How the technology super-rich highlight the growing income gap in the US and Europe
I wrote about the growing concern over the ever-widening gulf between rich and poor a couple of years ago — a problem grotesquely highlighted in Silicon Valley — and it has now been taken up by Democratic politicians like Alexandria Ocasio-Cortez, Elizabeth Warren and Bernie Sanders, who are trying to raise awareness about the increasing power of the super-rich, a tiny elite of multi-billionaires they describe as able to buy politicians and set their own agenda. Comparisons with the fall of the Roman Empire, where xenophobia and inequality grew to unsustainable limits, are becoming more common.
Does it make sense to impose, as Ocasio-Cortez proposes, 70% income tax on those who earn more than $10 million dollars? Unsurprisingly, the super-rich gathered in Davos last month, were outraged at the idea, seemingly unaware that during the post-war period, until the Reagan presidency, the super-rich were taxed at 70% and the economy did just fine. Some leading economists defend reintroducing high taxes on the very wealthy, arguing that it isn’t about stifling initiative or preventing people from enjoying higher standards of living, but instead curbing the ability of the very rich and powerful from doing anything and everything in their means to protect their wealth.
That said, millions of discontented US taxpayers, goaded by fake news on the social networks, voted for Donald Trump, one of the most visible members of the super-rich despite his myriad bankruptcies and business failures, and who has spent his time in office lowering taxes for other super-rich people while further increasing inequality and encouraging xenophobia while at the same time systematically breaching every rule in the book to the extent that most of his advisors face jail time.
This latest approach to fighting inequality is not about punishing those who have worked hard to achieve a better standard of living, but is about establishing a reasonable upper limit after which the accumulation of wealth ceases to function as an incentive to continue creating value for society, and instead becomes about power and influence, effectively hijacking politics. Regardless of the value that you have been able to generate thanks to the visionary application of a concept, there comes a time when the accumulation of wealth becomes a threat to society, and it is that same society, in its own long-term interests, that now has to work out a better redistribution of wealth, for the benefit of all.
As the United States gears up for next year’s presidential elections, this is a topic we’re going to hear a lot more about.
(En español, aquí)