Why we shouldn’t tax the rich

Eric Garland Culture Trends, Finance Trends, Government Trends 8 Comments

Alain de Botton is a modern-day philosopher, one I think may be more famous in future centuries that right now. His insights on everything from romance to video games deal with our problems here and now. This article “What the rich really want, and why we should give it to them” is an example of his wisdom applied to an issue ramping up in prominance – the domination of a small group of overly influential citizens, and its impact on the general happiness of societies.

But de Botton goes to the heart of the matter – social power is not about money, it’s about love.

Surveying the problems of Capitalism, the standard response of the left has been to suggest that one simply tax the rich more. But this fails to grasp, and therefore properly to exploit, the real psychological motives of the rich. The rich only pursue money fanatically (to our great collective cost) because wealth appears to be the primary, most objective source of honour in the modern world. If only we can fix how honour is obtained, we will be able to redirect their mania to more socially beneficial ends in ways that don’t demand that the rich become ‘nice’.

At present, a natural inclination is to force the rich to give up their wealth using the instrument of new taxes, but this strategy simply won’t work. The chances of people running away and taking their assets with them is too great. We know that entrepreneurial energy and competitive drive can too easily be depleted; the economic balloon can deflate and all will suffer. We need to go down a different route. We need to harness the talents and drives that the rich are currently using to squeeze the earth and its people too hard – and ensure that these energies are made to address  the collective needs of society.

The aim should be to seduce the rich – to make them want to benefit their societies in return for giving them what (we know) they deep down really want but haven’t until now reliably been able to get except through money: namely, honour.

It’s an incredible, simple insight – this is all simply about good feelings and love, though the impact of it is damaging the people and the planet. If we want a chance at a happy society, we must create a greater economy in applause, of all things.

Society should do a systematic deal with capitalists: it should give them the honour and love they so badly crave in exchange for treating their workers as human beings, not abusing customers and properly looking after the planet. A standard test should be drawn up to measure the societal good generated by companies (many such schemes already exist in nascent form), on the basis of which capitalists should then be given extraordinarily prestigious titles by their nations in ceremonies with the grandeur and thrill of film premieres or sporting finales. It might be something to go after their names (for example, RC: Responsible Capitalist), a title that would have some of the same associations as the Nobel Prize, the Victoria Cross and the Pulitzer prize – in other words, a fitting target for the most ambitious and narcissistically craven and damaged people in society to strive for.

Royal Investitures

  • Jennifer Jarratt

    Eric, isn’t this what charities, non-profits, and causes that can bring love and social visibility to donors are designed to do? It’s how they get money. Suggests the US gov’t should convert to a non-profit and appeal to our better natures with all the “causes” they support (like poverty) to get money from us–rather than in taxes.

    • I think de Botton is speaking of more of a cultural response than a bureaucratic one. In fact, the base of his argument is essentially that democratic institutions no longer function whatsoever. The notion of making policy in society by the consent of the governed is declared dead on arrival. It’s pretty dark stuff, however, I think he’s being quite realistic on the notion that the mechanistics of Washington DC and New York are likely to change America (or London the UK, et cetera.) He’s got a point. Didn’t many of us hope for some kind of fundamental change when Obama took office? Six years later, they couldn’t find a single banker to indict amidst $3 trillion of fraud. Clearly, progress of any sort will come from something more grassroots.

      • Jennifer Jarratt

        I guess I’m still feeling we are already being “nice” to bankers, and fund principals, and CEOs, and Wall St. tycoons by doing exactly what they want us to do, and by calling them “job creators’ etc. In a way I guess they are teaching us a lesson by showing us, “look, you dummies, this is what the system you’ve created allows us to do, and we are doing it!”

        • I agree, but it seems that narrative is changing pretty quickly. Thomas Piketty is sold out in both America and France. Strange for so many people to be interested in a book on economics, don’t you think?

          • Jennifer Jarratt

            I agree, but think many are looking for answers, solutions, etc.

  • Jimbo Jones

    Eric what do they owe you? Are you sure you are not black or Jewish?

  • Well, changing what people do to achieve higher status in a culture might be one way to substitute for the accumulation of money to achieve status. And in no-growth to low-growth economy, which is where we are headed if we manage to avoid the outright collapse of industrial civilization, it might become a cultural necessity to change how people acquire status because the opportunity to accumulate money will be greatly reduced due to the global and irreversible decline in net energy. The general problem with status-seeking behavior is people will do almost anything to get it, including killing their children. As for the capitalist class, I suggest understanding capital as social power and not as the accumulation of productive assets. See Nitzan and Bichler’s book “Capital as Power” for a full explanation of their thesis as it represents a radical shift in the understanding of capital. Their analysis of the current “degraded” economy and the ever-widening gap between the very rich and everyone else suggests that capitalists actually do not want an economic recovery. With regard to taxation, our government has painted itself into a corner by enshrining tax breaks in our voluminous tax code and through a legislative agenda that consistently reduces the tax burden on the very wealthy, which is the 0.05 percent of the population willing to purchase these tax breaks through their political campaign contributions. Unfortunately, government can’t shift the tax burden to a thriving middle class and working class any more because their economic prospects have been in constant decline since the mid 70s save for a few brief years in the 90s under the Clinton administration. The “solution” to the problem of government collection of sufficient taxes has been to shred the country’s social safety net of programs that were created starting in the 30s and by massive government borrowing over the past 25 years, which benefits the holders of public debt, who are mostly the already wealthy. To paraphrase Herb Stein, things that can’t go on forever won’t and neither will a society that is comprised of the very wealthy and everyone else.