Too Wealthy for the Public Weal
A reader with (considering the question) the very appropriate name of Moore writes in to ask:
Economically and socially speaking, is there any amount of wealth that is ‘too much’?
Here’s the analogy: we have a right to bear arms. Nonetheless, I can’t own a fully-functioning tank, or an MX missile, or a nuclear bomb. And most of us (I presume – please correct me if I’m wrong) are OK with that. There’s a limit – someplace – to what it means to ‘bear arms’, and hunting rifles are within it and F-16s are beyond it.
Similarly, we have a right to property. Now we don’t often see someone who controls $10B as being as dangerous as someone with a squad of M-1 tanks, but my question is: why not? As someone who has spent years in the finance industry, that rich man, and what he is capable of, is every bit as scary and dangerous as somebody with a hundred fully automatic assault rifles, probably more. For if the guy with the assault rifles decides to, he (and 99 of his buddies) could take over a city kill some people, until the police, the national guard and the other armed citizens take them out. The guy with a few billion dollars, with a few of his buddies, can, say, bring down the economy in order to profit by having bought ‘insurance’ that only pays off if the economy collapses – and then get his people in the government to fund the payoff of his insurance. Millions of innocent people lose jobs, pensions and billions of dollars in the value of their holdings and we all inherit trillions in debt as a result of these moves. More or less – this is the ‘atomic bomb’ level. Something like this did just happen.
So – and this is a real question – in theory, would it be prudent to limit the size of personal fortunes at some very high level, say $250M? I understand that in practice this would disastrous unless our current government, and, indeed, our citizens were profoundly changed for the better.
I think of this as sort of the personal equivalent to ‘too big to fail’ – I think that any company that is too big to fail is too big to exist. It is extraordinarily difficult for even the most honest business to remain insulated against the problems of the giant corporations that have been bailed out.
Your argument rests on the implicit assumption that the right to bear arms and the right to own property are both ‘rights’ and therefore if some reasonable restriction on the right to bear arms can be, without injustice, imposed if done wisely, likewise some restriction on the right to own property can be imposed if done wisely.
Like most argument, the argument follows if and only if the two rights are of the same kind and nature, such that what is reasonable for one is reasonable for another.
Yet a moment’s reflection will show this is not the case.
The right to free speech is a limited right, because certain types of speech, namely libel, or publishing the sailing times of ships in wartime, (1) do such harm and (2) do not serve the purpose free speech serves (to safeguard liberty).
On the other hand, the right to life is an unlimited right, because no man, merely by living, abridges the purpose of the right to life, or necessarily poses a threat to any other life.
Also, a limitation on freedom of speech which, in the case of libel, restricts a man to speak the truth (because the truth of a statement is in common law a defense against libel) or, in the case of publishing sailing times of warships to an enemy in wartime, restricts a man not to use his power of speech to aid and abet an enemy, such restrictions are no more than prohibitions a just man should welcome in any case. But a limitation on the right to life, saying that this man or that negro or this Jew or that unborn baby must not exercise his right to life, is to kill him. So the nature of the restriction is different.
Using the law to stop libel is not the same as using the law to commit infanticide and genocide.
In short, when discussing what, if any, restrictions can be placed justly on any right, the nature of the right must be discussed. We must say what the right is, what purpose it serves. Then say what the nature of the limitation is, and what purpose it serves.
Hence, in order for your argument to carry weight, you would have to identify what property is, and what the limitation on property is.
Property comes in two origins: it is the loot inherited from ancestors who conquered lands and enslaved natives, such as the landed gentry in England enjoy, or it is the fruit of labor admixed with property, which, in a free market, has its value to others measured by the money (gold) or paper substitute
(currency) other men are freely willing to trade for it in exchange.
Of the first origin of property, there is no need to speak. Either all property anciently seized from others is invalid, or the law must treat the owner at the time of the establishment of the state as legitimate. To do otherwise is war.
Of the second origin, it is readily seen that a limitation on ownership is an limitation on labor, and a limitation on the right to evaluate another man’s fruits of his labor, and exchange money or currency for it. It is, in fact, a limit on the right of a customer to buy that man’s goods or services, or a limitation on that man’s liberty to do what he wishes with his vital powers and his mortal lifespan on Earth.
Now, in all honesty, there are restrictions on the right to property, and they are, in common law, wise and just.
For example, if the King wishes to make a highway through your living room, the power of Eminent Domain grants His Majesty the right to compel the purchase. Nor do I think it is hard to tell the deference between uses of this power, in order to seize land for some public work, such as a fortress or post road, and abuses of this power, in order to seize land to give it to a shopping mall developer who is a crony of the County Commissioner. Unfortunately, such abuses are common these days.
Another example of the limitation of property is that no man can own property which is owed as taxes. The use here is a neutral tax for the purpose of raising public revenue; and abuse is confiscatory taxation, or sin tax, or some other tax used to manipulate the economy or to levy fines without due process of law. Unfortunately, such abuses are common these days.
A third example is the impounding of property or livestock used in a crime. The use is seizure for evidence or the make restitution. An abuse is to impound goods to fund police efforts, which, in effect, rewards them for looting the innocent. Unfortunately, such abuses are common these days.
But your argument here is that the ownership of property above a certain proportion or amount in and of itself poses a danger to the public weal. You invent an unlikely scenario of a man able to make money from the collapse of the economy uses that wealth somehow to create a collapse.
Look at history. All economic collapses have been caused, every single one, by the exact same economic phenomenon: government interference in the credit cycle, government devaluation of currency, government taxation. So, in reality, the best defense against the economic collapse you fear would be to restrict insofar as possible the right of the state to seize moneys and interfere with credit.
Which is the opposite of your hypothetical.
Look at real life. Who has so much money as you mention? Did they come by it honestly? Or did they come by it by bribing politicians and regulations to pass laws and regulations to abolish competition and reward them a monopoly?
If the second is more prevalent in history than the first, (and I assure you that even a cursory glance at history proves this beyond doubt) then the surest security against the economics collapse and the heaping up of unearned wealth is to abolish insofar as possible the state’s ability to micromanage the economy, or make regulations for frivolous or corrupt reasons, such as wage and price controls, pro-union regulation (which is the same as pro-thuggery regulation) and ecological scaremongering, and government created and granted monopolies.
So, excluding economies that collapse due to state meddling with the credit cycle (which, by the way, caused both the Great Depression in the 1930’s, the Dot Com bust in the 80’s, and the Housing Market Collapse of the Noughts) and excluded fortunes gained by Obama-style and Nazi-style crony capitalism, what are we left with?
We are left with a complete bugbear that has never existed in history and is so unlikely that to take legislative steps to forestall the danger would be worse than useless.
Honesty businessmen amassed great fortunes by producing some good or service that a large number of people wanted very badly, such as Ford producing cars, or Standard Oil producing cheap and easy ways, much cheaper than whale oil in kerosene lamps, to bring light and heat and cheer into every household, even the poorest. These benefactors of mankind rank equal with the most famous medical geniuses or generals who saved their nations in war in terms of the number of people they served, and the quality of life that was exalted.
Now, suppose you were a gold prospector living in a tent in the cold wasteland of the Old West, who, having struck gold by pure chance, takes up the lovely nugget and travels on mule back to the nearest town. This is a town which grew up at the mouth of a coal mine and the depot of a rail line, let us say, and the richest man in the country, Andrew Carnegie, owns both the coal mine and the rail line. Just for the sake of argument, let us suppose that he dug the mine himself with his bare hands, and laid the track of the rail line.
Entering the town, you discover that a new method has been invented by Carnegie to extract power from coal and distribute it through electrical wires to every house and cottage in the town, and also to power the trains. It is not perfect, for nothing in life is perfect, but it is so much better than the wind power used by sailing ships and the muscle power of horses to haul goods across the wasteland to Eastern factories and markets, that there is no comparison.
Got the picture? Is there anything Mr Carnegie has done wrong? Is there any danger to the public weal so far?
Now let us change the picture slightly, and say that these services are so very valuable, that Mr Carnegie controls the exact amount of money which the law you propose would forbid in the name of the public weal. Suppose it is one gazillion dollars to the penny. Carnegie wastes tens of thousands of accountants and money-counters on staff to make sure he is always one penny short of the dreaded amount which would run him afoul of the law. In other words, every in town is a customer of his, uses his powerhouse, or uses his rail line, or buys something from someone who does.
Here you are, a rich but dusty prospector. You stink, you want a bath. You thirst, you want whiskey. You hunger, you want food. You crave a fat cigar and a slender dance hall girl to sit on your lap. The purchase of all these commodities and services are legal (even the dance hall girl, provided she only perches on your knee, and you watch your hands).
Are you with me so far? Is there anything in this hypothetical which is slanted or untoward or absurd? Is it a legitimate question?
Okay, next: you walk into the bar. The whiskey was brought in on the train, and if you buy it, Mr Carnegie will earn five cents from the five dollars the bottle costs. The bartender, an employee of Carnegie, instructed not to allow his boss to run afoul of the law, must forbid you from buying his wares.
Likewise, the hot bath. The meter is connected to the power house, and Carnegie would get a penny if you filled up the tub. Likewise, if you turn on those newfangled electric lights which draw on the cheap and freely available power Mr Carnegie has created by the sweat of his brow. Likewise, everything else. Even the dance hall girl came here on one of his trains.
The only way Mr Carnegie can stay within the bounds of the law is by denying you goods and services that you want and crave and even need. The law fears his wealth, and the law makes him poorer than he otherwise would be. But, if his wealth is of the second kind, honestly earned, and not of the first kind, raped and looted, then the only way to make him poorer is to make your poorer.
So your nugget of gold is no good in this town, old man.
Let me repeat: your argument only makes sense if we, like Marxists, assume that all property is property of the first kind, all property is theft. When property is theft, the law can make the theft poorer and make his victim richer by taking the stolen goods and returning them to their true owner.
But that is not the case outside the hysterical madhouses of Marxist pseudophilosophy. In real life, property is of the second kind, the wealth gained by creation and by mutual trade for mutual benefit.
When property is honest, the law can make the creator of wealth poorer by making and only by making the customer and partners he serves and benefits poorer. That is the nature of the limitation we are discussing.
A final word: You use the analogy of a corporation being ‘too big to fail.’ You reason that bailouts of companies that are too big to fail are wrong, and in this you see clearly, for they are wrong.
But you then take an illogical leap when you assume that what makes the company too big to fail is the company’s bigness, that is, the company’s success. You then imply that in order to halt the evil of bailouts, we must halt the cause of bailouts, namely, the growth of successful companies.
The very opposite is the case.
It is not the growth of successful companies we must stop in order to serve the public weal. Indeed, we must encourage failure of failed business in order to minimize waste, and allow the natural flow of capital and assets away from wasteful and useless lines of enterprise toward rewarding lines of enterprise.
An enterprise only fails to retool and revise its business in the face of changed public demand for two reasons: incompetence and coercion. An incompetent enterprise is poorly run, and loses money. In the normal course of events, it would be sold to a more competent competitor.
The other reason is coercion.Unions, either through direct threat of violence or by means of laws which unjustly favor them, forces management to make economically unwise decisions, namely, ,to pay the Unions more in wages and benefits than their labor, in the eyes of the customers, is worth. It is a racket. The customer money would naturally flow elsewhere, unless laws and regulations prevent it. A company mired in economically foolish (or even suicidal) Union obligations is not allow to economize and retool and serve the customers as the customers wish.
The whaling industry, at one time, was America’s primary industry, employing countless sailors and whalers. Standard Oil found a method of refining and distributing petrol in such low prices, that whale oil needed for kerosene lamps fall out of demand. Had the whalers in those days been unionized, the union thugs would have bought a politician, and the politician would have busted up Standard Oil, and raised the price of oil to the customers, making them pay for whale oil which they did not want or need. Standard Oil would have been “too big to fail.”
What “too big to fail” really means is that Union parasites, upon killing the host upon whose blood they feed, turn to their bought politicians to force the taxpayers to transfuse their blood into the corpse and keep it alive for another season.
Such bailouts are merely a crime on a wide scale. In a sane and uncorrupted society, the union extortionists and their bought political henchmen would be hanged, and the newsmen who spread and tell the lies that justify and hide the crimes be horsewhipped.
There is no such thing as “too big to fail.” It is a lie, and a silly one. There is such a thing as “too much political corruption to fail.” That is what we are experiencing these days.