How can we, the 99.99%, in order avoid suffering the tragic consequences of any awful leveling events, coexist in a friendly and mutually beneficial way with the extremely wealthy 0.01%?

Edoardo Campanella reviews five books debating “the growing wealth gap between a narrow upper class and the rest of the human population” that which he argues may be the greatest economic challenge of our time. “Inequality and the Coming Storm” Project Syndicate, December 8. 

The books reviewed are: The Great Leveler, by Stanford University historian Walter Scheidel; Global Inequality, by CUNY economist Branko Milanovic; The Vanishing Middle Class, by MIT economist Peter Temin; The Broken Ladder, by University of North Carolina at Chapel Hill psychologist Keith Payne; and Plutocrats, by the former journalist and current Canadian Minister of Foreign Affairs Chrystia Freeland.

There are many origins of that wealth that feeds inequality, some abominable and odious, like crime and corruption, other, like Chrystia Freeland writes, “built their fortunes through hard work, talent, and discipline. But, once that wealth has been created, it can be destroyed by what Walter Scheidel calls the “Four Horsemen of Leveling”, exemplified by “the twentieth-century world wars, the Russian and Chinese Revolutions, the fall of the Roman Empire, and the Black Death, respectively. 

Surely the consequences of such horrendous levelers, especially for the much more numerous poor, cannot justify us ever wanting to get rid of inequalities that way… that is except if we have a need of a schadenfreude with masochistic characteristics. 

When Scheidel argues, “all societies eventually reach the level of inequality they can tolerate. Once this pain threshold is breached… Only carnage, chaos, and destruction can restore fairness in the system… extreme inequality yields only to extreme equalizers” our first and only concern should be, how on earth can we learn to live well and prosper in a world of runaway inequalities? 

Campanella, seemingly agreeing on that goal writes: “What can be done? Many commentators recommend improving the availability and quality of public education. Others have proposed more effective ways to tax wealth, such as a global tax on capital income, higher marginal tax rates, more aggressive estate taxes, or even a tax on robots. And still others are calling for a universal basic income (UBI).”

But Campanella is no optimist… “none of these will be a panacea. Educational policies take years to gain traction; taxing the global super-rich would require a level of international cooperation that does not exist today; and a UBI is simply unaffordable for most – if not all – governments.”

I instead, hopefully since I see no other remedy, think we do have a chance to coexist in a friendly and mutually beneficially manner with the unbelievable wealthy. But for that to happen there are some requisites:

1. We appreciate what inequality might produce. For instance when Campanella writes “Most of the great temples, royal palaces, pyramids, castles, and other monuments of history are the lasting evidence of past wealth disparities”, we should immediately ask ourselves whether those monuments would have existed at all without rampant inequality and, if our answer is no, would the world have been a better world for all of us? 

In this respect I had a wake up experience a couple of years ago when reflecting on a beautiful richly adorned but totally useless shield at the Museum of Louvre, it dawned upon me that most of it would not exist were it not for immense inequality. I suspect that Thomas Piketty, as a Frenchman, would not want to have sacrificed Louvre either, in the name of some unknown equality…we know the inequality we have.

2. We begin to understand that much of the wealth that exists cannot just be redistributed without the possibility of serious unexpected consequences. For instance what harm can it do that one person has now decided to freeze on a wall, with a sort of voluntary tax, US$450 million of his main-street purchase capacity, in Leonardo da Vinci’s Salvator Mundi? If anything we should go after those who got the US$450 million and see what they do with it… and if they pay their taxes. Those US$450 million on the wall should also help to raise expectations about the value of art, which might lead to some thousands of painters getting a dollar or more for their paintings, something which though it might not decrease inequality much, would in general be very good. (Disclosure, my daughter is an art consultant J)

3. We fully comprehend that all that wealth that, if it were ours, would surely help us to solve many of our daily problems, does not really guarantee its current owners one iota more of happiness.

4. We fight against all that hinders opportunities, like the risk weighted capital requirements for banks with which regulators have basically decreed inequality. In the same vein we need to combat all criminal or unproductive accumulation of wealth, like that obtained by means of corruption or the excessive exploitation of monopoly elements. 

5. And finally (especially as a Venezuelan) we have to fight tooth and nail against all the redistribution profiteers, those who instigate envy and class hatred only in order become themselves the neo-Plutocrats.

PS. And though for much more than reducing inequality, I do believe in a Universal Basic Income.

“The wealth of 62 richest equals that of 3.6 billion poorest” That‘s a deviously false odiously divisive argument.

I come from Venezuela where I have seen a discourse full of hatred, carried out by those who want to profit financially or politically from promoting redistribution, destroy a country. I cannot sit back and see the Venezuelan tragedy reenacted on a global scale.

As always in all useful lies there are traces of truth. Of course the market value of the possessions of the 62 richest, especially after being inflated by means of fiscal deficits bailouts and QEs, could be similar to that of the market value of the possessions of the world’s 3.6 billion poorest. 

But, what does that mean when there is no way to liquidate the possessions of the rich in the market, so as to be able to transfer a similar amount of wealth to the poor. What on earth does a $25 million dollar penthouse in New York, which only some equally wealthy can buy, signify to the poor in terms of access to a better life?

And what's to be gained from the wealthy selling all their Picasso's and the Picasso's losing a lot of value? How do you morph a $200 million Picasso hanging on a wall of a wealthy into real purchasing power for the poor?

So if we are to analyze wealth inequality with intellectual honesty in any concrete applicable way, we should refer exclusively to the inequality that exists in transferable wealth. 

And, besides that, I swear that, in years of life lived, air breathed, water drunk, land trampled, food eaten, laughs and tears shed, those 3.6 billion poor posses at least a billion more times than those 62 most wealthy.

And this does not mean I do not commiserate with the poor of the world, and would not like them to have much more resources available in order to diminish their hardships. I do so very much, and that is precisely why I insist that what we must do, is to analyze what type of interventions help to generate the existing inequalities, and what blocks the opportunities for the poor to reach up. And on that route, one of the most important steps is keeping the redistribution profiteers at distance.

And this does not mean I am against redistribution. In fact before we are able to enable the opportunities that can lead to a sustainable betterment for the poor, I accept the need of redistribution, even if that is clearly less sustainable. But, that redistribution should take place in the most direct and cost effective way among citizens… again with the least interference possible by redistribution profiteers.

In my Venezuela that starts by sharing out its oil revenues directly to the citizens so as to avoid these falling into the hands of redistribution profiteers like Hugo Chávez.

And again, much more important for the poor than having wealth redistributed, is the generation of more wealth for them, which can only happen by enabling their access to opportunities. 

And in the enablement of opportunities there is much to do. For instance we must ask whether open-ended patents, no profit limits, stimulates or blocks more growth and human creativity. And we must stop that odious regulatory discrimination against “the risky’s” access to bank credit. This last really decrees inequality.

And for the health of our planet's sake...keep all those non-productive climate change profiteers out of the way. As I have often said, if the fight against climate change fall into the hands of something like our bank regulators...we're toast! If we really want to help on all fronts, let the fight against climate change go arm in arm with that of the fight inequality, by using Universal Basic Income.

Did poverty in the world decrease over the last decades because the world redistributed wealth, or embraced the MDGs (Millennium Development Goals), or because many (like China) allowed their citizens more opportunities to generate wealth?

"Panama Papers" Don't let redistribution agitation profiteers raise your expectations.

Legend holds it that when Otelo Saraiva de Carvalho, chief strategist of the 1974’s Carnation Revolution in Lisbon, told Sweden’s Olof Palme: “In Portugal we want to get rid of the rich”, Palme replied, “how curious, in Sweden we only aspire to get rid of the poor”

My current list of prominent inequality drivers

I do not care about some having much more wealth than others, for instance having Picasso's on their walls that if taken down only had to go up on somebody else’s wall… and I fret where all those jobs which are based on obnoxiously expensive manual procedures would be were it not for the insanely wealthy… and, if there were no accumulation of wealth where would all those savings that can be invested come from?... 

But I do care profoundly when wealth is acquired by ways of opportunities not accorded to everyone... like mothers (and fathers), not getting any direct monetary societal reward, for their extraordinary efforts when staying home to lovingly take care of their children.

And here are some new non traditional inequality drivers of which I am currently most suspicious.

Intellectual property rights which give way to incredible fortunes… there should be some more explicit limits on these… like a maximum amount of profits covered … a fixed number of units produced protected… or at least that profits derived from intellectually protected activities should be taxed at a higher rate than profits derived from competing naked in the market.

Monopolies… profit derived from monopolies should perhaps be taxed at a higher rate than ordinary profits.

Market shares/globalization… profit derived from activities that have achieved especially large local or global market shares should perhaps be taxed at a higher rate than ordinary profits.

Financial returns produced by the fact that banks because of implicit government guarantees are able to hold less capital than other normal commercial entities should be taxed at a higher rate than ordinary on their profits… something which they could naturally avoid by simply keeping more capital. 

And then there are those regulatory inequity drivers like pushing quantitative easing flows through a banking system with risk-weighted capital requirements, which so much favoring what is perceived as absolutely safe so much discriminates against what is perceived as risky, and something which of course impedes that liquidity and credit gets to where it is needed the most.

And had it not been for bail-outs and QEs Piketty’s book Capital in the 21st Century would not stand a chance to have seen the light as so much wealth would have been wiped out. 

And then there is the wealth tax, which if applied in a system where inequalities like those explained above persist, will only end up concentrating wealth more and more among fewer and fewer Plutocrats.

And, of course, perhaps foremost, all those other sources of discrimination that exist and hinders some from having the same opportunities as others... and all those resulting from the many existing inequalities at the start point.

And the list goes on, and the list goes on.. most likely including the low interests too.

And I also utterly dislike those who are only out to make a buck on the redistribution of wealth. If there is going to be redistribution do it through a system that guarantees that at least 99% goes where it was supposed to go… and that it all does not end in the hands of for equality fighting opportunists

But before ending let me pose the BIG Q.: Professor Thomas Piketty. What’s better, to live in your own inequality, or in somebody else’s equality?