500 Richest gain additional $1.2trn in 2019

[WolfeTone]

Actually, I think you need to be more ambitious. Why not expand it to the top 25% of people in the world, (which would include the vast majority of people in Ireland (probably including yourself))? Every increase in wealth and 100% of it should go to the poorest 25%? Any wage increases, increases in property values and we all write a cheque for that amount and send it to the poorest 25%. Seems fair to me

Ah, jeez Firefly, I started this thread identifying 500 of the wealthiest people in the world as the focus with an average of $9.6bn in personal wealth between them.

But even at that, the 'what-if-ometer' and 'what-about-ometer' started to churn.
So to ease what I thought would not be complicated, I amended the suggestion to target one single person - that person being the wealthiest person in the world, or the wealthiest person in any given society.
But you suggest to cast the net much further, 25% of global population!
I fear if I followed your thinking the reaction here may crash the site.
No, best just stick to 1 person for the moment.
Mercedes and lollipops aside, incentives to motorists to switch to electric vehicles, or investment in food science to reduce the liklihood of obesity would be more probable.
I certainly think a cleaner environment and a healthier population to be conducive to achieving higher standards of living for everyone.

 

[Firefly]

But you suggest to cast the net much further, 25% of global population!
I fear if I followed your thinking the reaction here may crash the site.
No, best just stick to 1 person for the moment.

But why? Wouldn't the top 25% also include the richest person and so would result in an even GREATER redistribution of wealth?

As you asked yourself.....

I appreciate the sentiment that it would still be no mean feat to achieve. But, just to shoot the breeze for a moment, if it were achieved, what would be wrong with it?

 

[Duke of Marmalade]

... incentives to motorists to switch to electric vehicles...

A very good example to get across my main message, which I fear I am still failing to do.
"Switch" is the key word here. A recognition that we can't actually increase overall economic output but we can redirect it. Confiscating from the top 500 and subsidizing the purchase of electric cars is a possible way to achieve that. So would taxing petrol cars and using the tax to subsidize electric cars. The problem with the first is that it would be inflationary, we are just pushing money around, it would be little different from printing money. We are not making any real redistribution from the 500.

 

[WolfeTone]

that World economies are more or less operating at capacity i.e producing the optimal amount of goods and services.

Are we still in 1930's economic thinking?
I do have upmost respect to the aforementioned Keynes and to others who preceded him.
But isnt it time modernize the wallpaper? Or, as I have asked before, you think there is nothing left to improve?
My dear Duke economies operating at capacity providing optimal goods and services is indeed an intriguing and thought provoking theory.
It is something to strive for, but alas, and despite all the great technological advances of modern times to help us on our way, we are still a long,long way from that holy grail.

Mr Z's paper wealth cannot be turned into additional goods and services for the rest of us by redistribution of that wealth.

This is interesting, and I will come back to it due course when I have time.
Im pretty sure however, that in recent times, paper debt was transferred from private sector to the State sector limiting, or closing the opportunity to avail of many services. In turn the State transferred that paper debt back onto citizens by increasing taxes on income, forcing businesses to close and people to emigrate.

 

[WolfeTone]

Wouldn't the top 25% also include the richest person and so would result in an even GREATER redistribution of wealth?

Because, im estimating, that the top 25% of income earners have not acquired excessive amounts of wealth beyond what anyone could reasonably need.
It is why I focused on only the top 500 wealthiest people out of a population of 7,000,000,000.
But even that seemed to ruffle feathers so I limited it one person - the wealthiest person in the world. I limited it to a 100% tax on any additional wealth acquired.
These posts are from the first page.

Dont get me wrong, im all for anyone and everyone making as much money as they can.
But surely there is a limit? Surely there comes a point where accumulated wealth can be defined as excessive and ultimately capped?

the increases for each individual are massive - beyond what anyone could ever reasonably need, beyond what anyone could reasonably figure out what to do with

And the point of this thread is to acknowledge first, that the wealth acquired by the wealthiest of the wealthiest, is simply beyond any reasonable comprehension or need for anyone individual, and then multiplied by some light years.

The Duke raises an interesting point about capacity.
So to word my point another way - is there capacity to tax wealth acquired by the wealthiest without unduly infringing on their standard of living, or without unduly affecting in a negative way price levels, productivity levels, overall standards of living?
Take the wealthiest person in the world as a starting point with $100bn personal wealth. Apply a 100% tax on any additional wealth acquired over and above that limit (e.g. a max limit of personal wealth of $100bn) say, $10bn and ask, will it unduly affect in a negative way that person, price levels of the economy, productivity levels in the economy, the overall standard of living in society?

I suspect it wouldn't. But if it would, how so?

 

[AlbacoreA]

What a wonderful world

They must have worked so hard, upskilling, to make all this additional money on top of their existing fortunes.

Dont get me wrong, im all for anyone and everyone making as much money as they can.
But surely there is a limit? Surely there comes a point where accumulated wealth can be defined as excessive and ultimately capped?
Why are the 99.99% so submissive and meek when it comes to the centralising of so much wealth into the hands of so few?

The problem with this concentration of wealth is that it's usually at the expense of others. That is if a few people are getting a disproportionately wealthier a lot more people are getting a disproportionately poorer.

But it seems these days the cost of everything is much more expensive for those less well off. For example we make running a cheap old car much more expensive (if we ignore depreciation) than a brand new one.

Something like this..



On the flip side there is this...

Milton Friedman - Redistribution of Wealth

Milton Friedman clears up misconceptions about wealth redistribution, in general, and inheritance tax, in particular. http://www.LibertyPen.comSource: Milto...

youtu.be

 

[Duke of Marmalade]

I am not saying we are in a state of perfect economic balance and optimal redistribution. I am simply saying that when we look at these enormous, nay obscene, accumulations of paper wealth we should avoid the illusion of thinking in terms of how that wealth could be better deployed.

Wolfie talks about the denial of access to education, healthcare and environmental protection brought about by this concentration of wealth in the hands of a few. This suggests to me that he is thinking of how many teachers you could employ, how many childrens’ hospitals or how many electric cars. So let’s say we spend it on teachers and bring the pupil teacher ratio down to 2/1. The real economy would have to cope with this by diverting resources from other sections. It would finish up being a redistribution from them and not from the rich guy in the first place. His lifestyle would be unaffected.

Milton Friedman makes the point in that interesting clip. Asked about 100% inheritance tax he says that would just cause the rich guys to dissipate their wealth. Asked what’s wrong with that he asks where would the machines and factories come from to satisfy this consumption. That’s my key point, inferring that this paper wealth can be converted to useful consumption of goods and services assumes that the economy is operating under capacity and is an illusion.

 

[Duke of Marmalade]

Let me try this one. One could conceive of a situation where the top 500 or X folk have so much paper wealth that it would appear that it could be redistributed amongst the rest of us and we could all give up work. I presume we accept that that would be an illusion.

 

[WolfeTone]

Well I have to say, that is an excellent post, and timely interjection exhibiting both sides of the wealth distribution coin.

There is certainly much to ponder within.

 

[WolfeTone]

I am simply saying that when we look at these enormous, nay obscene, accumulations of paper wealth we should avoid the illusion of thinking in terms of how that wealth could be better deployed

This is the talk of the indoctrinated.
"Dont touch my wealth, its not good for you. Take it from someone, somewhere else".

So let’s say we spend it on teachers and bring the pupil teacher ratio down to 2/1. The real economy would have to cope with this by diverting resources from other sections.

Here we go again. The implication being that economy couldn't cope by diverting resources from one area, (the extreme wealth), to another area teacher/pupil ratios.
Yet, as I recall in recent times, a 'local property tax' was imposed on my paper wealth. A transfer of my (paper) resource to be redistributed elsewhere (probably to plug a hole in county council funding).


The key questions are, have I the capacity to cope with this redistribution? - yes I have. Has the economy the capacity to cope with this redistribution? - it appears so.

So I rephrase my original question somewhat.

Is there capacity for any additional acquired wealth of the singular most wealthiest person in the world, or in any given society, to be redistributed back into society as a whole, mindful of unduly affecting in a negative way that persons standard of living or unduly affecting in a negative way price levels and productivity levels of the economy?

I would suggest that, quite clearly, there is that capacity.

 

[joe sod]

Let me try this one. One could conceive of a situation where the top 500 or X folk have so much paper wealth that it would appear that it could be redistributed amongst the rest of us and we could all give up work. I presume we accept that that would be an illusion.

In the nineteenth century when socialism was being conceived by Karl Marx and others that was the issue they really dwelled on, if you give people unearned wealth well then they will not do any work, the people that earned the wealth will also do much less, Karl Marx actually referred to this phenomenon as "vulgar socialism". Of course when socialism came into existence in Russia, that's exactly what happened, it wasn't implemented by men like Marx, but by Stalin and Lenin. They tried to rectify the production deficits in the Soviet economy using gulags and forced labour, very " vulgar socialism".
Even in the Soviet union they had no problem getting people to do the bureaucratic jobs, however they had big problems getting farmers to grow the crops and miners to dig the mines. It would still be the same today if it was tried. That's why my emphasis on "crap jobs" because those are the jobs that people give up, and there are still a lot of those jobs today even though they are largely invisible workers. It was also probably the reason for the hammer and sickle flag, and the socialist realism murals, they needed to try and glorify these workers and put them on a pedestal.

 

[Duke of Marmalade]

Of course there is scope to transfer wealth from the wealthiest person in the world, question answered.
I am highlighting the illusion that the transfer of the excess "wealth" of these guys would not in any way translate to a comparable transfer of economic consumption. In fact your very premise that they should not suffer any loss of standard of living is evidence that there would be no transfer of economic consumption. For ordinary punters and dukes like myself LPT, for example, does reduce my consumption without reducing my economic contribution and is therefore a genuine economic transfer.

 

[WolfeTone]

Of course there is scope to transfer wealth from the wealthiest person in the world, question answered.

Ok, we are getting somewhere.

In fact your very premise that they should not suffer any loss of standard of living is evidence that there would be no transfer of economic consumption. For ordinary punters and dukes like myself LPT, for example, does reduce my consumption without reducing my economic contribution and is therefore a genuine economic transfer.

I agree with the latter part, I dont agree with the initial part.
My premise is that the standard of living is not appreciably affected. If I have €110bn and it reduces to €100bn a simple calculation would deduce that my personal wealth, and as such my standard of living has fallen. But considering the sums involved, and as it is acknowledged that these sums are at a scale that no human being could ever reasonably need or require, then the affect on my standard of living is negligible, it wont register. Unlike for instance, imposing a LPT on the population with limited incomes as you point out.

If I eat a large crispy baguette with ham, egg and peppers, and a crumb falls from mouth, the affect of that crumb in satisfying my hunger inconsequential. It does however offer a mouse, or a bird, some chance of fulfilling their need to feed themselves.

The wealth tied up in the value of my home is unutilised wealth which could be put to use if I sell it or if the government, which it has done, taxes me on it. However, that could have a negative impact on my standard of living if I cannot find somewhere to live or forces me to reduce my consumption.

The wealth accumulated at extreme levels (ie the wealthiest person in the world) can be taxed without negatively impacting, in any real sense, the standard of living of that person and it can be transferred to society as a whole opening up opportunities for greater access to education, healthcare, protecting the environment etc.

The problem I see is that as a society we tend to work from €0.00 upwards, imposing higher taxation rates as incomes increase. Instead, what would be more beneficial is to start with the guy with €100bn working down to see where unutilised accumulated wealth can be taxed and put to use in the economy but before the point where such taxation of wealth starts to negatively impact, in a real sense, the standard of living of those who have accumulated that wealth, or adversely impacts price levels in the economy etc.
I would hazard that at least 500 people would not be, in any real sense, detrimentally impacted on by virtue of the huge sum of wealth they have accumulated. Others may argue that all billionaires fall into this category.
I would suggest that applying this concept to the top 25% population, for example, would have started to impact negatively.

 

[Duke of Marmalade]

The wealth accumulated at extreme levels (ie the wealthiest person in the world) can be taxed without negatively impacting, in any real sense, the standard of living of that person and it can be transferred to society as a whole opening up opportunities for greater access to education, healthcare, protecting the environment etc.

That is the illusion.
Let me try a parable. We have only three persons in this society. The accountant, A, works hard and keeps the books. B the baker also works very hard to provide society with its daily bread and C the carpenter is at full stretch to keep society in furniture. B and C begin to notice that A has a billion theo in his account whilst they have nothing. Things are priced in theo and thankfully A gets as much bread and furniture as he needs and does not use his vast paper wealth to grab all the economic output of the society. However, B questions this state of affairs and suggests to C that we should divvie A's billion between the three of them. C points out that this wouldn't mean there will be more bread and furniture to go round - the prices will only go up. And there is also the joe sod point that with B and C getting this windfall they might stop producing bread and furniture.

 

[WolfeTone]

Let me try a parable

Yes, if the economy is working at full capacity, if the economy is producing the optimal amount of goods and services.

But it is not and it is an illusion to think it is.

The economy is littered with inefficiencies and deficiencies, it is littered with over supply in some sectors and under supply in other sectors, it is littered with capital misallocation and missed opportunity.
We strive, as a species, to resolve all of these issues through greater understanding of human behavior and investing in research and development. We have progressed considerably in many ways and failed in many others. And in between, we are constantly facing new unforseen challenges and hurdles that force us at times to rethink what we thought was right is now wrong, and what we thought was once wrong to be right.

I'll introduce D the doctor, T the teacher (of accountancy) and S the student (of accountancy).

C hurts his hand with a chisel and cannot work for six months. He attends the doctors and finds that the doctor has no bench (he was in the process of ordering a new one from C).
This leads to a crisis in furniture shortage. S qualifies as an accountant but there are no jobs available as it is already taken. He is unemployed - now U
In an effort of social solidarity, the government taxes A, B, C, D and T in order to provide U (the student formerly known as S) with some benefit.
B, C, D and T are a bit peeved having to pay tax for welfare benefit at the same time cannot even get any furniture. U is peeved because there are no jobs. A is unperturbed by all of this, closeted in his general splendor.
The government invites I, the immigrant, to fill the skills gap for carpentry. This threatens to eat into C's market and while out of work goes on protest. The protest projects a negative image of society and, people being people, start to reduce their spending in the event that the economy takes a turn for the worse for them also. Sales at the bakery fall and B's income is barely covering his costs.
The government wants more tax to cover the shortfall in receipts, making matters worse.
B,C,D,T and U want a change. They demand that the government ease the burden of taxation on them as it is crippling the economy and causing social unrest. The government responds there is no pot of gold at the end of the rainbow.
B, C, D, T and U point to A's vast store of wealth as a means to assist. The government responds that his wealth is only an illusion and wont be of any help.

B,C,D,T and U respond "Dont be silly!"

 

[Duke of Marmalade]

Yes, if the economy is working at full capacity, if the economy is producing the optimal amount of goods and services.

But it is not and it is an illusion to think it is.

The economy is littered with inefficiencies and deficiencies, it is littered with over supply in some sectors and under supply in other sectors, it is littered with capital misallocation and missed opportunity.
We strive, as a species, to resolve all of these issues through greater understanding of human behavior and investing in research and development. We have progressed considerably in many ways and failed in many others. And in between, we are constantly facing new unforseen challenges and hurdles that force us at times to rethink what we thought was right is now wrong, and what we thought was once wrong to be right.

I'll introduce D the doctor, T the teacher (of accountancy) and S the student (of accountancy).

C hurts his hand with a chisel and cannot work for six months. He attends the doctors and finds that the doctor has no bench (he was in the process of ordering a new one from C).
This leads to a crisis in furniture shortage. S qualifies as an accountant but there are no jobs available as it is already taken. He is unemployed - now U
In an effort of social solidarity, the government taxes A, B, C, D and T in order to provide U (the student formerly known as S) with some benefit.
B, C, D and T are a bit peeved having to pay tax for welfare benefit at the same time cannot even get any furniture. U is peeved because there are no jobs. A is unperturbed by all of this, closeted in his general splendor.
The government invites I, the immigrant, to fill the skills gap for carpentry. This threatens to eat into C's market and while out of work goes on protest. The protest projects a negative image of society and, people being people, start to reduce their spending in the event that the economy takes a turn for the worse for them also. Sales at the bakery fall and B's income is barely covering his costs.
The government wants more tax to cover the shortfall in receipts, making matters worse.
B,C,D,T and U want a change. They demand that the government ease the burden of taxation on them as it is crippling the economy and causing social unrest. The government responds there is no pot of gold at the end of the rainbow.
B, C, D, T and U point to A's vast store of wealth as a means to assist. The government responds that his wealth is only an illusion and wont be of any help.

B,C,D,T and U respond "Dont be silly!"

The government's advisor, W, a well meaning leftie suggests that it could take 500m theo off A and she wouldn't miss it. That could then be distributed 100m apiece amongst the rabble. This seemed a no brainer and indeed it did give rise to an uptick in the economy as the monetary injection corrected the fall in demand for bread so that B became fully employed again. Unfortunately the other problems remained and there was large resentment at the rampant inflation. There was after all no pot of gold - it was all paper. What's worse U has decided that with his new found paper wealth he isn't interested in work.

 

[WolfeTone]

Its descending into a rowdy episode of Trumpton.

Trumpton Riots


As mentioned, this is nothing more than a crude experiment lab. I am satisfied that the point im trying to make is understood, to any reasonable observer, at least.

I will also accept that it is not agreed upon and that differences will continue to persist.

 

[joe sod]

As mentioned, this is nothing more than a crude experiment lab. I am satisfied that the point im trying to make is understood, to any reasonable observer, at least.

Why is it a "crude experiment lab", it explains perfectly and simply the problems and real life disasters that have happened with improper wealth redistribution. Go on a communist tour in Warsaw or Budapest and it will be explained in exquisite detail what happened.
It is a big problem in economics that simple concepts are hidden using fancy jargon. Therefore it is very necessary to use "crude" and simple language to explain things properly.
Even the greatest scientists like Einstein used simple thought experiments to describe difficult concepts in physics. He did not use any mathematics or jargon, just two observers A and B observing the same event but "seeing" different things.

 

[WolfeTone]

Go on a communist tour in Warsaw or Budapest and it will be explained in exquisite detail what happened.

Why? Who is proposing a return to Soviet style communism? You?
Certainly not me.

Even the greatest scientists like Einstein used simple thought experiments to describe difficult concepts in physics. He did not use any mathematics or jargon, just two observers A and B observing the same event but "seeing" different things.

Yes, and I am using 1 single person, namely, the wealthiest person in the world with a current personal wealth of some $100bn as my guinea pig - no one else.
Yet, you are inviting me to tour Warsaw and Budapest, why ??

Perhaps, let me try it from another angle?

If the average industrial wage was $50,000 pa, would you be against imposing a 100% tax on the accumulated wealth of an individual where that persons wealth equates to, or exceeds two million times the average industrial wage, and still only applying the 100% tax on wealth over and above the two million to one ratio?

Its not a hard question, no history lessons involved. In fact I would say it is a unique proposal. I certainly haven't heard it before. To my mind the answer should be a straight forward Yes or No.
If Yes (being opposed), why?

 

[joe sod]

Why? Who is proposing a return to Soviet style communism? You?
Certainly not me.

Because this period in history is being completely and intentionally forgotten about, especially how communism affected the common woman and man, the endless queuing for basic foodstuffs. You had to wait years for a tradesman and pay him on the black market not with money (which was useless) but with meat or bread.

As @Duke of Marmalade has been illustrating nominal paper money is not really wealth, wealth is man hours , land, food ,technology etc and these commodities are very limited. One very rich man can only consume what one man can consume. If you spread this paper wealth to every man and woman, well then all these people will want to consume much more than the rich man. However the commodities are still limited and cannot be increased because everyone has more paper money, therefore the price of everything goes up.
Paper money is really an abstraction , in fact the whole financial services sector is an abstraction, it allows people to distance themselves from the nuts and bolts of what is wealth creation, and then to think that wealth is paper money.