The battle between capital and labour may be surpassed by the battle between the working class and the not working class.

Rana Foroohar announces, “The age of wealth distribution is coming and will have major investment consequences”, “The age of wealth accumulation is over” August 5.

Indeed, but two questions stand out. 

First, for wealth to be redistributed some assets of the wealthy must be sold and, since precisely because of that there might be less interest among other to acquire those assets, the value of these could fall… with unexpected consequences. Here’s an example, what is best for New York City keeping property taxes and property values at current values, or increasing the taxes running the risk that property values fall and wealthy property owners run away somewhere else?

The second question is who is going to redistribute? Will a mechanism like an unconditional universal basic income be used, or will the usual redistribution profiteers be in charge of it?

Foroohar also announces, “Another battle will be between capital and labour.” That battle will always be present but, in these times when robots and AI seem to threaten jobs, the real battle could end up being between the working class and the not working class.

http://perkurowski.blogspot.com/2012/04/we-need-worthy-and-decent-unemployments.html

@PerKurowski

Redistribution profiteers have a vested interest in us ignoring the wealthy already redistribute their purchase capacity.

Sir, Tim Harford writes “One academic paper produced by Emmanuel Saez (a star in the study of inequality) and Peter Diamond (a Nobel laureate and colleague of Mirrlees) estimated that the combined rate of tax on the income of high earners could be 73 per cent in the US without proving counter-productive…[for that they] assume that a dollar is 25 times more valuable to a person on about $50,000 a year than to a person on $500,000.” “The super-rich are an easy target for tax rises” February 2.

Indeed, and that‘s why those with much higher income sometimes buy shoes that are 25 times more expensive than those earning much less. But, where does that type of analysis take us? Should jobs producing expensive manually produced shoes be prohibited? Should we have dollars with sensors that measure the value we assign to them? 

The problem with all the “resolve poverty and inequality by taxing the wealthy” is that it ignores the fact that all the purchase power that the income of the wealthy contains, is immediately returned to the real economy when purchasing assets and services. 

In this sense those prescribing higher taxes on wealth are, at the end of the day just arguing, they are better redistributors than the wealthy. Are they? Perhaps yes, perhaps no. In Venezuela those redistributing wealth have clearly done so in order to get their hands on the wealth. In Venezuela we have a saying that goes “The one who cuts the cake in order to distribute the cake, keeps the best part of the cake.

PS. Thomas Piketty should visit the Museum of Louvre in his Paris, and make a checklist of how much would not have existed there, had it not been for some “filthy rich”

@PerKurowski

To understand how the west might be lost it is important to remember how it was won.

Sir, Martin Wolf when reviewing Paul Collier’s “The Future of Capitalism” titles it as “An important analysis of how the west was lost” December 3.

I have not read it yet, but I will be attentive to if Collier gave the film “How the West was won” or John Kenneth Galbraith’s “Money; whence it came, where it went”, or something similar, any consideration when writing this book. That because risk-taking is the oxygen of any development and current regulators, having imposed on banks loony and dangerous risk adverse risk weighted capital requirements, have helped set the west on a downward path.

Wolf does tell us that Collier is for some “updated Henry George type taxation of rent on land, [arguing] we need to tax more forms of rent, including that from agglomeration, which now goes to lucky individuals and businesses.”

I assume “agglomeration” refers here to land and other assets? Of course, if that agglomeration produces higher cash-rents then those rents should be, and already are, mostly taxed, but, if land and assets are taxed on their value, if taxed, land and assets would have be sold, at ever lower and lower prices. How would that asset value deflation solve any problems?

Wolf writes that Collier’s starting point is one on which surely everybody agrees: “Deep rifts are tearing apart the fabric of our societies.” 

Indeed, but as I feel it, much of it is the result of polarization and redistribution profiteers having been so empowered by social media to merchandize their products of hate and envy.

Sir, I’ll stop here until I have read the book.

@PerKurowski

How much of billionaires’ wealth might have de facto already been redistributed?

Sir, John Gapper writes interestingly, from the perspective of how these are designed, about “public art museums funded by billionaires”. He concludes in that, as so many follow the same principles; it is beginning to have similitudes to a franchise. “Billionaires are franchising the art museum” August 9.

Currently in the political market, way too often we hear offers phrased in the simplistic terms of: “Let’s take it from the filthy-rich and give it to the poor and, Puff! all odious inequality will have disappeared.”

In order to stop the creation of those false expectations, which at the end only leads to frustrations and the enrichment of the of the redistribution and/or polarization profiteers, by increasing the value of their franchises, there is a real societal need for much more information. 

Like, what wealth to be redistributed are we talking about? How much might billionaires have already de facto redistributed their Main-street purchasing capacity wealth, by demanding and buying assets that no one else but them would be demanding, at least not at those ridiculously high prices?

Not long ago, someone really wealthy, by means of a sort of voluntary tax, froze US$ 450 million of real purchasing power on a wall, by acquiring Leonardo da Vinci’s Salvator Mundi. Sir, I ask, how do you redistribute that painting without perhaps serious unexpected consequences? Cutting it in thousands of small-certified pieces, and selling these in the market for much more than US$ 450 million? 

@PerKurowski

For access to confidential private Swiss banks accounts, why not “wealth asylum”, something like political asylum?

Sir, John Gapper writes “there are decent reasons apart from tax evasion, or even legal tax avoidance, for the wealthy to put money in Swiss banks”, yet he with reason asks “the rich”, whether that is “any way to behave”, since doing so they will “resemble money launderers”, “Private banks must be more than laundries” February 12.

But Sir, why should a rich have to give up his private Swiss bank account if his reasons are decent?

It seems that what could be needed is something like a Swiss government office where a person can go and request “wealth asylum”. He would there of course have to present reasonable evidence of his source of wealth not being illegal.

If granted, such asylum would offer special confidentiality rights, which would be guaranteed for as long as the Swiss government does not receive substantial proof that shows the application contained major falsehoods.

If Robin Hood could hide in Sherwood Forest why can’t wealthy hide in private banks? I mean let us be frank; there are many bad Sheriffs of Nottingham out there.

If persons are allowed to carry guns against bandits, why not, in these Piketty days, can the wealthy carry private Swiss bank accounts against some overly greedy government bureaucrats?

And sometimes even if its not all "legal": If a poor North Korean managed to evade paying taxes and escape with some money, should not his capital have right to anonymous asylum?

But why on earth should you think about putting the burden to decide about what’s decent and what’s is not, on a small bank clerk who might rarely been out of his country?

PS. Am I wealthy? No! But just like for instance a shoe-artisan in Milan knows it, I know that the higher the number of wealthy around me, the more likely I am to be better off… and so, sometimes, though not too frequently, I also have to think a bit about how to keep the wealthy wealthy. If you have to be a servant, then most often, though not always, you are better served having to serve a wealthy master.

I am very suspicious of those who seem wanting to promote shared poverty… because quite often it sounds like their populist business plan for trying to become very wealthy themselves. And I do oppose the redistribution profiteers

PS. But then, now and again, I get hit by the thought: "If the wealthy could not safeguard their wealth in other countries, then perhaps they would make a stronger stance and defend their wealth more in their own country". And that sometimes could be what is really most needed.

If the £30 million Rembrandt painting was John Kay’s, when would he worry about Piketty taxing it?

Sir, John Kay writes about “The problem of finding fair value in fine art and finance” June 18.

And, in doing so he gives us the example of a painting that the National Trust has just discovered to be by a Rembrandt and estimating its value to be £30 million.

If that painting was hanging in John Kay’s home, when would he start worrying about Thomas Piketty taxing it?

After taxing the social capital wealth represented by Facebook followers, do we then tax FT’s social capital?

Sir, I am pleasantly surprised you dared to publish Hans Byström’s creative and provocative proposal of taxing the social capital wealth represented by the followers on Facebook, “Tax the socially wealthy too!” April 5. I mean from that there is very little distance to taxing the immense social capital wealth of the Financial Times, with its influential editor and columnists, and its many readers.

If that tax on FT could be used, for instance to increase the voice of a smalltime blogger like me, that would definitely help to combat what at least I perceive to be a monumental unjust inequity. 

That said, and even if he comes from my own Alma Mater, Lund University in Sweden, I must argue with Professor Byström. What he holds to be social capital, number of followers, is just sort of gross earnings. Since all followers at Facebook do not necessarily have an equity interest in your well being, they might just as well represent liabilities, the final net social capital from being followed in Facebook can in fact also be enormously negative. A tax credit?