How much is enough?

Would NZ$20 million do it?

Ingrid Robeyns’ book, Limitarianism: The Case Against Extreme Wealth, is 230 pages of mind-bending information (plus 50 pages of notes and references). She’s all for capping personal wealth. Some call this outrageous; others say it can’t come soon enough. Still more say it’s a serious discussion we need to have.

Robeyns’ idea wasn’t the whim of an afternoon. It’s based on 10 years of her own research and collaboration with colleagues during her time as chair of ethics of institutions in the faculty of humanities at Utrecht University in the Netherlands.

In the course of her research, she interviewed hundreds of people, including many wealthy people who agree with her. (Those who want to hold on to all their cash were more reluctant to speak.)

The first thing we need to get our heads around, Robeyns says, is just how rich the super rich really are. Using the 2022 statistics in her book, there were 2,668 billionaires on the famed Forbes rich list. On average, the value of their assets was $4.75 billion. It would take working folk 45 years of 50-hour weeks, year in, year out on $40,598 an hour to accumulate such wealth.

I can’t possibly do justice to the book in the bit of space I have here. I’ll just say if you’re intrigued by the idea and want to learn more, get the book! This article and this article will give you a taste of it.

Robeyns says we’ll need action on three levels: structural (eg, guaranteed minimum wage and affordable, universal health care), fiscal (eg, fair and effective tax systems) and ethical (eg, embracing a limitarian ethos).

Early chapters delve into extreme wealth and its impacts: ‘It’s keeping the poor in poverty while inequality grows’, she writes. ‘It’s about dirty money’ (think transatlantic slavery, heads of state looting their own countries, Russian oligarchs and money laundering, the Panama Papers and business practices that deliberately cause customers harm). ‘It’s undermining democracy’ (having the US billionaires in charge, how’s that going?). And ‘It’s setting the world on fire’ (climate change and the impact of luxury yachts, private jets, multiple homes/mansions, and consumption to the max, not to mention the egregious behaviour of the fossil fuel giants and air travel as a growth industry generally).

Later chapters dig us out of this depressing hole. Chapters like ‘There’s so much we can do with the money’, ‘Philanthropy is not the answer’ and ‘The rich will benefit, too’. The final chapter looks at ‘The road ahead’.

Robeyns says the ‘political’ limit/cap (one that societal structures and the fiscal system should enforce) should be €10 million in her country, the Netherlands, given the social support and safety nets available. Caps would vary country to country, each deciding as they wish, but this is a good guide be it in euros, pounds or (US) dollars. This would put the cap at about $20m in New Zealand. (Kiwis with this level of wealth are considered in the ultra-wealthy echelon locally, so no one will suffer. This is the considered work of a thoughtful academic, not a communist takeover. Change will take time.) Robeyns also proposes a lower limit individuals could set for themselves. This is where ethics would come into play.

Let’s for a minute consider some things we could do with all that money. Governments wouldn’t get to decide. Citizens’ assemblies would. Here are a few suggestions for them.

Rebuild Gaza. Not a Riveria-type development for Trump and his mates, of course, but infrastructure, services and housing for Palestinian residents. The UN and World Bank put recovery and reconstruction costs at US$71.5 billion. Just 8.5% of Elon Musk’s $839 billion net worth as reported recently by Forbes would do it. Obviously there should be similar projects for other areas in need.

Deliver on promises. We need to dramatically increase the provision of funds from the wealthy Global North to countries in the Global South as compensation for loss and damage caused by climate change. The focus should be on adaptation and resilience in vulnerable nations. Grants, not loans, are in order.

Go public. Renewable energy-driven public transportation as a worldwide phenomenon. Comprehensive route systems and high-frequency service will be necessary to compete with the private automobile. And it should be free. While we’re at it, let’s embrace the bicycle as a integral part of the transportation system everywhere.

Get up to speed. I reviewed The Good Ancestor: How to Think Long Term in a Short-Term World in an earlier blog. Long-term thinking and a limitarian ethos have a lot in common. I suggest a free copy for every adult in the wealthy Global North. Not just to read, enjoy and shelve, but to be discussed with others and acted on.

The book’s author. Roman Krznaric, suggests we hold good ancestor conversations, considering questions like: ‘What legacy do you want to leave for your family, your community and for the living world?’ And, ‘What long-term projects could you pursue with others that extend beyond your own lifetime?’

We all have a part to play.

Gord Stewart is a sustainability consultant with a background in environmental management and economics.

Thinking Local & Public Good

Of the 38 OECD countries, 79% have a comprehensive capital gains tax (CGT). New Zealand is not one of them. In fact, we are considered a primary outlier. Here’s a little exercise showing what we might accomplish if we had one.

Fonterra just sold off its Mainland Group retail brands to Lactalis. The average payout to dairy farmer shareholders was $400,000 as a tax-free capital return. No doubt some will be used for farm improvements and to pay down debt. But most of the farmers I know would be considered comfortably wealthy, so it’s perhaps just a bit of a windfall gain for them.

Let’s go with a 28% CGT – that’s $112k of the $400k in – and look at putting that money toward cataract removal surgeries. Current government policy will normally pay for one eye. Those who wish to have the second eye done, and can afford it, will pay about $5,000. (One ophthalmologist with a wry sense of humour calls them the ‘government eye’ and the ‘private eye’.) Other patients who can’t afford the ‘private eye’ will be left with compromised sight. In this case, CGT collected from the returns to one Fonterra shareholder would allow the government to fund the second eye for 22 people. Twenty-two deserving Kiwis with healthy, improved vision provided by the public health system. Now multiply that by a CGT on all 8,000 Fonterra shareholders and we have some serious gains in individual health and well-being.

We could use some CGT funds to reduce the wait time for all sorts of other treatments and operations. And we could remunerate all our health care professionals, social workers and teachers more, making it easier to keep good people here and improve our chances of luring much-needed professionals from overseas. The list goes on.

Reducing inequality and using CGT funds wisely in public services can only be good for the country.

Postscript: One local farming family has funded a new state-of-the-art ambulance for St John emergency services. The cost is about what the family would have realised through Fonterra’s recent sale. This gift is a good example of Robeyns’ idea of individual ethical action.