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What is it like to be a billionaire?


Howard Schultz’s bizarre explosion onto the national political scene raises a number of questions. (By the way, if Schultz’s campaign actually goes anywhere, somebody needs to check out exactly why and how he ended up going to Northern Michigan University.  My spidey sense tells me the contradictory accounts he’s given about that are leaving out a big part of this story, which on its face makes no sense.  Why would a working class kid end up paying out of state tuition at an obscure school 1000 miles from the Brooklyn neighborhood where he had spent his whole life, especially when could have gone to a New York state system school for practically free at that time? There’s something happening here, and what it is ain’t exactly clear).

Anyway, Schultz’s main reason for wanting to be president seems to be his horror at the prospect of taxing the rich at higher rates than those they currently pay.  Now I’m genuinely perplexed how someone from his background — which, the extent his autohaigography is accurate, is that of someone who grew up at least sort of poor —  comes to the conclusion, after acquiring three billion dollars, that the most pressing social problem of the moment is that extremely rich people might be required to pay more in taxes than they currently do.

As Paul Krugman points out, the optimal rate at which to tax extremely rich people is whatever rate maximizes revenue.  This is true from a purely utilitarian point of view, without even taking into account more general considerations of ethics and social justice.  After all, the declining marginal utility of income guarantees that every extra dollar acquired by an extremely rich person would be better spent elsewhere, where it could actually benefit society, instead of making it marginally easier for the owner of the Washington Ethnic Slurs to install an IMAX theater on his latest super yacht.

All of which is to say I just can’t grasp the mental world of people like Schultz.  I mean people at this level of wealth live what is, for almost all practical purposes, a post-scarcity existence.  If you have three billion dollars, then you can buy almost anything without even bothering to consider what it costs, since what it costs is, to you, practically indistinguishable from “nothing.”  (The extremely rare exception would be something like the presidency of the United States, which remains frustratingly difficult to buy, although the Roberts Court is doing its best to fix that).

Given that everything is for you already basically free, why would you even care if your tax bill goes up?  Especially given that you live in a society in which, despite what is by a historical standards an almost inconceivable amount of total social wealth, lots of people still have to worry about getting enough to eat, not freezing to death in the next polar vortex, etc?

Some possible answers:

You want to make sure you’re great-grandchildren et. seq. will all have more money than they can possibly squander.

This strikes me as a highly implausible explanation.  Nobody actually cares about the specific welfare of their great-grandchildren, who after all are almost always abstractions.  It’s also a terrible reason to not increase taxes on gazillionaires, even if they did care. (Note that Jeff Bezos is forty times wealthier than Schultz’s already unimaginable level of wealth).

You buy into some completely discredited supply side gobbledygook about how high taxes  on extremely rich people will have bad economic consequences, because they will damage incentive structures.

OK, I can well believe that, but that pushes things another turtle down, i.e., why do people like Schultz want to believe that, in the face of all the actual evidence?

You just object “in principle” to high tax rates on extremely wealthy people.

But what is that principle, exactly?  Obviously if you’re some kind of anarcho-capitalist, who thinks taxes are theft, and that we should all arrange for our own private security forces in a blissfully libertarian Hobbesian landscape, that’s one thing, but I doubt very many such people actually exist, because that’s such an absurd belief system on its face.  If you don’t reject the necessity of a state, in other words, what “principle” militates against high taxes on people who get no apparent marginal utility from the vast bulk of their vast wealth?

You are greedy.

Again, this doesn’t compute for me.  You already have, for almost all practical purposes, much more money than anyone could possibly use.  What does “greed” mean in such a context?

You want to buy the presidency of the United States, and that could actually put a real dent in your wealth, so marginal tax rates still have practical significance to you.

OK then.

. . .  Many commenters have pointed to the psychology of “keeping score,” where money becomes a purely abstract way of measuring the competition between rich people to be rich, simply for the sake of being richer than others. (This is closely related to Veblen’s concept of conspicuous consumption as competitive social display).

This is surely true, but again, I don’t understand the psychology.  When you are competing to have the most money, when more money has become something that has no actual meaning to you in regard to acquiring something with it, this seems like some sort of pathology or perversion.  JM Keynes in 1929:

When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession -as distinguished from the love of money as a means to the enjoyments and realities of life -will be recognised for what it is, a somewhat disgusting morbidity, one of those semicriminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease. All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.

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