Life During Class Wartime

War is bad. Don’t start one. But we’re already in a class war and we’re losing. Where by “we” I mean most people; the winning side comprises, roughly, the richest 0.1% of the population, who are morphing into a hereditary aristocracy. [I mean that, see below.] So, what to do in a war one didn’t choose?

How bad is it? · It’s really bad, and getting worse fast. I recommend cruising through Wikipedia’s excellent article on Distribution of wealth; maybe jump straight to the Wealth inequality section. I’ve pulled one helpful graph, sourced from Oxfam, into the margin. The article has loads of other statements of the form “The richest X compared to the poorest Y have Z times️ as much.” The values of X, Y, and Z are uniformly saddening.

As a resident of a wealthy West-Coast New-World city, the effects of pathological inequality are in my face every day: Bentleys gleaming on the road, ragged people huddled in the rain cadging cash outside the drugstores, thousands homeless.

Why is that bad? · It’s not only a sinful by any sane definition of sin, but stupid, inefficient, and damaging. I turn once again to Wikipedia: Effects of economic equality. I’ll add one pointer to an effect that is less obvious: It exacerbates the unaffordability crisis.

One effect of the increasing imbalance between the ultra-wealthy and everyone else is the emergence of, effectively, a hereditary aristocracy. “Wait!” you exclaim, “How about high income-tax rates for the wealthy, and inheritance taxes?” You might well ask. It turns out those are no longer operative. I’ll get into details about that, but first…

A parable: Grant Gustavson · I am, as previously related (see Southsiders and Fútbol Joy) a fan of the Vancouver Whitecaps Football Club (VWFC) who play in Major League Soccer. It’s affordable, light-hearted, high-drama, high-quality entertainment and has lifted my spirits notably in the recent dark years.

However, it appears that Vancouver’s about to lose the Whitecaps, at the whim of a Vegas-based purchaser, of whom The Athletic writes:

The potential buyer is Grant Gustavson, the son of Kentucky billionaire Tamara Gustavson and grandson of B. Wayne Hughes, founder of Public Storage, according to multiple sources with knowledge of the discussions. Forbes estimates Tamara Gustavson’s net worth at $8.5 billion.

Gustavson, 30, lives in Las Vegas. A graduate of the University of Southern California, he has been involved with the athletic department at his alma mater and helped to develop the Name, Image and Likeness (NIL) program there. He continues to work with the USC basketball program and is also involved in the management of his family’s farm, “the country’s premier thoroughbred farm with decades of storied champions throughout the stables.”

So this fucking youngster, who has life experience working at the gym at USC (where his Mom’s on the Board of Trustees) and helping out at the family farm, can reach out his mighty hand and snatch away a popular pleasure from another nation. Droit du seigneur in action.

Staying rich · I highly, highly recommend Our Tax System Should Make You Furious from the NYT. By “our” they mean America’s. First, it addresses the canard that the tax system is actually progressive; people who like things the way they are like to say “Forty percent of people pay no federal income taxes, and then the top 1 percent pay 40 percent of the income taxes.” (Tl;dr: Somewhere between highly misleading and a big fat lie.)

Second, it explains the mechanisms by which generational wealth is accumulated and preserved, effectively in perpetuity. People like Bezos and Musk pay basically no income tax, and the way they do it isn’t complicated or hard to understand.

There is actually a family of financial products called Dynasty Trusts. The first ad that popped up in response to my Web search had the marketing copy “Dynasty trusts: preserving family assets for future generations”. Or, put another way, “Dynasty trusts: Starving beggars in your neighborhood.”

Revenue from the rich · So what can we do about it? Tax expert Ray Madoff, the interviewee in the “Should Make You Furious” piece, has smart things to say. Then there’s Thomas Piketty: “Opponents of the tax on the ultra-wealthy lack historical perspective”.

The common thread is taxation of wealth not income, because the arcane abstractions of accounting make income too easy to hide. The argument is that a wealth tax of say 2%/year, starting at a threshold of a few tens of millions, won’t impair the lifestyles of the seriously wealthy, but still yield systemically important public-sector revenue

Also worth reading, from the International Monetary Fund: Game-Changers and Whistle-Blowers: Taxing Wealth. Among other things, it reports that the proportion of wealth that is hidden in one offshare tax shelter or another is pretty small, ranging from 8% in the developed countries up to 30% in poor nations. Apparently it’s harder to hide wealth than income.

Good karma · If wealth taxation won’t touch wealthy lifestyles and will help build a safer, calmer, happier society, it feels sort of irrational to oppose it. And some of the wealthy don’t. My favorite example of this is Avi Bryant. Check out I’m a Millionaire. Tax Me More, Please and Meet a millionaire who wants Canada to tax the rich. [Disclosure: I made a nice little chunk of money when my tiny investment in Avi’s startup turned into pre-IPO Twitter shares.] I’m also interested in Patriotic Millionaires, which Avi founded.

Also worth checking out: Jeff Atwood’s Stay Gold, America and Launching The Rural Guaranteed Minimum Income Initiative. So, not all of the 0.1% are The Enemy.

It’s not complicated · Around the world, governments are running up huge debts and cutting back social programs because the taxation revenue doesn’t come near the amount it requires to provide a livable society. So the choice is stark: Cut and slash deeper (read: starving beggars) or find more money. There’s lots of money out there basically just playing financial games; it needs to be put to work doing something useful.

This package of ideas should be easy to sell to voters. Of course, resistance will be ferocious and extremely well-funded. But the currently-winning side in our class war is actually a soft target. Target for what weapon, you ask? Democracy. No need for tumbrils and guillotines. Yet.

Contributions