Letter to an ultra-richist
Dear ultra-richist,
First of all, let me define you.
An ultra-richist is someone who staunchly supports the power, current legal rights and alleged grand merits of the ultra-rich. Ultra-richists oppose measures that aim to limit the power of the ultra-rich and promote the empowerment of the rest of the population, like substantial taxation, antitrust legislation and the prohibition of legalized corruption of politicians.
I am writing to you because I think you cherish some things I cherish too, like freedom, wealth creation, innovation and doing the right thing. However, with your untempered defense of the ultra-wealthy, you are in fact conspiring against all of those.
Of course, an ultra-richist is different from an ultra-rich, who is someone with assets of 50M and upwards. (So, the addition ist is in reality a significant subtraction).
You are not ultra-rich — you just defend them.
Yes, some ultra-rich are also ultra-richists. Those are probably your idols, like Elon Musk. But, many are not. There you have Bill Gates, who said:
“I don’t deserve my fortune. Nobody does. It has come through timing, luck, and through people I worked with. I certainly worked hard and I think software has been a beneficial thing, but I benefited from a structure too.” [1]
Microsoft’s founder added:
“I have paid more than $10 billion in taxes, but I should have paid more”.
I know that you act and express yourself in good faith and no one pays you for lawyering for the ultra-rich. But apart from good faith ultra-richists like you, there are the paid ones. This is a cohort of people that write and speak in the media without regard for the truth or the public good, but with an eye toward the ultra-rich that hire or might hire them. These professional ultra-richists are tricking you. Read on to find out what are their tricks.
The trick of the self-made billionaire anecdote.
They have been tricking you by exploiting our irrational tendency to believe more in anecdotes than in statistics. (Research has shown again and again that people are more persuaded by anecdotal than statistical evidence).
So paid ultra-richists bombard you with anecdotes of, say, 10, 20, 30 creative, hard-working, smart individuals that became super wealthy. You are shown curated content on their appealing journeys and the interesting gadgets they designed.
You are not shown the literally billions of anecdotes and real life struggles of individuals who work, maybe a couple of hours fewer or a couple more than your heroes, but still can’t make ends meet.
The trick of all-or-nothing thinking
You were are also tricked into all-or-nothing thinking, and after instilling this defective mindset in you, they have you believe that:
a) Taxation is…boo…socialism.
b) Taxes or other social justice measures would hinder entrepreneurial spirit and wealth creation.
If taxing heavily the ultra-rich were socialistic or communistic, you would have to reach the absurd conclusion that, at the peak of the Cold War against the Soviet Union, the United States was a communist nation. (From 1951 to 1963 the highest marginal income tax rate was 91%. I mean, in the US, not in the USSR).
As to the incentives issue, nobody is proposing here that getting rich should be forbidden. I am writing to you regarding people with 50M and upwards. Do you really think that capping wealth at 50M would discourage the brightest minds from going ahead with their ideas and companies? (I even dare to suggest that he/she who is discouraged by a reasonable limit on extreme wealth, makes us a favor by staying out of positions of power).
Zeroes matter
They also trick you into all-or-nothing thinking with the issue of fair compensation for hard word and risk taking. I absolutely do not dispute that it is Ok to be rich for someone who works hard, takes risks and develops successful products or services. However, zeros matter.
The median net worth of American households is $121,700.[2] As an average household has 2.5 people [3], the median net worth per American hovers around $48,680. Let’s round it up in 50 K (50 and three zeros).
An ultra-rich has at least 50 million dollars. But let’s just keep the 50M figure (50 and six zeros).
50M is 1,000 times 50K.
Now, may I ask you: Do you really think that the ultra-rich have worked 1,000 times harder than the average guy? Could the ultra-rich IQ be 1,000 times yours? Have they acted 1,000 times riskier than you? Are they 1000 times more creative?
Really, 1,000 times?
At this point you are driven to reply that the mere fact that they amassed a fortune 1,000 larger than the average is the proof that, somewhat, they made contributions by which they deserve what they have. “If the market pays for it…”.
Here is were I wanted to take you.
The trick of ignoring the current structure —and that other structures existed in the past and are possible in the future
Let’s go back to Bill Gates’ phrase:
“I benefited from a structure too” (not sure if the bold is mine, as I used Bill Gates tools for it).
The structure that today allows the creation of obscene fortunes is mainly comprised of:
a) The denial to every person that comes to the world of a right to certain piece of real estate, or capital, or share of natural resources, as our ancestors in fact had. By denying to vast swaths of the population a right to a share of the value of at least the land, the free market price of labor goes down, making it cheaper for companies to hire people. At the same time, it becomes harder for people to be entrepreneurs themselves, as a large proportion of the population has no cushion in case business goes bad.
b) A legislative body greatly influenced by money and that drowns out the voices of ordinary Americans. [4] Said legislative body enacted a tax system in which super-wealthy individuals pay a ridicule low effective tax rate. May be you don’t know that, as there is no wealth tax, a super-rich individual may not pay any income tax at all, while his wealth keeps growing thanks to stock appreciation and he lives from “borrowing” money.
c) As a consequence of the above, upward mobility in the US — despite the anecdotes you hear — diminishes each day. More or less as the tax rate for the wealthiest came down, the likelihood of people to earn more than their parents also came down. [5]
This structure is just one and not the only possible one.
Once upon a time, America was the most egalitarian rich place on earth. From 1951 to 1963 the highest marginal income tax rate was 91% (today it’s 37%, and with plenty of loopholes). [6]
The trick of distorting history
I can’t blame you for resorting to “Americanism” and “the Founding Fathers” in your pro bono endeavors for the ultra-rich. Professional ultra-richists systematically silence facts and distort history.
The whole idea of the Founding Fathers was that the broad diffusion of property ownership was essential for liberty.
As historian Gordon S. Brown wrote, citing Tomas Paine:
“Men were equal in that no one of them should be dependent on the will of another, and property made this independence possible. Americans in 1776 therefore concluded that they were naturally fit for republicanism precisely because they were ‘a people of property; almost every man is a freeholder’.”
George Washington noted that the United States “will not be less advantageous to the happiness of the lowest class of people because of the equal distribution of property the great plenty of unoccupied lands, and the facility of procuring the means of subsistence”.
I’m pretty sure that, if alive, the Founding Fathers would put their signatures in this letter to you.
The trick of confusing what’s legal with what’s right
Everybody agrees that stealing is wrong and that no one should take what belongs to others. However, who owns what is not a question that today’s law can settle in stone forever. In the first place, laws can change. So if you intend to defend the property rights of the ultra-rich based on the law, you’ll need to accept that if that law changes, the definition of property rights changes.
But more profoundly, the law is not always just. Remember that in the past slaves could be owned. Legal property rights included them. Well, slaves cannot any longer be the object of property rights. Something of the sorts should happen with obscene concentration of wealth.
By the way, the more influence the ultra-rich have in Congress, the less fair is the legislative output, and the harder it becomes for people who want to do the right thing to defend property rights over descomunal fortunes on moral grounds.
The trick of “We are all ultra-rich”
This is the funniest of all. You can’t be so naive to fall for this one.
The paid, professional ultra-richists are desperate to shelter the ultra-rich behind a shield, along with the regular rich, the business owners and entrepreneurs, and anyone who — rightly so — thinks that incentives and free markets are good. All against “the socialists”. They create a narrative in which the interests of the ultra-rich are aligned with those of the rest of society.
The truth is that extreme wealth in a few hands is prejudicial to everybody, the regular rich included.
Like you, I value economic progress and wealth creation. Like you, I believe the free market is an extraordinary system for that. But precisely to get the best of free markets and expand opportunities for wealth creation, I propose reasonable safeguards for reducing the crazy, dangerous, deranged accumulation of extreme wealth that we are suffering.
As a current ultra-richist, you are important in this. Unfortunately, with your support, you allow the survival of the specific structure that Bill Gates mentioned, unchanged.
You are putting your valuable energy in a cause that doesn’t deserve it.
If you value freedom, entrepreneurship, innovation, wealth and democratic government, trust me: by regaining a fairer distribution of wealth, all those things will thrive. So I invite you to stop falling in the traps of the self-made-billionaire anecdote, all-or-nothing thinking and the “we are all ultra-rich” joke.
Supporting substantial taxation for the 0.1% and granting a floor of economic rights to everybody —these are two sides of the same coin — will expand freedom and opportunity for all, and give us back democracy and the republic. This has nothing to do with socialism, which is characterized by social ownership of the means of production. Quite the contrary, a widespread distribution of private property — akin to the one the US enjoyed in the Founding Fathers’ time — and fairer taxation — as the US had during the Cold War era — , will enhance —not degrade — personal responsibility, competitive markets, opportunity, freedom, democracy, republicanism and overall happiness.
In your hands lies the potential for great and meaningful change.
Sincerely yours,
Gabriel
___________________
NOTES
[2] https://fortune.com/recommends/investing/average-net-worth-by-age/
[3] https://www.statista.com/statistics/183648/average-size-of-households-in-the-us/
[4] https://www.brennancenter.org/issues/reform-money-politics/influence-big-money
[5] https://www.visualcapitalist.com/the-decline-of-upward-mobility-in-one-chart/
[6] https://www.taxpolicycenter.org/statistics/historical-highest-marginal-income-tax-rates
