How to REALLY help the next.generation?
Something has been bothering me since the 2008 financial crash. Capitalism failed. It’s not the unfairness of what happened right now that is irritating me, but what it’s done for the game of capitalism — a game no one has ever asked me to subscribe to, but i’ve been forced to since I was young. Turns out I like the game — shame, odds are, I lost before I even nestled on the cushion to play. How about we fix the rules, once and for all? Make it fun. (For the first time, ever.)
My view of economics, I admit, throughout my degree, was always reinforced through a qualitative rather than quantitative interest – but I still grasped the essentials of those markets.
“What was once a glass ceiling is rapidly solidifying into a concrete one.”
When assets and business succeed, people win. Simple — wow, those university fees were well-spent. But, there’s a downside — when they fail, people lose. Losing is one of the fundamentals of competition — for me it makes sense. It’s not pretty, but as a species, we need to push ourselves, especially now we’re a bit more enlightened beyond evolution’s simple “survival of the fittest” (in the main.) When the so-called credit crunch occurred my faith in competition died.
In 2008 the banking industry was re-capitalised on a massive scale. The U.K. alone began a programme that was designed to pump about £550bn+ (!) of printed money into them. No other industry has enjoyed such support, like ever. We watched some of our country’s greatest makers burn, and we’ve done it recently with steel, car marques — but that’s old news.
The stats since speak for themselves. Wealth inequality, far from stalling, has increased! No epic failure, no price collapses and re-distribution of that opportunity. The rich enjoyed the stability, and with new, cheaper liquidity, they’ve sown up ever more of the world’s conduits of power. What was once a glass ceiling is rapidly solidifying into a concrete one.
The banks are, for sure, along with the rich, integral to economic progress (I don’t like the word “growth” – cavemen grow, civilisation progresses). They bear risk, employ people and add liquidity to many a sector. They are a cornerstone — they are not a foundation, though.
We of the working, lower and upper middle class (sorry if “classes are not PC, happy to edit with other titles) should aspire to improve our lot in life, and give back – live by morality – en route. That’s my view – greed is good, if properly tempered.
Banks and rich play the game of greed and it does benefit us all. Only if anyone can have a fair crack at building their stack in this game. A chance to sit at the table in the big competition of life. Everyone with middle ground politics senses that. In the absence of a better way – capitalism reigns. That doesn’t mean those playing high stakes capitalism get a different set of rules. Nor should they have a bottomless chip stack.
This isn’t me bashing banks, or jealously eyeing the billionaire’s wealth. I actually don’t blame or envy them. I, too, want to be wealthy. I know what kind of a person I am and, inspired by the likes of Bill Gates, Zuck, Buffett (note: I struggle to name a super-wealthy British philanthropist I hero/worship), I know the responsibility that comes from financial success. I have dreams, like everyone that imagines how they’d spend their lotto win.
My problem is with policy and weak guardians of competition. They EPIC-FAILED to force an economic price on this unprecedented gift. I doubt they thought much more beyond the need to calm the panic — it was their moment. When Goldman Sachs got hard up for liquidity- they went to Warren Buffet. He was able to strike a very, very good deal. He sensed his opponent was weak, and he took some of their stack. Policymakers? They don’t think like that. But they have to, or we of the less-well-off are incrementally more screwed by every passing billion that flies to the tops percentiles.
Every good thing that has ever happened to me has had to be earned. I don’t think this gift of financial elite was earned or “paid for”. And now that quick-drying concrete on this new ceiling to the movement of wealth is looking harder to crack for those coming behind, even my generation.
They can’t afford houses — pay rises are a paltry. Jobs are being disrupted by the technocratic. It’s a war on two fronts! Whilst starting a business has never been easier, most VCs and financiers tend to request investments via a stereotypical doctrine of “if we know someone that knows you” or “well he made X work, so surely Y is a frickin’ score!!”.
I fear for my youthful kin.
We, of the generation after the one before, need to solve this issue. And I think it’s easily solved. Wait for it. We need to erase one big gaping competitive advantage that “some” people and company’s unfairly have. And we need to do it to prevent oligopoly (times ten) of the money supply to the elite few, globally. So let’s start fixing this in the UK.
Inheritance? You have their genes, what more do you want? Ok — £10m it is.
The day you die, only £10m total assets (cash to ingots – you name it) can be passed to ANYONE in your will. Nothing, zero, should be taxed up to that value. Your kids get the lot. But above that sum – nothing can pass. (I’m happy to make that a spread, if you think £10m is too generous, say, £5m — but you’re no doubt basing that on “how much will I have by the time I cark it.” Don’t, think for the economy.)
You can be as rich as you like during your life, otherwise chaos would likely ensure — normal tax (if there is such a thing) applies. Billions are nothing to you. But you can’t pass more than £10m down the food chain, to anyone. I’d consider a stretch to saying perhaps “per child”, to be kinder to the kids with four siblings! (Capped to avoid birth rates rocketing to tax-dodging levels).
Further, to grease the wheels, a transition of sorts, you should be offered an amnesty right now. Pass that wealth on now, pass less of it to the “state” institution later. I.e. Before the policy comes into force, there’s a period where those with >£10m to bequeath can pay a, say, 70% tax to shift that wealth to anyone now – as opposed to via their will and estate at death. By which time they will only have the capped amount. (Obviously married couples operate on a second death model.)
That still leaves all the super rich to lavish their kids with privilege before they die – it just caps the legacy for generation after.
How would I use this money?
Every. single. Penny… Would be put into a bank whose sole job it was to pay down our national debt – using the very system of stability the state has so successfully propped up with its left wing capitalism. Those markets love people with money!
A private sector portfolio, used to pay off the public pickle, managed like a private business everywhere but the UK (to avoid conflict of interest) A sexy sovereign wealth fund. Asset investment, dividend hunting, trade, arbitrage, M&A – you name it. Profits pay down debt over and above interest owed.
If you’re a middle class individual or anyone for that matter that “isn’t” worth more than £40m – this should appeal to you. If you’re a Republican, don’t forget the baby Royals would be slightly poor after this. I’m saying you can get super loaded – but you can only give your children or beneficiaries exactly the same head start in life or boost as anyone else. Equality.
Why should I have such a huge success multiplier — why should anyone? We’re not erasing the advantage of inherited wealth, we’re skewing it.
If indeed we are ALL equal – the game must be played from the first roll of the dice by every generation. My game still skews the rules extremely favourably in the direction of the entitled – but hopefully it narrows the divide.
I wouldn’t stop there, though. The same thing applies to corporations. Right now, several dozen corporations have more money than your average nation does in its current account. Despite the fact that they are benefitting from conditions underwritten by the working masses, via governments like the UK’s. Seems a bit cheeky.
It irks me that some are sitting on ever growing piles of cash — what do they intend to do with it? Keep watching it grow? Every additional dollar increases their competitive advantage to insurmountable scales. They aren’t indestructible – but they are heading that way. Bad.
If a company has more than £50bn cash reserves (obviously some will lobby for exceptions – I’m just theorising, here) then the rest must be paid to this bank I’ve mentioned. Sorry — you can get super massive, but you can’t own the world, board of directors. Money needs to be spread.
Think of it as a thank you for protecting the company’s integrity, security and policing market forces as the lender of last resort, etc.
Keynes suggested a similar model for balance of payments a long, long time ago — no one listened. Now we have piles of national debt for poor states that are, at last glance, not going down. Bad.
Now I know this policy, in isolation exposes UK plc’s to M&A — because not every other state is going to adopt, let alone contain their disdain at this policy – but the sharpest of you will note that the very bank taking on all this new generational tax has an opportunity, alongside a reformed competition commission, to white knight-the-shit out of those scenarios. Something that simply never happens right now, and has seen many a good British brand or business unnecessarily stalked, skinned and gutted with liquidity provided by the very banks that every UK taxpayer has latterly underwritten. Forget rebalancing the economy to manufacturing – how about rebalancing it to SANITY. When you consider it, it’s actually the dumbest thing ever to concentrate such financial muscle in too few hands. Of course they’re too big to fail! Funny how no-one bothered solving that problem to avoid history doing what it always does. And someone, somewhere is pissing themselves laughing as they swim in their mountain of gold sovereigns.
I suggest this concept because I love capitalism – it’s a good, fun, inspirational game – right now I think it is our best hope. But it needs to be turn-based. You know, I enjoy a game of Risk or Monopoly like the best of em’ – when I know I’m losing, I can’t wait for the next game. Aren’t generations deserving of the same rules? Why SHOULD kids sit at this table we’ve rigged. It’s bonkers.
There’s another thing. I wonder if this form of generational taxation – call it strategic taxation – could help Britain become the richest (by standard deviation) per capita state on earth – with a better standard of living, of course! And, you know what, without being the kind of patriot Oscar Wilde would flinch from, I have faith that our culture and way of life could be a beacon of inspiration were it to, once again, enjoy another golden age. Having much less debt would be good — having a bit of entrepreneurialism reducing our need for state tax sounds pretty epic, too. We’ve remembered, learnt and tried to kill our flaws. We are self-aware, and as a nation, that is rare in this World. I think you call it experience, or collective wisdom. Not perfect, but no better or worse than the others. That’s potential.
Humanity has a bright future, but right now, global civilisation sits at an inflection point. Nation states have begun to slowly disolve behind a mass of people and corporations with all the money. That’s not democratic — it never can be. They slide between the cracks, don’t they!
Continue as things are and, well, you know even more drastic fixes will be required. I’m not a doomsayer – I’m an optimist – we can fix any problem. I just like to fix them when it’s easier and less painful than war, suffering and disaster. Don’t you? Or are you mad, too?
There’s a solution – changing the rules of the game. Consider this, I beg you, and appraise it. Why would this be a BAD thing? Then talk to others and ask the same. How much money do you want on your death bed — should you even care?
The game is still capitalism, and my chips are on the table. Our kids deserve the chance not to have to sit through the pain of an already ongoing game, in our warm seats, knowing they’ve lost after their first ten moves.
Where’s the fun in that? Life could be fun, you know.