
U.S. billionaires worry about the survival of the system that made them rich - weston
https://www.washingtonpost.com/politics/capitalism-in-crisis-us-billionaires-worry-about-the-survival-of-the-system-that-made-them-rich/2019/04/20/3e06ef90-5ed8-11e9-bfad-36a7eb36cb60_story.html
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lisper
There is a super-simple solution to this problem: a progressive tax on income,
wealth, and most importantly, inheritance (with an exemption for private
businesses below a certain size that are both owned and administered by a
single family).

Another possibility: eliminate private ownership of land. This is actually not
as radical as it sounds. It's a big shift in mindset, but not that big a
change in how things actually work. The mindset shift is to go back to the
native american idea that all land is collectively owned by the people. The
government is the "management company" that administers it, and one of the
things it can do is offer long-term leases. This would essentially be the same
as the status quo except that instead of owning the land and paying property
tax, you'd own a lease and pay rent. The reason I think this would have a
beneficial effect is that the change in mindset would change the dynamics of
political debates. For example, NIMBYism would be less tenable because it's
not your back yard any more. You're just a tenant.

~~~
lifehacked
The problem is that the changes you propose rip out the framework that allowed
our country to become a leader in many respects, show me a socialist or
communist country that innovates, there are none, they all come to capitalist
countries to learn and compete, your missing the forest for the trees mate.

~~~
cortic
People come to the US for its socialist school system, or the security of its
socialist policing and fire services. Or the benefits of a socialist military
industrial complex that prop up half the country and invest huge amounts into
socialist research and development. People come for the security of the
socialist banking system named _too big to fail_. Show me someone who comes
for the capitalist healthcare or prison service...

There are very few countries in the world that lived by the laissez faire
rules of capitalism, because its been a disaster every time.

~~~
Mirioron
People want to go to the US because the US is wealthy. It's wealthy due to
private businesses, low corruption, and the rule of law.

~~~
cortic
Sure, but how much of that is down to the socialist things i listed, and how
much is down to Wall street? Even if you believe mostly the latter; The
success of the financial services of Wall St and private enterprise in the US
is a direct result of socialist policies. Can you imagine any of this success
without socialist schools? can you imagine any _rule of law_ with a private
police force?

If a country is too far socialist or too far capitalist, the result is the
same; _the few_ gaining great power and privilege, while _the many_ are
powerless and suffering in poverty. Its obvious that a balance is needed,
socialism _can be_ very good at leveling the playing field for basic
necessities, while _regulated_ capitalism _can be_ good at distributing power
hierarchies while remaining fairly efficient.

The problem i see us facing right now is that capitalism has had a lobby on
political power for fifty years and is preventing this balance, substituting
its own power-wealth hungry pseudo-balance. This is why we have difficulty
dealing with climate change, and why places like the US are struggling with a
universal health system, or why the UK is dismantling theirs.

~~~
Mirioron
Don't US colleges have their own police? The rule of law seems to still apply.
And I wouldn't consider the police to be "socialist".

> _Can you imagine any of this success without socialist schools?_

Yes.

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gpsx
I'd agree income inequality is a problem, but I think what is specifically
bothering people is that they feel they don't have the opportunity to make
more. Once someone has money they can use it to help themselves and "hold
down" others. (I put that in quotes because it might be a little exageration,
but I think people feel that way.)

There are many examples but a the most basic one in the US is that the outcome
of a trial is highly correlated with the amount of money you spend on lawyers.

A problem with Khanna and the article is that he is just continuing to give
outsize influence to the rich. I hope he can learn something from Sanders and
not worry too much about "alienate(ing) some of his wealthiest backers".

~~~
Frost1x
"Once someone has money they can use it to help themselves and "hold down"
others."

They can and do, it's part of daily business strategy. Sometimes those efforts
are shared if the company is publicly held, even then, the majority of the
returns snowball to the large shareholders.

A retired good friend of mine from the chemical industry worked at one of the
leading chemical businesses. Part of their entire business strategy/model was
collecting strategic patents in chemical processes to prevent others from
competing and forcing them to pay royalties to that company. He worked there
for several decades leading one of their core research divisions and they shut
down most their research divisions because the patent game gave more ROI than
actually producing innovative new processes. That specific business now
primarily focuses on acquiring IP as blockades and tolls to innovators
entering the industry.

That's just one example but I see many businesses use as many anticompetitive
strategies as they can get by with. In the tech industry, often potential
competitors are simply bought out early before they become competitors either
through offers or hiring their talented staff.

Pick a business and they've probably engaged in similar activities. People are
not delusional with this assessment, it's spot on.

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zcw100
There’s too much to work with so I’ll just pick out this little gem, “Khanna
said, but too many of them felt locked out of the country’s economic future
and were looking for someone to blame.”

Too many? How many is too many? So only 20% if the population feeling locked
out would be a okay?

Feel locked out? So it’s just in their heads? The unwashed masses are so
emotional. Like animals they go on feelings not facts.

Looking for someone to blame? Their baseless feelings need some outlet and if
they’re blaming me it must be just because I happened to walk down the street
that day, not because of anything I actually did.

The truth is they don’t feel locked out, they are locked out and after giving
people like this guy a pass for three decades are finally looking for the
reason they’ve been getting screwed over and this guy is scared shitless
they’re going to find it.

The sad part is it’s not going to happen. More likely thing is they’ll have to
part with 0.000001 of their wealth to make 5% of the population winners and
just get them to oppress the other 95% thus ensuring a healthy return on that
0.00001 making them even richer. They’ll just have to get over the humiliation
of having to share their success with a few extra people.

~~~
Gibbon1
> and after giving people like this guy a pass for three decades are finally
> looking for the reason they’ve been getting screwed over and this guy is
> scared shitless they’re going to find it.

Preach on brother zcw100!

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_bxg1
My worry with UBI as a replacement for work is that it relies on the continued
altruism of the elite, with no balancing force keeping the status-quo. Despite
its problems, properly-functioning capitalism keeps the few accountable to the
many. Billionaires can only throw their weight around up to a point, because
at the end of the day they rely on regular people to keep their economic
engine going. They need us for our economic value, which gives us power. If
that became no longer the case, democracy itself could be abolished, with no
consequence to those at the top. Capitalism has many problems, and doesn't
work on its own, and certainly needs fixing in 2019, but I think it's also the
lynchpin maintaining any status quo at all between elites and everyone else.

Now, this also assumes that people become literally useless in the automated
future, compared to systems. It's possible - if unlikely - that humans always
move on to a higher frontier of uniquely human work once the previous one
becomes automated. In that scenario, UBI could be a great way to ride that
transition. Also, _partial_ UBI, meant only to give people a platform for
growth in a world that still has jobs for them, could be a good way to combat
economic inequality.

~~~
enitihas
I think this is the same point that Harari makes in "21 lessons for the 21st
century" i.e democracy became important simultaneously with the work of people
being important along with the industrial revolution. Nations needed a happy
population as a happy population was the ultimate source of economic output as
well as an army. If more and more economic output doesn't involve humans,
humans can't use a lot of existing tactics to bring about a change. Also, if
most people are getting by well on an UBI, would people even be anymore
interested in politics, since jobs are currently an important issue in any
election.

~~~
vageli
> Also, if most people are getting by well on an UBI, would people even be
> anymore interested in politics, since jobs are currently an important issue
> in any election.

One possible counter is that people may have more free time to spend engaging
in politics. Once one need is satisfied attention will inevitably shift.
Mazlow's hierarchy and all that.

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didibus
I'm going to say something most likely naive, but I always thought that
democracy needed a ladder reset. If online games need to in order to keep the
competition healthy and the game fair, why not real life?

Now, how you'd go about doing it, I have no idea.

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jammygit
Honest question: we have unlimited examples of corporations run amok. What
examples of law abiding billionaires run amok have we lately? I'm sure they
exist but all I can think of is funding ventures that harm the public good
(eg, taking all the nice beach front property, lobbying for oil and gas
subsidies, legal bribery, or in an extreme case funding extremist
organizations).

Most of the excesses seem to be a matter of not outlawing bad things. Is the
wealth itself actually harming anybody?

Edit: I guess there is the snowball effect where previous winners have
competitive advantages in new competitions, or else outright rent seeking
behaviours. I'm also curious about those aspects.

~~~
c256
It’s not billionaires, but: search the internet for “college admissions
scandal”. Note that the people involved already have better schools, more free
time for extracurriculars, tutors, test prep, better environmental factors,
etc.

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hliyan
I've been thinking about the following scheme, primarily in the context of a
science fiction novella plot:

1\. Income is not taxed. _Wealth_ is.

2\. Wealth tax brackets are determined based on a multiplier: no one person
may own more than 1000 times the median per capita wealth.

3\. Wealth is not actively monitored. But undeclared wealth is not protected
by law.

What would the implications of this scheme be?

~~~
Mirioron
Poverty. Why take the risk of starting a business if you can't really benefit
from it. Why invest money in another business if you can only own 1000 times
the median per capita wealth? Why save money at all? Just spend it
immediately!

It would be the world's greatest party until it collapses, because no savings,
investments, and risk-taking means that jobs disappear.

Also, stealing would be very popular, so a job in law enforcement is about as
good as it gets. It would allow you to seize the most.

~~~
nercht12
For your disaster scenario, I think it depends on how low the max is. If 1000
times the median per capita wealth still buys you a couple office buildings
and a yacht to boot, the ceiling would still be high enough that the vast
majority people wouldn't all resort to stealing (much less petty theft).
However, it would still lead to shady business deals, high-dollar theft, and
hidden assets (especially foreign). But that's a problem for the wealthy. In
other words, the idea is that you can be rich, but not TOO rich.

~~~
Mirioron
The 1000 times median net worth is the upper limit, but you're still paying
taxes based on wealth.

------
jayalpha
Related

Human and nature dynamics (HANDY): Modeling inequality and use of resources in
the collapse or sustainability of societies /Safa Motesharrei a,⁎, Jorge Rivas
b, Eugenia Kalnay c

Summary Collapses of even advanced civilizations have occurred many times in
the past five thousand years, and they were frequently followed by centuries
of population and cultural decline and economic regression. Although many
different causes have been offered to explain individual collapses, it is
still necessary to develop a more general explanation. In this paper we
attempt to build a simplemathematicalmodel to explore the essential dynamics
of interaction between population and natural resources. It allows for the two
features that seemto appear across societies that have collapsed: the
stretching of resources due to strain placed on the ecological carrying
capacity, and the division of society into Elites (rich) and Commoners (poor).
The Human And Nature DYnamical model (HANDY)was inspired by the predator and
prey model, with the human population acting as the predator and nature being
the prey. When small, Nature grows exponentially with a regeneration
coefficient γ, but it saturates at a maximum value λ. As a result, the maximum
regeneration of nature takes place at λ / 2, not at the saturation level λ.
The Commoners produce wealth at a per capita depletion rate δ, and the
depletion is also proportional to the amount of nature available. This
production is saved as accumulated wealth, which is used by the Elites to pay
the Commoners a subsistence salary, s, and pay themselves κs, where κ is the
inequality coefficient. The populations of Elites and Commoners grow with a
birth rate β and die with a death rate α which remains at a healthy low level
when there is enough accumulated food (wealth). However, when the population
increases and the wealth declines, the death rate increases up to a famine
level, leading to population decline. We show how the carrying capacity – the
population that can be indefinitely supported by a given environment (Catton,
1980) – can be defined within HANDY, as the population whose total consumption
is at a level that equals what nature can regenerate. Since the regrowth of
Nature is maximum when y = λ / 2, we can find the optimal level of depletion
(production) per capita, δ* in an egalitarian society where xE ≡ 0, δ∗∗(≥δ∗)
in an equitable society where κ ≡ 1, and δ __* in an unequal society where xE
≥ 0 and κ N 1. In sum, the results of our experiments, discussed in Section 6,
indicate that either one of the two features apparent in historical societal
collapses – over-exploitation of natural resources and strong economic
stratification – can independently result in a complete collapse. Given
economic stratification, collapse is very difficult to avoid and requires
major policy changes, includingmajor reductions in inequality and population
growth rates. Even in the absence of economic stratification, collapse can
still occur if depletion per capita is too high.However, collapse can be
avoided and population can reach equilibrium if the per capita rate of
depletion of nature is reduced to a sustainable level, and if resources are
distributed in a reasonably equitable fashion.

~~~
jammygit
This seems to say that societies where the rich consume more tend to consume
their resources more quickly? I think the opposite is through though. The rich
don't consume in proportion to their wealth, but doubling the income of
plumbers and farmers does increase consumption.

Unless I misread the summary, I read it in a hurry

------
angel_j
Here's an idea for billionaires: "invest" in things that only break even at
best and don't beset the economy with future rent-keeping. Get yr money back,
or further tax breaks. For instance, affordable housing.

~~~
anovikov
Affordable housing is an oxymoron. In the U.S. in general, housing is very,
very affordable already. It's just that in the few spots where the money is,
it is super expensive, exactly because everyone wants to get there. Build a
lot of affordable housing, and you will pay with the time you spend standing
in traffic, also an unaffordable amount.

~~~
angel_j
Sure, we'll just have school teachers live in Idaho and commute to S.F.

FOH.

~~~
NotAnEconomist
It also doesn't make sense to have everyone in the country try to live in a
dozen cities.

Those cities themselves are unsustainable: SF, Portland, and Seattle are all
literal shitholes, due to failed civic leadership and uneconomic policies.

As a civilization, we need to figure out how to reduce the pressure to collect
in a handful of places, and spread ourselves back over multiple locations and
jurisdictions -- because it's clear that's a better plan.

Our current system is optimized for a few major players, and it's collapsing.
They're right to worry, and try to adjust it.

Figuring out how to get people to live in already affordable places is the
only way to reduce the pressure on those cities and create housing affordable
and livable for average people.

~~~
nercht12
> Figuring out how to get people to live in already affordable places is the
> only way to reduce the pressure on those cities and create housing
> affordable and livable for average people.

... And thus a bunch of Californians moved to affordable Austin, TX and made
it super expensive, driving all the native residents and average day workers
out of their homes and onto the streets.

Pressure moved from one location just builds it somewhere else because people
tend to congregate. You can't just say "Everyone, go move to remote places in
Montana". It doesn't work like that. People congregate around the job markets,
money pools, and nice locations. Hence, the coastal states in the US (centers
of trade and places with beaches) have the highest population densities.

~~~
NotAnEconomist
> People congregate around the job markets, money pools, and nice locations.

To be fair, there's a lot of nice locations outside of major cities.

But I agree with you that people tend to congregate around job markets and
money pools -- and I think that's precisely what has the wealthy concerned and
looking for new models, because the attractive forces in the current paradigm
lead to unsustainable attractive blobs.

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moomin
Perhaps they should stop trying to kill it, then.

People often confuse the needs for working markets (capitalism) with
preserving the elite’s position (rent-seeking).

------
RickJWagner
At present, the US has near record low unemployment, rising wages, and a very
high stock market.

Yet we also have many thousands homeless.

Truly, capitalism is the worst form of government. Except for everything else,
which share the downsides and lack the upside. It's why there are tens of
thousands pouring over the border monthly-- to get to America and to
capitalism. They want to work for their chance.

~~~
timbit42
Capitalism without limits is worse.

~~~
RickJWagner
Can you cite an example? Contemporary USA still has lots of people trying to
get in, so I'd think it's not a good example.

Is there someplace else you're thinking about?

~~~
thewileyone
If you look at the South American countries that most migrants to the USA are
coming from, they do live in uncontrolled capitalistic economies, regardless
of their political systems. The rich there use their money and power to
control and grow their influence regardless of the impact to others.

------
cletus
Up until probably WW2, war and revolution were the ultimate redistributor of
wealth and arguably mitigated or even prevented too much concentration of
wealth. Arguably in some cases that concentration is what precipitated wars
and revolutions.

I worry about this now, particularly in what's increasingly a post-nationalism
era with almost frictionless global capital mobility. The ultra-rich do their
damnedest to pay almost no taxes on their massive wealth and buy themselves
even greater tax breaks. The Trump tax "cuts" (I say this because for many
professionals living in blue states it was a tax increase) were such a nakedly
self-serving (even corrupt) wealth grab at the expense of the country. It's
depressing how easily manipulated the GOP base was and is in supporting this
(or at least not holding their representatives to account).

What difference does it make if you have $50B in assets vs $60B? I mean
really?

You gained that wealth because you lived in a country that was politically
stable, had infrastructure like roads and bridges and wasn't being invaded or
fighting wars (mostly). Someone needs to pay for that.

This almost feels like an algal bloom of wealth. In an algal bloom, individual
organisms are finding local optima. The net result however is that everything
dies.

So how about this:

1\. We need stronger estate taxes. Inherited wealth is a recipe for a
permanent ruling class and a pox on our house.

2\. Owning land in the US subjects your worldwide income to US taxes.

3\. We need to start property taxing income rather than taxing spending. This
further lowers effective tax rates.

The last one requires a little explanation. Let's say you earn $100m in a
year. As ordinary income this may cost you $40m in taxes. Of course, no one
pays that. It's typically structured so you only earn income for tax purposes
when a gain is realized.

So if you need "only" $20m to live this year instead you just realize a $20m
gain and pay taxes on that, leaving the other $80m untaxed. It's worse than
that because not all of that $20m will be a gain. This allows you to offset
tax liabilities essentially indefinitely.

But it gets even worse than that. At the height of the QE era, you could
borrow money for essentially nothing. So instead you borrow $25m, putting $5m
aside to service the debt for some number of years and don't realize any
income and pay no taxes whatsoever. Companies were issuing corporate bonds
like crazy in this era to avoid US corporate taxes.

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tarr11
When robots are sentient enough to do most human work, won’t they require the
same rights and benefits that humans do?

