14 Reasons Why We Need to Put a MAXIMUM Limit on Wealth (starting at $10 million) | DEGROWTHIFY #10
Is it too crazy to think that there should be a limit to how much wealth a human can have? If you say yes, it’s too crazy, then should we allow some humans to have a trillion dollars or infinite dollars? If you say no, it’s not crazy, what should be the maximum limit? A billion dollars? A hundred million?
I argued before for a maximum income of 111,111 dollars with no exceptions. Today I will argue that a maximum wealth of ten million dollars is more than enough for any human to have a decent life. There are many arguments to defend this. Let’s go through some of them.
To get to the wealth of Jeff Bezos you would need to work 2000 years, 8 hours a day, no weekends, no vacation, and earn 35000 dollars per hour! That’s inequality. Elon Musk can buy 274000 houses in cash with his wealth. You can buy one, with a mortgage for 30 years, if you’re lucky. That’s inequality. Mark Zuckerberg can buy a new Rolls-Royce Boat Tail, the most expensive car in the world priced at 28 million dollars, every single day, and only from the interest he would earn if he kept his wealth in a savings account at 6% interest. That’s inequality. If this is enough to make you angry and realize how unfair our economy is, you can stop the video right here. If you need more reasons for why this insanity needs to stop, I urge you to keep watching.
To build a case for a maximum wealth of ten million dollars for all humans, I will use three tools: determinism, limitarianism, and degrowth. Briefly, determinism shows how we do not have any free will whatsoever, that all our behavior is determined by personal history from seconds to decades ago, all influenced by the environment, over which we do not have any control. Determinism shows how merit and status are ridiculous ideas, how nobody deserves their wealth or position in life. People can be rewarded for putting in different levels of effort, but through rights and entitlements, not merit. All of this decided democratically.
Limitarianism is the ethical and moral need to put a maximum on wealth, as a principle to organize society. Finally, degrowth talks about slowing down the economy, putting it on a healthy diet, by phasing out wasteful activities, and phasing in wellbeing for everyone.
Reason #1 There is no merit whatsoever
Here comes determinism. Robert Sapolsky quotes research that demonstrates how human behavior is caused by what happened in the body and brain seconds before you acted, minutes before, hours before, days, years, and even generations ago. No thought, or action happens without a cause. There is no free will. For free will to exist, you would need to prove that a bunch of neurons fired without a cause, free from any influence. You will have to prove that your behavior is also not caused by anything. While it feels like we choose freely what to do, in reality it’s an illusion. All our choices have an ultimate cause outside of us. You cannot control what you do, as you cannot control where you are born, the color of your skin, to have rich parents, to be good at chess, to have a good memory, to like ice-cream, or to hate spinach.
The consequences for wealth accumulation are huge. Determinism wipes out all merit. The entire libertarian philosophy of just desert (no, not cakes) goes down the drain. Along with it, down goes status. Since humans are now rewarded differently based on merit, and if merit proves to be an illusion, then rewards are an illusion. Elon Musk only had blind luck to become wealthy. A chain of circumstances put him in that position, not the wisdom of his decisions, that were actually a bunch of snappy neurons just doing their thing. There is no evidence for anything else.
I go much further than Ingrid Robeyns and Tom Malleson when I say, that the limit to wealth has no connection with merit whatsoever. A limit of 10 million dollars is meant to create a moral and just society. There is plenty of room to grow your wealth, if that’s your thing, up until that limit.
Reason #2 Everything has a limit, so should wealth.
Life has a beginning and an end. Civilizations have a beginning and an end. Planets have a beginning and an end. Hard work has limits. The hours in a day are limited. The amount of land, water, air, trees are limited. Even social behaviors are limited by law. You cannot harm others without consequences. Wealth should not be an exception, on this ground alone, that there is no natural justification for NOT having a limit. This is also what degrowth says. Earth is a limited system. We broke its limits. We are now in overshoot that manifests itself as the climate crisis, the refugee crisis, social unrest, wars over resources and land. To fix the crisis, we must consider the limits and respect them or we will consume ourselves into extinction.
Reason #3 Inequality matters, a lot.
Why does it matter that the official poverty line is $2.15 a day? Or that some economists say that the poverty line should be at $15 a day? And that is what you can buy in the United States for that money, not what you can buy in rural Congo! It matters because it has bad consequences. It creates stigma, undermines social cohesion, leads to abuse of power, undermines equality of opportunity, causes mental health problems.
It’s also a matter of principle. Billions of humans are so dirt poor while others swim in oceans of wealth. It itches your eyes to see this, doesn’t it? It pulls out feelings related to ignorance, insolence, sociopathy. It is what is it. I don’t care. There’s nothing I can do about it. And even worse, there’s nothing anybody can do about it.
There is also huge inequality between nations. The Global South lost $62 trillion from 1960 to 2017 in the global trade exchange with the rich Global North. That’s a loss of around 9000 dollars per person and gain of a gain of 65000 dollars per person, the Global North. All this is possible because the ruling super-wealthy got away with it.
Reason #4 Extreme wealth is dirty money
In his book Nazi Billionaires, David de Jong shows how contemporary heirs of rich Nazi supporters must be transparent that their inherited wealth is comes from collaboration in genocide. Close to Auschwitz, IG Farben acquired for cheap, land whose Polish inhabitants had been forcibly evicted by Nazi occupiers. Then IG built a factory where it put to work thousands of prisoners from the Auschwitz concentration camp.
How about the wealth made by major fashion brands on the backs of cheap labor and inhumane working condition? Do people making t shirts have more freedom than the prisoners at Auschwitz?
We must say something about slavery too. Just before abolition, in around 1860, about four million enslaved humans worked in America. It has been calculated that those people lost about 20 trillion dollars in wages for their work. That value has been passed on over generations into the hands of the heirs of slave owners. Today Black Americans own 4.5 percent of total private wealth, while they make up 13.6 percent of the US population.
Of course, not all extreme wealth is criminally dirty, from a historical and legal perspective. Some wealth is cleaner than other. But if we had a limit, we would have a virtual guarantee that dirty money cannot happen again.
Reason #5 People can imagine limits to wealth.
For the Dutch, having total wealth above 2.65 million euros means a family of four is super-rich. In the same survey most people do not consider extreme wealth itself a severe problem and object to the government’s enforcement of limits to wealth, and income. At the same time, people support more taxes on the super-rich.
What can we make of this? People recognize that extreme wealth starts at very low levels, well below 10 million dollars. On one hand extreme wealth is not a problem, on the other hand the super-rich should be taxed. Sounds like a contradiction. Baked into answers to surveys like this, is perhaps ignorance about how extreme wealth is very bad to society, some concealed envy, and why not, some hope that maybe I can be super rich too. It only takes a bit of self-reflection to realize that an objective limit to wealth can refocus the mind on a much more realistic and fulfilling life. A limit that everyone respects and does not attempt to break in secret.
Limitarianism, makes a distinction between three limits: the riches limit, the ethical limit, and the political limit. The riches limit is the level at which additional money cannot increase your standard of living in any meaningful way. The ethical limit is the maximum level of wealth one can own on moral grounds. The political limit is the ultimate limit on wealth that the state should use as a goal. Wealth above this level is immoral.
By the very fact you are watching this video and think about this classification, you can now internalize these differences. It applies to everyone else, the Dutch, the Americans, the Japanese, and even Romanians. This information can change how people understand accumulation of wealth.
Reason #6 Tax dodging.
The super wealthy dodge taxes a lot in two ways: tax avoidance and tax evasion. Tax avoidance is using legal rules to minimize the tax one pays. Tax evasion is dodging tax through illegal practices. In the US alone, 470 billion dollars in taxes that are due, are not paid. If that money was put into a savings account for each child, at age 18 they would each have 115000, plus interest, in their account on the day they turned eighteen. Globally, about 8 percent of household wealth is held in tax havens. 10 percent of the world’s GDP.
Wait, but here is now something really interesting. Nearly three quarters of millionaires polled in G20 countries support higher taxes on wealth. Over half think extreme wealth is a “threat to democracy”. Whoa. Even the super rich support taxes. Then, why do they dodge them in the first place? Maybe those answering these surveys are not tax dodgers. The problem is with the rules of taxation. They are loose, they are uneven, they allow exemptions, they allow for greed, they allow bias, they do not have a universal rule, such as a wealth limit. If such a rule existed, and it applied to everyone, without exceptions, without exemptions, it will be much easier to deal with tax dodging.
Reason #7 Extreme wealth is really bad for democracy.
And I mean really bad. Quick reminder about how I define capitalism. As an undemocratic relation between property, power, capital, and the growth imperative. The owners of capital have power based on the principle one share=one vote. If you are a worker in an Amazon warehouse, if you have no power over how Amazon should be government. You need shares to have that power. This translates into huge imbalance of political power. Collective decision-making is wiped out in corporations. If you count the board of directors as a collective, that’s pretty much the extent of democracy in corporations. About 10 people deciding the work life for about a million and a half.
The super wealthy can literally buy political power by making contributions to political candidates. Empirical studies have shown that US politics is heavily tilted in favor of the super wealthy. Political decisions tend to reflect the preferences of the rich while ignoring those of the poor. A more insidious form of lobbying is corporate blackmail. It’s when major companies influence political decisions by threatening certain actions if things don’t go their way.
Reason #8 Taxing wealth is for solidarity.
In his book, Tom Malleson argues that we need a maximum limit on wealth because the rich undermine democracy, and the rich privately appropriate the resources that we desperately need for other things, such as providing basic needs, essential opportunities, green investment, and economic security to reduce xenophobia and populism.
You know, we often understand taxes upside down. Governments do not collect taxes, then spend them on hospitals and schools. They spend first, then collect the taxes. BUT, taxes do not go to hospitals and schools directly. They go into the government’s budget first. And if you are a country that has its own currency, you can spend as much as you want, regardless of how much taxes you collect, and when you collect them. This is called modern monetary theory.
Tom Malleson is correct that we should tax the rich, but the real reason should be to foster social solidarity and belonging. Yes, it’s good to avoid inflation and not let the government’s budget be out of control, but social solidary and belonging should come first. We need a cap on wealth so we can have a friendlier society, a less divisive society, with more unbiased opportunities.
Reason #9 Phasing out class divide.
The political left is often busy with talking about how society is divided in classes, the rich vs the poor, workers vs managers, capital owners vs salary workers, the Global North vs the Global South, and so on. It terms of political strategy, having a demand like a wealth limit of 10 million dollars, can unite the entire progressive left against the ruling elite. When the entire left unites behind this proposal, the chances of success can increase exponentially. This is not a far-fetched idea. The 8-hour workday, ending slavery, empowering women to vote, marriage equality seemed to be revolutionary ideas in their early days. They were based on an egalitarian moral code and on advancing wellbeing for all humans. A wealth limit has the same foundations. It could be the best policy demand that the political left could put forward today. It might as well save the left from inner fighting and fragmentation. It could unite humans from the labor, environmental, and indigenous movements behind the greatest political alliance that has ever formed in history.
Reason #10 No glitter, no envy.
We hear fierce capitalists dismissing limits wealth on the grounds that you are jealous of the super wealthy. Even if envy was a real motivation, which may be or may be not, not really important, even if it is so, why can we not limit wealth just because it creates envy? It is, of course, a childish argument. More so, envy comes in two flavors, so do psychologists say. Benign envy, involving upward motivation, and malicious envy, involving hostility against superior others. In both cases, there is no intrinsic connection to wealth being infinitely large. Envy can exist even if wealth was capped at a million dollars.
The glitter displayed by the super wealthy may cause some envy in many people. And some adulation. Sure, some worshipping too. If that glitter disappeared by putting a limit on wealth, people will have the opportunity to see the wealthy more grounded to reality, and closer to everyone else. It will humanize the rich, and elevate everybody else.
Reason #11 Upgrade the thinking of billionaires.
Ingrid Robeyns went on the Pitchfork Economics podcast, cohosted by billionaire Nick Hanauer. The billionaire liked the effort behind limitarianism but was not convinced.
“Of course, one of the really interesting facts about this idea that if you put somebody like me at the very tippy-top, that my wealth would be limited to $10 million, is that as a practical matter, I suspect that that would create a society where the median wealth would be $5 million because you can’t squish the money around any other way without making people multimillionaires. If you could do that, that would obviously be a pretty great society where everybody in it was financially independent and thriving. The question is, as a practical matter, can you get there? For my own part, I don’t think limits are the way. I certainly believe that the tax code should be infinitely more progressive. I’m serious about the proposal of linking the wages at the bottom to the wages at the top. I think that that’s a way to tie the fortunes of the society together, I think in a very, very productive way.”
So, instead of limits, Nick Hanauer wants to link wages. Say, maximum wage cannot exceed ten times the minimum wage. But, this is also a limit. It’s not capping wealth, it’s capping wage ratios. Sure, capping wage ratios is great, I support it, but it can be done in addition to capping wealth. A limit to wealth is easier to track, mathematically, than tracking wage ratios inside each country, and between countries. Wealth is seeing life as an ocean. Income is looking at the rivers that flow into the ocean. They are all connected. They all matter for bringing balance.
Reason #12 Extreme wealth burns the planet.
The five super-majors, BP, Shell, Chevron, ExxonMobil, and TotalEnergies, showered shareholders with dividend payments and share buybacks worth $104bn in 2022. In East Asia, the poorest 50% emit on average 2.9 tonnes of CO2equivallent per year, the middle 40% emit nearly 8 t, and the top 10% almost 40 t. This contrasts sharply with North America, where the bottom 50% emit fewer than 10 tonnes, the middle 40% around 22 t and the top 10% around 69 tonnes. Where does it have to be? To have high chances of staying below +1.5 °C global temperature increase, the average per-capita emissions should be 1.9 tonnes between now and 2050. Roughly, the equivalent of an economy-class round-trip flight between London and New York, and zero tonnes afterwards. Zero. Not 1, not 10, not 100. Zero.
What does this have to do with wealth? If wealth was capped, rich humans would not be able to receive insane dividends from fossil fuels, regardless if they received them directly in cash or through shady intermediaries. And there are a lot of shady intermediaries! This can accelerate the phasing out of fossil fuels because these companies would either have to pay those amounts into taxes, or invest them into clean energy. Or even better, be dismantled and wiped out from the economy. We can safely say, these are some of the most criminal organizations in human history because they are killing life on Earth, with premeditation.
Reason #13 Experience finitude (the spiritual reason)
In the Nick Hanauer version of limits, incomes are limited in their relative ratios, minimum income versus maximum income. Both incomes can keep growing in locked tandem indefinitely, at least in theory. A maximum wealth is the ceiling that would tell the incomes where to stop. Knowing the existence of this limit, regardless if you reach it or not, is liberating. We can stop obsessing, as a society about the accumulation of wealth. Those humans who still want to measure themselves against how much wealth they can accumulate, they can still do that, in fact, look at how high the ceiling is, it took this giant human a ladder to reach it! There is plenty of room to play.
Once we stop obsessing about who can climb the ladder faster or higher, we can refocus our minds and souls onto something else, much more interesting and meaningful. Such as understanding we are not tardigrades who can survive very high and very low temperatures, understanding what consciousness is, phasing out fascism, and finding that theory of quantum gravity already because I am tired of waiting.
Reason #14 The sky is blue, the grass in green (merit as delusion).
I am a determinist. I had no free will in breaking the pattern of the list. Let’s go back to merit. It feels like everything revolves around it. if no other reason convinced you, maybe thinking about merit should be the tipping point. Tom Malleson argues against merit, to a large extent. All wealth is based on luck, including talent and skill. Robert Sapolsky shows how at an individual level, merit disappears completely when we see the scientific evidence that free will does not exist. Even philosopher Michael Sandel argues that we live in a tyranny of merit, and that we could live in a much better society if our values did not come from the delusion that we have to reward humans with great wealth and status, when in reality they did not deserve it, they did not have agency over their decisions. It boils down to this. We are 100% our history. We are 100% what happens to us. The author of our decision is the multitude of processed in the brain. There is no ME, outside those processes, telling my body how to behave, or my brain what to think. Once we truly internalize this scientific reality, the pyramid of merit crumbles like a house of cards, taking down with it, extreme wealth, undeserved social status, and undeserved punishment. In essence, this is the path to liberation.
Until next time be well! Increase the peace!
How Much (More) Should CEOs Make? A Universal Desire for More Equal Pay
data from 16 countries reveals that people dramatically underestimate actual pay inequality. In the United States—where underestimation was particularly pronounced—the actual pay ratio of CEOs to unskilled workers (354:1) far exceeded the estimated ratio (30:1), which in turn far exceeded the ideal ratio (7:1)
https://www.hbs.edu/faculty/Pages/item.aspx?num=47954
Degrowth through income and wealth caps?
https://www.sciencedirect.com/science/article/abs/pii/S0921800918314836
The average selling price of a home in Canada $735,900 in April 2024.
Limitarianism, The Case Against Extreme Wealth, by Ingrid Robeyns
https://www.penguinrandomhouse.com/books/734828/limitarianism-by-ingrid-robeyns/
Against Inequality, The Practical and Ethical Case for Abolishing the Superrich, by Tom Malleson
https://global.oup.com/academic/product/against-inequality-9780197670408?cc=us&lang=en&
Enough, Why It's Time to Abolish the Super-Rich, by Luke Hildyard
https://www.plutobooks.com/9780745348544/enough/
The Case for Capping Wealth at $10 Million What Would Society Look Like if Extreme Wealth Were Impossible?
https://www.thenation.com/article/economy/wealth-cap-limitarianism-davos/
The limits of wealth — calling time on the super-rich
https://www.ft.com/content/30ee490f-c118-4f27-99f2-2642184a5aba
Progressive Wealth Taxation
https://gabriel-zucman.eu/files/SaezZucman2019BPEA.pdf
Limitarianism: The case for capping personal wealth
https://blogs.lse.ac.uk/inequalities/2024/03/13/limitarianism-the-case-for-capping-personal-wealth/
Trends in income and wealth inequality
https://www.pewresearch.org/social-trends/2020/01/09/trends-in-income-and-wealth-inequality/
The Secret IRS Files: Trove of Never-Before-Seen Records Reveal How the Wealthiest Avoid Income Tax
Report: It's Time To Tax Extreme Wealth Inequality
https://www.taxfairness.ca/en/resources/reports/report-its-time-tax-extreme-wealth-inequality
An economist makes the case for a limit on personal wealth and a world without billionaires
https://www.cbc.ca/player/play/audio/1.7145376
Visualizing the World’s Growing Millionaire Population (2012-2022)
https://www.visualcapitalist.com/visualizing-the-worlds-growing-millionaire-population-2012-2022/
March 2024 global poverty update from the World Bank: first estimates of global poverty until 2022 from survey data
The Centre for the Study of the Legacies of British Slavery DATABASE: https://www.ucl.ac.uk/lbs/
How Rich is Too Rich? Measuring the Riches Line
https://link.springer.com/article/10.1007/s11205-020-02552-z
Taxing the super-rich: at the G20, Gabriel Zucman advocates for international standards for tax justice
Nearly three quarters of millionaires polled in G20 countries support higher taxes on wealth, over half think extreme wealth is a “threat to democracy”
Government of the people, by the elite, for the rich: Unequal responsiveness in an unlikely case
https://www.econstor.eu/bitstream/10419/180215/1/1025295536.pdf
The Tyranny of Merit, What's Become of the Common Good?
https://us.macmillan.com/books/9780374289980/thetyrannyofmerit
Envy: An adversarial review and comparison of two competing views
https://psycnet.apa.org/record/2020-03585-001
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https://www.jasonhickel.org/the-divide
Paris Conference Calls for UN Tax Convention to Combat Inequality
https://wid.world/news-article/paris-conference-calls-for-un-tax-convention-to-combat-inequality/
Real-Time Billionaires List
https://www.forbes.com/real-time-billionaires/#51993c23d788
Global Tax Evasion Report 2024
https://www.taxobservatory.eu/publication/global-tax-evasion-report-2024/
Big five oil companies to reward shareholders with record payouts
Global carbon inequality over 1990–2019
https://www.nature.com/articles/s41893-022-00955-z
16 amazing facts about tardigrades, the world's toughest animal
https://www.sciencefocus.com/nature/amazing-facts-about-tardigrades-the-worlds-toughest-animal
The wealthy are dodging $600 billion in taxes every year. Joe Biden and Janet Yellen are fighting with the GOP to collect just a fraction of that
https://fortune.com/2024/02/07/how-many-taxes-wealthy-dodging-600-billion-year-irs-treasury-yellen/
Tax Gap Estimates for Tax Years 2014-2016
https://www.irs.gov/newsroom/the-tax-gap
Visualize the doughnut of each country, and compare their social foundation and ecological ceiling performance relative to their boundaries.
https://doughnut-economy-fxs7576.netlify.app/
A Good Life For All Within Planetary Boundaries
https://goodlife.leeds.ac.uk/national-snapshots/countries/ …some economists say that the poverty line should be at $15 a day… “Robert Allen points out that the prevailing threshold of $1.90 a day makes for a standard of living lower than that of enslaved people in the US in the nineteenth century.”
Plunder in the Post-Colonial Era: Quantifying Drain from the Global South Through Unequal Exchange, 1960–2018
How Fast Fashion is Bad for the Environment
https://www.plasticcollective.co/how-fast-fashion-is-bad-for-the-environment/
Taylor Swift Speak Now – Pittsburgh
Excellent essay Vlad! ...and let's hope they are working on "finding that theory of quantum gravity already because I am tired of waiting". 😁