Preview: “LIMITARIANISM” - The Wealthy Owe You $200,000. As A Start.
“Excellent”, “Astonishing”, “Eye-opening” – this new book is a powerful argument for constraining the super-rich.
A Note on this preview: Starting April 15, we will open each week with a news-driving topic. This first one is “LIMITARIANISM” – the most convincing and radical of today’s proposals for wealth redistribution.
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A new proposal to make our economies and societies more equal is grabbing the attention of the analysts: Limitarianism. Ingrid Robeyns is the Dutch economist and prophet of the new model of economic liberation, saying that a fairer economy is possible - one that works better for us all.
In her book “Limitarianism”, she points out that our distorted concentration of wealth is not ‘natural’; governments make structural decisions that place hundreds of millions of people in poverty.
“Those who will gain from a new limitarian economic system vastly outnumber those who will lose from the transition,” explains Robeyns, arguing that an upper limit on wealth would be good for society and even for the wealthy.
The numbers support her case.
For the past four decades or so, reports Oxfam, the world’s five richest people (all men) have doubled their fortunes (to a total of $780-billion) while the world’s lower 60% (me and 5 billon other people) have lost money.
This gap will continue to grow. Most people get their money by working for a living. Billionaires make money by owning assets; they do not ‘labor’. Seven out of 10 of the world’s biggest corporations have a billionaire as CEO or largest stockholder. Business profits have risen sharply despite a cost-of-living crisis.
In the US, corporate profits have exploded since 2020, driving more than 33% of inflation since the start of the pandemic. In the final three months of 2023, corporate profits reached an all-time high of $2.8 trillion.
Julia Davies, an investor and founding member of Patriotic Millionaires UK is a nonpartisan group of British millionaires campaigning for a wealth tax; its founder Jula Davis says that taxes on wealth are “minuscule” compared with taxation on income from labor. “Just imagine what $27-billion invested in public services and infrastructure could pay for,” she said.
Robeyns argues that three kinds of actions are needed.
“First, there is structural action. Our societies’ key social and economic institutions should give people genuinely equal opportunities, through affordable childcare, free high-quality education and a comprehensive anti-poverty strategy.
“The more structural steps we take to reduce inequality, the less need there will be for the second strategy: fiscal action…meaning the tax and benefits system.”
The third strategy is ethical, to embrace a limitarian ethos.
The rich in America have also done well as they have taken more power. Of the $112 trillion wealth increase over the last thirty years, more than two-thirds – $ 80 trillion – went to the American super-rich.
The rich do not have the same financial risks as everyone else. When the 2008 financial crises hit, as a result of the bankers’ imprudent and extreme risks, they were bailed out by taxpayers.
The Internal Revenue Service (IRS) periodically estimates the amount of taxes that are not paid. Its most recent estimates are that, after collecting the taxes that are late, there remains a net tax gap of about $470 billion per year.
If we were able access that gap money, we could do wonders. With just above 74 million children currently under the age of eighteen, it would mean that the US government could open a savings account for each American child, and deposit $6,350 in it every year. Assume an interest rate of 3%, when the child turns 20, they would have $187,000 in their account.
That’s a much better way to launch your business or professional career than trying to pay off $100,000 in student loans.
At the same time, she is not advocating a uniform pay-scale for everyone:
“Limitarianism does not advocate strict equality. There are reasons, based on principle as much as pragmatism, why some degree of inequality is justified. Some people work much harder than others, take more risks or assume more responsibility.”
Among its proposals is an idea for leveling the playing-field when it comes to inheritances by taking a certain portion of that ill-earned wealth and spreading it out to every citizen, and putting a cap on wealth in the future.
Your share of a cap on inheritance hand-downs today for example would come to $200,000.
And don’t fret about the poor super-rich; they will still have some $10-million to pass on to their children.
What will be missing is their ability to escape from paying their share of inheritance tax.
Donald Trump’s father, Fred Trump, for example, had made extensive use of all the legal loopholes and other fiscal engineering allowed by US law, in order to pass on his fortune to his children without them having to pay tax….
This condensed version is a glimpse into her powerful argument. Please join your colleagues and support this endeavor. To all, thank you for reading Barry’s Substack.
This is a long but very detailed explanation of how we got into this mess and the obstacles to getting out. https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/