Taxing The Wealth of Bezos Is Unproductive — Literally
Every day I come across posts on Facebook urging politicians to fix this or that problem— or at least make the world a fairer place — by taxing billionaires like Jeff Bezos. Oddly, few say we should tax Elon Musk or Oprah Winfrey. That strange selectiveness suggests taxing the rich is more a product of moral outrage; they deserve less, we deserve more. But even in a straightforward way, taxing wealth changes little.
Since humans figured out farming and settlement building, work has been producing wealth. For the most part, a one-way process. Wealth can change what we work on, but only to a point. Jeff Bezos can hire 10,000 engineers to work on a rocket, taking them away from other work. But if he spent all his wealth setting up pre-K across the globe he’d eventually run out of money and it wouldn’t generate more wealth to keep it going.
So back to square one.
When we were hunter gatherers (and for those who remain so) wealth is almost non-existent. Each person has the same clothes and tools as everyone else. If a young man needed a spear he either made it himself or an old man would make it for him. If a sewing-challenged woman needed a sling for her baby, the same. Humans, like apes, share what they have and what they produce. They naturally want to make others happy, to give. And all of us descended from apes enjoy receiving.
We can easily conjecture that in our past, when someone made simple jewelry out of shells, or found pretty stones or metals, they would give them to others who helped them in some way. We do this today. Modern money remains useful as a store of favors, which can be traded. I might help an old person walk to the river. They would give me a shell. Later, I might give that shell to someone who helped me mend my sandals.
Contrary to what billions of dollars spent, marketing financial services, would like me to believe, I use money mostly in that way. Money is love made visible.
I agree with David Graeber that barter has never been a significant part of human civilization. Money has always existed as a form of passing thanks and settling personal debts of gratitude. When a family member is in hardship, we don’t give them a job cleaning our dishes. We simply give them money hoping all will work out.
When humans learned to farm and raise animals to the point that they could settle in one place everything changed. We began to rely on the safety of the farm and organized production. Most important, where someone slept became valuable. Before that, each hunter would have good or bad sleeping spot as the tribe moved every day, keeping resentments among hunters to a minimum. Sometimes you did well, sometimes not. Anyone camping with friends experiences this.
In a settlement, where you sleep becomes permanent. We could compare what we have to what others have. Property became the first and most primary form of real money (or wealth). Because farming (and every other technology since) requires a kind of intelligence that is not common to all people, those who can organize a successful farm end up with the best places to sleep.
If the simple laborers in the settlement asks for better spots then the “rulers” either simply leave and farm someplace else or they give some other laborers nice sleeping places to get rid of the complainers. However, for the most part, people didn’t, and still don’t, care if some people have better sleeping spots than others — as long as they felt appreciated among their family and friends.
As people settled and work became more organized they began to increase their use of money (shells, gems, precious metals, etc) to acquire the things they wanted. Remember, once settled, people have time to produce things they don’t have to carry with them. Unlike life as a hunter-gatherer, there is no limit to the possessions you can have (store) when you live in a farming community.
So we have money. Yet money, by itself, is worthless. You can only use money to acquire what someone else agrees to give, or do, for it. Everyone understands that money, like a hundred dollar bill, has no intrinsic value. What they easily forget is money is only valuable if someone else agrees to take it. We like to believe that our money always has the power to acquire what we want. It does not.
(To see money clearly, one has to block out the incessant advertising of the financial services industry.)
A couple of things to note. Property takes precedence, is worth more than money. No matter how much money you have you can’t step into someone else’s property if they won’t let you. Even with hunter-gatherers there is some possessiveness. That trait grew unchecked in human settlements.
Second, governments, whose primary task is to protect the settlement from outside invaders, tax only in their currency. So everyone must use it or go to prison. Taxes are only one of the ways the government has to take money out of the communities economy.
Let’s go over it again. Money is used exchange goods and services but the actual labor behind it is never a given. Fiat money is created by a government, backed by police and military, which sets the amount of defense labor to be allocated in the economy. But again, settlers don’t have to take the money for military service. This is a complex and fascinating subject in itself. Suffice it to say, money only exists for as long as enough settlers exchange it amongst each other and agree to the government’s taxation for security purposes.
In short, we choose to both exchange money for labor, individually and for security, collectively. Another way that a civil war can be defined is what happens when one set of money splits into two.
So yes, cyber-currencies like Bitcoin are serious business.
Getting back to Mr. Bezos’ billions.
What is the difference between $100 in your pocket and the same $100 in Jeff Bezos’ pocket? There is none. It will buy the same stuff. It’s even possible that you could enter a bar and buy beers with your $100 where Bezos could not (because the owner hates Bezos).
What’s the difference between you and Bezos if you have $50,000 in savings, both cash and stock, and he has $200,000,000,000? There is none for as long as neither of you try to acquire something with your wealth!
Sure, Bezos probably spends more than the average Joe. I read an estimate that some billionaires spend $50 million a year. That seems right. If so, Jeff Bezos, for his personal consumption, in his lifetime, will probably not spend more than 1% of his wealth. Most of that is for upkeep of yachts, mansions, aircraft, etc. (most of which goes to jobs that feed families, pay for vacations, put kids through school, etc., so is it truly wasteful?)
But okay, we tax away $100 billion of Bezos’ wealth. Now what? Let’s say we want pre-K for everyone. We must find people willing to take our money to run pre-K schools. Again, we can’t force people to work as pre-K teachers. And no matter how much money we have we can only hire real living human beings of which there is around 100 million in the U.S. who have shown the ability and willingness to work for money.
We put out help-wanted ads for pre-K teachers. Say we need a million. We discover that we can only get that many if we offer $100,000 a year. That seems like a lot, but again, we can only pay for what people will accept. Would we end up spending Bezos’ fortune in that way?
I know what you’re thinking. We can get pre-K teachers for less than that. Can we?
Consider this honestly. How many times have you sought some labor but have not been able to find it? For any price? My neighbors have been spending weeks looking for a nanny. They’re probably offering something like $20 an hour. Sure, if they offered $50 an hour they would probably find someone but would that person want to be a nanny? That candidate would most likely be highly skilled in another area they, like design, and would only do the nanny work for an unrelated reason, like being able to run errands for their sick parents. The point is, if we’re truthful, it’s often difficult to find the right people to work for us.
Even if my neighbors hire a PhD in chemistry to watch their child that person will not stay long.
Finding someone who wants to work for us is the exception, not the rule.
So I always wonder, if we can’t find one nanny why do we believe the government can find millions?
There are many arguments one can make about the logic I’m outlining above, but they all don’t survive close scrutiny. For example, one could argue there are plenty of people looking for work in many poor cities across the nation. Okay, but where do we put them? Do we expect them to leave their community, family and friends? Again, more than a question of cost, a question of who will work to satisfy their needs?
Getting money for pre-K is actually simple. Indeed, if there was enough demand and people interested in doing the work the government could easily raise taxes to pay for it. Despite much complaining, most people don’t really care about taxes. If Bezos was threatened with taxes to pay for pre-K why wouldn’t he just pay for it himself through charity? Billionaires already do that. Indeed, everyone who gives anything does.
If you were to take all the wealth from billionaires and distribute it to everyone what would happen? Amazingly, we now have that answer since the pandemic scared the government into giving everyone an amount greater than what they would have received if every billionaire wealth was redistributed.
People who already had money saved it (where it doesn’t do anything different than what it was doing in Bezos’ bank accounts). People without money paid off debts or used it do to something different with their lives. I didn’t see anyone organizing to build a better society with those stimulus payments. Why not? Again, we should be honest. For the most part, people like things the way they are.
Taking all of of Bezos’ money is easy-peasy. The hard part is agreeing to work for it. And, for others to use it!
Standing back from all of this, why do so many people believe wealth creates work when that makes no sense at all? Work creates wealth.
All this goes to say that taxing the rich is irrational if people won’t work for that money in a way that will change the composition of the labor force — that is, pay so people become pre-K teachers rather than something else.
Current events have made it clear, that unless people are fleeing violence or poverty, as they are from North Africa and South America, they won’t work for others if they don’t feel like it. Getting back to our first farming settlements. You don’t help someone to the river because they’re giving you shells; you help them because you want to. The shells are secondary. Today, has much changed? Money is secondary.
Materialism is effective in getting everyone in the mood to work for more stuff, bigger houses, cars, kitchens, etc. But if the desire to socialize with others declines why bother? Many people aren’t anymore in wealthy Western societies.
What we don’t like about Bezos isn’t his wealth; it’s the fact that he doesn’t seem to care about others, and because he sets the tone of much labor in the economy, it makes it difficult for us to care about others too. We instinctively need to feel wanted! That’s way more important than wealth, per se.
We don’t want to tax Oprah Winfrey because she makes us feel life is more meaningful than simple labor. Elon Musk gets us excited about an adventure to mars, or improving cars. We are so desperate for meaning in our lives that some overlook the fact that Musk is a complete creep and others that Trump is morally bankrupt.
Anyway, to get more pre-K we need to make people want to work in pre-K. The truth staring us in the mirror is that we don’t feel like working in pre-K for others. We don’t really feel like building “affordable housing”, or allowing more people to become doctors, and so forth.
Until the motivation comes I don’t see it happening, no matter how much wealth is taxed. All the money in the world won’t make someone work at something that leaves them feeling lonely and unappreciated, if they’d be no less happier living on rice and beans.