Re-Thinking Capitalism

As one of the nation’s premier non-economists, I have some thoughts I’d like to share about how to fix the economy to the betterment of the many over the enrichment of the few. We’ve all heard the expression, “The rich get richer and the poor get poorer.” Most of us believe it to be true (because it is), but the naysayers are almost always from the elite class of people who have quite a lot of money. More than they need, if you want to be perfectly honest. And to me, therein lies the heart of the debate: Should Capitalism be about getting what you need, or getting what you want?

The people who study this stuff refer to it as Wealth Condensation, but I’m a non-economist, so I’m simply going to refer to it as a “flaw” in the system. In a nutshell, the way things are set up right now, wealth flows through the system into the hands of an elite few – the Super Rich. I’m talking about the people with, like, a hundred million dollars or more. They’re out there, and they have a lot of the money. “Bouchard & Mezard estimate that 90% of “total wealth” is owned by 5% of the population in many rich countries.” – [Wikipedia] And this means that there is less money floating around for the rest of us. You see, there is a limited supply of US Dollars out there. So when the vast majority of it ends up in the hands of just a few who do nothing with it to “move it around”, it means that there is less money available for people like you and me to borrow to buy a house or a new car or pay for our kids’ educations. Or it is in such tight supply that the majority of us will not be able to afford the loan, because we do not have a high enough credit score to qualify for payments we can afford. The Super Rich don’t have that problem. But here’s the thing. It’s gotten to the point where that meager sum for the rest of us is not enough. It’s not enough to help out the people (who aren’t Super Rich) who need a new home or car or even a college education for their kids. It’s just not enough. And printing more money won’t help because of how the system works. Right now, 90% of any added money to the pool of available cash will, still, invariably find its way into the hands of about 5% of the population. And we’re right back where we started.

Unlike the Super Rich, we do not make so much money that paying our bills is not a problem. It’s not a question of living beyond our means for a great many of us. It’s that the day-to-day expenses of living as a “non-elite” have begun to exceed the more-or-less stagnant incomes the rest of us have. How much did it cost to fill up your gas tank this past summer? Mine was up over $50. It was half of that in the Before Time. Oh, sure, you can talk about what one can do about this “in theory”, but theory often has a disconnect with reality. Sure, if there are no high-enough paying jobs around here, we’re free to pack up and move to where we can compete for the high-paying jobs somewhere else. But moving costs money, and if you don’t have the money to move, you can’t move to where the jobs are. (Or where it’s less prone to flooding or tornadoes, or where there’s less random crime in the streets.) And forget about the emotional turmoil of turning your back on a home you’ve had for a good many years and starting over. Most of us do not have enough money to get to that point.

There comes a point where the mere accumulation of wealth has served its purpose. It’s gotten you that nice home to live in, and probably a second home somewhere else (or maybe even a third through seventh home if you’re into marrying drug-addicted former beauty queen beer distributorship heiresses, but how many people in the country fit that “demographic”?), and several cars to enjoy. Your kids’ college diplomas are paid for and their kids even have a few million to start off with themselves when you die. So what are you going to do with the rest? Just keep it, so that nobody else can have it? Why? What good does that do?

It’s not enough to say that the accumulation of wealth should be the driving purpose of Capitalism, there should also be an obligation to better the lives of most of your fellow human beings. (I say “most” because there will always be those small few who may suffer or simply draw no benefit from an action. If we’re not talking about killing them outright, or causing them undue suffering, then we should not expect that what we do will always “benefit” them. It still might benefit them indirectly by benefitting those who might try to help them in other ways.) Not all of he Super Rich are bad people, disinterested in helping their fellow human beings. For example, Bill and Melinda Gates do a great deal of philanthropic work through their Foundation. In fact, one of the things they do is a perfect example of how we should re-think Capitalism to reward (not simply “encourage”) this kind of behavior. Malaria is still a big problem in some parts of the world. A simple solution to cutting down the number of cases of Malaria is to have as many people as possible use mosquito netting in their sleeping quarters. They only cost about thee to four dollars. So Bill and Melinda spent a surprisingly small number of millions of dollars to buy and distribute millions of mosquito nets. You know what? That kind of thing should be mandatory for the Super Rich. No more sitting on your hundreds of millions, just keeping it for yourself or your offspring.

Here’s an idea. I haven’t worked out all of the details yet and, to be perfectly honest with you, I am about to freewheel and improvise. Let’s see where it goes.

Your first hundred million dollars that you (somehow) accumulate will be taxed at the standard rates. Fair is fair, and you are living in a society whose liberal policies made it possible for you to accumulate all that wealth, so stop complaining. You’re no “self-made man”. But I think we can all agree that once you hit that hundred-million dollar mark, you don’t need to worry about money. We won’t go into how or why you have it right now, though we may look into that a little more deeply mater. How would I know? And I probably don’t want to have to testify later to what you told me. Okay, let’s get some terminology straight. Anything over that first hundred million will be called “Excess Wealth” (from the words “wealth”, referring to the things you have of value, and “excess” meaning more than is necessary). So, as you can see, “Excess Wealth” is, by definition, an excess of wealth. More than you’ll need. If you didn’t have it, you could still live quite well for the rest of your natural life (even if you’re two days old), and not want for anything of necessity. You could have a roof over your head, clothes on your back, and food on your table. Those are the Necessities of Life. And with a hundred million dollars, you should have no problem getting those. Anything beyond that is a Luxury, and not something to which you are Entitled. So we define “Excess Wealth” to be any assets you have beyond that first hundred million dollars worth. Over time, this figure can be adjusted as economic realities change.There may come a day when One Hundred Million Dollars is what Fifty Million Dollars is today, or even what Two Hundred Million Dollars is today. And for purposes of this discussion,as you may later agree, that figure of One Hundred Million Dollars is quite generous to the extremely well-off people who are worth less. Many of them could be considered as having “Excess Wealth”, but we have to start somewhere. Let’s set aside the arguments that this hundred-million dollar figure is way too high, as only about $15-$20 million might fit that criteria, because there’s some math ahead, and I don’t want to make it harder for myself than I already will by bringing this up in the first place. Thanks.

Every dollar of your Excess Wealth will be taxed at the rate of 100%, with the following exceptions and exemptions. For every penny of that Excess Wealth that you donate to a worthwhile cause along the lines of the mosquito nets (and, by all means, mosquito nets are still needed in high-risk places around the world, so do buy more), you can exempt ten cents of that excess wealth from taxation at 100%, but it will still be taxed. As to what constitutes a “worthwhile cause”, there will obviously be some argument. Let’s say at the rate of 10%. [All I will say on that point for now, is that when you start handing money to organized religion, no matter what they plan to do with the money, you are crossing the line in the Establishment Clause of the First Amendment. There are plenty of other areas where the money could be encoraged to go, but religious affairs should not be any beneficiary of government money. That’s my opinion and I’m sticking to it.]

So, if you spend one tenth of your Excess Wealth on something good like the mosquito nets, then your entire Excess Wealth figure will only be taxed at 10%. You will not get rewarded more taxation-wise for spending more than ten percent of your wealth, but I do believe that you will feel th rewards of doing so from the happy faces you’ll encounter while doing it. Besides, you may make to easier to pay less in the future by giving away more now. If you give away less than ten percent of your Excess Wealth, then anything above ten times what you did give away will be taken at the rate of 100%.

Now, since I just thought of all that, let’s plug in some imaginary numbers. You’re Super Rich. You have a fortune worth one billion dollars. So you have $900 million of Excess Wealth. If you give none of it away to qualifying charities, the government will take all $900 million of that Excess Wealth, and leave you with your “paltry” $100 million dollars that gets taxed at the normal rates. If you give away $45 milion dollars, then $450 million of your Excess Wealth will get taxed at 10%, for a sub-total of $45 million, and $450 million will be taxed at 100%, for a grand total of $495 milllion in taxes. You’ll be left with $460 million dollars. ($1,000 million minus the $45 million you gave away minus the $495 million in taxes.) And if you give away $90 million, then none of that Excess Wealth will get taxed at 100%, and you will have $820 million left. ($1,000 million minus the $90 million you gave away minus the $90 million you paid in taxes.) Then, next year, assuming you accumulate no more in income (unlikely, but go with it), you only have to give away $82 million to avoid the Excess Wealth Tax. And remember, you still have that first $100 million dollars that we said would be exempt from this taxation system. And face it, how many people is this going to affect? Maybe a hundred? Don’t be crying that it could be you, because frankly, if you’re reading this blog, you’re not among the Super Rich, so this will never be forced upon you. And if it ever does? What? A hundred million dollars isn’t enough? Get in your limo and get out of my sight.

Now, for the rest of you. What ways can we exempt money the Super Rich can spend to lessen their tax burdens? And we’re talking about People here, not Corporations. We can talk about ways Corporations can pay something close to the 35% percent they theoretically have to pay the next time, if you want. (Assuming the Super Rich hate to pay “too much” in taxes to the government of the country whose liberal policies made it possible for them to accumulate so much wealth in the first place, or did I mention that already? Well, it’s true, so I’ll probably say it again.) Now, we want the contributions to have positive effects for the greater number of people, and not just the wealthy few. You don’t get to claim money spent on your country club’s efforts to have their kitchen “go green”. They can afford that type of thing themselves. You don’t get to contribute to a private schools and colleges, but contributions to public schools and colleges can be made in many ways. For example, if you pay for a public school to get solar panels installed on its roofs, that would count toward an exemption. And not everything would receive a credit of ten-to-one. That one was for a life-saving effort. But saving energy is important, too, so let’s say it qualifies for a five-to-one credit. And not just solar panels, you could also pay for upgraded computers (preferably ones rated a “Best Buy” by Consumer Reports, even though they can’t say that, but I can), so we don’t have to make so many new computers, or discard as many old ones. Something with an Environmental Benefit to it, something every intelligent person can agree would help, so that disqualfies people like Senator James Inhofe who, mysteriously, won re-election earlier this month. How about money spent on health intiatives? Pay for flu vaccines for elderly and poor people who can’t afford them, and you get a nice credit on that, too. Helping those less fortunate than yourselves is more an indication of how good a person you are than the mere accumulation of wealth for yourself. Doing something beneficial to mankind with it should be rewarded.

Now, how can Corporations reduce their taxes on their record profits? Well, I don’t have a complete answer on that, so I’m sure that would be something to pick apart. The first thing we have to remove is remove the requirements that maximizing profits is the primary obligation of the corporate leadership. It should be amended to, as I stated earlier, to also include the betterment of people’s lives. Certainly we could reward similar expenditures of their money in the same way we reward Individual People. We could also allow the Energy-Saving improvements that they do on their own buildings to count for something. There could also be some sort of “Super Rich Corporation” threshold above which all profits (not income) would be taxed at 100% if not used for the betterment of mankind instead of the personal greed of the shareholders.

And isn’t that part of the problem, too? Greed? The desire to have more for yourself than your fellow man? Isn’t that the kind of selfishness we wish to discourage in our society? Is it morally correct to benefit financially to the detriment of so many others, when you could benefit just a little less and still do some good for the rest of your fellow human beings? We are fellow human beings, right? I know I’m human.

So what do we have? An idea that gets us all behind a noble and sanctified effort, such as improving education and maintaining the environment we all share in a responsible way, and we suppress the idea of selfishness through accumulating more wealth than is reasonable to need. Add to that the fact that there is fairness to it, and it results in less harm to humans, and you have something that both liberals and conservatives could support.