Reimagining capitalism

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Continued from last week.
Concerning tax issue, a group of supper rich American businessmen including investor George Soros, Facebook’s co-founder Chris Hughes, and Molly Munger, daughter of billionaire Charlie Munger recently wrote an open letter stating that “America has a moral, ethical and economic responsibility to tax our wealth more,” The group said in their open letter that “A wealth tax could help address the climate crisis, improve the economy, improve health outcomes, fairly create opportunity, and strengthen our democratic freedoms. Instituting a wealth tax is in the interest of our republic.”
As reported on BBC, among the 18 signatory of the “Open Letter” were a descendant of Walt Disney and the owners of the Hyatt hotel chain. Many in the group have been associated with progressive initiatives on issues such as climate change and the growing wealth gap. The letter pointed out that fellow billionaire Warren Buffett has said he is taxed at a lower rate than his secretary.
Fresh off pondering the future of billionaires, Bill Gates recently went on Stephen Colbert’s eponymous show with his wife, Melinda, to a crescendo of cheers. In accepting his new role as the world’s second-richest person, he quipped, “We’re trying to give it away faster” and the audience swooned. From their call for higher taxes on the superrich to the obligations of the successful to the empowerment of women, the applause kept coming. By the end, Stephen Colbert was playfully goading the Gateses to run for political office.
Compare that with Amazon. Its founding Chairman, Jeff Bezos worth over 130 billion dollar (at least until his divorce settles), and Amazon is worth $800 billion. Why extract a measly 3 billion dollar in corporate welfare from New York? In the truest Friedman sense: because he has shareholders – and he could.
Naomi Klein, the well known author of “The Shock Doctrine” stated that the dueling reactions underscore an American truth as timeless as Astor and Cooper and Rockefeller: Americans expect their meritocratic royalty to remain accountable to the public that helped create them. Traditionally, that means philanthropy, an aspect of extreme success (there are now 137 deca-billionaires in the world) that no longer feels optional, albeit one that still engenders cynicism. Says Gates: “The attack that ‘Why should you even have a say in setting the agenda?’ That has a certain resonance to it.” For Bill Gates, who within our lifetime will likely be regarded as the greatest philanthropist ever, accountability starts with framing the role: “picking novel ideas” or “off-the-wall theories,” as he says, and then proving that the concepts work, or don’t, taking the kinds of risks that no taxpayer-funded government or shareholder-dependent corporation could justify.
But in this era, Gates also recognizes that motives will be questioned. “If we come and improve math class, then people are like, ‘Hey, you didn’t do the band ” Bill Gates says. For this reason, Gates tries to hold himself publicly accountable through transparency, including a public letter from the foundation that he and Melinda write each year. It’s also the driving reason for the Giving Pledge, in which 189 of the world’s wealthiest people have affirmed, for all to see, that they will give away at least half of their fortunes, most much more.
A Giving Pledge signatory, Salesforce founder Marc Ben¬i¬off has similarly shifted from anonymous giving to putting his name on two hospitals, in part to be a role model for emerging tech billionaires and in part because “it sent a message that we’re supporting the community in a tangible way.” And he does the same thing with his company, which pioneered a “1, 1, 1” model that placed 1% of the company’s equity in a trust, along with a pledge to donate 1% of its software products and 1% of his 35,000 employees’ time to volunteer work. It’s a combination that’s generated $260 million in grants and 3.8 million hours for civic causes.
Paul Collier who author of “The Future of Capitalism: Facing the New Anxieties” stated that rather than rely on such voluntary munificence, Paul Tudor Jones, an American investor, hedge fund manager, and philanthropist who cut his philanthropic teeth founding the innovative Robin Hood Foundation in New York, has focused for the past several years on holding corporate America directly accountable for better capitalism. He founded Just Capital, which has surveyed more than 80,000 Americans in order to get a precisely calibrated take on what makes a good corporate citizen.
America’s older workers, it turns out, aren’t so different from its youngest, desiring companies to pay and treat their employees well, put out good products that have integrity, and care about the environment and the community. Just Capital ranks every major public company across its 36 criteria, from best to worst, proffering a Good Housekeeping-like seal to the top companies, in order to spur better corporate citizenry. Such remedies are urgent. “Unless we find a market-based solution to the exponential growth in inequality, we will end up with populist legislation that creates a hammer to go after every nail,” Paul Tudor Jones says.
Johan Norberg, the author of “In Defense of Global Capitalism” asserted that the great majority of American billionaires acknowledged that higher taxes on the billionaire set are inevitable; most even saw them as beneficial, if correctly applied. According to Bill Gates, Warren Buffett, and others, the correct way to levy taxes on the superrich is at a transaction point. Either an estate tax without the loopholes that currently render it useless or a higher capital gains tax applied only on extreme fortunes, to avoid suppressing growth.
And better yet, the tax code can be refined to encourage growth and spread it around more evenly. The launch of opportunity zones, engineered by the Facebook and Spotify billionaire Sean Parker, has already been put in motion, offering tantalizing tax breaks in needy areas of all 50 states. Adjusting corporate tax rates based on jobs created – more jobs, lower taxes – is another worthy idea.
The eternal beauty of the free market is its ability to evolve. Leave it to the most admired capitalist in the world, Warren Buffett, who has lived through more than one third of this country’s history and who bought his first stock in 1942, at a moment when it was conceivable the United States could lose World War II, to make a prediction: “The luckiest person that will ever be born in the world to date will be a baby being born in the United States today.” Bet against Warren Buffett, and capitalism, at your peril.