Concentrated wealth: bad for democracy?

[lpetrich]

Cristina Alesci on Twitter: "“Maybe @BernieSanders shouldn’t exist,” says Blackstone’s Schwarzman in response to @alansmurray asking him to defend billionaires, which Sanders says should NOT exist https://t.co/YG5tHoSz3K" / Twitter
then
Alexandria Ocasio-Cortez on Twitter: "“Billionaires should not exist” does not mean certain people should not exist.
It means no person should have a billion dollars.
The ascent of billionaires is a symptom & outcome of an immoral system that tells people affordable insulin is impossible but exploitation is fine. https://t.co/fjxKOGIdc2" / Twitter
I think that that is excessive, but I do think that excessive wealth concentrations are bad for society and bad for democracy. That is because the owners of that concentrated wealth can much more easily buy political access than the rest of the population.

Public Citizen on Twitter: ".@AOC thinks concentrated wealth is incompatible with democracy. So did our founders. It's time to #TaxTheRich. https://t.co/GdTDC7mdWw" / Twitter
AOC’s Call For Abolishing Billionaires Is Deeply American

After popularizing the idea of a 70 percent top marginal tax rate earlier this month, the freshman congresswoman recently suggested that the mere existence of billionaires was both immoral, and a threat to American democracy. “I do think that a system that allows billionaires to exist when there are parts of Alabama where people are still getting ringworm because they don’t have access to public health is wrong,” Ocasio-Cortez told the writer Ta-Nehisi Coates, during an interview on Martin Luther King Day. One day later, the congresswoman approvingly quoted an op-ed by the economists Gabriel Zucman and Emmanuel Saez, which argued that the purpose of high taxes on the wealthy wasn’t merely to generate revenue, but rather, to safeguard “democracy against oligarchy.”

That article also mentioned

In a letter to James Madison, Jefferson wrote that the extremity of European inequality was not only morally suspect, but economically inefficient. Aristocrats had grown so wealthy, they were happy to leave their lands uncultivated, even as masses of idle workers were eager to improve it. Thus, these proto-billionaires undermined both the peasants’ ability to transcend mere subsistence, and their society’s capacity to develop economically.

His proposed solution?

Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.

... But it is not too soon to provide by every possible means that as few as possible shall be without a little portion of land. The small landholders are the most precious part of a state.

Thus endorsing progressive taxation. So if AOC is un-American, then Thomas Jefferson was un-American.

And while that strain might have been marginal among the leaders of the American Revolution, it was pervasive among its foot soldiers (there’s a reason the leading propagandist of the war effort, Thomas Paine, was one of the earliest champions of an American welfare state).

Regardless, Ocasio-Cortez’s second argument against the existence of billionaires — that concentrated wealth is incompatible with genuine democracy — was something close to conventional wisdom among the founders (including those who opposed democracy).

America’s first political theorists took these truths to be self-evident: that a person could not exercise political liberty if he did not possess a modicum of economic autonomy, and that disparities in wealth inevitably produced disparities of political power.

Jefferson's ideal was everybody owning their own land, and approximately equal lots of land at that.

Critically, relatively few of the founders saw these premises in a progressive light. To many 18th-century American elites, the fact that the propertyless lacked the capacity to exercise genuine political freedom was not an argument for giving them property, but rather, for denying them the franchise. Similarly, the notion that true democracy couldn’t coexist with wealth inequality struck many leaders of the early republic as an argument against democracy.

They seemed to prefer an aristocratic sort of republicanism - democracy limited to upper-class people and maybe also upper-middle-class people.

 

[Loren Pechtel]

Concentrated wealth is not good for society. The problem is we must be very careful in what we do about it as it's very easy for the cure to be worse than the disease.

Furthermore, note that we need inequality. Without it there is little incentive to better oneself.

 

[Jason Harvestdancer]

Is it a cause, or an effect? Does concentrated wealth cause harm to society, or is it a symptom of something wrong with society?

 

[lpetrich]

Related to that is how oil and democracy don't mix very well.

In the Middle East and the West, Oil and Democracy Don’t Mix | Columbia News

He argues that dependence on coal—a single, concentrated energy source—enabled people to build collective political power around the flow of that material. Workers wielded power because they could, through a general strike, shut down the entire system if their demands were not met. The sheer number of workers needed in the coal industry, and their access to critically important mines, rail yards and processing plants, gave them political power.

By contrast, oil workers are comparatively few, and they do not have to go into the ground themselves to bring up the oil. It goes right into a pipeline, onto a tanker and around the globe.

Thus, oil is more oligarchically controlled than coal, though coal has been becoming more oil-like with such large-scale mechanization as bucket-wheel excavators and giant dump trucks.

 Resource curse - politics becoming a contest over the ownership and distribution of resource wealth. Oil is an obvious one -- Saudi Arabia and the Gulf States are rich nations with much less democracy than most other nations with similar GDP per capita.

One can avoid that by making ownership of resources widely distributed. That is in Thomas Jefferson's ideal of everybody being a small farmer. Alternatively, resource-based wealth could be overshadowed by labor-based wealth.

 

[ruby sparks]

Great thread and good for thought. Yet again lpetrich you confirm your reputation as the best thread-starter in the forum.

Imho.

 

[lpetrich]

Alexandria Ocasio-Cortez on Twitter: "Hey everyone, I think I figured out how we’re going to pay for it https://t.co/zhKcUFdqYW" / Twitter
noting
David Leonhardt on Twitter: "Last year, for the first time on record, the 400 wealthiest Americans paid a lower total tax rate than any other income group. https://t.co/i9thIFaCRJ" / Twitter
Which will likely bring joy to the hearts of wealth worshippers.

Alexandria Ocasio-Cortez on Twitter: "(I love how GOP pundits are already saying “it’s not enough to pay for it!” even though “it” isn’t even defined in the tweet
It’s almost as if regardless of the circumstance, the GOP take is: “Whatever you’re talking about, don’t tax the rich - no matter what!”)" / Twitter
I'm sure that they know where the money is coming from to finance their careers.

Alexandria Ocasio-Cortez on Twitter: "Even billionaires are saying billionaires shouldn’t exist.
I wonder if extreme-wealth worshippers will listen to the point now that those with extreme wealth are saying it, too? https://t.co/1u4dqMZhKG" / Twitter
noting
Bloomberg on Twitter: "Mark Zuckerberg agrees with Bernie Sanders that billionaires probably shouldn't exist, but says he's trying to make his billionaire status useful [url]https://t.co/IfPV0jmcTt https://t.co/JI0xnQvGrb" / Twitter[/url]
Good luck with that. He ought to continue donating to politicians who are willing to (1) accept big money and (2) raise taxes on the very rich.

 

[Trausti]

Is it a cause, or an effect? Does concentrated wealth cause harm to society, or is it a symptom of something wrong with society?

Neither. It does not hurt you one bit that Zuckerberg or Gates is a billionaire. This is just the braying of the envious to make excuses for taking from others. Coveting another’s wealth and success is ruinious government policy. Remember the Kulaks.

 

[lpetrich]

Neither. It does not hurt you one bit that Zuckerberg or Gates is a billionaire. ...

It can and does if them and fellow billionaires and multimillionaires bid up the price of housing to unaffordable levels.

The Fountainhead: Poor Doors | Adam Lee

Some of the world’s most expensive cities are witnessing a trend: new residences get snapped up as fast as they’re built, but not for anyone to live in. They’re being bought by ultra-rich elites who care about the properties only as investments to flip later. In the meantime, they’re left unoccupied.

Many of the buyers are oligarchs from autocratic and corruption-plagued countries like Russia, China or Saudi Arabia. Rather than keep their money where it could be seized at the whim of the authorities, they park it in real estate in foreign nations with a stronger rule of law than their own. Expensive real estate is even better for the purpose, since it lets them squirrel away more cash. New York City and London have been particularly plagued by this trend, as have Toronto and Vancouver.

These “safe-deposit boxes in the sky” are so common, they create a bizarre spectacle: in the most expensive, exclusive neighborhoods in the world, block after block sits vacant.

For Wealthy Foreigners, NYC Apartments Are 'Safe Deposit Boxes With Views' - Business Insider

The reason it's raining money on Manhattan real estate right now is because of the foreign super rich. They are trying to stuff as much money as possible from overseas here. These aren't apartments they are buying; they are safe deposit boxes with views.

London needs homes, not towers of ‘safe-deposit boxes’ | Peter Wynne Rees | Opinion | The Guardian

But while gloriously un-plannable the capital needs to be loved if we want to avoid the phenomenon of “lights-out London”, with homes just used as boxes for spare cash. It cannot survive without careful management and subtle control. Left to untrammelled market forces it will become an unstoppable nuclear reaction.

Toronto to impose 15% tax on foreign home buyers to regulate housing costs | World news | The Guardian

Foreigners who buy homes in Toronto and its surrounding area now face an additional 15% tax – echoing a recent measure adopted in Vancouver – as part of a slew of measures aimed at tempering a heated housing market that ranks as one of Canada’s most expensive.

Vancouver slaps 15% tax on foreign house buyers in effort to cool market | World news | The Guardian

Foreigners looking to purchase a home in Vancouver now face an additional tax of 15%, as Canadian authorities seek to temper a heated housing market that ranks as one of the world’s least affordable.

 

[prideandfall]

Neither. It does not hurt you one bit that Zuckerberg or Gates is a billionaire.

actually it does - perhaps not directly in the now, but it is a long term detrimental risk to me.

there is not a single instance in the whole of human history where wealth concentration (either in individuals or corporations) did not eventually lead to one or multiple segments of the underpinnings of a given society becoming bloated by predatory investment, leading to the masses being effectively shut out of the enterprise, and then some or all of that segment collapsing under the weight of inflation and corruption leading to the masses being fucked over.
for a recent example of this, see the housing crisis and ensuing economic stumble that happened because of it, or the tech bubble in the 90s, or the current cost-of-living catastrophe the US is slowly sinking into.

having more money than other people isn't a problem, and having enough money to afford unnecessary luxury isn't a problem, but allowing resources to pool up and go unused in the coffers of a select few while the rest of the species is suffering and dying due to no resources pretty much defeats the entire purpose of homo sapiens being social animals in the first place.
there is absolutely no conceivable argument to justify an individual person having more than about 300,000 dollars worth of wealth, there is no rational value in a person having more than that. once you start going over that amount, you're getting to a point where you're no longer making income based on any personal merit and you're now just siphoning off of society at large, at which point i see no problem with taking 95% of additional earned income to invest in the species as a whole.

This is just the braying of the envious to make excuses for taking from others.

perhaps, though if so then the braying is the part that is being wrongly done, because more refined dialogue should be had explaining the situation. there doesn't need to be an excuse to take from others, because in this case there is every conceivable sound reason to be taking from others.

Coveting another’s wealth and success is ruinious government policy.

mandating another's wealth and success is an equally ruinous government policy.

Remember the Kulaks.

remember the french revolution.

 

[DBT]

Some reasons why gross inequality in wealth distribution is bad for society:

''One political consequence of inequality that turns into an economic liability is that it creates a feeling that everyone is only out for themselves. This impression undermines the social cohesion that lubricates economies and societies. As people become more fearful, selfish and insecure, corruption flourishes, crime jumps, anti-social behaviours increase, labour unrest stirs and legal disputes tied to commerce rights rise. When people feel they no longer live in a fair society or one where they have much opportunity they will eventually react.

''A second economic liability created by the political fallout from inequality is that the resentment against economic injustice epitomised by globalisation nurtures an environment ripe for populist policies''

''A third political threat from inequality that carries economic costs is that the concentration of economic power can undermine democracy because it gives the mega rich too much political power. As the wealthy use this muscle to expand their economic interests (via, for instance, subsidies or anti-competitive moats around their assets), the core political institutions of society are eroded.''

''Lastly, inequality imposes direct long-term economic costs because unequal societies prove to be faulty and inefficient economies. When too much income and wealth gushes to the top, the middle and lower classes are incapable of marshalling the purchasing power needed to fan sustainable economic growth.''

 

[Worldtraveller]

Furthermore, note that we need inequality. Without it there is little incentive to better oneself.

You keep repeating this canard, but it has been shown to be false in all but the most extreme cases.

Can you stop?

 

[TV and credit cards]

Neither. It does not hurt you one bit that Zuckerberg or Gates or Sackler is a billionaire.

There. That looks better.

 

[lpetrich]

Blowout by Rachel Maddow: 9780525575474 | PenguinRandomHouse.com: Books - "Big Oil and Gas Versus Democracy—Winner Take All"

With her trademark black humor, Maddow takes us on a switchback journey around the globe, revealing the greed and incompetence of Big Oil and Gas along the way, and drawing a surprising conclusion about why the Russian government hacked the 2016 U.S. election. She deftly shows how Russia’s rich reserves of crude have, paradoxically, stunted its growth, forcing Putin to maintain his power by spreading Russia’s rot into its rivals, its neighbors, the West’s most important alliances, and the United States. Chevron, BP, and a host of other industry players get their star turn, most notably ExxonMobil and the deceptively well-behaved Rex Tillerson. The oil and gas industry has weakened democracies in developed and developing countries, fouled oceans and rivers, and propped up authoritarian thieves and killers.

Interesting her focus on Russia in that book - one would have expected Saudi Arabia.

Closer to home is the Koch brothers, with their pushing of right-wing policies.

Peter Turchin's Cycles of History
From the book "Secular Cycles" by Peter Turchin and Sergei Nefedov:

• Integrative - centralized, unified elites, strong state, order, stability -- wars of conquest against neighbors
  • Expansion (Growth) - population increases
  • Stagflation (Compression) - population levels off, elites increase
• Disintegrative - decentralized, divided elites, weak state, disorder, instability -- civil wars
  • Crisis (State Breakdown) - population declines, elites continue, lots of strife
  • Depression - population stays low, civil wars, elites get pruned
• Intercycle - if it takes time to form a strong state

Greater egalitarianism is associated with broader well-being -- elites are smaller and they hog less of the society's productivity.

 

[lpetrich]

Ages of Discord -- American History's Big Cycle -- by Peter Turchin
From the book "Ages of Discord" by Peter Turchin:

• Population Well-Being
  • Employment Prospects -- fraction of people who are foreign-born (-)
  • Relative Wage -- median wage / GDP per capita
  • Health -- physical height (stature)
  • Health -- longevity
  • Family -- age of first marriage (-)
• Elite Overproduction (-)
  • Top Wealth - largest assets / median wage
  • Education Cost - Yale-University tuition / median wage
  • Elite Fragmentation - party polarization in Congress
• Political Violence (assassination, lynching, terrorism, riots) (-)

A (-) means a correlation in the opposite direction.

Here also, greater egalitarianism is associated with broader well-being, like in the Era of Good Feelings and in the Eisenhower Era.

Peter Turchin The Double Helix of Inequality and Well-Being - Peter Turchin - shows how he worked with his data
History tells us where the wealth gap leads | Aeon Essays - nice article
Dynamics of political instability in the United States, 1780–2010 - Peter Turchin, 2012 - a long-term wave with a peak in the 1890's, and short spikes around 1870, 1920, and 1970 (rounded off by decade).

 

[Elixir]

... we must be very careful in what we do about it as it's very easy for the cure to be worse than the disease ...

Zatta fact? "Worse" for whom? I am sure that every step that has ever been taken toward reduction of wealth disparity has been far worse for the extremely wealthy than that horrible "disease" of having more money than you and your family could possibly spend in a hundred years.
I'd love to see some examples from history where the people at the other end of the wealth spectrum (of whom there are far more) suffered more from the reduction of wealth disparity than they did from abject poverty prior to said reduction of wealth disparity - if that has ever happened.

Or may be you just meant that a lot of blood gets shed every time the very wealthy are threatened by the unwashed masses. That is definitely the case, but the decision about how a reduction of wealth disparity should be undertaken rests with the empowered class only so long as conditions on the bottom are not so bad that the people on the bottom want to risk their blood. The "real problem" is that historically, the greed of the wealthy tends to escalate along with their wealth, until the disparities are such that the economically oppressed are moved to use their vast numbers to overwhelm the powers that be, regardless of the blood cost. If our government hadn't been sold out to billionaires, it would be able to make some adjustments that could have satisfied the general unrest, but as it is... we're probably going to see some blood in the streets, and it's just a matter of when.

 

[Koyaanisqatsi]

The question--as always--is HOW? You can't just send in jackboots to kick your neighbor's door down because he has a bigger pile of gold in his basement than you do and you think you just deserve to have some of it. That's stealing, full stop.

So you can't take. That has never proven successful in the many many many times it's been tried in the past.

You can tax. You can try to legislate changes in business codes so that no employee can be compensated in any way by more than, say, 100% of the least compensated employee, but what is the justification for that? Because some think that's "fair"? Who measures it and by what metric? And in a global economy, that would require a global government to enforce and encode.

These threads always kick up the righteous indignation and the oh my god that's so much money moral grandstanding, but never any actual solutions. The wealthy have ALWAYS run things. Every single generation has been about a smaller, ruling elite controlling the much larger majority. Literally every single generation of humans on this fucking planet.

So we're not talking about anything new. The numbers! The numbers are meaningless. Red herrings to incite emotional responses that once again don't solve anything.

So who has got any actual, comprehensive solutions? Why shouldn't John be paid $20 Million if he increased a company's profitability by $200 million? Conversely, why should Tom get any bonus at all if the only thing he did for the company was the job he was already compensated for through his salary? Altruism? Ethics?

These are incentive-based constructs. You can argue to remove the incentive base, but then what do you propose to replace it with? We all just do what we all just do and it's somehow magically mandated?

 

[PyramidHead]

Imagine raising this question in this forum and expecting an accurate analysis

 

[RVonse]

The question--as always--is HOW? You can't just send in jackboots to kick your neighbor's door down because he has a bigger pile of gold in his basement than you do and you think you just deserve to have some of it. That's stealing, full stop.

So you can't take. That has never proven successful in the many many many times it's been tried in the past.

You can tax. You can try to legislate changes in business codes so that no employee can be compensated in any way by more than, say, 100% of the least compensated employee, but what is the justification for that? Because some think that's "fair"? Who measures it and by what metric? And in a global economy, that would require a global government to enforce and encode.

These threads always kick up the righteous indignation and the oh my god that's so much money moral grandstanding, but never any actual solutions. The wealthy have ALWAYS run things. Every single generation has been about a smaller, ruling elite controlling the much larger majority. Literally every single generation of humans on this fucking planet.

So we're not talking about anything new. The numbers! The numbers are meaningless. Red herrings to incite emotional responses that once again don't solve anything.

So who has got any actual, comprehensive solutions? Why shouldn't John be paid $20 Million if he increased a company's profitability by $200 million? Conversely, why should Tom get any bonus at all if the only thing he did for the company was the job he was already compensated for through his salary? Altruism? Ethics?

These are incentive-based constructs. You can argue to remove the incentive base, but then what do you propose to replace it with? We all just do what we all just do and it's somehow magically mandated?

Start with Germany's example. Mandatory Union leaders on all the corporate boards. Therefore CEO pay and where the manufacturing plant gets located is a joint decision between management and labor.

The CEO of General Motors makes 30 times what her workers do. The CEO of Volkswagen (larger company) only makes 5 times. Furthermore, it can be argued that Volkswagen is healthier than GM even though it has been paying its workers more and CEO less.

Its probably a better model for the company and surely a better model for the workers and the country of Germany.

 

[Worldtraveller]

Concentrated wealth is not good for society. The problem is we must be very careful in what we do about it as it's very easy for the cure to be worse than the disease.

Furthermore, note that we need inequality. Without it there is little incentive to better oneself.

Also, how come you're not all "We need to be careful how we lower taxes" when that has, historically, led to far great economic fuck ups?

https://twitter.com/DLeonhardt/stat...talkrational.org/index.php/topic,396.350.html

 

[atrib]

The question--as always--is HOW? You can't just send in jackboots to kick your neighbor's door down because he has a bigger pile of gold in his basement than you do and you think you just deserve to have some of it. That's stealing, full stop.

So you can't take. That has never proven successful in the many many many times it's been tried in the past.

You can tax. You can try to legislate changes in business codes so that no employee can be compensated in any way by more than, say, 100% of the least compensated employee, but what is the justification for that? Because some think that's "fair"? Who measures it and by what metric? And in a global economy, that would require a global government to enforce and encode.

These threads always kick up the righteous indignation and the oh my god that's so much money moral grandstanding, but never any actual solutions. The wealthy have ALWAYS run things. Every single generation has been about a smaller, ruling elite controlling the much larger majority. Literally every single generation of humans on this fucking planet.

So we're not talking about anything new. The numbers! The numbers are meaningless. Red herrings to incite emotional responses that once again don't solve anything.

So who has got any actual, comprehensive solutions? Why shouldn't John be paid $20 Million if he increased a company's profitability by $200 million? Conversely, why should Tom get any bonus at all if the only thing he did for the company was the job he was already compensated for through his salary? Altruism? Ethics?

These are incentive-based constructs. You can argue to remove the incentive base, but then what do you propose to replace it with? We all just do what we all just do and it's somehow magically mandated?

Well said.

Compensation and earnings should be based on merit, and the ability of an individual to provide a service that is in high demand.

If you are an author and your book sells 50,000,000 copies, or if you develop a software app that is used by 500,000,000 people around the world, you should make a LOT more money than the writer who sells 52 copies of his book or the developer of an app that has 63 downloads.

If Timmy is willing to work 60 hours a week laying asphalt pavement, he should be paid at least twice as much as the worker who chose to work 30 hours that week doing the same job.

If along the way Timmy develops a new machine that can lay down asphalt pavement twice as fast as the old machine, and needs only 3 workers to run it instead of 5, and Timmy is able to patent the technology and start his own company making and selling it, then Timmy should be able to sell the new machines or license the technology for as much as the market is willing to pay for it.

To each according to his ability - there is no system more fair than this. In a free market, wealth is created by people who figure out ways to better serve more people. The author who sold 50,000,000 copies of his book or 500,000,000 copies of his app enhanced the lives of the millions of people who read the book or used the app. There is not a finite pool of money that they are stealing from - they are growing the pool and creating wealth through their work. To tie their financial success to the success of the mediocre author or software developer is deeply unfair.