So I've really enjoyed this discussion. Thank you.
Likewise ;-)
My fault, dangling use of "them." I was referring to the other quality of life data points not shown. Life now is significantly better than it was 20, 30, 40, 50, 60 years ago. Using only two metrics to show that we need to kick off a class war has been happening almost constantly for what feels like 8 years now, and it troubles me. Aside from being blatantly dishonest, it is increasing in sophistication and being discussed at very high levels. Wage growth is relevant, but in the context of what it can buy. Inflation is relevant, but in the context of what it is measuring. Literally all costs have gone down relative to wages across the board, and saying otherwise is making the obviously false claim that a car purchased in 1960 is superior to one purchased today, or that a house purchased in 1960 is superior to one purchased today.
Cars are better because technology has improved. Technology may improve even faster under capitalism, but it improves exponentially over time by default. I don't think life improvements due to technology are relevant to the discussion of wealth distribution.
Further, I'm not entirely sure we can claim a house built today is necessarily better than one from 1960. I've never worked on a 1960s house with particle board cabinets, but most of the recently built ones I see have them.
People are spending a higher proportion of their income on housing, so you'd have to control for that too to make the claim that houses are superior today - sure, the average house built today is larger (does that automatically mean it is better?), but how has the cost per square foot changed? (the answer is it is approximately exactly the same)
If we can look at improving technology and use it to prove that the system is making life better, then we'd have to also use that same evidence in every other society. In socialist democracies, and in communist nations, and in the 3rd world, and everywhere, more people have cars and computers and telephones, so it must be that their economic systems are working. Right? Or...
No, but once you wipe out the fortunes of this generation, plus every generation that came before, what now? You'll have only the new fortunes to wipe out. The whole premise was that the problem is with multi-generational fortunes, and the justification is that you can use it to lower the tax burden on everyone else. But once you wipe out the Rockefeller fortune, it is gone. If you wipe out the 400 riches families, you don't get to do that again. You get maybe 30 families every 30 years that amass this kind of capital and manage not to spend it/lose it.
You are operating under the idea that a fortune is something that is created, something which didn't used to exist and does because of a person's actions.
To some extent, yes, obviously, using technology can cause raw materials to have new and better functions, and that causes value to exist which once didn't. That is done via human labor. To some extent the development of new technology allows human labor to create items of value in new and innovative ways, which can bring wealth into existence which did not exist previously.
But you seem to think that ALL fortunes are created that way, that no one builds wealth any other way.
I believe that is the minority of how fortunes are "created". I wouldn't even use that word. They are concentrated.
Just like when AT&T buys out Pacific Bell, AT&T did not just "create" all the jobs of the former Pac Bell employees, and when a landlord buys a rental unit they did not "create" housing for anyone, I don't see skimming cash from the labor of one's employees as "creating" wealth. It is merely a transfer of wealth. That wealth would exist anyway, just spread out among more people.
The money doesn't all just disappear. It is spent. Spending means it goes to other people. Most of the services the government provides, most of what it purchases, it uses American employees and contractors. So that money circulates in the hands of other Americans.
I was never meaning to suggest that the inheritance tax should only apply to the massively wealthy. I think it should apply to EVERYONE. Maybe a couple thousand exemption for items of sentimental value, paintings or jewelry or something. Wealth would continue to be created from people doing productive work and technological improvements, and each generation would be better off than the one before. That wouldn't change. The total amount of wealth in the nation would continue to grow (just like it does in all the socialist nations of the world, and all the places with stricter inheritance taxes).
So, no, of course the supply would never run out.
Claim #1: That some individuals acquire great wealth through inheritance causes harm.
Beyond vague references to shadowy political forces using these fortunes to broker influence, these very wealthy people aren't hurting you. The obsession with the "wealthiest 1%" and the "we are the 99%" arguments are irrelevant.
Wealth can be created over time, but at any given instant, their is a fixed amount of total value in existence in the world. There are finite natural resources, finite amount of labor, limited available technology. Wealth is not infinite. That means that if the emperor of the world owns everything, everyone else has to rent from him, buy supplies from him, and everyone is as poor as he chooses to allow them to be. The more one person has, the less others can have. The total grows, but at any given moment it is a zero sum game. Its hard to see, because the numbers involved are bigger than the human mind can really picture, but it is still true.
One can claim that "I just have one car, if I don't repair my catalytic converter, it isn't hurting anyone" and it would certainly be true that you can not name a specific individual person who is being harmed. The fisherman who goes over his quota doesn't hurt any one specific person. That lack of specificity does not make the harm less real. Air pollution is a real thing, and it does real harm. Overfishing is a major problem for a lot of people (not to mention a lot of fish!). Diffuse harm isn't "no harm".
The idea that since you can't point to the person being harmed it doesn't exist is called "the tragedy of the commons"
It is one of the best arguments for having a central government.
Do you believe that it is OK to charge rent to someone living in a house you own?
Not really, no.
In fact, I think this is one of the best possible examples to use!
The traditional argument in favor of capitalism is that the investment causes value to be created.
But when an investor buys a house, they have not created anything. The house was already there.
By buying houses that they don't need, investors (collectively) drive up the price of homeownership substantially.
Over half of all residential units in the country are investor owned, so the supply of homes to purchase to live in is less than half what it would be without the investors.
Supply and demand sets price, so cutting supply in half is dramatic enough a change alone.
But with real estate, prices aren't linear - raising the purchase price raises insurance, taxes, closing costs (which are all direct percentages of sale price), and the total interest paid on the loan over time. It also raises the downpayment and any required reserve.
Now, as a result of all this price inflation driven by investor home buying, lower middle class and below citizens can not afford to purchase a place in which to exist. In most places it is illegal to be homeless, so they are forced to pay someone rent for the privilege of having some space of land on which to exist.
This is so blatant a hold over from the days of feudal society that we have even kept the name: "Land LORD".
This is not a coincidence!
I'm all for private property rights. Individually owned territory is not even unique to human society, never mind America.
Bears and dogs and cats and all sorts of others own property.
But there is none other than us that make the claim we can "own" the land that
someone else lives on. You don't see bears collecting tribute honey from other bears as rent.
Landlords are creating their own market by buying houses they don't need just so they can rent them back to other people at a profit.
Two people both do the same in school, get similar jobs after, but one has parents who can co-sign a loan and gift a downpayment on a duplex, and the other doesn't. So one is a homeowner, the other has to rent. The second person has to give 1/4 of their income to the first every month for years, while the first gets more and more equity for having done nothing - mommy and daddy paid the downpayment, and person 2 is paying their mortgage for them.
I'd say, yeah, actually, the fact of inheritance is doing harm.
The alternative isn't that the duplex is melted down into gold to pay the tax bill.
The alternative is that inheritance gets distributed equally to both people, and now they can each afford to buy one half of the duplex as a condo.
They both have to work to pay their respective mortgages, but they are each building their own wealth through equity.
I still don't get how the second scenario isn't better.
If I can't find anyone to use my capital at that price, then I will withdraw it from the marketplace. This is called capital constriction, and it happens at two times. When the market tanks (capital has been destroyed) and when taxes go up (capitalization has been destroyed).
I don't think capital is as valuable as you think it is.
Capital helps increase the
rate of growth. If you have a small business, and you are making only a small profit, then in order to expand to a couple of new locations, you have to either 1) wait a long time, to save up capital, or 2) borrow.
We usually take it for granted that borrowing in order to grow is always the best thing. We measure the economy not in-terms of output, but in
growth. Actually, not even in growth, but
rate of growth. Economist will say things like: "the economy 'only' grew by 2% last year", as though that were a bad thing.
OK, so your investor withdraws his capital from the marketplace. Great! Now the small business owner takes option 1 and saves up, avoiding having to pay any interest on a loan.
And in the meantime, maybe others open businesses across town and takes the customers he was hoping to get. Great!!!! Now we have THREE small businesses making a small profit. The same items are being created. The same customers are being served. But instead of having one owner with 15 employees, we have three owners with 5 each. There is more room for entrepreneurs
because the lack of capital prevented any one from dominating the market.
Starbucks didn't bring coffee shops into existence. They just took the place of thousands of existing independent ones, turning former business owners into baristas.
The consequences of such a system is growth would slow. But thats ok. Because we already have enough. Also because infinite growth is not possible. Also because in recent decades the vast majority of growth has all gone to the top tenth of a percent of the population anyway, and if the growth isn't making life better for most people, why should we, society, support the system that's doing it?
And there is, right now, an ongoing wealth tax of around 2%. It's called inflation. You know, that thing we use in our retirement calculations that reduces the value of our portfolios each and every year. Inflation is a wealth tax. It is borne entirely by the have's, as if you have nothing, it doesn't matter if everything is worth less.
Agreed. Which is one advantage of having a gold (or some other fixed) system. Of course, there are trade offs there too...
Not really sure what the best way to deal with inflation would be.