Absolutely, even if Prince Bush’s advice sounded tone-deaf in the immediate aftermath of 9/11. If cash isn’t flowing through our consumer economy then that economy – which is what we in the West based our prosperity on for 60+ years – withers and dies.
For that cash to flow, wealth can’t be concentrated at the top while 80% or more of the population is relegated to the precariat or unnecessariat. And yet that is exactly what Western society’s wealthiest and most powerful are pushing for, despite the fact that robots don’t yet aspire to buy $200 Supreme t-shirts:
And this short-sighted, ladder-pulling thinking is going on while sketches like this are airing in mainstream culture:
This is a loud expression of young people getting upset over a bunch of older hoarders crying about their lot in life. You don’t get a stronger signal than that, and yet people like Wilbur Ross or the Davos crowd are deaf to it.
Hoarding goes beyond Piketty, because it offers negligible to no “r” to compare against “g”. You don’t get any sort of return on your investment if it’s being burned, wasted, or hidden away and sitting stagnant in the money bin (try swimming in it, Uncle Scrooge style, and you’ll break your teeth).
In response to discussions like this, Libertarians (especially the unsophisticated ones who aren’t wealthy) like to squawk “it’s his money to do with as he wishes! How dare you judge how he spends it?!” But in the case of hoarding, there’s an economic (and often a financial) basis for the judgement.
If someone starts a company, which obviously isn’t worth anything at the beginning. Do you consider it to be ‘hoarding’ if their shares are worth billions years later? Consider someone like Bezos.
It seems that a lot of people think that the ultra-millionaires and billionaires have their wealth as cash stashed in banks that’s doing nothing when in fact it’s tied up in assets such as company shares. Should they be forced to sell just to minimise their wealth?
One of the main problems with the wealth tax idea is finding cash to fund the tax bills when the asset either doesn’t generate any income or doesn’t generate enough income.
Suppose someone has a collection of paintings worth $500 million dollars. But their actual job earns them an income of $50,000 a year.
Elizabeth Warren puts a 2% wealth tax on the paintings. That’s a wealth tax bill of $10 million.
Where does this person get the money to pay this $10 million bill?
That seems… highly unlikey a scenario… Most people making 50 grand a year do not have half a billion dollars in paintings… they might have one of worth, such as something they inherited from a family member or got when the artists wasn’t famous, etc. It’s likely never actually happened in reality. Most people who have half a billion in art also have other forms of wealth, including liquid cash, houses, stocks, bonds, businesses, etc.
No, because it’s a share in a public company that’s actually doing something productive for the economy of society. Same goes for a bond, which is issued to borrow for the purpose of a for-profit or non-profit endeavour. When serious and educated people talk about “hoarding”, they’re most assuredly not talking about equities and fixeds.
The people who think that don’t include Warren, Ocasio-Cortez, Sanders, or most of those commenting here.
If a share have to be sold off to pay the bills, that implies that someone else is going to be buying it. That’s not a bad thing, but is better known as a “stock exchange”.
There are people like this, but they’re real edge cases even in the context of the very small group of Americans that Warren’s tax would impact, and are taking a ridiculously large risk with their net worth. The painting in those cases usually represent an inheritance, not something they’ve bought on their incomes.
As to what happens in this nutpicked case, the person will just have to sell a few paintings hanging on the walls of her modest home or rental, which is sad but which in most of that tiny number of cases won’t do much harm to their $50k/annum lifestyles.
It really is absurd. On $50k/year you couldn’t afford to properly insure, secure, maintain, and probably display half-a-billion-dollars’ worth of art. I’m sure there are a handful of “Grey Gardens” scenarios where something crazy like that happens, but they’re so few as to be irrelevant to the larger discussion.
If this is the most compelling case that opponents of a tax like Warren’s can come up with … well, to be honest, at least 27% of the electorate are Know-Nothing rubes who’d believe it.
That wasn’t even close to what I was saying, but it doesn’t particularly matter either.
This is not the point anyone is trying to make except the ones tilting at windmills, but there is something that should be made clear. Buying a share of stock is helping the economy, holding a share of stock is not. The active trade of stocks without liquidation into loose cash is a good thing, but someone just owning stock does nothing but creating something that is a lean against a company’s financials - especially when it is an exhorbinate amount. If Bezos decided to cash out and live his life on an island he buys he could crash the global economy - that’s not a healthy place for the world to be.
Although your overall point is sound, I’d disagree slightly. Holding stock is still holding equity in an operating company, which in theory means some degree of direct and indirect influence over how it’s run (in practise it’s usually very indirect). It’s not really a lien (that would be a bond issued by the company, a loan that’s expected to be repaid). Holding, buying, or selling all have benefits and downsides.
Companies that do stock buybacks are often legitimately accused of hoarding, because they’re pulling equity back inward and not necessarily applying it to the business. Apple is the go-to example here.
This is the main semi-plausible concern about the tax, that it would spark a mass sell-off in the equities markets. But people cash out whenever times get tough, and if a tax is coming these households in particular will have plenty of notice to do so in a very deliberate manner that results in the most advantageous tax situation possible.
I agree that it’s false but more in presentation than substance. While it’s true that SSI and Medicaid et al are giant expenses, they are paid for by their own separate taxes, taxes which can’t be spent on anything else. These aren’t discretionary programs, they are by mandate, and must be paid regardless.
The enormous haul the pentagon gets from discretionary spending…
Okay I just looked deeper, the 57% figure comes from a poorly done pie chart meme. In 2015, however, defense/homeland security accounted for 54% of discretionary spending. So yeah, it’s amateur hour analysis, but the point is mostly valid.
There is also room to significantly expand the military budget, although it would be grotesque at best to do that without first significantly changing the social contract.
Adjusted for PPP, the us military budget is about equal to China and Russia combined. And they are increasing their budget.
Although PPP is pretty standard, I’m sure the Pentagon has some other way of comparing lethality that possibly destroys my point, since otherwise I’d expect to hear my point from the Pentagon daily.
Can you imagine enforcing “significant” and “truly productive” in court? They would be bent to the interpretation of whomever is in power or whichever judge you happened to be assigned. In your example, someone would be hurting society if they thought that we were in an asset bubble and wanted to store cash so that they could buy when prices were more fairly reflective of value. Usually, that is why wealthy people increase their percentage of holdings in cash or cash equivalents.
It seems like if the ultra rich put their wealth to work, the complaint is that it is the rich getting richer and they are benefiting from investment opportunities that only they have access to. But now if they don’t put it to use, they are hoarding and depriving society of their capital which could have been used as economic stimulus for all. Those with wealth are always going to be looked at as targets for taxation. They have wealth and they are severely outvoted. The only thing that saves them at all is that a little over half our voting population views having property rights as a good thing. I suspect that may soon be changing.
Bin Salman recently imposed an exorbitant wealth tax in Saudi Arabia. Those that he taxed did not need that much wealth and many came by it dishonestly and through corruption. So he treated them very well and brought them all to the Ritz Carlton to explain to them how it works. Some of them are slow learners and are still having it explained to them.
But it worked great. It punished the rich for their previously ill gotten sums and it generated over $100B, which cut their deficit in half.
Why would anyone have to? You asked for a definition, you got several. You didn’t specify a legal definition because you likely know it isn’t a real issue in this discussion. Like the rest of the comment, you’re shifting the goalposts and tilting at straw men because you’re unable to contest the substance of the definition I or the others provided.
If it does, it will be because the type of people who hoard wealth in the tens of millions of dollars got greedy, and because of their dunderheaded and delusional useful idiots. As the old saying about the market goes: some days the bulls win, some days the bears win, but pigs get slaughtered.
Despite your false picture of the Democratic portion of the electorate, a large majority of them are in actuality interested in saving capitalism from its worst and most self-destructive late-stage excesses, and have absolutely no objection to property right.
What does a corrupt absolute monarchy stealing from other corrupt aristocrats who fell out of political favour have to do with this discussion? You’re flailing here.
What I mean is that holding a stock puts the pressure of an eventual sell-off on a company, many that do buy-backs are hoarding but also are trying to shake out shares that they know will be selling at an uncontrolled time in the near future. It’s all very complicated, but the general rule is that you want people investing in stocks and then selling their stocks to invest in different stocks regularly and not just squatting on them. Majority shareholders are the only exception, but even then only when they are actively investing into the business with their time and expertise.
My entire point is that you don’t want to have huge (dollar) amounts of stock fixed in place, because while it is different from being held in a bank it isn’t much different from being held in real estate or valuables. You need to incentivize money - especially disproportionately large portions of money - to continually being invested and reinvested.
This is probably your most entertaining hyperbole yet. There’s a reason that virtually every ultra wealthy individual in the world has invested in A) every major political party in their home country and B) an influential media corporation.
