What Piketty Leaves Out

Thursday, 26 June 2014, 13:09 | Category : Uncategorized
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The more money a very rich person has, the smaller the percentage of his or her wealth such a person can actually spend and consume. You can’t eat a hundred meals at once or drive a hundred cars at once or get a hundred PhDs. So the wealth has to go somewhere, i.e. to other people in one form or another, as wages, investment capital, or lower bank interest rates. Even if you just hide your money under the bed, that constitutes an interest-free loan to the Treasury and to us, the people. In other words, rich people are already paying a wealth tax, i.e. all the capital they did not manage to destroy by consuming it.

If justice were to be served in terms of reward for services rendered, someone like Steve Jobs should have been able to consume a million times as much stuff–clothes, entertainment, information, food, etc–as the average person. But he probably couldn’t consume much more than about ten times as much. What he did for others was so much more valuable (in terms of the demand) than what others could do for him that it would have been hard for him to find anything equal to it for himself to consume. Maybe he could look at lots of great works of art, but the rest of us do have museums. Maybe he mightn’t be as stressed as someone working hard at a repetitive job. But like all humans, he had plenty of stress already, like dying of cancer.

A world wealth tax would be a bad idea, because money is an illocutionary act or performative statement, in this case an act of naming. An amount of money is a name for the amount by which the bearer of the money has done more good for other people (in their opinion) than they have done for him or her. A wealth tax is a way of falsifying that act of naming, as if a meter or a pound or a liter or a degree of temperature were by law bigger or smaller for rich people than for poor ones, or as if, having been taxed at say 50% by the government just for being rich, every dollar of his represents twice as much benefit to others and half as much benefit to himself as does the poor man’s dollar.

Where Piketty may have a point might be with inheritance taxes. I certainly owe Steve Jobs much more money than I have ever spent on Apple products, but I don’t feel that I owe his heirs anything at all. I am willing to concede some transferred obligation to them because of my respect for his will, but not much. And as for their heirs, very little at all. I think the obligation implied by money, let’s say, is not very transferable to a representative or beneficiary. So an inheritance tax would actually reinforce the illocutionary force of money, rather than damaging it.

2 Comments for “What Piketty Leaves Out”

  1. 1Bill

    “A wealth tax is a way of falsifying that act of naming.” Excellent point. It can be extended to QE, which progressively falsifies all our economic acts of naming and is a wealth tax on rich and poor alike.

    The era of Too Big To Fail and Zero Interest points out the distinction between free exchange (unrestricted naming) and coercive transactions (counterfeiting). We used to think of corruption as marginal to the economy as a whole. It is starting to look like the main event.

    Glad to hear from you again!

  2. 2Troy Camplin

    Also, you cannot redistribute wealth. You can only redistribute riches — money. And when you do, you destroy wealth. Wealth can either be created or destroyed; it cannot be redistributed. The riches of many of our riches get translated in to wealth for themselves and others.

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