Wealthy Bullies

From Zanecorpwiki

TODO: the ponderings on the LMB to it's own thought and reference.

One of the perennial arguments against raising taxes on the wealthiest proposes that raising taxes will reduce incentives for the rich to make money, which means lowered investing and ultimately a weaker economy. I've never really understood this. More money is more money and you're only ever taxed on profits. At a certain stage--and you don't have to be very wealthy to reach it--you're making as much money as you can use. One could calculate this number quite precisely in fact. My guts says it's around $100,000 dollars.

Let's call it the limit of marginal benefit, or LMB. After this point, the utility of additional money falls off rapidly because there's nothing else to buy. If you can afford a house, a car for every member of your family, comprehensive health insurance, a suite of appliances, and a reasonable amount of luxury.ref group=notesThe idea that luxury can be reasonably limited is really the only controversial part of this idea. I base it's reasonable assertion on two points. First, one's ability to enjoy is strictly limited by time. Second, enjoyment is further limited by a natural decrease on return that happens in any economic system when pushed past it's natural efficiencies. Getting a foot massage is infinitely better than no foot massage. Getting a foot massage by a decent practitioner is a lot better than one administered by a novice. A good massage is better than a competent one, and an great massage is a little better, but the greatest massage on earth is only a small, tiny fraction better than the previous step whereas the very step was huge. In other, words, even assuming unlimited resources, there is a natural limit to any enjoyment, and therefore a limit on the wealth required to move one to that limit. Further advance along the line take geometrically more wealth for quickly disappearing returns./ref

Given this context, I it's hard to read something like this as a bully's threat. In other words, there's no rational reason why the wealthiest individuals who are way beyond the level of wealth required for any amount of satisfaction and are therefore simply playing a game of biggest number would care about additional taxes. Tax them as heavily as you like and there's no functional difference in their individual utility.ref group=notesInsanity would be the only exception./ref. There's no economic argument for why higher taxes on empersonal/em income would hurt the economy, so such a statement can only be a threat. You best not raise our taxes our you'll be sorry!

Today I read an article on rules that would increase corporate democracy and end the practice of putting only one nominee for each position on the ballot of a publicly traded company. This could cause problems was one of the themes of the article. I was very interested to see what these problems could be. Since I couldn't see any problems with the proposal, I thought I might learn something truly new--which is very exciting.

Instead, I realized I was just failing to be cynical. The problem was an entirely artificial threat by wealthy individuals to refuse to run. Why? Because they might be beat. It was at this moment that the idea of wealthy bullies crystallized in my mind. Who but a bully refuses to enter a contest unless victory is assured while all the while boasting at their prowess?

It's a quite pathetic argument. The unfortunate side is, of course, they can hurt the companies they refuse to run for. The fact is that much of what we call business is run entirely by social networks controlled by rich individuals. Companies (to a varying degree in any case of course) gain and lose as many contracts as much by who's on the board as they do by any meritorious aspect of their operations, products, or services.

Notes

references group=notes /