally exactly what the wealthiest billionaires are doing today?
The Giving Pledge is a campaign, founded by Bill Gates and Warren Buffett, to encourage wealthy people to contribute a majority of their wealth to philanthropic causes. As of June 2022, the pledge has 236 signatories from 28 countries. Most of the signatories of the pledge are billionaires, and as of 2016, their pledges are estimated to a total of US$600 billion.
It’s higher now. For one example:
“To help make this spending increase possible, I am transferring $20bn to the foundation’s endowment this month,” Gates announced on Twitter, later explaining, “As I look to the future, I plan to give virtually all of my wealth to the foundation. I will move down and eventually off of the list of the world’s richest people.”
The foundation’s efforts include fighting disease and poverty across the globe, including by helping to support the Guardian’s Global Development series.
“I have an obligation to return my resources to society in ways that have the greatest impact for reducing suffering and improving lives,” said Gates, whom Bloomberg reports is worth approximately $113bn. “And I hope others in positions of great wealth and privilege will step up in this moment too.”
And please don’t say they should just dump all their money all at once today. That would create chaos and wind up hurting tens of millions of people the gradual and intelligent dispersion of money could otherwise help.