An Embarrassment of Riches
By letting markets control our destinies, we've lost sight of what it means to be "rich enough."
Since the dawn of civilization, markets have been ubiquitous. Many of us have benefited from their focus and efficiency. Yet two widely held beliefs — that markets are best left unregulated and that markets are inherently benign — are naive and outdated. In fact, all markets require some regulation; and it is as likely that there will be clear winners and losers, as that all will benefit from a market economy. For many, perhaps most, Americans, markets are sacrosanct. Most people in the United States cannot even envision a society that doesn’t revolve around an untrammeled market. In interviews with Americans (particularly young Americans), my research team has found a widespread assumption that any governmental intervention is bad, that the most accurate measure of success is how much money you have accumulated, indeed that general merit can best be gauged by one’s net worth — with perhaps an exception made for Supreme Court justices. People find it hard to believe that chief executive officers and star athletes did not always earn millions, that the marginal tax rate on high incomes was once more than 90 percent, and that some lead happy lives without numerous cars, homes, and private-school educations.
The accumulation and cross-generational transmission of wealth in the United States has gone way too far. When a young hedge-fund manager can take home a sum reminiscent of the gross national product of a small country, something is askew. When a self-made entrepreneur can accumulate enough money to, in effect, purchase that country, something is totally out of whack. It’s impossible to deny that market fundamentalism has gone too far.
There are two modest and generous ways to change this situation. First, no single person should be allowed annually to take home more than 100 times as much money as the average worker in a society earns in a year. If the average worker makes $40,000, the top compensated individual may keep $4 million a year. Any income in excess of that amount must be contributed to a charity or returned to the government, either as a general gift, or targeted to a specific line item (ranging from the Department of Veterans Affairs to the National Endowment for the Arts).
Second, no individual should be allowed to accumulate an estate more than 50 times the allowed annual income. Thus, no person would be permitted to pass on to his or her beneficiaries more than $200 million. Anything in excess must be contributed to charity or donated to the government.
To those who would scream "foul" to such limits on personal wealth, I would remind them that just 50 years ago, this proposal would have seemed reasonable, even generous. Our standards of "enough" have become irrationally greedy. Were these proposals enacted, I predict that they would be accepted with amazing speed, and individuals would wonder why they had not always been in effect.
As a society, we would be sending an unambiguous sign that we believe no individual or family should be allowed to accumulate unlimited wealth. In addition, we could use the newly available billions — indeed, probably trillions — to begin to solve the problems about which others are writing in this collection of solutions to save the world.