A continuous background theme in Thomas Piketty’s Capital in the Twenty-First Century is that citizens in democracies are stupid and/or ill-informed, which is why they don’t vote to use the government’s power to take away more income and wealth from rich people. In Piketty’s view, the Honda drivers out there need to read his book to see that others are driving BMWs and Mercedes SUVs to shopping sprees at designer boutiques then returning home to their massive McMansions/estates. If they had access to his data they would see that what is rightfully theirs has been unfairly collected by a rich person and they would try to get it back.
I’m wondering, though, if Piketty isn’t seeing a difference in data availability and IQ, but rather a difference in morals. A PhD economist generally takes an amoral view of the world. More money is good. Less money is bad. But the average citizen does not have a PhD in economics or the corresponding amoral outlook. Thus Milton Friedman and more than 500 less famous economists signed a letter back in 2005 calling for legalization of marijuana, an idea that most voters did not support at the time. To an economist, the drug war is an obvious pure waste from a dollars and cents point of view. But apparently drug prohibition has some value to voters, as evidenced by the electoral success of politicians who take a “tough on drugs” stance. I personally don’t want to pay for the imprisonment of stoners. However, if my neighbor does want to pay for that (through his or her tax dollars) and votes accordingly, I don’t think it follows that my neighbor is therefore stupid or misinformed as to the cost of imprisoning stoners.
Could it be that Piketty’s “tax the rich” plan reveals the same conflict? An ancient human idea is that it is immoral to take things away from other people and that it is immoral to covet things that rich people own. Exodus 20:1-17 and Deuteronomy 5:4-21 instruct Jews and Christians as follows: “Thou shalt not covet the neighbor’s McMansion”; “Thou shalt not covet the neighbor’s 4K Samsung”; “Thou shalt not steal”. The Buddha said “Steal not, neither do ye rob; but help everybody to be master of the fruits of his labor”. A Buddhism expert lists “Avoid stealing — taking what is not yours to take” as the #2 moral precept (reference).
In our pilot community we recently came up against this. A man earning $75,000 per year was splitting up from his wife of 10 years, one of the superstar executives whose compensation Piketty decries (and I as a shareholder also don’t like the practice!). The divorce mediator and judge advised him that he could tap this woman for years of alimony payments that far exceeded his income, but he replied “I don’t want it. She worked for it. She works all of the time. She earned it. I didn’t. I am comfortable on what I earn. I don’t need to take something that belongs to someone else.” He was reminded that under Massachusetts law he was absolutely entitled to take a few million dollars out of this woman, but he continued to turn it down due to the conflict with his personal morals.
If an 18-year-old girl got pregnant after a one-night encounter with a drunken medical specialist, law firm partner, finance industry executive, or management consultant, her profits from child support in most states would exceed the median after-tax household income in that state. Yet more women pursue college degrees and work for a living than decide to turn their bodies and children into cash.
By reference to Balzac, Piketty points out that it makes more sense to pursue wealth through marriage to an heir than to work. And Piketty might say that our pilot friend is an idiot and that the 18-year-old girls who study boring subjects in college or take jobs that aren’t enjoyable simply aren’t aware of the profit opportunity in having children in the U.S.
Piketty mostly agrees with Balzac that “Behind every great fortune there is a great crime”. Steve Jobs earned his fortune honestly (previous posting) in Piketty’s view, but many rich people got there because they appointed their golfing buddies to the board of a public company or because they established a monopoly. If we adopt Piketty’s facts and assume that 50 percent of rich people are justly rich and 50 percent of rich people are unjustly rich, it comes down to personal morals as to what the correct course of action would be. If we think it is more important to take money away from the unjustly rich then we can establish a wealth tax on anyone with money. If we think it is more important to adhere to the teachings of the Buddha and the Hebrew Bible then we let some monopolists get away so that we don’t steal from those who became wealthy from hard work and/or saving rather than spending. Piketty says that anyone who prefers Choice #2 is an idiot and/or doesn’t have enough data. But maybe people picking Choice #2 simply adhere to a moral code to which Piketty does not subscribe.