AN ELECTION-SEASON EPISTLE ABOUT PYRAMIDS, DIAMONDS, INHERITANCE TAXES AND A CLOSE ELECTION THAT SOMEHOW HAS EVERYBODY BORED STIFF
Hello all. Here's hoping that autumn 2000 finds you well as we continue our transition into a new century.
Has anyone noticed something interesting? The complete lack of any voices proclaiming that December 31, 2000 is the _real turn of the century? Odd huh? I haven't heard a single call to celebrate this formal milestone -- even as a simple excuse to have another party! You'd expect at least for some Society of Nit-Pickers & Pedants to do so..
Anyway, whenever it's time to bid adieu to the Summer Olympics and prepare for Halloween, you can be sure that we in the USA are also approaching another bizarre ritual - our quadrennial presidential elections.
As usual, there is the politics you see on the surface... and what's going on below. Issues that get little play in the press. Issues that are really driving the deep agenda of one party or the other.
I've noticed one of these. And it bothers me enough to provoke spending an evening to pen this letter, offering a comment or two, in case some of you are interested.
SPOCK VERSUS DARTH?
Something strange is going on in the States (for those of you who live outside and cannot feel it in the air.) Times are good and that tends to seep some passion out of the political contest. Also, nobody is particularly scared of the choices being offered. Or excited, for that matter.
True, almost everyone agrees that Al Gore has about twice the IQ of George W Bush, more experience and a much better idea what's going on. Some call him "overqualified the same way Spock was, to be captain of the Enterprise, and therefore unromantic, a rather unpalatable choice for those preferring the zing of human fallibility in their leaders.
(See the latest issue of Yahoo Internet Life Magazine for a fascinating interview that seems to support this view.)
But for those who worry about George W's paucity of intellect, do not fret. By nominating Richard Cheney as his running mate, Bush quite properly signalled that he is front man for a brain trust that has considerable experience and knowledge about the workings of policy and government. As they did under Ronald Reagan, these gray eminences will handle most decisions with utter seriousness. They are not scary madmen or boat-rockers.
Government will function either way. To a large degree (at least compared to past empires) it will leave us pretty much alone. Those of us in the middle class, that is.
Then why am I writing now? Clearly I care, and wish to influence your vote, speaking openly, as one citizen to another.
THERE IS A DIFFERENCE
Well, for one thing, I utterly reject the silly platitude going around that says the republican and democratic parties are just the same. What hogwash!
On the left, some males swallow this romantic twaddle and go running off to Ralph Nader, seeing him as a Don Quixote-type, ignoring his programmatic vagueness, his oversimplifying demonization of markets and his many questionable personality traits. Very few women seem to have joined the Nader campaign. Maybe because they are more practical, knowing that the next president will appoint at least three Supreme Court justices. I've seen quite a few buttons saying "It's the Supreme Court, Stupid."
That issue, alone, should eliminate any thought of voting Republican this year.
But there is another, far more important reason. It has to do with a blatant attempt at social engineering that none of us should like or put up with. An effort to fundamentally alter a social contract that has done very well by America and the West for several generations.
A SOCIAL CONTRACT THAT WORKS
Look at the difference between European and American societies. Both have changed considerably since World War II by becoming much less pyramidal and more "diamondlike".
Some of you may have heard me talk about this before. It's an obvious metaphor for our unique culture. Throughout history, almost every civilization had a social structure shaped like a pyramid, with a few at the top lording it over uneducated masses below. And it was in the best interest of those on top to make sure those masses stayed down. Social position was inherited. Above all, information flows were tightly controlled.
In sharp contrast, our contemporary social pattern is diamond-shaped. For the first time, the well off actually outnumber the poor, at least inside our national borders. The educated outnumber the uneducated, and those who see themselves as somewhat empowered make up a majority. For the first time, most people merely envy the rich and do not hate them, because each of us can daydream taking our own turn in the pointy upper half. And if not us, then perhaps our children. It's called "social mobility" and it never happened before - at least not on this scale.
Above all, we feel that society's elites are somewhat accountable - or at least they are limited in the degree that they can use their elevated position to wreak capricious and direct harm on us, unlike the impunity that cloaked aristocracies in pyramidal cultures of the past.
(Harm done to the earth is another matter, we can discuss elsewhere.)
People who rage at "government bureaucrats" seldom stop to think how little those bureaucrats can actually do to harm you, compared to the impulsive power-abuses of aristocrats and oligarchs in nearly every past culture. And not too long ago! Forget Caesar and Louis XIV. Read Dickens, Jane Austin, Faulkner, Steinbeck! Hell, look at Myanmar and China today. It's like peering into a strange and desperately lopsided world -- the world that all our ancestors toiled in, friends. We are the ones living in an anomaly. The social engineering that occurred since WWII -- through marvels like the GI Bill, the explosion of literacy and expanded state universities, etc. -- caused a peaceful revolution in human affairs that was unprecedented across all time. And unlike other revolutions, it happened without much violence or bitterness. This revolution benefited those below without tearing down those above. We ought to appreciate such a marvel; it's incomplete, by a large margin, but it's also quite unprecedented. Our diamond-shaped social structure, with its implication that any of us may succeed next year, promotes a vibrant, can-do spirit that makes vigorous use of tools like mutual criticism and accountability. And note this symptom of health -- America has seen a burgeoning in the number of millionaires, but the vast majority of them made their own fortunes in the marketplace, through competitive delivery of goods and services.
Hey, that's what capitalism is supposed to be for, right? We can (and should) argue all day about how to help the poor. But at least their brightest sons and daughters already have a much better chance than the peasant kids did in the past. Every year, some of the best (or luckiest) make it all the way to the top. And countless sons of the rich find themselves having to earn it all over again.
*=> In Europe, by contrast, a majority of millionaires inherit their riches. Studies show that few of them seek to learn useful occupations or do anything dynamic with their fortunes. They do work hard at politics, striving to keep property and inheritance taxes low, while sticking the poor with high sales taxes. This way, they will be able to pass on their money, titles and life-style as entitlements to their lordly kids without impediment or inconvenience.
A DIAMOND UNDER SIEGE
Don't get me wrong! I have every intention of getting into the upper brackets myself. I've already made some progress in that direction. And I plan to be sure that my children get some advantages from my success. But that's a far cry from entitling them to billions from goods and services they never did a thing to produce or provide to anyone. My success does not entitle them to a position in life that safeguards them from competition.
I lived in the U.K. when Margaret Thatcher succeeded in ramming through a bill ending all property taxes. The chief beneficiaries were 1,000 landed families who no longer had to worry about actually earning some money to keep their grand estates. The chief effect? An increase in the VAT paid by normal folks... oh, and many castles and manor houses stopped having open house days, since they no longer had to earn tourist dollars to pay the rates! Oh boy, now the art collections could go back to being "for our eyes only!"
Here in the States you see the same movement at work. Lots of "Simple Tax Plans" take advantage of citizens' (justified!) anger at tax code complexity, pandering to that anger by pushing a National Sales Tax, with the chief effect of shifting the burden of taxation from the top of the diamond to the bottom. And the underlying agenda of turning that diamond into a pyramid once again.
(An aside: I am working with a group developing ways to simplify the income tax code using a computer program that will find politically neutral simplifications, taking the whole issue out of politics. It's an exciting project, requiring fascinating algorithms, but more than we can get into here.)
*=> Now comes along George W. Bush with his grand plan to "cut taxes" in a manner that blatantly gives fully half of the benefits to the richest 1%. Delaying the payoff of our grandchildren's public debt for a decade, he'll use most of the budget surplus to achieve such wonders as completely repealing the inheritance tax.
WHAT THE INHERITANCE TAX DOES
Now there's a funny thing about the inheritance tax - it's effects are vastly greater than they seem at first sight. At the surface, it doesn't look like the government's biggest source of revenue. In fact, its chief effect over the years has been encouraging super-rich folks to create charitable foundations, in order to keep their money away from the IRS!
Get this -- in the USA, charitable giving by the rich is MORE THAN TEN TIMES as high as it is in Europe! Studies credit most of this difference to the inheritance tax, spurring the wealthy to use their money to buy fame and gratitude, rather than let Uncle Sam decide how it will be spent.
Yes it's kind of quirky and ironic. But there's a kind of beauty to it, leaving the super-rich free to choose WHICH charitable use their money will go to. That's a lot of pleasure and power to have while doing a lot of good. And the pleasure goes to the people who got rich by actually providing goods and services, not their spoiled kids. (Andrew Carnegie set aside a nice little fund to ensure his kids' comfort, then dedicated the bulk of his fortune to giving libraries to the poor, all over the world. He said -- "I'd rather leave my son a curse than the almighty dollar.")
Care to guess what'll happen to charitable giving if GWB gets his way?
We are entering a period when some estimate that fifteen trillion dollars will shift hands between generations. For those in the middle class, this may be the only sizable dollop of cash they'll ever see, since most of their current savings are tied up in their homes... and the Inheritance tax won't touch a penny of it. But about a third of that fifteen trillion dollars is set to flow to a few thousand people who never produced a thing to earn it. Fortunately a large portion will also go into charitable foundations, taking on a myriad bold tasks that simply don't appear on the radar screens of either government or corporate planners. Fascinating projects, chosen by real innovators. That is, if things stay the way they are.
THAT is why the effort to revoke the Inheritance Tax is so frantic and urgent right now. It is why the bosses of the GOP have made it their number one priority. A trillion or two, taken away from bold foundations and slipped into the pockets of new lords. What a cool agenda!
FAMILY BUSINESSES? BALONEY
Oh, don't talk to me about "family businesses & family farms". That's been debunked, big time. The effect of the inheritance tax on small and mid-sized family business is virtually nil today. Nil. Moreover, Clinton & Gore have shown willingness to push upward the exemption from a million dollars to two million. Hell, make it five! TEN! That's a heap of equity to pass on. The kids should be able to do a lot with it, even if they must reconsolidate a bit
That's still a far cry from letting a small cadre of lazy preppies scoop in billions without paying a penny of it to the nation that protects them, pays for the research, protects them, educates their workers, protects them, keeps the poor from rioting, protects them, maintains labor peace, protects them, enforces contracts, protects them, invests in saving the environment we all share and then protects the rich some more, in ten thousand more ways than they would ever willingly acknowledge.
It's ungrateful, churlish and just plain nuts.
No, I am not preaching class warfare... though that is exactly what you will get eventually, if the pyramid is restored.
A lot of people are upset because the fraction of our economy controlled by the top 5% is rising, higher and more rapidly than at any time in 3 generations. I'm a bit less concerned by that, so long as the diamond remains healthy. So long as most of the millionaires in each generation still have to earn it and their kids still go to college with our kids. In that case they'll keep intermarrying with us, instead of thinking themselves a different species.
...which is exactly how the rich always thought of themselves in other cultures/times/places. As a different species, justifying their status with absurd racial notions or self-serving ideas about divine authority.
(Okay, not all of the rich! Not today.
(It depends on which kind of wealth eggs you on -- RELATIVE wealth or ABSOLUTE wealth.
(Take those who want to be rich in order to have lots of fun and cool stuff. These folks don't compare themselves to those below them. They don't begrudge if others get rich too. In fact, the more the merrier! Let's all get so rich together that everybody vacations on terraformed Mars! Ski Olympus Mons! Ain't it awful how crowded Europa is getting these days?
(Others need to feel rich-er than the masses. It's the "er" suffix in richer that gives their life zest and meaning. The relative comparison to others. They would feel happier being in the top 1% of a poor society - with shabby servants to scream at - than being at the mere 90th percentile in a fabulously wealthy nation of equal citizens.
(I'll bet you know both types, admit it! This personality factor makes a big difference in which political movements each wealthy person donates money to, even if they buy similar cars and belong to the same clubs.)
WOULD-BE PYRAMID BUILDERS
People, it's time to say no-thanks to those wanting to bring back the old social pyramid. The diamond deserves our loyalty.
But alas, the diamond ain't stable, ladies and gents. The natural human tendency is for those with power to want more power.
I accept the productive value of capitalism, when the market is a vibrant place for fair competition of goods & services. But if accumulations of wealth pass a certain point, capitalism will die and feudalism will replace it, as happened every other time there was a brief renaissance of competitive opportunity in human affairs. Seriously, name a bright era when that did not happen, shutting down opportunities and progress for centuries at a stretch.
Anyone who wants the pyramid back is your political enemy, folks. Not just the enemy of us but an enemy of his own children. Just ask the innocent young baronets who lost their heads during the French Revolution. THEY didn't rape the serfs, but they paid a stiff price for their grandparents' arrogant, insatiable greed. Alas, those yearning for pyramids are too stupid to grasp how wealth is really made, or what happened to the pinnacle classes in every other culture, when the people below got fed up. They are too stupid to realize that the diamond is their own best friend.
OKAY, OKAY, OKAY....
Oooh, Brin is really starting to go over the top now!
Oh, all right.
Maybe the social diamond won't fall apart overnight if George W. Bush becomes president. Maybe he'll be balanced by a Democratic Congress. Maybe we'll be fine. There are lots of other factors involved than which figurehead occupies the White House.
Still, his blatant campaign to give a few trillion dollars to those who need it least bothers me deeply. Especially the raging avarice and ingratitude of it. People who have thrived immensely under the protection/support/subsidy of a great nation don't want to help pay to keep that nation prospering and growing, or to help poor kids rise up high enough to compete with them on an even playing field.
They want to be lords. OUR lords. And we shouldn't let them. Merely as rich as Croesus, that's all they should get to be. Getting to be rich as Scrooge McDuck should be enough for anybody.
Oh, pity their poor offspring, who must graduate from Andover or some other prep school knowing that now they have to go to university alongside the bright scions of accountants and teachers and laborers!
Oh no, they may actually feel a need to study something useful in school, in case their measly inheritance ever gets frittered away. Their mere ninety million dollars instead of tens of billions.
Worst of all, they have to suffer and watch as Dad's fortune goes to some prissy goody foundation to cure cancer, or to some university to buy buildings named after him and Mom.
"What an outrage! That money's MINE, you hear? Do you have any idea how little ninety million dollars can buy, these days?"
This is the GOP's absolute top agenda item - they say so themselves - and we should reject it resoundingly. Send the Republicans back to the drawing board.
If Bill Clinton and Al Gore can see the light about welfare reform and budget balancing, then Dick Cheney can bloody well go back to the brain trust and report that the GOP needs some fresh ideas. And, please, some fresh blood while you're at it.
There are fresh ideas out there! * Ideas about how markets can be used to help stimulate and promote sustainable occupancy of the planet without putting all our faith in bureaucrats or the almighty dollar. Ideas about how markets can be made more vibrant than ever, spurring innovation while helping forge a diamond that floats ever higher, carrying everybody on Earth upward with it.
Go away this time, Dick. Give poor George W. a nice cushy job somewhere in the oil biz and bring us someone else in 2004. Somebody with brains... and proposals that make sense.
* For those of you who are libertarians, see the next issue of LIBERTY magazine for an article about ideas like these. Ideas about freedom and "reduced government" that are worth campaigning for and that aren't about helping foster an old-fashioned inherited aristocracy in America. When you think about how many interesting things Cheney & co. could be talking about - like ending the Drug War - you'll wind up holding your nose and voting for Gore.
For those of you on the left who are actually thinking of voting Nader... gadzooks, do you know anything about that person? A gadfly needs personality traits that would be calamitous in a President. Learn more about him, for Gaia's sake. Then think about Global Warming, the Supreme Court and the Internet. You'll hold your nose and vote for Gore.
Me, I ain't holding nothing when I vote for him. He's a geek, but a smart/nice one. We've done worse. Most of the time, in fact. A lot worse.