Monday, December 12, 2011

Lowest Hanging Fruit

There has been much vitriol leveled at inequality and what is believed by some to be unfair compensation. CEOs, Professional Sports Stars, Brokers, Bankers, Brokeback Bankers, Actors, Paris Hilton, Hedge Fund Managers, The Koch Brothers, Trial Lawyers, Plastic Surgeons, LBO/Private-Equity Kings, Trustafarians,  Mark Zuckerberg, Televangelists, all though not exclusively have been the target of critics questioning whether or not they are in fact deserving of the riches heaped upon them, or in perhaps the rarer case, otherwise earned.

Some people see such folks (particularly Bankers, Private Equity and Hedge Fund Managers) as unequivocally Evil and, as such, are proverbially low-hanging fruit in their search for scapegoats, sources of Government revenue, or merely general contempt. While sympathetic in-part, I think they are missing the obvious. Indeed, the over-sized day-glo bullseye, and the lowest-hanging fruit for all derision and heated debate regarding inequality should in reality be directed elsewhere - quite simply, at The Dead. No, not Jerry & the Boys who it must be said have been scorned by many 1%ers for decades, but the Deceased; the Un-Living;  the Already-Departed.

For those who think this a joke, let me state categorically that it is not. The cremated and already-decomposed  are the perfect villains - vampirious leeches, the ultimate symbol of absurdist something-for-nothingism, not to mention quite convenient effigies upon which to heap our rage. "They" - or their estates and beneficiaries receive royalities, own assets, extract rents, but we must ask the question: should they? For presently, the State needs it more than the offspring, and is probably more deserving. Errr ummm, well, perhaps not, though one might better argue that descendants are LESS deserving of the eddying pools and wealth in legacies, trusts and foundations for their benefit. Randians, even more than others should welcome this boot-strap-lifting proposal since it logically follows their preference for Darwinian outcomes, and the resultant wealth that increasing is believe to yield. And what could foster more genuine competition than everyone starting from more or less the same lane?

So here they lie, in box or urn, now, dead. They can neither spend it nor enjoy it. They certainly no longer EARN it. And their chosen or Napoleanoic beneficiaries did even less to earn it. What is the philosophical or moral basis of their claim? The politically astute cannot fail to notice one of the most compelling reasons to shine the klieglights thusly: They cannot complain. They cannot vote you out or vilify you on Fox news. They cannot [any longer] directly mobilize lobbyists or start a Swift Boat-like smear campaign that will stick and possibly remove you from the Great Milk-Teat. They are a far better target than illegal immigrants, whose legal relatives and extended families increasingly control Florida, and Texas, and are significant swing voters in more and more states. Why waste time building fences (which costs money) when we can simply raise it from the dead (no pun intended) before it corrosively arrives in the control of its heirs?

Walmart heirs control wealth equivalent to the net worth of the bottom 30% of The People. This simply cannot be good for consumption, and hence employment and economic activity. And Politicians should realize that highlighting this to their voters will be more advantageous than accepting campaign contributions from such heirs in support of the status quo. Sustainability (without private armies) apart, the more fundamental question that people have ceased asking is: Why this is so, and how fair it is (or isn't). What philosophical basis is there for passing ownership and de facto control of vast pools of wealth and accompanying privilege via blood, kin or for that matter by legal assignment? If we have transcended this in the political sphere (or tried to since political dynasties DO still exist), why are we so forgiving in the economic sphere which given the influence of money over politics equates to the former in any event?

I understand that you might have some hesitation. You may be afraid of the paranormal and their potential wrath. You might wonder whether or not you might regret abetting what some will term as the immoral sequestration of assets, when you are seeking entry into the Great Country Club On High. As a 1%er you may yourself have grave concerns about your progeny's wits, motivation, or ability to tie their own shoelaces when well into adulthood. Or perhaps you have more systemic concerns about how it might affect the property rights of the living. As a politician, or a member of the 1%ers who will benefit from the deflection of attention, you no doubt will understand the pragmatism of focusing upon the here-and-the-now. If you are concerned for the downward mobility and consequential well-being of your offspring, I would highlight that it is worth thinking about such issues as social safety nets and universal healthcare BEFORE the cards are dealt. If on the other hand, you are concerned that an economic placeholder is required for systemic reasons of securing property rights of the living, why not let it be in the Public's Interest - who is able, like other SWFs to hold it in trust for a rainy day, or as collateral for the inevitable future demographic inversion? Indeed, it is likely that the societal beneficiaries will in aggregate be the same public that contributed towards your success when amongst the living. Being presumptuous, speaking on  behalf of The Dead, it is a befitting memorialization, and a gesture (nearly) all of the living would appreciate.

Of course, if one thinks such a proposal too bold, or simply too unfair, there remains one further, even more-surefire-target (on par with banning assault rifles in elementary schools) upon which to point the wrath and fury of the 99%ers: Dead Pet Trusts....


Anonymous said...

Tim Wilson said...

It's not a moral issue or a question of fairness. It's math. In a free market/capitalist economy, wealth will always concentrate into the hands of the few. Think about it-- if a couple of guys who own all the businesses take a cut of every transaction will sooner or later they will own it all. When they do, everything grinds to a halt. Anyone who has played Monopoly knows this. If you want a healthy economy there has to be a mechanism to reverse the trend. Progressive taxation and a healthy estate tax are the only proven methods. If anyone has a better idea they should let me know.

John said...

Here's a link you will enjoy...

The pet trust reminds me of a character in Midnight in the Garden of Good and Evil who was always seen walking an imaginary dog. It seems the dog's owner had left it a fortune but failed to make provision for the caretaker when the animal died. Everybody understood, then, when he continued his activities as though the dog were still alive. Otherwise he would have no way to make a living.

Your idea of harvesting some of the wealth in the eddying pools and wealth in legacies, trusts and foundations is super. It is politically dead in the water, of course, but it illustrates a real and present threat to how present policies are seriously threatening the future, namely by eroding what little net worth may have been accumulated over several generations by allowing it to be harvested by those already flush with more than they ever will need.

All the discussion of "income" is a smoke screen calculated to obscure the real issue -- net worth. Income taxes are only concerned with twelve months of new wealth. But for many that does not represent wealth at all but a chance to buy back a bit of negative net worth, the only way that generational wealth can be accumulated. (I heard that a third of the black middle class has been wiped out by the current recession.)

But short of generational wealth, just being able to make it to the end of life without sucking wealth from the NEXT generation is enough to motivate policy makers to protect at least that little bit. One would think. But one would be wrong.

Good luck with your idea. I like it a lot.

Anonymous said...

Hedgie whining.

Drop dead.

Anonymous said...

As Henry George pointed out a long time ago, the bigger problem isn't current riches in the form of inherited rents, but ongoing rent collection:

Chapter 7: The Great-Great-Grandson of Captain Kidd,
The Irish Land Question.

Anonymous said...

I forget the source of the quote, but it runs something like this:

I want to leave my kids enough that they can do anything, but not so much that they can do nothing

Jack Parsons said...

About income tax v.s. wealth tax. I recently saw the US income tax form from (I think) 1864. The questions were "how many houses do you own" and "how many carriages do you have". Meaning, it was neither income nor wealth, but an conspicuous consumption tax.