Must We Limit the Wealthy’s Wealth?

BY SAM PIZZIGATI

 JANUARY 31, 2024
Facebook

TwitterRedditEmail

Photograph by Nathaniel St. Clair

If the late, great egalitarian U.S. Supreme Court justice Louis Brandeis were looking down on us today and chanced upon a copy of the gripping new book from the egalitarian European philosopher Ingrid Robeyns, what might his reaction be? He’d be absolutely outraged.

What would have Brandeis so outraged? Certainly not the book’s theme. Justice Brandeis would agree wholeheartedly with the reality that Robeyns lays out in her just-published  Limitarianism: The Case Against Extreme Wealth, that economic inequality unconscionably undermines the values we say we hold dear.

“We must make our choice,” as Brandeis once observed. “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

Brandeis lived long enough — he died in 1941 — to see Americans take his warning to heart. By his passing, lawmakers had begun putting in place tax rates on the nation’s highest annual incomes that would have been inconceivable at the start of his career.

Ingrid Robeyns absolutely shares the Brandeisian perspective on grand concentrations of private wealth. In Limitarianism, she makes what may be the most accessible brief yet for capping how much fortune any one individual can hold and hoard.

So why here, in the opening weeks of the year 2024, would Brandeis be so distraught to see this new Robeyns book hit the world’s bookstore shelves? He’d be distraught to see — a quarter of the way into the 21st century — that we haven’t yet undone our nation’s and our world’s raging inequality. Our wealth’s concentration has actually intensified since the 20th century’s middle decades.

Even worse: In this pivotal 2024 election year, precious few of the candidates in over 70 nations campaigning for office are concentrating their fire on this intense concentration. That needs to change, and Robeyns — with her landmark new book — is asking the questions that can move this change along. Why should we be letting our wealthiest grab so much of the treasure we are all creating? Why should we be letting our richest few do that grabbing at the expense of so many?

The “limitarianism” tag that Robeyns attaches to her bold egalitarian perspective can at first glance come across as overly obscure. But, in fact, talking “limits” makes perfect and popular sense.

We set limits in our societies, after all, on a regular basis. We limit how fast motorists can drive. We limit how many ducks hunters can shoot. We limit how much noise our neighbors can make.

But if we want our human societies to thrive — indeed, in this epoch of climate change, if we want our human species to survive — we need to do more. We need to embrace, as Robeyns so compellingly argues, limits on income and wealth.

“A world on fire needs a lot of money to extinguish the flames,” she notes in her new book’s final pages, “and the super-rich are holding onto money they don’t need.”

The Guardian has just published an excerpt from Limitarianism that gives a vivid taste of the book’s eye-popping flavor. How much would you have to earn per hour to amass the fortune that Elon Musk, the world’s richest man, held as Robeyns was writing this book’s pages? The answer this University of Utrecht scholar so helpfully provides: $1,871,794 every 60 minutes.

“Almost two million dollars per hour,” Robeyns notes. “Every working hour for 45 years.”

Her answer to this insanity? We need to embrace, as individuals and as societies, a limitarian ethos. We need to be taking the sorts of structural steps — everything from capping executive pay to ending the intergenerational transmission of great wealth — that can free our world once and for all from the fabulously rich.

We spoke with the 51-year-old Robeyns last week about the road that took her to limitarianism and where she believes that road can lead us. We’ve excerpted from that interview below.

You were born in Belgium and now live in the Netherlands, two nations that over the past half-century have rated among the world’s most equal. How has this life experience shaped your perspective on income and wealth distribution?

These two tiny, well-off countries have a high quality of life that many Americans like Bernie Sanders would like to see the United States model. But if you’re living in these countries and interested in distributive justice, you see all the unfairnesses that remain.

These two tiny countries actually have real differences. The Netherlands has gone down the neoliberal road much further than Belgium. The Dutch have become much more punitive, holding people on welfare, for instance, responsible for their poverty.

My own experience? I have a kind of boring story to tell. I wasn’t born poor, I also wasn’t born rich. I’m basically a middle-class person, with parents who essentially started from nothing. But they benefited from the huge investments of the postwar welfare state. They could go to university, thanks to that state’s scholarships, and they enabled me and my siblings to go to university as well.

As a student, I always did voluntary work with poor kids, from places like eastern Germany, Tunisia, and Latin America. I was studying economics then, and I found such a huge gap between what I was studying in the economics mainstream and what I was seeing in the world. Things didn’t fit together. I started to ask questions.

Over the years, I’ve had in my circle of friends vulnerable people who’ve had bad luck in life. If you’re poor or if you’re unemployed, the neoliberals hold, you must be lazy. But I saw that just wasn’t true. And the academic research shows that the capacities we’re born with and the families we’re born into — the natural and social “lotteries” so to speak — leave us all unequal right from the start.

Those who’ve been extremely lucky with their lottery tickets then get to take advantage of social systems that let them get even luckier. I see in my own life the role of luck. And I also see people around me who’ve had a lot of luck, but won’t acknowledge it.

I think studying both economics and philosophy has, in the end, been a blessing for me. Economics has a lot of dogmatism in it. Philosophy happens to be exactly the opposite. You question everything.

You work with students who’ve grown up in a world with a wealth distribution much more concentrated than the world you grew up in. These young people see daily the dashing exploits of fabulously rich people ranging from Elon Musk to Kim Kardashian. How do these young people respond to your advocacy for limits on the wealth any one person can hold?

When I write a book, especially a trade-press book, I argue for whatever I think is right. In my role as a teacher, on the other hand, I try not to impose my views on students. I want to help them find things out on their own. But I have colleagues in other Dutch universities who do teach my work, and they report back to me that many of their students embrace what I believe.

Students, I think, tend to see the whole of my analysis. They see it’s going to be hard for them to afford a home of their own. But they don’t have a broader understanding of why home ownership has gone beyond the reach of ordinary people, in part because they encounter little discussion overall  about economic systems, but plenty on nationalistic themes and other digressions.

How much pushback do you get when you speak to general public audiences about limiting personal wealth? What seems to give people the most pause? How do you respond?

Some people ask me whether we could still have small companies and family firms under limitarianism. That seems to me the most substantial question/objection I get from people not sure whether limits would work.

Other people worry that a limitarian world would essentially kill the economy as we have it, in the process harming everybody. Or they ask how I could claim to care about climate change and yet be critical of Elon Musk when he’s made all these cars so important to the ecological transition.

Perspectives like these don’t consider alternative possible worlds. If Elon Musk had less market power, for instance, we would have many more electrical vehicle companies and more of the cars we need for the green transition. And Elon Musk would pose much less of a danger to democracy because he wouldn’t have the same wealth and power.

The Dutch edition of Limitarianism came out in November. I’ve been getting a lot of reaction from people who say “I’ve been thinking about this for so long and now I understand why.” But I’ve also heard from people, generally somewhat older males, who say they just don’t like what I’ve written. Some of what I’ve received is pure hate mail.

Your book sees the precepts of limitarianism playing out on multiple battlefronts, from collective bargaining tables to legislative chambers. Where do you see the most promising potential for victories that can start convincing the public at large that we don’t have to take grand concentrations of private wealth as an eternal given?

I think we should be trying to create the preconditions for limitarian success, most importantly by closing tax havens. Our contemporary tax havens undermine the capacity of governments to have fair fiscal systems, and very few people benefit from tax havens, with a good number of them criminals. Going after tax havens would be a struggle that would help us build a broad coalition for change.

We can try, as part of this effort, to come to international agreements, but sometimes individual countries just need to take the lead and unilaterally announce they’ll no longer allow business to be conducted in a certain way. Going this route would gain these nations the moral authority to call upon other nations to follow suit, what analysts call “social norm setting.”

Having the United States step up and set an example could be really pivotal because the US remains, of course, a very big and powerful country.

Many mainstream elected leaders, particularly in the United States, see talking about curbing grand fortune as divisive. They urge us instead to focus on helping the poor. What do you say to these elected leaders who urge us to concentrate on fighting poverty and essentially leave wealth alone?

Well, they should look at the data. They should read Matthew Desmond’s new book, Poverty, By America. He shows quite clearly that poverty in no way represents a natural phenomenon. Poverty comes from the political and economic choices our society’s most powerful make.

If we give tax cuts to our richest — something that’s happening worldwide, especially in the United States — we have fewer resources available for things like social housing. Calling talk about fighting inequality “divisive” amounts to a dogmatic, purely rhetorical strategy that aims to stop us from talking about the real choices our most powerful are making.

In the end, the only way you could say we shouldn’t bother with inequality would be if trickle-down strategies really worked. But they don’t.

Your book highlights a number of wealthy people who share your horror over the rising maldistribution of our world’s wealth. Are the numbers of these concerned wealthy people growing enough to help make a real difference? Or do you feel that great wealth will always trap the vast majority of the super rich in a bubble of reality denial they can never escape?

I do know for sure that the wealthy people I’ve interviewed represent the exceptions among the wealthy. The vast majority of the super rich do not, for instance, give away their fortunes, as Chuck Collins, an heir to the Oscar Mayer fortune, did over 30 years ago. Today we do have more individual examples of Chuck’s behavior and even organizations of wealthy people calling for greater equality, groups like Patriotic Millionaires and, in German-speaking countries, taxmenow.

Marlene Engelhorn, a young heir to the family fortune behind the German chemical giant BASF, has just announced that she’s putting together a citizens assembly of 50 Austrians who will decide what should happen with 25 million euro, the largest part of her inheritance. I interpret what she has done to mean that she doesn’t just want to give away her money. She wants to unload her fortune in a way that contributes to the political debate about inequality and how that inequality undermines democracy.

Some of the people in organizations like Patriotic Millionaires, people like Abigail Disney, have become very outspoken. I spoke with her at length for my book. She’s become, in her own life, more political and more radicalized about inequality. That seems to suggest that something is changing among the rich, but how fast will that change be? That’s the question.

At the speaking events you do, do people ask you what they can do to help us move toward limits on wealth? What do you tell them?

People in my audiences tend to be ordinary people, but I also often run into people old enough to have bought a house in the 1970s or 1980s, people who have really gained a lot from increases in housing market value. These people ask me what they should do.

I try to stress that it’s not just a question of what an individual family can do with its money. It’s a matter of how society can change. Inequality has grown so much because we’ve come to look at society in a different way, a neoliberal way that involves celebrating the market, scaling down the welfare state, distrusting government, and no longer seeing ourselves as citizens but as “investors in human capital.”

In my student days, we all seemed engaged in one or another political or charitable activity. Now students — not all of them, but many — see themselves as just attending school to get a degree and make some money on the side. And when they don’t study or make money, they go on holiday. A much more consumerist lifestyle. You can call it an economistic lifestyle.

I see ourselves instead as what the ancient Greeks would call political animals. We need to work politically toward a more caring society, a less harsh society, societies less into everybody for themselves and letting the richest among us win while others get left behind.

I try to ask people to look for ways to contribute to a better society that fit their personality and skills. I ask them to join a democratic political party that respects the rule of law. They have options. And I think that people should also join labor unions. We’ve come to forget the contribution unions make to protecting basic worker rights.

As you look across the world today, what gives you the most hope and inspiration?

The activists. I’ve dedicated Limitarianism to activists in general. Activists are taking risks — often with their own lives, especially in the Global South — to make change.

I’ve also been teaching climate ethics and have seen a big difference over the last year. You now have companies that are really trying to do things differently. That’s fantastic — because if these companies can scale up, we could have a different economic system. But other companies are still actually killing the Earth. And who is really fighting these companies? It’s the activists.

So that’s why activists give me hope.

You can now find Limitarianism: The Case Against Extreme Wealth by Ingrid Robeyns, published on January 16, available online and at booksellers worldwide.

Sam Pizzigati writes on inequality for the Institute for Policy Studies. His latest book: The Case for a Maximum Wage (Polity). Among his other books on maldistributed income and wealth: The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class, 1900-1970  (Seven Stories Press). 

Wealth of Musk Compared to the Income of 

Shohei Ohtani and a Tesla Assembly Line 

Worker-

BY RICK BAUM

 JANUARY 30, 2024
Facebook

TwitterRedditEmail

Photograph Source: MINISTÉRIO DAS COMUNICAÇÕES – CC BY 2.0

Many people do not like reading articles containing numbers. Doing so is necessary to be able to grasp the extent of the wealth of the world’s wealthiest individual, Elon Musk. Comparing Musk’s wealth with the future income of baseball player Shohei Ohtani and that of a newly hired assembly line worker at the Tesla Fremont, California plant can help to bring some clarity to how much Musk is worth.

According to the Bloomberg Billionaires Index, at the end of 2023, Musk’s wealth stood at $229 billion after increasing $92 billion during the year.

At the end of 2019, Bloomberg placed his wealth at $28 billion. In a mere four years, despite declining $133 billion in 2022, it had increased more than 800%.

Here is where the Bloomberg Index placed the size of Musk’s wealth in the billions at the end of recent years.

2019     $28 billion
2020    $170 billion
2021     $270 billion
2022     $137 billion
2023     $229 billion

The above numbers may look small (though when written out, the last four come to 12 digits). The size of Musk’s 2023 wealth and its growth that year may be difficult to grasp without comparing them to some other amounts.

Musk’s Wealth Compared to Ohtani’s Income

Professional baseball player Shohei Ohtani recently signed the biggest contract in the history of sports. He is to be paid in each of the next ten years $70 million (though much is to be deferred). That comes to $.07 billion/year. Were his  $70 million income added to Musk’s wealth at the end of 2023, it would increase from $229 billion to $229.07 billion. Were the value of Ohtani’s entire contract, $700 million, immediately given to Musk, his wealth at the end of 2023 would have come to $229.7 billion. In other words, Ohtani’s massive ten-year contract for $700 million is less than one-third of one percent of Musk’s entire fortune.

If Ohtani could make his $70 million/year tax free and save all of it, he would have to play baseball for over 3,200 years to reach the level of Musk’s current wealth.

On an average day in 2023, Musk’s wealth increased over $252 million and in an average three days, it grew over $50 million more than the value of Ohtani’s  10-year contract of $700 million.

Musk’s Wealth and Ohtani’s Income Compared to Tesla Assembly Worker

At the Tesla factory in Fremont, California, in early January, there was a full-time job openingfor a Production Associate that requires one to work 12 hour shifts three days a week and every other week a fourth day from  “06:00AM-06:05PM or 06:00PM-06:05AM.” When accessed, the job description provided that the “Expected Compensation is $23.00 – $31.00/hour + cash and stock awards + benefits.”[1] However, soon thereafter, for many days in our high-tech world under “Expected Compensation” is “System is not able to retrieve compensation data at this time, please try again later.”

This job is not for everyone. One is expected to have “a strong work ethic” and be able to “demonstrate flexibility as needed by the business” that includes being “open to schedule flexibility that will allow for a variety of shifts, including days, nights, overnight, and/or weekends as needed as well as potential overtime.” The job involves “essential physical demands” including the “ability to work quickly,” the need to “stoop, lay, bend, reach, squat, kneel, crouch, twist and crawl for extended periods of time, including up to 12 hours/day,” and enduring “exposures to hazardous materials used in the painting process.”

Working an average work week of 42 hours (36 hours one week and 48 the next), yearly pay for that worker will range from $50,232 to $67,704/year (assuming no extra pay for overtime). If the additional value of benefits, etc. come to $12/hour, a Tesla Production Associate paid the highest hourly rate of $31 would be making a yearly pay package valued at $93,912.

To make as much as Ohtani is paid in one year, that worker would have to work more than 745 years. For the worker to make as much as Musk’s wealth increased in 2023, $92 billion, the worker would have to work over 979,600 years.

Musk’s wealth growing over $252 million in an average day in 2023 means that it grew more than $10.5 million in an average hour which comes to more than $175,000 in a single minute.  The yearly pay package of this newly hired Tesla Production Associate who would be expected to spend “extended periods of time” stooping, squatting, crouching, and crawling while being exposed to “hazardous materials” would be covered by less than the increase in Musk’s wealth during an average minute in 2023.

And Taxes

The pay of Ohtani and the Tesla Production Associate is subject to income, social security, and Medicare taxes. By contrast, since there is not a wealth tax on financial assets like stock, Musk is likely to pay little or no taxes on the increase in his wealth except for any of the increase that is income, or his stock holdings are sold at a gain. If the stock had been held for more than a year, it would likely be taxed at a lower rate than the rate paid by both Ohtani and the Tesla Production Associate on their pay.

Musk and other multi-billionaires have been allowed to accumulate great fortunes which is especially troubling given that millions of people throughout the world lack food, proper shelter, medical care, access to an education, and must endure severe environmental problems.

Notes.

[1] Job announcement may have been filled/taken down.  Here is a comparable job announcement. Other jobs listed at https://www.tesla.com/careers

Rick Baum teaches Political Science at City College of San Francisco. He is a member of AFT 2121.