This month at an auction in Switzerland, a record was broken for the world’s most expensive wristwatch. One sold for $31 million.
Just take a moment to think about that: $31 million, for a wristwatch.
To be sure, it’s a very nice watch. It has a salmon-colored face, it chimes, keeps track of multiple time zones, has a moon phase indicator … it’s actually reversible, which is pretty cool … $31 million.
School districts run for less than the cost of that wristwatch. Houses can be built. Roads paved. Public parks established. Police hired. Children fed.
There are many, many, things you can do with $31 million, all of which are — by any objective measure beyond what sells at auction — more valuable than a wristwatch.
Which suggests to me that money no longer has a meaningful relationship with “value.” The question of just how much “value” money can adequately represent isn’t new, but it may have reached a point of absurdity: so much money now belongs to so few that it has warped the relationship between money and value. We’ve been able to observe this for a while; the financial markets have, over the last 30 years at least, basically been set up to reward short-term hype over long-term profitability. Witness how much money gets invested in tech companies with no viable business model — Uber has always operated at a loss — while small, local businesses that actually both generate revenues and jobs and value for their communities are driven under.
If you want to understand why our economy is going so haywire, it is in no small part because money simply no longer follows value in any meaningful way. On the contrary: it has been sucked away from things of value to fund other things.
It is with that in mind that I want to look at Elizabeth Warren’s wealth tax.
Her proposed taxes only start taking effect after the first $50 million a person has earned — but Wall Street tycoons and billionaires are up in wristwatch-clad arms, telling us that the ability to make less money after the first $50 million will discourage entrepreneurship and innovation.
Which, I’m sorry, but why?
In fact, given how little money actually relates to value at this point, does someone being less ambitious about making a second $50 million actually hurt us? Frankly, at this point I wouldn’t mind if our corporate overlords were a little less rapacious.
According to a report from the New York Times, if Warren’s wealth taxes had been in place since 1982, Bill Gates would have been worth $13.9 billion last year instead of $97 billion, Jeff Bezos $48.8 billion instead of $160 billion.
And I’m struck by the question: what can’t you buy for $13.9 billion? Literally, what?
On a practical level, in the way one’s day-to-day life goes, what is the difference between having $48.8 billion and $160 billion? Can you name one thing that you can get as a $100-billionaire that you realistically can’t as a $10-billionaire?
I honestly can’t. The extra $90 billion is completely divorced from anything of actual value. It’s just a number, a way of keeping score.
If it were to be put to use — put to work — funding schools or cleaning the environment or saving lives, then it would be connected to value in some way. It would do something. It would mean something.
High wealth taxes aren’t anti-American or Socialist; we had tax rates approaching 90% on extreme wealth in the 1950s, which were also the height of the anti-Communist period in this country. And a time of significant economic prosperity. When that money is put to work by and for the country, everyone prospers and the value of things increases.
But when that money is hoarded on a billionaire’s balance sheet? It doesn’t improve the billionaire’s life in any material way, but it warps the rest of the economic system. Schools don’t get funded, the middle class disappears and wristwatches cost $31 million.
We are promised in this country life, liberty and the pursuit of happiness. A wealth tax like the one proposed by Elizabeth Warren does not interfere with any of these for billionaires, but the way in which the concentration of immense wealth warps money away from value directly interferes with the ability of millions of Americans to access these things: health care is crucial for life, a functioning political system is needed for liberty, and if all the wealth is being spent on executive compensation and wristwatches to the point where a functioning middle class is impossible to preserve, then happiness is mostly out of reach.
Many Americans have been called on to give up their lives so that the promise of life, liberty and the pursuit of happiness may endure. Others, who have benefited so much from this nation, can be called on to pay a few cents more on every dollar earned after the first $50 million. They’ll still be able to buy wristwatches.