This presentation will be a Zoom Meeting: https://us06web.zoom.us/j/971381033
The Ethics of Extreme Wealth
Presented by Richard Dowsett
Current global wealth inequality is at one of the highest levels in recorded history, on par with those experienced in the Gilded Age (1870 to 1924), Feudal Europe (9th to 15th century) and the Roman Empire. The top 1% of adults command 43% of global wealth (1). But at the tippy-top of the global wealth pyramid are over 400000 (426330 in 2023 (2)) Ultra-High Net Worth Individuals (UHNWI’s) with net worths exceeding US$30M who command a staggering 19% of global wealth!
By way of illustration, for every US$1 million of the Global wealth pie, there are:
11272 adults taking an average slice of US$48.00
79 adults whose slice averages US$3367
and 1 UHNWI whose massive slice is US$190000!
BTW: if you’re not worth US$1M, you’re one of the 11272. 😉
So, the world is an unequal place. Tell us something we don’t know, right? Well, if you look back at history (Rome, 18th century France, 19th century Russia) huge wealth inequalities were at the heart of revolutions and massive societal declines. Alarm bells should be clanging. Current wealth inequality is perhaps made more galling by the reversal of apparent progress. The massive gains that were made to reduce income inequality in Europe, North America and parts of the other continents during the middle decades of the 20th century were lost over the past 35 years. Less a trend than a blip, it seems.
And wealth inequality at the top end is getting worse. 63% of global wealth gains since 2020 were captured by the top 1%. Between 2009 and 2022, billionaire wealth increased from US$3 TRILLION to US$13 TRILLION.
So extreme wealth inequality exists and is increasing unchecked but the question remains:
Is this inequality ethically problematic?
Suggested framework for analysis
1. The past sources of wealth. Can we make ethical judgements about the accumulated fortunes that now exist? Can or should these judgements be the basis for action? Can we apply today’s ethical standards to judge the legitimacy of past wealth acquisition?
2. Current wealth inequality. In what ways is the current wealth inequality a benefit to world society? Which of humanity’s goals and aims does the current system, that creates and sustains such immense wealth inequality, serve? In what ways is the current level of wealth inequality and the system that creates it costing our species and thwarting our goals?
3. Future of wealth inequality. Are there ways we can adjust current levels of wealth inequality and change the system for the future to prevent catastrophic change and serve the needs of humanity? Can these measures and changes be justified ethically?
Subsidiary questions
Past Sources of Wealth
At all stages in history, great wealth has been concentrated in those who have commanded great power and/or authority.
Historically, power and authority has been based in:
· Birth rite and tribal identity (Traditional authority)
· The ability to lead (Charismatic authority)
· The control of resources (Economic power)
· The ability to command force (Coercive power)
· The control over Ideas (Ideological and Cultural Power)
· Social Influence (Informal power)
· Positions invested with the power of laws & institutions (Legal power)
· Skills and talents (Rational authority)
1. Can sources of wealth be considered legitimate or illegitimate and thus ethical or not ethical?
2. Should restitution or reparations be enacted to counter specific unethical accumulations of wealth?
3. Can the concept of product liability settlements (e.g. Tobacco industry settlements at $200+ Billion, Purdue Pharma settlements for Opioid Crisis at $16 Billion) be extended to social liability with claw backs of historical profits based on costs imposed on governments by unethical acquisitive actions?
Current Wealth Inequality
1. How can the accumulation of extreme wealth be viewed as a positive sign of a healthy and thriving society? In what ways can it be seen as a sign of a sick and dysfunctional society?
2. In his (in)famous speech of the 2012 Presidential Campaign, Barack Obama said “You didn’t build that” referencing the idea that there is a societal wealth of institutions and infrastructure that underpin capitalism and make possible innovation and successful commercial activity. There is a debt to this societal wealth that must be recognized and repaid in the form of taxation to allow a nation to thrive over the long term. How true is this idea?
Future of Wealth Inequality
1. Is there a better way than income taxes to ensure large commercial enterprises pay their fair share? Would charging them fully for the public services they consume, the common elements they employ and the externalities they create be fairer?
2. What about wealth taxes and inheritance taxes? Up until 1975 the USA had inheritance taxes up to 77%. Canada abolished most estate taxes and succession fees in the 1970’s. European countries had very high estate taxes through much of the 19th and 20th century and some still do (Belgium, France, Spain, UK) though not at the same high levels. What are the ethics of inheritance taxes?
3. Income tax rates on high incomes are still officially high in the OECD countries (45 to 75%) but effective tax rates can be much lower. Elon Musk’s effective tax rate from 2014 to 18 was 3%. Jeff Bezos’ was 1%. Corporate tax rates reflect a similar reality. Can such free-ridership be ethically justified?
4. How does removing the term “extreme” from the topic question affect how we think about it? The average Canadian is in the top 10% of global personal wealth. Does Canada have an ethical duty to the world community commensurate to that owed by the extremely wealthy? If you have a personal net worth over C$375K you are in that top 10% bracket of global wealth. If your personal net worth exceeds C$1.5M you are in the top 1%. What is your personal ethical duty?
Resources:
(2) Ultra High Net Worth Individuals in 2023
(3) Survival of the Richest – Oxfam Report Jan 2023
(4) World Inequality Report https://wir2022.wid.world/chapter-1/
(5) "Credit Suisse Global Wealth Databook 2022"
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