Words of occasional wisdom from Bruce Oakley

Isn’t it rich?

Posted by boakley59 on October 3, 2008

Wealth has been on my mind more than ever lately, what with news dominated by global financial worries and a presidential campaign seeking to address them, and my own illness making it harder and harder for Suzy and I to make ends meet.

All of the argument eventually comes down to who should pay how much for what, and whether the governmental decision to help those who can’t afford to pay for a particular service can be made fairly. The assessment of fairness depends on whether the service is a right or a privilege, and so on. One way or another, the essence of our system is a redistribution of wealth. The debate hinges on who controls the redistribution.

The simple truth is those who have more can afford to share more. Our system is driven by the principle that we should all try to accumulate more; sharing is not our driving aim. The question that must be examined is whether individual success ends with accumulation: How much does any individual need, and how heavy is the obligation for those with an overabundance to help those with less meet their needs?

The existing redistribution is working backwards: Those with more are sharing less and those with less are increasingly burdened. I stumbled upon Warren Buffett being interviewed by Charlie Rose on public television recently, and he described our tax system as “crazy.” He said people like him were paying a lower share of their new wealth than ever in capital gains taxes, while the people in his office who emptied the waste baskets were being squeezed tighter and tighter by income taxes. He spoke of possible acquisitions he considered in the current financial crisis and noted that he would have been happy to have bought into some of the struggling corporations if he could have done it for a mere $5 billion or $10 billion. He chuckled that he wasn’t shy about such casual spending. This is the kind of wealth he deals with, and yet his tax bill barely touches what he considers pocket change.

When the people who profit from our system laugh at it and say it’s broken, we need to start over. If we want to pay for such things as our children’s education, our transportation and energy infrastructure, our individual, national and financial security and so on, most of our taxes must be targeted where most of the money is. That’s not a problem of some misguided attention to the supposedly envious poor, that’s a problem of mathematical certainty. We’re working at the wrong end of the funnel.

When I hear the charge of a tax policy being a misguided attempt by the merely envious to unfairly redistribute the wealth, I like to do some quick figuring. Most of us do want more money, so there must indeed be some envy of those who have more, but numbers can put in perspective whether that envy is truly the crucial factor.

I like to start by trying to understand how much $1 million is. That’s about $3,000 a day for a year. When I think about spending $3,000 a day for a year, I wonder how I would do it. I could buy a house, a car, a computer and loads of big-ticket items and still have months of spending left over, though of course I could buy the biggest, most extravagant versions of those things and have nothing left. But the gulf between my spending now and $3,000 a day is enormous, and I could make myself quite comfortable and secure with plenty left over, without buying extravagant versions.

I wonder what any human being needs with $1 million. Much of humanity now endures on less than $2 a day. Someone earning $1 million a year can spend to match 1,500 of those lives. How many is 1,500? That’s twice the enrollment of the high school I attended. It’s more than five times the number of newsroom employees at Arkansas’ largest newspaper. It’s a lot more than the biggest groups that have been a part of any of the typical days of my life.

In a longer view, $1 million is a cumulative earnings target I might have reached in the next several years had my illness not halted my career. I got about three-quarters of the way there, starting with summer jobs in 1977. So, $1 million is more than 30 years of work for me.

As a practical matter, $1 million would buy my house outright and leave something like $800,000 still to spend. At an annual rate of only a few percent, interest earnings on that remaining $800,000 would match our household income. Someone with $1 million could buy my house and use the interest on the remainder to acquire my financial position, minus the most significant debt I struggle to pay.

About my house: It holds more bedrooms than people. Also more bathrooms, phones, TVs, computers, calculators, clock radios and musical instruments. It contains one microwave oven, refrigerator and dog per person. We struggle to make the mortgage now, but there is no mistaking that we live quite comfortably compared to the masses enduring on $2 a day.

Do I want to take from someone else’s $1 million just so that I can be more comfortable? No. My point is that when my comfortable life could easily be absorbed by someone with an even more comfortable life, we are failing each other when our system widens the gaps that separate that millionaire from me and me from those struggling to eat.

The wish to redistribute the wealth is not a sign of human frailty. It is exactly the opposite: It is a recognition that we understand how much any of us really needs and that we give from our excess to lift up those with less. Much is expected of those to whom much is given, and it is they themselves who should drive that expectation.

Leo Tolstoy wrote a short story about greed called “How Much Land Does a Man Need?” The question’s sobering, obvious and undeniable answer is that a man needs just enough land for a grave. When we’re trying to figure out who the rich are or whether one group or another should pay more or less taxes, let’s admit that those of us who aren’t under the ground yet have enough and let’s let arithmetic help us share our abundance.


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