Saturday, June 04, 2005

The moral problem with the super-rich

I have a lot of objections to the super-rich, and most of them, from a policy perspective, have to do with the concentration of power. As virtually no one would deny, money is power, and concentrating money in the hands of the few is thus fundamentally anti-democratic.

But from a philosophical perspective, my objection to the superrich is actually a bit more nuanced. Philosophically, I don't have a problem with individuals who earn a large amount of money: they've excelled at something, and deserve to keep whatever they've got (within limits, since all huge earnings only take place by leveraging social infrastructure). What I really object to is actually not earned wealth, so much as unearned wealth -- whether of the landed aristocratic sort, or of the bourgeois sort.

If we had a radical inheritence tax, I'd be much more inclined to let current wage earners keep much more of their income. If by their talents certain individuals earn large sums, and they then choose to exercise those talents in the political arena, then that's fine -- I've got no objections to the Ross Perots or the Mikhail Khordokhovskys.

What I object to, however, are the cosseted children of the superrich. (A small precaution: this attitude probably reflects bad experiences I had in prep school with the dipshit children of the superrich who, without the slightest sense of irony or self-awareness, honestly believed they were entitled to their parents' money; this attitude struck me as exactly identical to that of "welfare queens" who believe they are entitled to the state's money: what the F have either done, personally, to earn this entitlement?)

There's actually solid philosophical grounding for this attitude, I might add. If you read John Locke's Second Treatise on Government (the founding text of modern liberalism), Locke explains that the reason people have the "right" to property is that they have "commingled their Labour with it"; in other words, that they have invested part of their own personal being in the property. Locke makes this argument to set up the point that for the government (or anyone else) to expropriate a person's property is essentially to rob that person of part of their own personage. This is to me a compelling argument.

But no argument about "the labor invested in acquired property" applies to inherited wealth. The children of the rich have invested exactly nothing of their labor in whatever wealth they inherit. They simply have got it by a fluke of law.

Any meritocrat, and any democrat, thus ought to object to inherited wealth. This principle explains why I believe, essentially, in a confiscatory inheritence tax (a position, I should perhaps disclose, not without considerable negative personal ramifications). A confiscatory inheritence tax is the natural corrolary of a belief in meritocracy: every individual must earn his or her own way; the fact that your father (or more rarely, mother) earned a huge amount should have minimal bearing on your economic options and opportunities.

5 comments:

zachawry said...

So you are saying that in your perfect world the government would deprive people the right to bequeath things to their children, all because you met some snots in high-school?

What about, say, a grandmother's diamond ring? Hey, her granddaughter didn't earn that--she obviously has no right to wear it. Why should a son continue to live in his father's house after he passes away? He didn't pay the mortgage, the punk. To the government!

You would also have to outlaw gifts while alive, or else a good portion of the estate could be passed on while the generation who earned it was still living.

Oh wait, you're going to prevent people from giving money to others? What about charity? Why should the charity be able to receive money? They haven't earned it, and in your world the only person with the right to any property is the one who actually earned it.

Not only is this supremely morally obtuse, but people would figure out a way to get around it unless you outlawed all gift-giving at all.

Nice society.

The legal ability to give gifts to your kids is not contrary to the idea of a meritocracy, as you state, since the idea of merit is that those who posses it get to do what they wish with its rewards (within reasonable limit). In your dream society, however, the rewards of work are really only on loan from the government, who in truth owns them, because the government is the only entity to whom the earner can make a gift of the fruits of his labor.

Finally,

(A small precaution: this attitude probably reflects bad experiences I had in prep school with the dipshit children of the superrich who, without the slightest sense of irony or self-awareness, honestly believed they were entitled to their parents' money; this attitude struck me as exactly identical to that of "welfare queens" who believe they are entitled to the state's money: what the F have either done, personally, to earn this entitlement?)

I'm sure those kids really were obnoxious, but that doesn't alter the fact that there is a HUGE difference. The kids literally and figurative were entitled to receive the gifts their parents wanted to give them voluntarily. Welfare, however, although I am all in favor of it, is totally involuntary on the part of the giver. I give a very small part of my paycheck to every welfare recipient. Although I am glad to do it, and I think the system is fair, even if I didn't I would go to jail if I did not pay my taxes. So, the threat of jail kind of makes a teensy-weensy difference between the status of the gifts given to the rich kid and the welfare recipient.

purpleprose said...

Teach me to be confessional about the personal experiences that lead to political attitudes....

Zak, you said: "The only person with the right to any property is the one who actually earned it.... This supremely morally obtuse."

That's right. The point is that everyone should have to make their own way in this world. It's called "personal responsibility" -- I don't see how that's morally obtuse.

For the record, I didn't say I believed in a 100% inheritence tax, precisely because of the diamond ring issue. As a matter of practical policy, I think some exemption (say, $500K per individual) is reasonable, with perhaps a couple of steps to the tax above that (50% to $2M, 95% thereafter?).

Despite my small precaution, the real point is not about "getting back" at the annoying rich kids from high school. The real point is about democracy: it's about avoiding excessive concentrations of wealth (and, thereby, power) that can be passed along indefinitely intragenerationally, creating a hereditary overclass,and with it, a plutocracy. As we all know, it takes money to make money, and if we're going to have either a meritocracy in the economic realm, or a democracy worthy of the name in the political realm, then we need to do some field-leveling between generations.

As for the argument that "people would figure out a way to get around it," there's no doubt that actually implementing this tax policy (like any tax policy) would require continuous iteration.

At the same time, I dispute your assertion that the rich will just dodge the taxes anyway: if it were really that easy, then why would the Republicans be so intent on abolishing the estate tax? If you're hyperrich, it's not that hard to avoid income taxes -- but the estate tax is in fact awfully hard to dodge without renouncing your citizenship.

I actually think that such a law would be GOOD for charitable giving, since people would have a choice when they died, "Do I want to give this money to the government, or is there some worthy nonprofit that can do better with the money?"

To reiterate: my policy goal here is not to enhance revenues, but rather to accelerate social mobility -- especially downward social mobility for the feckless progeny of the rich (ha!).

zachawry said...

I understand your point about mobility, and it is well-taken. It still seems inherently wrong to this American to take away almost everything when someone dies, even if that person is very rich.

That is why such a tax would never pass in the US, because it strikes people as inherently unfair. Even those who would benefit from it monetarily wouldn't like it because of this "moral" issue.

Anonymous said...

Zak, the dead don't have moral rights -- and you can't steal from them. Unless you think their souls are in heaven counting the value of their estates....

SBB said...

I resent that you imply that all children from super-wealthy parents do not become entitled to that property. There are responsible children who work hard, during their parents' lifetime to earn the right to that inheritence.

Being born super rich is no guarantee of an easy life. It's not easy to run a multi million dollar empire, grow up with the stress of business-minded parents, having to learn diplomacy at a young age. Not to mention that many entrepeuner-business parents who are super wealthy are also super-egos, difficult to live with and severely autocratic. Most would choose to trade that for a middle class family with easy going parents.

As for the super-snob idiots who do nothing but still view the inheritence as "theirs" - well, money runs out eventually - and it is just as likely they will end up with lots of money, but no purpose and no avenue for true self fulfilment.