Most solutions that seeks people to be "better" fail to take into account that up to 10% of the population have Cluster B issues and cannot easily be persuaded by cultural norms. Does the narcissist or sociopath care that we want them to be more charitable and exercise more restraint?
A great deal of our problem right now is we have created a culture that *lauds* these individuals and thus inspires copycats from those who are just lost and not mentally ill. Changing the culture might peel some of these followers away but it doesn't solve the problem of Cluster B people with wealth and power, which is more urgently needed than simply wealth redistribution. After all, people were happy to tolerate "good kings" who took care of the people. The problems arose when a narcissist or sociopath took the throne...
If you worry about outsize consumption eroding the norm of equal human dignity, the obvious solution is a progressive consumption tax (which might include a Georgist tax if you include "imputed rents" as part of consumption). Whatever overall level of government spending and taxation you support, this is both a more efficient and arguably a more just way of raising the needed revenue than progressive income taxation or wealth taxation.
And if you worry about the outsize power and scale of federal spending, but still want government to provide high-quality public services and a social safety net, the obvious solution is federalism. Other countries (Canada and Switzerland come to mind) have a greater proportion of overall government spending controlled by subnational levels of government than we do, so devolving more tax and spending power to states, counties, and cities is not pie in the sky.
Neither of these are obvious political winners, but both seem like better prospects now than at any time in the past 50 years. "I hate billionaires and I hate Washington" may be as close to a message of bipartisan common ground as we're going to get these days. As a bonus, reducing the stakes of federal elections at least has a shot at reducing polarization and thus reducing the likelihood of political violence.
That last is underrated. Government corruption only matters because government is so powerful. Even if the overall power can't be reduced, shift more to states from federal at least brings back a modicum of competition.
"Extreme wealth" isn't "outsized consumption". It's control. It's that thing that the far-left control freak fears most - a non-trivial slice of civilization that isn't under the thumb of a centralized authority that he deludes himself into thinking is compelled to align with his own ideology.
Wealth is control of resources, and we are all better off when it's decentralized. That means wealthy INDIVIDUALS, not a bunch of people who own nothing while the state runs everything.
Wealth is power. Yes, we are subjugated if the state owns everything and people own nothing. But that’s only one side of the coin. We are hardly better off if almost all wealth is concentrated in a small group of individuals who use that power to control or place limitations on the rest of us. We have been too far trending in that direction. Our constitutional republic is strongest when we have a broad, stable middle class - when wealth as well as government power is decentralized.
For me, the question is how to achieve a better balance through means that are constitutional and much more based on voluntary and free market principles than government imposition. Ideologically, I am against using coercive means (such as confiscatory taxation) to redistribute wealth. Though a partial exception is I favor estate tax with unlimited charitable deductions in order to decentralize wealth and promote meritocracy, while allowing people to keep and use their wealth how they want while they’re alive, pass on a reasonable amount to their loved ones, and decide what charitable causes the rest will go to.
People may "hate Washington" but they like the things they get from it. More than that, they think getting those things is just and good. Shrinking the federal government, and thus shrinking what they get from it, would be taking away what they deserve, a betrayal. We see this in "Hands off MY Social Security."; Hands off MY medicaid." But lots of people feel the same way about the rest of the things they get from the feds.
Extreme wealth doesn’t seem to excite neurons in my brain associated with Big Problems. So I don’t have much to say about it, other than, “Neat. If I had that much money, I’d try to make the world a better place by doing X, Y, and Z.” Truth is, I’m not sure I’d want to have that much money. I don’t really want to be known beyond my current reach.
Significant fractions extreme wealth seem to get wasted. But this is just my uninformed opinion. I could be wrong.
The good that comes from extreme wealth is typically the means of obtaining it. Jeff Bezos had to “serve” billions of people to obtain his wealth. I’m still amazed that people deliver all these things to my house that I buy online. What a luxury for me.
“All men are created equal.” What do we really mean when we say this and wouldn’t it be better to say what we mean?
I think I’ll go outside and enjoy this fall weather with my family. Have a good day.
Arnold - your emotions on this one are overriding your quantitative reasoning. The issues around the top 10% are not the same issues as those around the top 0.00000001%. They don't have the same implications nor arise from the same causes. I'll stop here rather than attempt my own analysis; because I think I'll learn from you once you pull apart the very distinct distributional patterns that govern network effects from segments of the 'long tail.'
Though to be fair to Arnold, despite using that quote about the 10%, he never suggested otherwise, and was quite clear with his words that his problem is only with the ~0.00005% of double digit billionaires, not with the 10%.
But like you I wish he had made that more explicit.
Commentary on the wealthy usually fixates on consumption—houses, cars, luxury goods. But if an individual’s net worth is in the billions, or even hundreds of millions, visible consumption is only a tiny share of their total wealth. The much larger and more important portion is what is invested. That’s the piece that deserves more attention.
I should have asked myself the "Five WHYs" to better contemplate what came before and I would have gotten to "why government." Franklin said something about it is our Republic if we can keep it. It has not been kept for over 100 years, right? I think the scales tipped beyond any fixable place once there were more people dependent on taxpayer funding than not.
I have a theory that the Civil War had two big impacts. One, it showed that the federal government could solve in four years what the abolitionists had been try to solve by moral persuasion for 50 years; no one need ever wait that long again. Second, the veterans kept going back to Congress for better and better pensions at the public expense, far better than anything previous veterans had gotten, which showed federal money was available for a good cause. Almost all previous social spending, like for canals and roads and railroads, had come from states, I believe.
I have never seen anyone else make these arguments, so they are probably just my pet theory.
Without Elon Musk, we wouldn't have a space program to speak of, or the ability to rescue astronauts from the International Space Station, and we would be way behind Russia and maybe China in space. What impressed me most about SpaceX, based on Isaacson's bio of Musk, was Musk's single-minded focus on reducing the costs of building and launching rockets and satellites. Of course, cost reductions were low-hanging fruit, given that the US space program historically had been managed by the US government (NASA) and relied heavily on defense contractors using cost-plus contracting, but reading about SpaceX renewed my faith in what economics teaches about the incentives facing profit-seeking private firms. Needless to say, Musk is obviously kind of crazy, but you have to be crazy to develop a commercial space company to begin with. Jeff Bezos has also invested in rockets and space exploration, but his efforts seem more like a vanity project compared to what Musk has done. I haven't purchased anything from Amazon in ages. It is my personal boycott. I choose not to contribute to his wealth by sitting on my can at home and going click, click, click. There are always alternative options for making purchases. In my judgement, building a commerce platform is not equivalent in value to building a successful commercial space venture. I know economists don't draw that distinction, and economics does not provide a basis for drawing that distinction, but economics isn't the bible. Porn platforms like Only Fans also generate lots of wealth.
I think about the rice farmers in my state. A particular delta supported I think the bulk of our rice production. I feel it is cool that we grew rice. It’s cool to have many products rather than just a few. I liked buying my state’s rice. The submerged rice land had the subsidiary function of being popular with coastal birds. It sort of replicated, I guess, a natural process that has been circumvented by upstream control of the river. It took a fair amount of water, and was at the end of the line of users.
There was eventually a lawsuit over water being allowed to reach the estuary at all, filed by other interests - commercial fishermen, coastal conservationists.
Anyhoo, over time, the upstream river authority allocated more and more water to the big city on the river, obviously, as it doubled in population, and as much or more to all the sprawl housing in the watershed. The fake lakes were usually ugly things, drained bathtubs. Cue much unhappiness.
In the end, somebody had to be declared “greedy”.
Lake house owners? Water skiers? Land speculators? Developers building with no forethought over a tapped-out aquifer, because as there was no county-level building regulation whatsoever, they could always build now and beg water later from the river authority? Irrigators of bright green turf? The city leaders encouraging growth (even though jobs never matched that growth?) The immigrants filling the area from other countries? And now: all these suddenly required, mysterious data centers.
Nah, it’s rice farmers who are greedy, don’t you know. If they are greedy, others are not greedy. That’s the beautiful thing about it.
I mean, the rice farmers were probably local gentry, down on the coast. I guess that’s enough to be suspect.
Rice growing uses a lot of water, sure. Temporarily. It then goes on, to the ocean, unlike many of the other uses in the watershed.
But still: people growing food for you. That’s pure greed. I’m sure the Cato Institute would agree.
Your “solutions” are unimpressive. I invest personal wealth in the stock market, or I give it to individuals or causes of whom/which I approve. That should count as “using” it, in which case I *cannot* accumulate more wealth than I can use. And restraint in exercising power must come from the populace as a whole, especially in a democracy. The people have shown little interest in limiting the governmental exercise of power. So long as that is the case, politicians will show little restraint.
How much do you think Elon Musk, for example, spends on personal (including his family members) consumption each year? I think it all but certain that he spends a much, much smaller fraction of his net worth than I do, and this is with me basically being a Spartan in this regard. I look at all these great fortunes and much of what I see is sequestered inflation of the last 60 years. The last thing I would want to see is these great fortunes be monetized so that the fraction of that end consumption grows significantly in any near future.
My husband once happened to be at Alice Walton’s house at suppertime. This was many years ago when she was one of the two or three wealthiest people in America. I was very keen on the details. What was her house like? “It was a house.” Were there a lot of people there? No, but there was somebody there who worked for her. What was dinner? “Hamburgers. We each grilled our own on the patio.”
Oh.
The one interesting tidbit was that she had not yet built her museum, and some of her collection of American art was in the house - Winslow Homer and John Singer Sargent just leaning against the wall, temporarily.
I have to say, this didn’t make a good deal of sense to me.
I did read “Liar’s Poker” years ago and found it entertaining. I don’t know that the “orders of magnitude” matter all that much but I do recall that the guys who made their money in that world were inclined as I recall to spend it on big over-the-top parties, maybe cars. They had no imagination for anything else. They were happiest on the trading floor. Sure, splashy trashy parties do less damage than ideology-based tax-free giving (whether that’s to Open Society or to the Cato Institute 🤪) but we’re pretty far from “virtue” in either case.
I think of limits too, though.
Recently I learned about a dissident voice, Paul Kingsnorth, who despairs as some of us do, about nature. (I know you don’t, but just trust for a moment that outside your sphere, some people do.) I haven’t yet had time to acquaint myself with his thought, but it appears at first glance that he grasps that we are in the grip of hubris about limits, a fantasy about no-limits.
To me, the idea that limits don’t matter and everything will be fine if only billionaires will be a little quieter and act more like hundred-millionaires - seems fanciful. I’m not sure how it would work. Possibly you would find fault with whatever they spend their money on, because that would become the de facto luxury.
I think we like titans when they spend their spare $ on things we like. The Rockefellers, for instance: way to go. Carnegie Libraries probably once brought a lot of pleasure to people, though that is over. Various Huntingtons left tangible legacies. The youngest and I believe, thought least, of the Vanderbilts, George Vanderbilt, left more of a legacy than most of them, with regard to forestry. I don’t care anything about education, but I often like college campuses, and univ. buildings were usually gifts. I’ve never been to Chicago but I understand the thing that people like about it most, is *entirely* owing to Montgomery Ward. I like also that he said, after the s**t he had to deal with, over it, that he was sorry he had wasted his efforts on such worthless people. He’s my favorite, maybe. Partly because I used to drive by his head. There was a shabby class C office complex a mile or so from my home, and once at night I happened to turn around in its parking lot. In the lobby was a glowing head!
Couldn’t rest until I figured out whose head. Turns out it was M. Ward and was apparently made for some sort of mercantile exhibition in Chicago at some point, along with other Chicago luminaries. (I guess they had forgiven him for saving their lakefront by that time.) The heads must have been mounted along the famous drive.
How his ended up a thousand miles away among the dentists’ offices and such I do not know. Maybe a dentist bought it. I’ve noticed dentists sometimes like to cultivate unusual collections.
I don’t see a dentist myself (you don’t need to if you floss every night and don’t drink much in the way of sugary sodas) but I do wonder, if everybody is rich now, who is going to work like a dog on people’s teeth for 40 years?
“J.P. Morgan had a high ratio of wealth to that of the average household in his time, but AI’s tell me that it was less than half of that ratio for Jeff Bezos or Warren Buffet [sic] today.”
I love most of this piece.
But this comparison is misleading for multiple reasons,
First, there were FAR fewer other billionaires at the time. Competition and competing interests is a good thing.
Second, relative to the size of *government*, J.P. Morgan’s wealth was FAR, FAR higher that that of Buffett or Bezos.
Which means that Morgan’s power in his day was not only greater than any single billionaire today, but probably much greater than the top 5 combined.
I’ve read that in his day, Morgan and his network had tremendous influence in both political parties. It was assured that no matter who was elected, it would be one of his candidates. No one has that close to a political monopoly today.
"It was assured that no matter who was elected, it would be one of his candidates."
The fact that lots of people believed that does not mean it was true. Lots of people today think it is obvious that Trump is a fascist or Mamdani is a communist, or white people keep black people down, or the deep state controls everything.
It’s true I was just passing on an assertion, so thanks for challenging - looking into it more, there is a strong case for the 1920 and 1924 elections. In 1920 both candidates had Morgan connections. 1924 Davis (D) was literally Morgan’s chief counsel and Coolidge (R) was deeply aligned.
It is also not comparing like to like because it is the wrong person. The richest man in the world was Rockefeller for a couple of decades followed by Carnegie when he sold his stake in his company followed by Rockefeller again. And their wealth as a percentage of GDP was as high or higher than Musk currently. Their wealth was also significantly more in tangible goods. It is also of the genre of inappropriate time travel because who actually cares about these ratios and their changing over time. An average household didn't even have an indoor toilet or a refrigerator. Normal people are innumerate, and they don't even care unless you tell them to show they care about this stuff and maybe they care more if they are envious status drunk people. Most of the essay is gold as usual, but the setup ain't.
"The Panic of 1907 was a financial crisis that almost crippled the American economy. Major New York banks were on the verge of bankruptcy and there was no mechanism to rescue them, until Morgan stepped in to help resolve the crisis.[61][62] To ease the crisis, Secretary of the Treasury George B. Cortelyou earmarked $35 million of federal money to deposit in New York banks.[63] Morgan then met with the nation's leading financiers in his New York mansion, where he forced them to devise a plan to meet the crisis. James Stillman, president of the National City Bank, also played a central role. Morgan organized a team of bank and trust executives which redirected money between banks, secured further international lines of credit, and bought up the plummeting stocks of healthy corporations.[61]"
Morgan's actions, which were seen at the time as saving the banking system, were used as an argument that we needed an official banking system savior, a "lender of last resort" which could call upon the resources of the federal government. In 1914, Congress created the Federal Reserve System.
"At the depths of the Panic of 1893, around 1895, the U.S. Treasury nearly depleted its gold reserves. Morgan put forward a plan for the federal government to buy gold from his and European banks, but it was declined in favor of a plan to sell government bonds directly to the general public. Morgan demanded a meeting with President Grover Cleveland, where he claimed the United States government could default that day if action was not taken.[citation needed]
"Morgan came up with a plan to use an old Civil War statute[which?] that allowed Morgan and the Rothschilds to sell 3.5 million ounces[43] of gold directly to the U.S. Treasury in exchange for a 30-year bond issue.[44] The episode saved the Treasury but hurt Cleveland's standing with the populist agrarian wing of the Democratic Party, ensuring his political career was over. In the 1896 United States presidential election, bankers came under a withering attack from William Jennings Bryan, and Morgan was among many who donated heavily to Republican William McKinley."
I got curious about the Fed back when "audit the fed" was popular, and began tracing its history, mostly but not entirely with Wikipedia. What I found was that every single Panic, going back to the first one in 1819, was either a direct result of, or worsened by, government policies which were in large part a reaction to previous Panics. The Union in the Civil War banned private bank notes as the only way it could get people to trust government bank notes -- the original greenbacks. The Panic of 1819 was a combination of state governments investing poorly in canals and other infrastructure, and the National Bank making its own poor decisions, related to financing the War of 1812.
It's easy to always find private individuals and organizations exacerbating the Panics, but they could only do so because governments had created the loopholes and opportunities, and immunized their cronies.
This is one of your pieces that provoked both fascination and a big negative reaction at the end.
If this is a "why can't people be better?" just-so story, I don't super disagree with the main thrust of it? If it's a suggestion for how flawed people might practically coordinate their decisions to improve the world, it seems deeply misguided.
One point is that there seems to be a certain (pretty high) fraction of capable people who are willing to flip the bird to the prevailing culture. If you got your way, these people would be the billionaires, and no one else. That seems less than ideal.
The bigger problem though is this the idea that culture is a better way to reform human behavior patterns in a huge society than government. This will require lockstep coordination for the culture to move in the "right" direction. If it's going to be effective at large-scale reform, especially reform that goes so strongly against powerful people's self-interest, it can't be gentle. It has to be a cultural revolution.
And we've seen what cultural revolutions are like. It would be the anti-personal-wealth equivalent of a woke purge. People would ratchet up their demands on each other with no checks and balances. Extra-legal punishment would be meted out with no due process.
A final more minor point: You talk about the problems of the top 10% holding 50% of the wealth, and then you shift to talking about the problem of billionaires, propose a remedy that applies only to billionaires and would not affect the situation with the top 10%. There's still a big acknowledged problem of wealth inequality remaining even if your ideal culture gets imposed.
But yes, if the culture spontaneously changed so that nobody with the ability to become absurdly rich had the desire to accumulate billions, I suspect it would be a better world. That will never happen, though, and the de facto use of force required if people coordinated to make it happen would be worse than the disease.
"Actually, I am not bothered by the consumption of the top tier. I am content with the goods and services that I can buy."
While neither you nor I have extreme wealth, I suspect we are both near the top ten percent. [And we essentially want for nothing.] Not exactly a position to judge what bothers the middle or lower income who are less wealthy.
If we note that real wealth is control over the disposition of assets, not who has a piece of paper or a Bitcoin account. Our political/bureaucratic class has more real wealth than even the wealthiest person. You may own a huge property, only to have some idiot bureaucrat say no, you can only do what the bureaucrat wants. I am visualizing the largest copper deposit in Alaska, where some bureaucrat at the EPA said he didn't want a mine, independent of any analysis. His opinion, which doesn't have to be backed by any real facts, wins. That bureaucrat has shown real ownership in action. The paper deeds and mineral rights only determine who pays the taxes. The Mayor of NY, with his pen, effectively owns all the rental property in NY, making him the wealthiest man in the world. He controls the disposition or destruction of the assets that make up NYCity.
A crypto billionaire, like the tulip billionaires of yesteryears, can evaporate into nothingness overnight.
Yes! Politicians control far more wealth than the richest billionaires, and the President is at the top of that pyramid. They all scare me more than billionaires, and the President scares me the most.
In the case of the Pebble Mine, that deed would show the land belongs to the state of Alaska; and I would not think you would owe any taxes unless you sold your mineral rights.
This article surprised the heck out of me, not for its subject so much as for the despairing tone, which verges on extreme jealousy.
Who defines "extreme wealth"? Any attempt to do so will inevitably keep creeping lower and lower.
I do not believe that any possible wealth distribution can result in anyone having "too much" wealth. I have too much faith in markets and the competitive spirit.
The one exception is government. No one would put any President in the .00001% category, not even Donald Trump, as an individual. Even if Bezos or Musk were to run for and win the Presidency, they would have no time for managing their wealth and would have to convert it into a trust or foundation, and without their guiding hand, it would shrink.
But the President is the one with the true wealth of the day -- political capitol. They are the ones who have true extreme wealth -- the power to murder unknown people in international waters, to drone wedding parties on the other side of the world and murder American citizens, the power to start wars on a whim, to trash the world economy, to censor at will, to conduct lawfare on political opponents.
That scares me far more than the "extreme wealth" of the .00001% billionaires, who got that wealth the old-fashioned way, by earning it.
Most solutions that seeks people to be "better" fail to take into account that up to 10% of the population have Cluster B issues and cannot easily be persuaded by cultural norms. Does the narcissist or sociopath care that we want them to be more charitable and exercise more restraint?
A great deal of our problem right now is we have created a culture that *lauds* these individuals and thus inspires copycats from those who are just lost and not mentally ill. Changing the culture might peel some of these followers away but it doesn't solve the problem of Cluster B people with wealth and power, which is more urgently needed than simply wealth redistribution. After all, people were happy to tolerate "good kings" who took care of the people. The problems arose when a narcissist or sociopath took the throne...
If you worry about outsize consumption eroding the norm of equal human dignity, the obvious solution is a progressive consumption tax (which might include a Georgist tax if you include "imputed rents" as part of consumption). Whatever overall level of government spending and taxation you support, this is both a more efficient and arguably a more just way of raising the needed revenue than progressive income taxation or wealth taxation.
And if you worry about the outsize power and scale of federal spending, but still want government to provide high-quality public services and a social safety net, the obvious solution is federalism. Other countries (Canada and Switzerland come to mind) have a greater proportion of overall government spending controlled by subnational levels of government than we do, so devolving more tax and spending power to states, counties, and cities is not pie in the sky.
Neither of these are obvious political winners, but both seem like better prospects now than at any time in the past 50 years. "I hate billionaires and I hate Washington" may be as close to a message of bipartisan common ground as we're going to get these days. As a bonus, reducing the stakes of federal elections at least has a shot at reducing polarization and thus reducing the likelihood of political violence.
That last is underrated. Government corruption only matters because government is so powerful. Even if the overall power can't be reduced, shift more to states from federal at least brings back a modicum of competition.
"Extreme wealth" isn't "outsized consumption". It's control. It's that thing that the far-left control freak fears most - a non-trivial slice of civilization that isn't under the thumb of a centralized authority that he deludes himself into thinking is compelled to align with his own ideology.
Wealth is control of resources, and we are all better off when it's decentralized. That means wealthy INDIVIDUALS, not a bunch of people who own nothing while the state runs everything.
Wealth is power. Yes, we are subjugated if the state owns everything and people own nothing. But that’s only one side of the coin. We are hardly better off if almost all wealth is concentrated in a small group of individuals who use that power to control or place limitations on the rest of us. We have been too far trending in that direction. Our constitutional republic is strongest when we have a broad, stable middle class - when wealth as well as government power is decentralized.
For me, the question is how to achieve a better balance through means that are constitutional and much more based on voluntary and free market principles than government imposition. Ideologically, I am against using coercive means (such as confiscatory taxation) to redistribute wealth. Though a partial exception is I favor estate tax with unlimited charitable deductions in order to decentralize wealth and promote meritocracy, while allowing people to keep and use their wealth how they want while they’re alive, pass on a reasonable amount to their loved ones, and decide what charitable causes the rest will go to.
People may "hate Washington" but they like the things they get from it. More than that, they think getting those things is just and good. Shrinking the federal government, and thus shrinking what they get from it, would be taking away what they deserve, a betrayal. We see this in "Hands off MY Social Security."; Hands off MY medicaid." But lots of people feel the same way about the rest of the things they get from the feds.
Extreme wealth doesn’t seem to excite neurons in my brain associated with Big Problems. So I don’t have much to say about it, other than, “Neat. If I had that much money, I’d try to make the world a better place by doing X, Y, and Z.” Truth is, I’m not sure I’d want to have that much money. I don’t really want to be known beyond my current reach.
Significant fractions extreme wealth seem to get wasted. But this is just my uninformed opinion. I could be wrong.
The good that comes from extreme wealth is typically the means of obtaining it. Jeff Bezos had to “serve” billions of people to obtain his wealth. I’m still amazed that people deliver all these things to my house that I buy online. What a luxury for me.
“All men are created equal.” What do we really mean when we say this and wouldn’t it be better to say what we mean?
I think I’ll go outside and enjoy this fall weather with my family. Have a good day.
Arnold - your emotions on this one are overriding your quantitative reasoning. The issues around the top 10% are not the same issues as those around the top 0.00000001%. They don't have the same implications nor arise from the same causes. I'll stop here rather than attempt my own analysis; because I think I'll learn from you once you pull apart the very distinct distributional patterns that govern network effects from segments of the 'long tail.'
Well put.
I had the same thought.
Though to be fair to Arnold, despite using that quote about the 10%, he never suggested otherwise, and was quite clear with his words that his problem is only with the ~0.00005% of double digit billionaires, not with the 10%.
But like you I wish he had made that more explicit.
Commentary on the wealthy usually fixates on consumption—houses, cars, luxury goods. But if an individual’s net worth is in the billions, or even hundreds of millions, visible consumption is only a tiny share of their total wealth. The much larger and more important portion is what is invested. That’s the piece that deserves more attention.
The largest issue is how wealth influences policy, regulations, things that affect us little people.
Even larger than that is the question of why government should be able to have policies which encourage the corruption of wealth influence.
I should have asked myself the "Five WHYs" to better contemplate what came before and I would have gotten to "why government." Franklin said something about it is our Republic if we can keep it. It has not been kept for over 100 years, right? I think the scales tipped beyond any fixable place once there were more people dependent on taxpayer funding than not.
I have a theory that the Civil War had two big impacts. One, it showed that the federal government could solve in four years what the abolitionists had been try to solve by moral persuasion for 50 years; no one need ever wait that long again. Second, the veterans kept going back to Congress for better and better pensions at the public expense, far better than anything previous veterans had gotten, which showed federal money was available for a good cause. Almost all previous social spending, like for canals and roads and railroads, had come from states, I believe.
I have never seen anyone else make these arguments, so they are probably just my pet theory.
that's a really good point.
Without Elon Musk, we wouldn't have a space program to speak of, or the ability to rescue astronauts from the International Space Station, and we would be way behind Russia and maybe China in space. What impressed me most about SpaceX, based on Isaacson's bio of Musk, was Musk's single-minded focus on reducing the costs of building and launching rockets and satellites. Of course, cost reductions were low-hanging fruit, given that the US space program historically had been managed by the US government (NASA) and relied heavily on defense contractors using cost-plus contracting, but reading about SpaceX renewed my faith in what economics teaches about the incentives facing profit-seeking private firms. Needless to say, Musk is obviously kind of crazy, but you have to be crazy to develop a commercial space company to begin with. Jeff Bezos has also invested in rockets and space exploration, but his efforts seem more like a vanity project compared to what Musk has done. I haven't purchased anything from Amazon in ages. It is my personal boycott. I choose not to contribute to his wealth by sitting on my can at home and going click, click, click. There are always alternative options for making purchases. In my judgement, building a commerce platform is not equivalent in value to building a successful commercial space venture. I know economists don't draw that distinction, and economics does not provide a basis for drawing that distinction, but economics isn't the bible. Porn platforms like Only Fans also generate lots of wealth.
Comment #2:
Greed.
I think about the rice farmers in my state. A particular delta supported I think the bulk of our rice production. I feel it is cool that we grew rice. It’s cool to have many products rather than just a few. I liked buying my state’s rice. The submerged rice land had the subsidiary function of being popular with coastal birds. It sort of replicated, I guess, a natural process that has been circumvented by upstream control of the river. It took a fair amount of water, and was at the end of the line of users.
There was eventually a lawsuit over water being allowed to reach the estuary at all, filed by other interests - commercial fishermen, coastal conservationists.
Anyhoo, over time, the upstream river authority allocated more and more water to the big city on the river, obviously, as it doubled in population, and as much or more to all the sprawl housing in the watershed. The fake lakes were usually ugly things, drained bathtubs. Cue much unhappiness.
In the end, somebody had to be declared “greedy”.
Lake house owners? Water skiers? Land speculators? Developers building with no forethought over a tapped-out aquifer, because as there was no county-level building regulation whatsoever, they could always build now and beg water later from the river authority? Irrigators of bright green turf? The city leaders encouraging growth (even though jobs never matched that growth?) The immigrants filling the area from other countries? And now: all these suddenly required, mysterious data centers.
Nah, it’s rice farmers who are greedy, don’t you know. If they are greedy, others are not greedy. That’s the beautiful thing about it.
I mean, the rice farmers were probably local gentry, down on the coast. I guess that’s enough to be suspect.
Rice growing uses a lot of water, sure. Temporarily. It then goes on, to the ocean, unlike many of the other uses in the watershed.
But still: people growing food for you. That’s pure greed. I’m sure the Cato Institute would agree.
Your “solutions” are unimpressive. I invest personal wealth in the stock market, or I give it to individuals or causes of whom/which I approve. That should count as “using” it, in which case I *cannot* accumulate more wealth than I can use. And restraint in exercising power must come from the populace as a whole, especially in a democracy. The people have shown little interest in limiting the governmental exercise of power. So long as that is the case, politicians will show little restraint.
How much do you think Elon Musk, for example, spends on personal (including his family members) consumption each year? I think it all but certain that he spends a much, much smaller fraction of his net worth than I do, and this is with me basically being a Spartan in this regard. I look at all these great fortunes and much of what I see is sequestered inflation of the last 60 years. The last thing I would want to see is these great fortunes be monetized so that the fraction of that end consumption grows significantly in any near future.
My husband once happened to be at Alice Walton’s house at suppertime. This was many years ago when she was one of the two or three wealthiest people in America. I was very keen on the details. What was her house like? “It was a house.” Were there a lot of people there? No, but there was somebody there who worked for her. What was dinner? “Hamburgers. We each grilled our own on the patio.”
Oh.
The one interesting tidbit was that she had not yet built her museum, and some of her collection of American art was in the house - Winslow Homer and John Singer Sargent just leaning against the wall, temporarily.
I think I enjoy my life as much as Elon Musk enjoys his. Certainly if we were to trade places, both of us would be less happy.
I have to say, this didn’t make a good deal of sense to me.
I did read “Liar’s Poker” years ago and found it entertaining. I don’t know that the “orders of magnitude” matter all that much but I do recall that the guys who made their money in that world were inclined as I recall to spend it on big over-the-top parties, maybe cars. They had no imagination for anything else. They were happiest on the trading floor. Sure, splashy trashy parties do less damage than ideology-based tax-free giving (whether that’s to Open Society or to the Cato Institute 🤪) but we’re pretty far from “virtue” in either case.
I think of limits too, though.
Recently I learned about a dissident voice, Paul Kingsnorth, who despairs as some of us do, about nature. (I know you don’t, but just trust for a moment that outside your sphere, some people do.) I haven’t yet had time to acquaint myself with his thought, but it appears at first glance that he grasps that we are in the grip of hubris about limits, a fantasy about no-limits.
To me, the idea that limits don’t matter and everything will be fine if only billionaires will be a little quieter and act more like hundred-millionaires - seems fanciful. I’m not sure how it would work. Possibly you would find fault with whatever they spend their money on, because that would become the de facto luxury.
I think we like titans when they spend their spare $ on things we like. The Rockefellers, for instance: way to go. Carnegie Libraries probably once brought a lot of pleasure to people, though that is over. Various Huntingtons left tangible legacies. The youngest and I believe, thought least, of the Vanderbilts, George Vanderbilt, left more of a legacy than most of them, with regard to forestry. I don’t care anything about education, but I often like college campuses, and univ. buildings were usually gifts. I’ve never been to Chicago but I understand the thing that people like about it most, is *entirely* owing to Montgomery Ward. I like also that he said, after the s**t he had to deal with, over it, that he was sorry he had wasted his efforts on such worthless people. He’s my favorite, maybe. Partly because I used to drive by his head. There was a shabby class C office complex a mile or so from my home, and once at night I happened to turn around in its parking lot. In the lobby was a glowing head!
Couldn’t rest until I figured out whose head. Turns out it was M. Ward and was apparently made for some sort of mercantile exhibition in Chicago at some point, along with other Chicago luminaries. (I guess they had forgiven him for saving their lakefront by that time.) The heads must have been mounted along the famous drive.
How his ended up a thousand miles away among the dentists’ offices and such I do not know. Maybe a dentist bought it. I’ve noticed dentists sometimes like to cultivate unusual collections.
I don’t see a dentist myself (you don’t need to if you floss every night and don’t drink much in the way of sugary sodas) but I do wonder, if everybody is rich now, who is going to work like a dog on people’s teeth for 40 years?
“J.P. Morgan had a high ratio of wealth to that of the average household in his time, but AI’s tell me that it was less than half of that ratio for Jeff Bezos or Warren Buffet [sic] today.”
I love most of this piece.
But this comparison is misleading for multiple reasons,
First, there were FAR fewer other billionaires at the time. Competition and competing interests is a good thing.
Second, relative to the size of *government*, J.P. Morgan’s wealth was FAR, FAR higher that that of Buffett or Bezos.
Which means that Morgan’s power in his day was not only greater than any single billionaire today, but probably much greater than the top 5 combined.
I’ve read that in his day, Morgan and his network had tremendous influence in both political parties. It was assured that no matter who was elected, it would be one of his candidates. No one has that close to a political monopoly today.
"It was assured that no matter who was elected, it would be one of his candidates."
The fact that lots of people believed that does not mean it was true. Lots of people today think it is obvious that Trump is a fascist or Mamdani is a communist, or white people keep black people down, or the deep state controls everything.
It’s true I was just passing on an assertion, so thanks for challenging - looking into it more, there is a strong case for the 1920 and 1924 elections. In 1920 both candidates had Morgan connections. 1924 Davis (D) was literally Morgan’s chief counsel and Coolidge (R) was deeply aligned.
It is also not comparing like to like because it is the wrong person. The richest man in the world was Rockefeller for a couple of decades followed by Carnegie when he sold his stake in his company followed by Rockefeller again. And their wealth as a percentage of GDP was as high or higher than Musk currently. Their wealth was also significantly more in tangible goods. It is also of the genre of inappropriate time travel because who actually cares about these ratios and their changing over time. An average household didn't even have an indoor toilet or a refrigerator. Normal people are innumerate, and they don't even care unless you tell them to show they care about this stuff and maybe they care more if they are envious status drunk people. Most of the essay is gold as usual, but the setup ain't.
Didn’t JP Morgan bail out the government? Speaks to his wealth, sure, but to something else besides.
According to the left-liberal wikipedia:
"The Panic of 1907 was a financial crisis that almost crippled the American economy. Major New York banks were on the verge of bankruptcy and there was no mechanism to rescue them, until Morgan stepped in to help resolve the crisis.[61][62] To ease the crisis, Secretary of the Treasury George B. Cortelyou earmarked $35 million of federal money to deposit in New York banks.[63] Morgan then met with the nation's leading financiers in his New York mansion, where he forced them to devise a plan to meet the crisis. James Stillman, president of the National City Bank, also played a central role. Morgan organized a team of bank and trust executives which redirected money between banks, secured further international lines of credit, and bought up the plummeting stocks of healthy corporations.[61]"
Morgan's actions, which were seen at the time as saving the banking system, were used as an argument that we needed an official banking system savior, a "lender of last resort" which could call upon the resources of the federal government. In 1914, Congress created the Federal Reserve System.
I think I was thinking of 1893.
Going to that well again:
"At the depths of the Panic of 1893, around 1895, the U.S. Treasury nearly depleted its gold reserves. Morgan put forward a plan for the federal government to buy gold from his and European banks, but it was declined in favor of a plan to sell government bonds directly to the general public. Morgan demanded a meeting with President Grover Cleveland, where he claimed the United States government could default that day if action was not taken.[citation needed]
"Morgan came up with a plan to use an old Civil War statute[which?] that allowed Morgan and the Rothschilds to sell 3.5 million ounces[43] of gold directly to the U.S. Treasury in exchange for a 30-year bond issue.[44] The episode saved the Treasury but hurt Cleveland's standing with the populist agrarian wing of the Democratic Party, ensuring his political career was over. In the 1896 United States presidential election, bankers came under a withering attack from William Jennings Bryan, and Morgan was among many who donated heavily to Republican William McKinley."
I got curious about the Fed back when "audit the fed" was popular, and began tracing its history, mostly but not entirely with Wikipedia. What I found was that every single Panic, going back to the first one in 1819, was either a direct result of, or worsened by, government policies which were in large part a reaction to previous Panics. The Union in the Civil War banned private bank notes as the only way it could get people to trust government bank notes -- the original greenbacks. The Panic of 1819 was a combination of state governments investing poorly in canals and other infrastructure, and the National Bank making its own poor decisions, related to financing the War of 1812.
It's easy to always find private individuals and organizations exacerbating the Panics, but they could only do so because governments had created the loopholes and opportunities, and immunized their cronies.
This is one of your pieces that provoked both fascination and a big negative reaction at the end.
If this is a "why can't people be better?" just-so story, I don't super disagree with the main thrust of it? If it's a suggestion for how flawed people might practically coordinate their decisions to improve the world, it seems deeply misguided.
One point is that there seems to be a certain (pretty high) fraction of capable people who are willing to flip the bird to the prevailing culture. If you got your way, these people would be the billionaires, and no one else. That seems less than ideal.
The bigger problem though is this the idea that culture is a better way to reform human behavior patterns in a huge society than government. This will require lockstep coordination for the culture to move in the "right" direction. If it's going to be effective at large-scale reform, especially reform that goes so strongly against powerful people's self-interest, it can't be gentle. It has to be a cultural revolution.
And we've seen what cultural revolutions are like. It would be the anti-personal-wealth equivalent of a woke purge. People would ratchet up their demands on each other with no checks and balances. Extra-legal punishment would be meted out with no due process.
A final more minor point: You talk about the problems of the top 10% holding 50% of the wealth, and then you shift to talking about the problem of billionaires, propose a remedy that applies only to billionaires and would not affect the situation with the top 10%. There's still a big acknowledged problem of wealth inequality remaining even if your ideal culture gets imposed.
But yes, if the culture spontaneously changed so that nobody with the ability to become absurdly rich had the desire to accumulate billions, I suspect it would be a better world. That will never happen, though, and the de facto use of force required if people coordinated to make it happen would be worse than the disease.
"Actually, I am not bothered by the consumption of the top tier. I am content with the goods and services that I can buy."
While neither you nor I have extreme wealth, I suspect we are both near the top ten percent. [And we essentially want for nothing.] Not exactly a position to judge what bothers the middle or lower income who are less wealthy.
If we note that real wealth is control over the disposition of assets, not who has a piece of paper or a Bitcoin account. Our political/bureaucratic class has more real wealth than even the wealthiest person. You may own a huge property, only to have some idiot bureaucrat say no, you can only do what the bureaucrat wants. I am visualizing the largest copper deposit in Alaska, where some bureaucrat at the EPA said he didn't want a mine, independent of any analysis. His opinion, which doesn't have to be backed by any real facts, wins. That bureaucrat has shown real ownership in action. The paper deeds and mineral rights only determine who pays the taxes. The Mayor of NY, with his pen, effectively owns all the rental property in NY, making him the wealthiest man in the world. He controls the disposition or destruction of the assets that make up NYCity.
A crypto billionaire, like the tulip billionaires of yesteryears, can evaporate into nothingness overnight.
Yes! Politicians control far more wealth than the richest billionaires, and the President is at the top of that pyramid. They all scare me more than billionaires, and the President scares me the most.
In the case of the Pebble Mine, that deed would show the land belongs to the state of Alaska; and I would not think you would owe any taxes unless you sold your mineral rights.
This article surprised the heck out of me, not for its subject so much as for the despairing tone, which verges on extreme jealousy.
Who defines "extreme wealth"? Any attempt to do so will inevitably keep creeping lower and lower.
I do not believe that any possible wealth distribution can result in anyone having "too much" wealth. I have too much faith in markets and the competitive spirit.
The one exception is government. No one would put any President in the .00001% category, not even Donald Trump, as an individual. Even if Bezos or Musk were to run for and win the Presidency, they would have no time for managing their wealth and would have to convert it into a trust or foundation, and without their guiding hand, it would shrink.
But the President is the one with the true wealth of the day -- political capitol. They are the ones who have true extreme wealth -- the power to murder unknown people in international waters, to drone wedding parties on the other side of the world and murder American citizens, the power to start wars on a whim, to trash the world economy, to censor at will, to conduct lawfare on political opponents.
That scares me far more than the "extreme wealth" of the .00001% billionaires, who got that wealth the old-fashioned way, by earning it.