Taxing the Rich: So Necessary but Almost Impossible to Achieve

The election of Zohran Mamdani as mayor of New York City has brought new energy into discussions of wealth and income inequality.  The NYT reported in an article on the French debate over imposing the Zucman tax (a wealth tax on those with more than 100M euros) that it is estimated that the wealthiest 1% in the world own 43% of the world’s wealth.

I find it difficult to understand how people cannot concede that wealth and income inequality have grown dramatically and that the superrich have far too much power in political and economic spheres.

 

The super rich, surrounded by sycophants and unimaginable wealth, become deluded about their accomplishments.  They interpret their success as evidence of superior wisdom and capability.  They imagine themselves as humankind’s heroic class.  Like emperors, kings and robber barons of the past, they define their role as that of demi-Gods, chosen by destiny.

 

A subset of the billionaire class believes that they are more capable of solving the world’s problems than governments that they view as paralyzed by partisan rancor and boxed in by outmoded ideologies and platforms.  They are convinced that their control of much of the world’s wealth is warranted.  Many see massive investment in technology (under their control of course!) as more likely to provide long term benefits than any redistribution of wealth or other government programs.

 

But there is no technology quick fix for the world.  Neither Musk’s robots nor Altman’s Super Intelligent AI nor Zuckerberg’s meta-world will substitute for the slow, but steady international improvement of conditions on planet earth.  Indeed, it is more likely that these overwrought technology investments and frenetic races to dominate AI will cause more harm than good.

 

The French economist Thomas Piketty, in his book on this topic, Capital in the Twenty-First Century, recommends much higher taxes on both the income and wealth of the rich. But how likely is that to occur? 

 

In the USA, the subject of taxation has been highly controversial since before the birth of our nation.  Even when it is emphasized that tax increases would only affect the top 10% of incomes and wealth a significant percentage of those in the middle or lower classes side with their wealthier compatriots in strongly opposing such taxes.

 

The main arguments against increasing taxes on the wealthy are the following:

• Large tax increases will cause an exodus of those affected to countries with low tax rates (what Piketty calls ‘the race to the bottom’)
• Tax increases will hobble the economy by decreasing technology research, investment and expansion of businesses. It will decrease the incentive of entrepreneurs, inventors and job creators.
• The real economic problem is overspending by governments and increasing taxes will only make this problem worse.
• The rich already pay a majority of the taxes.
• Redistribution of wealth will only encourage sloth and dependency in the lower classes.

I will address each of these arguments and then explain why I sadly have almost no hope for any sizable wealth distribution outside of a major catastrophic chain of events.

 

First of all, let’s face it.  Almost everyone fights like hell to keep what they have.  And when you are a billionaire or have a few hundred million, then you have quite an arsenal for battling anyone or any group planning to take money from you.  The argument that higher taxation will cause capital flight is very valid.  Wealthy people already hide part of their wealth offshore.  Many New Yorkers already live half the year in Florida to escape NY city and state taxes.  But more on that later.

 

The long-lived argument that higher taxes on the wealthy will cripple the economy, stifle innovation, etc. etc. may have some validity at certain levels.  But today’s plutocrats have so much wealth that it is ludicrous to claim that having to give up some of it would cause them to stop investing or innovating. Exempting smaller entrepreneurs and business owners where increased taxation might hamper their efforts would need to be part of a larger tax concept.

 

The argument that governments are overspending and that higher taxation will simply encourage more profligate spending may have a germ of truth in some cases.  Any significant tax increases must go hand in hand with earnest bi-partisan efforts to analyze government programs, reduce where possible and eliminate waste. I think it is reasonable to aggressively pursue both revenue and expenses.  But a chaotic, vengeful and slapdash gutting of government departments a la DOGE is clearly not the right way to do it.

 

The argument that the rich already pay a majority of the taxes is specious.  The amount of taxation should be based on how much the taxpayer can bare without serious consequences, not by the percentages, especially in times of rising inequality.  Significant increases in taxes on both income and wealth would not change the lifestyles or the business decisions of the superrich and would barely impact even the top 10%.  As Jesus said, to whom much is given is much required! 😉

 

And the final argument, that wealth redistribution would only encourage sloth and dependency, is a fallback to the weary, old claim that the world will always have rich and poor and that the rich propel the world forward, while the poor drag it down.  Yes, human nature has elements of sloth and opportunism, and it also has elements of avarice and arrogance.  No one is advocating a scheme to completely eliminate poverty or inequality.  

 

To counter this line of argument, I would avoid using increased tax revenue for direct transfers to low earners.  Instead, I would invest in quality-of-life areas such as healthcare, education, transportation, network access, housing and urban renewal. This would defang the concerns about creating more dependencies and entitlements.  Creating a better quality of life so that there is less cost for healthcare, transportation, childcare and housing could make lower wage earners more productive, more stable and less vulnerable.

 

But there has rarely been a move to significantly raise taxation in advanced societies.  The great majority of the wealthy will never embrace it and they have ever more power to obstruct it.  Capital flight would certainly occur and it is highly unlikely that all nations will agree to avoid the ‘race to the bottom’ of providing tax shelters for those fleeing taxation.

 

The only times in history where redistribution of wealth has been achieved and inequality has decreased occurred after major wars or brutal economic depressions.  Unfortunately, this is probably the only likely scenario for rectifying the current disparity of wealth in this world.  And all signs point to one or the other occurring in the not-too-distant future.  I vote for depression, being the less catastrophic of the two.  But maybe climate change will trump them all!

Surprise, Surprise! - Macho is Cool Again

Mark Zuckerberg all muscled up, fantasizing about masculine energy and doing MMA when he isn’t licking Donald Trump’s boots.  Elon Musk doing his best storm trooper impressions on stage and populating his future mars spaceship with his progeny (minus one trans member who had the temerity to not pander to the demi-God wannabe).  Jeff Bezos looking embarrassingly pathetic with his bodybuilder physique and his trophy wife.

This is Revenge of the Nerds meets Rambo.  The tech titans are shedding their dweeb skins and becoming REAL MEN!  What a metamorphosis!  But sad to say, this is actually more reminiscent of Gregor Samsa’s metamorphosis into a huge cockroach.  Talk about deeply-rooted insecurities and damaged goods!

 

And then there’s Charlie Kirk and the whole world of so-called lost men who are feeling left out and under-appreciated.  They all want to be macho again and not feel guilty about it.  They want respect, damn it!  They want wives who will submit.  They want jobs that proclaim their manliness.  They want real lives as good as their video games.  They want to believe in absolute doctrines and dogma rather than have to ponder the mysteries of the world and attempt to understand the science that is the best bet to explain it.

 

Yes, machismo is all the rage.  And the most absurdly contradictory example of masculinity is leading the charge: Donald Trump.  But you need to get with the program, Donald.  Do some training, ditch the fast-food addiction and limit the makeup and hairspray.  You look ridiculous, bro!  

 

But then again, so do the rest of them.  Having billions of dollars apparently buys you a pass on looking like a desperate, foolish caricature of a superhero.  No, superrich doesn’t mean supercool, guys.  The retro macho thing will go through its cycle, hopefully without starting WW3 or a civil war.  You may have the money to buy a presidency or torment the world with increasingly toxic social media and cheap goods, but in the end, you can’t change the fact that you are deeply insecure little brats, and the followers you attract will find that embracing macho culture brings a very short-lived joy.

The AI Conundrum

 I am admittedly not a big AI fan.  After having spent my whole career in technology and generally embracing each new trend and capability, I am now evolving into a bit of a luddite.

Today I happened upon articles in the NYT, Nature and several other news sources that framed the myriad controversies that swirl around the AI juggernaut.  These types of articles are becoming ever more common.  Here are some of their fears:

 

• Environmental and resource concerns over the inexhaustible demands for server farms and electrical power
• The negative impact on developing countries where US tech giants have built vast server farms that compete with local needs for water and power
• The fraught decision-making in many countries as they weigh falling behind in the AI future versus meeting the basic needs of their constituencies.
• The uncertainties associated with generative AI accuracy, reliability and debugging.
• The unauthorized and uncompensated use of content 
• The effect generative AI will have on human creativity and skills
• The potential rapid loss of jobs (new jobs may eventually be created as in past technology leaps, but the initial impact might be so sudden as to cause major trauma)
• The likely rapid introduction of AI into military goals, creating a costly new arms race in addition to the costly AI race
• The existential dangers that a future AGI (Artificial General Intelligence) may pose

 

It is probably naïve to believe that anything could put the brakes on the AI juggernaut.  Competition and multi-faceted FOMO, as well as basic human curiosity will drive it forward no matter what scruples may arise.  What politician or tech executive can argue caution in the face of the AI gold rush?  

 

The AI true believers probably fall into two potentially overlapping categories of allegiance.  The first is the oldest motivation in human endeavor – greed.  The money and valuations that AI companies are already achieving beggar belief (though belief has been similarly beggared in past tech hype cycles as well).  Even with a likely dot-comish bubble deflation there will be unreal amounts of money to be made.

 

The second allegiance is to the billionaire-backed, messianic, ‘this will save the world’ club.  Musk, Altman, Zuckerberg, Ellison, Andreesen, Thiel and their brethren have jettisoned all concerns about climate change, plastic pollution, wealth and income inequality, international conflict and any other mundane earthly problems and seem to believe that AI will be the solution to all problems and will save the planet (how it will do this is still to be determined).

 

The accumulation of wealth in the hands of the increasingly narcissistic and wacked-out  billionaire club has made breakneck AI development an inevitability.  And under the current despotic Trump regime there will be nothing but encouragement as long as the Tech world licks the boots of the glorious leader.   The en masse shift of the tech bros away from Biden and the Democrats to Trump and the MAGA world can be directly traced to their outrage at the democrats’ inclinations to place some controls on AI development and potentially break up the clearly monopolistic tech giants.  And, of course, the democrats’ caution over their side hustle of cryptocurrency contributed to the breakup.

 

So, the AI conundrum is not whether it will be pursued as aggressively as possible because that is a foregone conclusion, but rather what ordinary people should do about it.  As for me, I will mostly fight it because I do not wish to be seduced into ever more soul-sucking forms of technical bondage.  Human beings of the world unite!  You have nothing to lose but your digital chains!

 

Trump’s Legacy: The Decline and Fall of the American Empire

Several recent news items caught my attention, and no, I am not referring to Trump’s triumph of vanity in Gaza or his gestapo-like dispatching of troops to democratic-run cities.  I am talking about a new report on the breaching of climate ‘tipping points’ and the failure of a global conference on limiting plastic pollution, followed by a report on industry executives who travelled to China and were blown away by its innovation and mastery in robotics, electric vehicles and renewable energy.

Trump is absolutely obsessed with opposing and destroying any of his predecessors’ accomplishments regarding climate change and renewable energy.  He has declared climate change a hoax perpetuated by ‘bad’ and ‘dumb’ people, and in his uniquely idiotic way, dismissed electric cars because they ‘don’t work in the cold’.  He has ordered an end to wind farm development, charging station rollouts and all research associated with renewable energy and global warming.  No doubt he welcomed the collapse of the plastics conference as well.

 

Future psychologists will be challenged to catalog the full list of Trump’s pathological traits, but the toxic mix of envy, narcissism, resentment and vengeance that drives his decision-making will be at the top of the list.  So deeply embedded is this psychosis that he has embraced every right-wing conspiracy theory and anti-science quackery that comes his way.  He has appointed charlatans and idiots to cabinet positions, with their only qualification being total obeisance to his will.

 

What does this mean for the future of our country?  We will soon be years behind in the development of renewable energy and electric vehicles.  We will have abandoned our leadership in international efforts to address climate change and other planet-threatening trends such as ocean acidification, plastic pollution, landscape and forest damage, and the loss of lifeforms and biodiversity.  We will have crippled our scientific research community and hamstrung our universities.  We will have irrevocably destroyed the trust of our most loyal allies.  We will also have seriously delayed efforts to transition away from fossil fuels and obtain a more sustainable balance of energy.

 

No empire lasts forever, and we have had the extraordinarily good fortune to be in a dominant economic and military position for over a hundred years.  But pride goeth before a fall, and there is no more extreme case of pride than the current president and his administration.  Trump will go down in history as the president who paved the way for the great period of decline of the United States, and the ascendance of China.

 

 

The Pendulum or the Spiral?

As an avid reader of history, I look for clues in the past to understand what is going on today.  George Santayana said that ‘those who cannot remember the past are condemned to repeat it’.  But the past has many different outcomes for seemingly similar trends, so how can one attempt to predict the future and respond appropriately?

The aggressive authoritarianism of Donald Trump and his administration appears to be unique in the history of the United States.  There have been other periods where presidents have acted forcefully and tested the limits of presidential power.  Andrew Jackson, Teddy Roosevelt and FDR are examples.  However, the vengeful nature of Trump’s authoritarianism, his pathological narcissism and his attempts to vilify all opponents and create a climate of fear are substantially different from these other presidential terms.

 

Are we on a path to repeat the fascist nightmares of the 1930’s?  Will Trump use his absurd depiction of the internal dangers of the radical left and crime-ridden cities to declare martial law and push us toward a true police state?

 

The periods of 1919-1921 and the Depression saw the country lurch toward dangerous and unstable economic, political and social circumstances.  But in both cases, the crises passed and the country returned to a state of equilibrium.  In both politics and economics, which find themselves inextricably linked, there is a dynamic that is similar to the motion of a pendulum.  There is movement from the moderate center to a more extreme position, followed by a return to the center and a move toward the other extreme.  

 

The pendulum swing is a cycle of politics, just as the economic patterns of inflation, unemployment, and job and GDP growth go through their various stages.  You have a Reagan/Bush cycle followed by a Clinton cycle, followed by Bush and then Obama.  This has been a healthy if imperfect way for US politics to find compromise and make slow but steady progress toward its lofty goals as a society.

As the pendulum swings in one direction, the opposing side depicts the motion as dangerous and extreme.  Politics is a game of hyperbole and drama.

 

But history is also full of times when the pendulum swing becomes too violent and there is no return to equilibrium; where the cycle morphs into a spiral of ever-increasing radicalism, hostility and, ultimately, violence.

 

What causes this departure from the normal cycle?  Are there specific events, crises or conditions that predispose a nation to begin falling into this deadly spiral?  In the 1930’s there was a poisonous mix of desperate economic times, a general sense of alienation among large portions of the population, strongly nurtured grievances from the first world war and demonic, yet charismatic strongmen.  There was also a cynical acquiescence by key business, political and military leaders who saw the short-term upside for themselves and ignored or rationalized the clear dangers.

 

In Germany, a single event – the Reichstag fire – gave the new chancellor Hitler the opportunity to suspend most civil liberties, including freedom of the press, freedom of expression, habeas corpus, and to authorize monitoring of the post and telephone.  By claiming the act was evidence of a widespread communist plot to overthrow the government he convinced the German president, von Hindenburg, to issue the decree.  This dramatically propelled the German state away from any semblance of democracy and into a police state and dictatorship.  

 

We do not have a desperate economic situation, though there is a huge disparity in wealth and income that is becoming ever more toxic in our society.  And it is not out of the realm of possibility that a major recession and economic shock will come in the next few years.  

 

Trump has already fabricated the myth of a widespread conspiracy of the radical left and of crime-ridden cities, and has taken first steps toward a police state by use of military forces in democrat-governed cities and by transforming ICE into a huge paramilitary force.  He has attempted to rally the military around the concept of using domestic conflict as a training ground. And he has instructed the justice department to target so-called radical left groups and their supporters.  It is not difficult to imagine a single dramatic event similar to the Charlie Kirk assassination serving as a Trumpian Reichstag fire.

 

It is also very possible that we are truly in the steepest part of the Trump pendulum swing, and that the reaction of the nation will be to reject his extremist agenda and bring us back toward the center, presumably by significant shifts in the midterm elections. 

 

The difference between a pendulum swing and a death spiral may be a set of random events or an insidious, orchestrated coup that creeps up on us and catches us off guard.  But at least half the country is on alert now and profoundly opposed to the Trump administration, so if the spiral is to occur it will be ushered in with the kind of sad, feeble reluctance to make a strong, timely stand that is the Achilles heel of comfortable human beings.

 

 

 

The H-1B Visa Problem

I despise almost all of what Trump has initiated in his nine months in office, but the H-1B Visa fees are not something I worry about.  In fact, wouldn’t the world be better off if we couldn’t rob other countries of their top talent?

There are three arguments against pillaging the best and brightest from other countries.  The first is that we should be focused on improving our own educational system.  We have three hundred and some million people in this country.  There is no conceivable reason why we should have to go far afield to find talent.  If the reason is better preparation in specific areas, then the tech companies should work with universities and secondary schools to improve the pedagogy in those areas. 

 

Within our population there is enough brain power to do anything.  There is no legitimate argument that we must tap other nations for the most intelligent or capable workers.  It is a simply a matter of developing the wonderful intellects that are already here.

 

The second argument is that H-1B visas are in essence a continuation of the western exploitation of the resources of other lands.  How can we expect these countries to become more stable politically with better developed economies and opportunities if we are taking the raw human resources that they so desperately need to make progress in a competitive world that is already stacked against them?  

 

The same is true for our visa system for studying in the USA.  It is a wonderful thing for our universities to train citizens from across the world if there are limited educational opportunities in their own country.  But we should not allow them to stay, for if they do not return, we are essentially stealing them from those other countries.

 

The world is a competitive place and I fully understand that there is a strong motive for recruiting talent, whether through university education or H-1B visas.  But the world is also a profoundly troubled place with grotesque inequalities among nations.  And those troubles and inequalities are no longer remote and meaningless to us.  They are increasingly causing strife within our land through immigration issues, climate change, wars, drugs and criminality.  There is no question that the loss of valuable intellectual talent contributes heavily to these woes.

Brain drain is a catch-22 for developing nations.  The more troubled or unstable a nation is, the more the best and brightest flee for better opportunities, which in turn creates more instability.  Developed nations are exacerbating the problem by aggressively recruiting people from struggling lands.

 

The third argument is that the H-1Bs are predominantly used to fuel the AI furnace, and the last thing this world needs is a furious, no holds barred arms race in AI.  We would all be better off if AI development were less frenetic and more measured, with essential ethical and safety analyses guiding the technology.  It would also be good for many countries to share in the development of this technology to motivate them to use it for the common good.

 

The AI arms race is similar to the nuclear arms race in the cold war.  But the mutual assured destruction scenario at least kept those arms in a dormant state.  I highly doubt there will be any such hesitancy or precautions in the application of AI technology.

 

Of course, all of my arguments are idealistic in the extreme and unlikely to ever be considered in public policy.  No doubt my concern for other countries and use of the term ‘exploitation’ would be ridiculed as hopelessly bleeding heart by more conservative readers.  But it is in my nature to ponder problems and look at an idealized scenario.  It is a naivete of sorts, but it is satisfying to me to imagine a more perfect world.  

 

Is Charlie Kirk the Horst Wessel for MAGA?

First, let me say clearly that I think the murder of Charlie Kirk is abominable and tragic.  There is no justification for this type of political assassination.  But the reaction of Trump, Vance and the rest of the MAGA world is frightening and incredibly cynical and manipulative.

 

Horst Wessel was a middle-class university student who reveled in the masculine subculture of the Sturmabteilung (SA) of the late 1920’s. He became a leader of a street cell that courted violent encounters with communists in Berlin.  He was shot by a communist thug over a lodging dispute and died later in the hospital from sepsis.

 

Josef Goebbels, at that time the Gauleiter of Berlin, had been looking for a martyr to use for propaganda purposes.  Horst Wessel was perfect for the role.  As the Nazi party became ever more powerful and the storm troopers grew in numbers and violence, Horst Wessel became an icon.  A song that Wessel had composed became the SA anthem and ultimately the Nazi party anthem and was known as the Horst Wessel Lied (Song).  To this day it is illegal to perform this song in Germany and both the lyrics and tune are banned.

 

There are strong parallels between the history of the Horst Wessel martyrdom and the current MAGA efforts to make Charlie Kirk into a noble hero cut down by evil leftists.  In both cases, rather than lamenting the violence that pervades society and calling for calm, the events were used for political vengeance and initiating draconian witch hunts for so-called co-conspirators. 

 

Ignoring the complex nature of violence in the USA, which has touched all sides of the political spectrum and is often more a question of mental illness and alienation than of political motivation, is profoundly deceitful.  And publicly shaming, threatening, suspending or firing people who express opinions that are critical of Kirk or that minimize his assassination are clear violations of free speech.  It is a very slippery path to a police state mentality.

 

There may indeed be wrenching sorrow in the MAGA ranks over the death of Kirk, but using his death as a way to limit political discourse and target political foes is clearly an authoritarian move that endangers the most basic rights of our country.  The proper way to honor Kirk would be to make a strong appeal for reconciliation and harmony.  We may not be able to cease vilifying one another in the short term, but using Kirk’s death to ratchet up the tension in our fragile democracy is courting disaster.