Still reading Simkhovitch on ancient Rome.
From page 234 (35 of 44 in the PDF):
... the degree of depopulation was such as to compel extraordinary measures. And so it came to pass that morals and children became political issues. Recall the puritanic campaigns of Caesar's heir, remember the laws against adultery, and laws restricting the property rights of unmarried men and childless couples.
So it is possible to restrict property rights under certain circumstances. It is not easily done, but it can be done.
As Simkhovitch tells the tale, ancient Rome had to keep conquering its neighbors so that it could take their grain, so that the Roman people had something to eat. To keep conquering its neighbors, Rome needed strong armies. And to build strong armies, Rome needed a growing population.
From this point of view, depopulation was unacceptable. A growing population was necessary to assure military success. This reason was good enough that laws restricting property rights were acceptable. It didn't work, of course, and Rome eventually expired. But it wasn't the changes to property rights that caused the fall of Rome.
I argue that changes to property rights — changes that limit the concentration of wealth — are essential to our continued survival as a civilization.
3 comments:
I don't think it has to be so sweeping as "changes to property rights". I think of it more in terms of "just paying for the services you're getting from the government". The guy with a billion dollars gets 1000x as much benefit from the military (and police, etc) protecting his property as the guy with a million dollars, so he should pay 1000x as much for that service. Is that a "change to property rights"?
I guess I'm talking about a wealth tax, and some people might argue that you need a constitutional amendment in order to tax wealth or net worth instead of income. I don't know if that is true or not. If it is true then maybe that counts as a "change to property rights". But I think that is a really exaggerated way to put it, more suitable to fearmongering propaganda than as an accurate description of what is really just sort of a tweak to make tax policy more proportionate to the benefit you're getting from having a civilization.
Hi Jerry. I like your justification for a wealth tax ("The guy with a billion dollars gets 1000x as much benefit...").
I think I read something the other day, that the first tax the USA had was a wealth tax. That should set a precedent, if true. But I don't even remember if it was the US I was reading about. Coulda been ancient Rome :) Maybe it is in my notes somewhere. Maybe I will look...
But even if we had a wealth tax, even if we had your wealth tax, if it did not set an upper limit to the concentration of wealth it would not solve the problem that troubles me. Assume the cow is a sphere...
Assume the economy is like the universe.
Assume wealth is like matter.
Mass accumulates until a black hole forms; the black hole can devour a solar system with less trouble than I have to swat a fly.
Wealth concentrates until a black hole forms; the black hole can AND DOES devour civilizations.
Jerry, I like your justification for a wealth tax. But you present a static picture, and the economy is a dynamic process. The next time you check on the guy with a billion dollars, he has a trillion.
Any chance he is NOT gaining on everybody else? No. You cannot inflate the economy fast enough that everyone can keep up. People won't allow it.
I think it would effectively set a soft upper limit on how much wealth can accumulate. I guess I think it's fine, if there isn't a hard limit, as long as it compresses the scale and sort of slows down the runaway effect. I do think that capitalism and competition and the market brings a lot of good. Baby and the bathwater.
If you're making $1B/year in profits, if there is a 5% tax then you'll asymptotically cap out at $20B net worth. If you're making $10B/year in profits, then you'd cap out at $200B net worth. The guy with $1T would have to be making more than $50B/year in profits to keep growing. The bigger you get, the stronger the restorative force becomes.
If black holes radiated 5% of their mass away every year, then they usually wouldn't get very big. The problem comes when they don't radiate anything, and only absorb.
(Or, more specifically, if they radiate in proportion to their surface area (R^2) instead of in proportion to their mass (R^3) -- a bit like having an income tax instead of a wealth tax!)
Sure, if you can reliably get a >5% return on your investment, then your net worth will continue to grow (albeit much more slowly), even with the 5% wealth tax. But I don't think you'll be able to maintain that kind of performance forever -- eventually you will reach equilibrium. And if you can maintain it, then hell, maybe you deserve it! At least you'd be paying your fair share to maintain the civilization that you're feeding off of. Nowadays, those guys pay way less than their share -- if they pay anything at all.
If it still turns out to be a problem, you can increase the tax rate to fix it.
"Everybody else" is already paying way more than 5% of their net worth in taxes (while the rich guys pay almost nothing), so the change would be decreasing the gap. (It's a little hard to calculate, but I guess between local and federal taxes I'm probably paying about 10% now.)
Some of the tax money could be spent in ways that help out the "everybody else", if we need to close the gap more quickly. I don't know what that would best look like...maybe universities (as an engine of social mobility) and jobs programs, maybe social safety nets. (Though I think that social safety nets still benefit people in proportion to their net worth...who has the most to lose from people getting desperate enough that society collapses into a french revolution?)
It might not be a full solution. But it would be a big improvement, and it is pretty obvious that it should have been that way all along, just so that people pay for what they are getting. I think it would get you 90% of the way to a solution, and then we can re-evaluate at that point to see what else you need to do.
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