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Monday, December 02, 2019


The monetary monster

by Tom Sullivan

All the 1% complaints about being "vilified" for their wealth miss an essential point: their getting impossibly richer eventually destabilizes the planet.

Donald Trump and his allies argue that if you don't have borders, you don't have a country. The subtext is about keeping non-white people from emigrating to the U.S. and diluting white sovereignty. But capital flowing unrestricted across borders? No problemo.

Eric Levitz addresses the issue of capital flows and wealth taxes for "Intelligencer." Economists and billionaires themselves argue the country would be unable to enforce the sorts of wealth taxes supported by Elizabeth Warren, Bernie Sanders, and 60 percent of Americans. Wealth taxes would simply incentivize more tax-dodging by the super-rich and/or moving their wealth offshore.

Levitz observes:

This argument asks Americans to accept a stark limitation on their nation’s sovereignty. It stipulates that in a world of globally mobile capital, the effective limit on top tax rates is set by our superrich, not our democratic polity. Why this diminution of the nation-state’s authority should be acceptable — even as a minuscule amount of undocumented immigration is regarded as a crisis of the rule of law — is difficult to explain.
Well, not really. Steeply progressive taxation is politically untenable "because of the outsize political influence (and innovative unlawfulness) of the cosmopolitan elites who bankroll the Republican Party."

Not that Democratic elites don't have skin in that same game too.

But here's something else to consider as apologists for unfettered wealth ply us with tales of all the good billionaires might do with their fortunes.

Microsoft billionaire Bill Gates has pledged to give away nearly all of his wealth. He has, Vox reported last year, given away over $45 billion through the Bill and Melinda Gates Foundation. He's saved millions of lives using his wealth to fight malaria and global poverty. (Bloomberg estimates the donations at a mere $35 billion.)

Berkshire Hathaway founder Warren Buffett has donated over $34 billion since pledging to give away his fortune. Reuters reported in July Buffet still owns "about 15.7 percent of Berkshire, despite having given away 45 percent of his 2006 holdings." He gave $3.6 billion this year to five charitable foundations so they can give it away for him. Reporting earlier this year showed Berkshire Hathaway was taking in money faster than Buffett could invest it.

It turns out giving away money is as hard, if not harder. It takes "expensive and time-intensive" due diligence to be sure the money isn't simply thrown at scam charities. (Our acting president's former charity, for example.) Gates' fortune has grown so large he can't give away his money as fast as he's making it. Gates' portfolio today is $16 billion larger than when he started giving it away.

Gates and others likely didn't set out to become Weyland-Yutani, "The Company" of the Alien and Predator franchises. But despite laudable efforts like Gates' and Buffett's, is that where unfettered wealth is headed?

Among the terrible B-movies from the 1950s is one called The Magnetic Monster (1953). Except, there is no monster. A scientist, naturally, creates a marvelous new something that is neither marvelous nor even visible at first. It quickly gets out of control, naturally again. But Jurassic Park this is not. The "monster" here is not alive, but a new isotope that grows, doubling in mass every 11 hours by sucking in energy and matter from around it. This script arrived before "black holes" had agents, but that's the idea. If other scientists cannot "kill" the stuff in time, it will grow massive enough to throw Earth out of its orbit and hasta la vista, baby.

Here we have massive fortunes growing ever more massive. Wealth concentrates itself in the hands of a tiny segment of the population as the middle class shrinks. The more high-minded billionaires can't even give it away faster than the piles swell. And in the roles of frantic science geeks trying to keep expanding piles of money from throwing the planet out of its orbit we have Warren and Sanders. Naturally, they are opposed by skeptical wealth-o-philes and Cold War dead-enders who condemn them as socialists who want to punish success.

In the 1950s, we knew who would prevail. Today, that's not a sure bet.