Kelsey Piper, A wealth tax could have unpredictable effects on politics and philanthropy, Vox (October 30, 2019). Some excerpts:
A wealth tax will likely make billionaires spend their money now instead of leaving it to their foundations or their descendants. If billionaires suck (and many proponents of a wealth tax think that they do), this might mean more distortionary political spending on behalf of ideals that most Americans don’t share, rather than less of it.
Some proposals for a wealth tax would transform foundations like the Gates Foundation — and if it had been around in Henry Ford’s day, could have transformed the Ford Foundation.
As I’ve written and as even the fiercest critics of philanthropy have agreed, foundations do essential work in many areas that wouldn’t otherwise get done. Trying to guess the effects of the proposed wealth taxes on these foundations and the work they do really is a conversation we should be having.
I looked at the entire Vox article. I sort of dreaded what it was going to say, given that so many wealthy people have contributed to making alot of what I and others have benefited from, in varying extents. The Sackler gallery for example, and the Sackler’s also fund a scientific conference (PNAS). They are also being sued for their role in the creation of the ‘opiate epidemic’ which has made death from drug overdoses more common than from car crashes and guns combined. The Rockefellers created Rockefeller U, Carnegies and Mellons created CMU, Bloomberg funds JHU medical school (where Ben Carson—of Trump admin) worked; and Rockefellers also own a whole lot of land they keep mostly in ‘wilderness’ state. (One of the Rockefellers also was governer of WV for many years, and I think he was relatively progressive for that state, and knowing WV, its likely his wealth helped him stay in power.)
But JHU med school uses to an extent the poverty stricken population of drug addicts in Baltimore as paid ‘guinea pigs’ for clinical trials, so its not all ‘bread and roses’. Ben Carson may not be the best choice for heading HHS (or whatever its called)---there is also some dispute over whether he was a genius neurosurgeon, or just a very competent one. Universities also tend to produce results with mixed values—only some people can go to the best ones, and then they (like Gates) can walk off with tax funded research and use it to make billions$. (The Gates Foundation wok on African agriculture has been criticized for its emphasis on GM crops, and though they changed their policy, their earlier work on malaria if i recall also was criticized as being misprioritized (they spent most of it on research at U Wash theoretically on vaccine development, but labs often work on more than one thing).
Henry Ford brought us the Ford , and some argue that all these cars and related highways and suburban sprawl lead to issues like ‘climate crisis’, air pollution (said to be bad for your IQ), biodiversity loss, etc. ---a mixed blessing.
U’s are now bringing us AI , and we already have FB and WWW, which again may be mixed blessings—alot of people now say limit your time using these (especially children ). (I now my ‘quality of life’ (as low as it was) sort of wnet into free fall once i started using WWW—i thought it would be a useful tool because it was for others, but not for me. (Its more like a ‘hamster wheel’—better than nothing but not like being outside and free to wander like a wild mouse. I likely just dont know how to use it—and instead waste time writing stuff like this. My previous quality of life was actually reasonably high, though it was ‘materially’ low—i just didn’t have much besides reasonable health and alot of free time ).
My area has tons of art and other museums, and U’s , which have been funded by billionaires (including Arab Sheiks from Saudi Arabia and elsewhere) , but there are plenty of people around here who basically don’t have access to them—sometimes because they don’t feel comfortable going to a free museum. For U’s, often they can’t get in because despite going to the local school system, for various reasons they aren’t prepared for the better U’s.
The article starts with Larry Summers—well known for his comments at Harvard on something like ‘there are few women in the sciences because they prefer housekeeping for their husbands’. He also had a ‘beef’ with Cornel West (though on that i was slightly sympathetic because West’s ‘rap album’ was a crime against humanity; West is also a ‘public intellectual’ basically (this class includes Sam Harris, S Pinker now (at one time he did a tiny bit of science, 50% of which is now known to somewhat incorrect but that’s science) , J Peterson, etc.). Public intellectuals are a step above journalists, and 2 steps above gossip columnists, talk show and podcast hosts. (The step above them actually leads to 2 stairways—one is called ‘science and scholarly research’; the other is called ‘fake science and scholarship’. They are almost indistinguishable to most people—its like asking a dog or a baby to decide whether a holy text is ‘the truth’, or a book on quantum theory is.)
Summers, though related in various ways to some good economists—eg P Samuelson (flawed but amongst the best) --doesn’t seem to be a chip off the same block in economics. He did ‘normal’ or ‘generic ’ economics, nothing special. His policies (i think he may have been in involved in NAFTA) have been criticized for not being ‘well thought out’ . (The author of the OP has an interview with an expert on AI , who says the risk with that is that if it works it can be like a very efficient factory which produces good products but in the process kills everyone who works there as part of the algorithm. Alot of applied economic theory of the kind Summers used—‘IS-LM’ etc.-- is like that. They get a result, just not a desirable one. This is partly why there is a ‘drug epidemic’ and ‘immigration crisis’ in USA (and even Europe—world bank and imf likely helped that along) , and Mexico has 20-40,000 homicides a year. )
I sort of think Summer’s reasoning could be taken to its asymptotic limits. For example, as anarcho-capitalists argue (eg Caplan at GMU, and Heumer at U Colo) things like taxes—all of them, not just wealth taxes—are inerintly distortionary, and a form of theft of private property , and should be abolished (except perhaps the taxes used to fund those people salaries at public U’s). Public education should similarily be abolished except maybe trade schools. Smarter people will be able to buy private education to develop robots, better babies, and AI.
Also considered what might have happenned if in 1776 or before USA or its precolonial form decided to ban slavery—which i view as a form of a wealth tax. Taking people’s private property—Jefferson might not have been able to help write the constitution , etc. We might not even have Dave Chappelle, Jay-Z, Chuck Berry, the Rolling Stones, Beatles, etc. We wouldn’t have best selling books about the civil war, or films like ‘incident at owl creek bridge’ (my favorite civil war short film).
The basic idea of the OP in Vox i agree with—a wealth tax needs to be ‘well considered’ (though that is difficult because its a political, not only logical problem—the logic i think is easy, but that is only in the ideal world without humans—if you try to include the logic of humans in your model, its more difficult, and almost intractable. ) A small wealth tax i think might just be like having a small ‘gas guzzler (or carbon) tax’ or ‘sin taxes’ (eg on cigarettes), or even a ‘meat tax’, ‘McMansion tax’, ‘commuting tax’—you have to pay for big roads and environmental devastation , etc.
The problems with FDR’s ‘new deal’ (SSI, etc.) and LBJ’s ‘great society’ and civil rights legislation (eg recent suit by Asian americans against Harvard for discrimination) shows how difficult it is to figure out what is the best policy. (In economics, one also has the issue of tarrifs, energy and climate change, and so on.)