Limitarianism: The Case Against Extreme Wealth

In this thought-provoking episode, we delve into Limiterianism: The Case Against Extreme Wealth by Ingrid Robeyns, a pivotal work published by Allen Lane in 2024. Authored by Lucas Chancel and featured in Nature, this review tackles the pressing issue of extreme wealth inequality, a challenge that calls for urgent societal and governmental action.

Robeyns proposes a bold solution: imposing a wealth limit of €10 million (or USD) per person. This episode explores the historical precedents for wealth limitations, from ancient societies to modern proposals like Roosevelt's 1942 income cap. We discuss how empirical research indicates that a wealth threshold of around €4 million for a family of four is widely accepted as a reasonable marker of the "super-rich" in Europe.

The conversation highlights the often unethical practices surrounding extreme wealth accumulation, including tax evasion, and connects contemporary disparities to historical injustices such as slavery and colonialism. We examine how wealth concentration not only hinders efforts to uplift the disadvantaged but also undermines democratic systems and equal opportunities for all.

Join us as we unpack Robeyns' argument that capping individual wealth could foster a more just and equitable society, enhancing social welfare and democracy. We pose critical questions: What challenges and benefits would arise from implementing wealth limits? How can these limits be enforced fairly? And what alternative solutions might exist to address the stark divide in wealth?

Source:

How rich is too rich?

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Transcript

0:24

Hey everyone and welcome to your deep dive. The one you requested about wealth inequality. We're so excited to dig into this with you. Yeah. We've got some really interesting stuff to unpack. Sure. Especially from this book by Ingrid Robbins called Limitarianism, the case against extreme wealth. Right. It really gets you thinking. Yeah. Just how rich Aya's too rich. That's a question that has been debated for centuries actually. Oh wow. Yeah. Seriously. Yeah. I kind of figured this was like a modern day problem. Oh yeah. So tell me more about that. Yeah. So it might surprise you to learn that this concept of limiting wealth pops up way back in ancient societies. For example, take the Hebrew Bible and Torah. Okay. They had this practice of debt cancellation, freeing slaves and redistributing land every seven years. Wow. It was like hitting a reset button to prevent extreme wealth from taking hold. So they were actively trying to prevent like huge gaps between the rich and the poor. Exactly. Even way back then. Yeah. That sounds almost radical. It was a way of maintaining social balance and preventing the kind of unrest that can happen when wealth becomes too concentrated. Right. And it wasn't just the ancient Hebrews. Okay. Over in ancient Greece, the philosopher Aristotle was a big proponent of cities that kept wealth inequality in check. Interesting. He saw it as a key ingredient for political stability. Which makes sense. Yeah. Too much inequality can definitely lead to instability. For sure. But I'm curious, did this idea of limiting wealth carry over into more modern times? Absolutely. Even in the United States, there have been moments where this concept was seriously considered. Okay. For instance, in 1942, President Franklin D. Roosevelt proposed capping annual incomes. Really? And get this, that cap would be the equivalent of about $480,000 today. That's wild. I never knew that. So it's not like this is some like brand new fringe idea. Right. There's a historical precedent for wanting to limit wealth. For sure. But what about today? Is anyone seriously talking about this anymore? That's where Ingrid Robbins comes in. She's a Dutch and Belgian economist and philosopher who really dives deep into this concept in her book Limitarianism. Okay. She argues that limiting wealth in the 21st century is not only morally justifiable, but also essential for a healthy society. So she's picking up where those ancient thinkers left off. Yeah. But applying it to our modern world. Exactly. That's going to be a fascinating read. It is. But does she actually propose a specific wealth limit or is it more of a theoretical concept? She actually does suggest a specific number as a starting point for discussion. Okay. She proposes a wealth cap of roughly 10 million euros or US dollars per person. 10 million. That's still a lot of money. Right. How does she arrive at that figure? Well, Robbins isn't just throwing darts at a board here. Okay. She sees this limit as a balance point. Okay. It's a figure that she believes allows individuals to accumulate a significant amount of wealth while preventing the kind of extreme concentration that can be harmful to society. It's a starting point for a conversation, a way to get people thinking about what level of wealth is truly excessive. Okay. That makes sense. So it's not about punishing success. It's more about finding a healthy balance. Exactly. But I'm curious, is there any evidence that people would actually support this kind of idea? I mean, 10 million is still a lot of money to most people. Yeah. Would there be public support for limiting wealth at that level? That's a great question. And Robbins actually did some research to gauge public opinion on this issue. Her research in Europe suggests there's surprisingly broad support for putting limits on extreme wealth. Really? That's pretty interesting. Do you have any examples? Yeah. What kind of wealth did people consider too much? Here's one that sticks out. In a survey conducted in the Netherlands, nine out of 10 people considered a family of four with over 4 million euros in specific assets to be super rich. Wow. Yeah. So we're not talking about your average millionaire next door. Right. This is a family with a mansion, a second home luxury cars, and a sizable nest egg. It's a level of wealth that most people can't even fathom. And what's even more striking is that this threshold of 4 million euros could be even lower in countries where the average income is lower. Oh, wow. This suggests that the idea of limiting extreme wealth has resonance across different economic contexts. It's not just a concern for the poorest members of society. It's something that many people see as a potential problem. It makes you wonder why we aren't having more serious conversations about this. Okay. So we've established that there's a historical precedent for limiting wealth, and that there seems to be some public support for the idea. But what about the consequences? Yeah. What are some of the potential downsides of having so much concentrated wealth? Well, Robbins argues that extreme wealth can lead to a whole host of negative consequences for a society. One of the biggest concerns she raises is the link between extreme wealth and unethical or even criminal behavior. We're talking about things like tax evasion, which is rampant among the ultra wealthy. So even if they're technically following the letter of the law, their actions might not be very ethical. Exactly. They might be exploiting loopholes and using their wealth to avoid contributing their fair share to society. Right. Robbins argues that these practices are morally questionable, even if they're legal. And there's another important point to consider. A lot of the wealth inequality we see today is rooted in historical injustices. Think about the legacy of slavery and colonialism. These events generated enormous wealth for some, while leaving others impoverished. And that legacy continues to impact wealth distribution, even today. It's like the sins of the past are still shaping the present. Exactly. The past isn't just history. It's woven into the fabric of our economic systems and social structures. It's kind of like what Sven Becker talks about in his book, Empire of Cotton. Right. He really delves into the brutal history of the cotton industry and how it fueled both slavery and global inequality. That's a perfect example. Yeah. So it's not just about the moral implications of extreme wealth in the present. It's also about acknowledging the historical forces that have shaped our current reality. OK, so we've touched on some of the potential downsides of extreme wealth. But what about the flip side? What does Robbins say about the benefits of actually limiting wealth? This is where things get really interesting. Robbins makes a compelling argument that limiting wealth accumulation could actually benefit society as a whole. Really? How so? Well, while people might disagree about whether market outcomes are inherently fair, most people would agree that things like a healthy democratic system and equal opportunities for everyone are desirable goals. Yeah, those seem like pretty fundamental things for a well-functioning society. Exactly. And here's the kicker. A growing body of economic research is actually challenging the trickle-down economics theory, which claims that more wealth at the top benefits everyone. So that whole idea of a rising tide lifts all boats. Yeah. Maybe not so accurate. Not necessarily. The evidence suggests that concentrating more wealth at the top often leads to fewer resources for everyone else. It's a system that can actually widen the gap between the haves and have-nots. That makes a lot of sense. It reminds me of Richard Wilkinson and Kate Pickett's book The Spirit Level. They found a strong link between income inequality and a whole range of social problems, from health issues to crime rates. That's a great connection. Their work provides compelling evidence that reducing inequality can lead to tangible improvements in social well-being. So it seems like limiting extreme wealth could have positive ripple effects throughout society. But doesn't Robbins also argue that limiting wealth isn't just about helping the poor? You're absolutely right. That it impacts everyone. Robbins makes the point that wealth concentration affects everyone regardless of their income level. And she uses a really powerful visual to illustrate this. Imagine houses built precariously over ravines in a low-income area, just a stone's throw from luxurious housing developments in Mexico City. Whoa. Yeah. That's a stark contrast. What's the takeaway from that image? It highlights the deep disparities that wealth concentration can create. It shows how it can literally shape the physical landscape, leading to separate and unequal realities existing side by side. That image is pretty powerful. But, you know, some people might argue that limiting wealth would stifle innovation and economic growth. What do you think about that? That's a common concern, but Robbins pushes back on that assumption. She argues that extreme wealth doesn't necessarily translate into greater innovation. How so? Well, when a small group controls a massive amount of wealth, they tend to prioritize investments that benefit their own interests, not necessarily investments that lead to broader societal benefits or drive innovation in a way that benefits everyone. It's like they're playing it safe with their money instead of taking risks that could lead to breakthroughs that benefit everyone. But what about the argument that limiting wealth would discourage people from working hard and striving for success? That's a valid point. But Robbins emphasizes that even with a wealth cap, there would still be ample room for people to achieve financial success and build comfortable lives. It's not about taking away everyone's money. It's about finding a more equitable balance. Right. It's not about eliminating wealth altogether. It's about preventing extreme concentration. Robbins believes there's a middle ground, a way to create a more just and equitable society without stifling individual initiative or economic growth. OK, let's say we buy into this idea of limiting wealth. Yeah. How would it actually work in practice? Wouldn't it be incredibly difficult to enforce? That's the million dollar question. It wouldn't be easy. That's for sure. Yeah. Robbins acknowledges that implementing a wealth cap would face practical challenges. It would require a global effort and significant changes to tax policies and financial regulations. But she argues that it's not impossible. So what are some of the strategies she suggests? Well, she outlines several approaches, including things like progressive taxation, wealth taxes and even limits on inheritance. OK, let's break those down a bit. Progressive taxation seems pretty straightforward. The more you earn, the higher your tax rate. Right. And a wealth tax is a bit different from income tax. It targets a person's total assets, not just their income. Think of it as an annual fee based on the total value of everything they own. Yeah. Real estate stocks, even artwork. The idea is that people with significant wealth contribute more to fund public services. That makes sense. And what about limits on inheritance? Wouldn't that be pretty controversial? It could be. But Robbins argues that it's a necessary step to prevent wealth inequality from being passed down from generation to generation. It's not about punishing successful people. It's about creating a more level playing field for everyone. So it's about giving everyone a fair shot, not just those born into wealth. Precisely. And remember, these are just a few of the ideas Robbins puts forward. The key takeaway is that there are ways to address the practical challenges of limiting wealth if there is the political will to do so. It sounds like Robbins is pretty optimistic about the potential for change. Yeah. But some might say she's being overly optimistic. What are some of the challenges and criticisms her proposals face? Well, one of the biggest criticisms is that her proposals are too idealistic, that they underestimate the power of vested interests and the complexity of global economic systems. So the people who benefit from the current system are going to put up a fight. Exactly. But Robbins isn't suggesting that we can achieve perfect equality overnight. She advocates for a gradual, incremental approach, one that involves open dialogue, careful planning, and a willingness to experiment and adapt. So it's not about imposing top-down solutions. It's about creating a bottom-up movement for change. Exactly. It's about empowering people to participate in shaping the economic and social landscape of their communities and countries. It's about fostering a conversation and building a collective vision for a more just and equitable world. And that brings us to the heart of why this deep dive is so important for you. Why should you, as our listener, care about limiting wealth? That's a great question. What are the key takeaways here? I think the most important takeaway is that the way we structure our economies and societies has a profound impact on everyone's lives. Our choices about wealth distribution, taxation, and social safety nets determine who thrives and who struggles, who has opportunities, and who gets left behind. It's a reminder that we're all connected and our choices have consequences for others. Absolutely. And Robbins' work challenges us to think critically about the role of wealth in our lives and in society as a whole. It encourages us to ask tough questions about fairness, justice, and the kind of world we want to create for ourselves and for future generations. It's a reminder that the systems we live in are not fixed or inevitable. It's amazing to think about how a shift in wealth distribution could have such a huge impact on those areas. It really is. It highlights how interconnected everything is, you know? The choices we make about wealth have consequences that ripple outward, touching every aspect of society. Exactly. So let's dive into some of those specific areas you mentioned, starting with education. What could be possible if we had more resources available for public schools? Well, imagine a world where every child, regardless of their background or zip code, had access to high-quality education. We could create a system that truly nurtures potential and gives everyone an equal opportunity to succeed. It would be amazing to see what could happen if we leveled the playing field and gave every child the tools they need to thrive. It would be a game changer for sure. And it's not just about funding. It's about rethinking our approach to education, creating a system that's more equitable and responsive to the needs of all students. Absolutely. And what about health care? We touched on this earlier, but it's worth exploring further. What could a health care system look like in a world with limited, extreme wealth? Imagine a health care system where access to quality care wasn't determined by your income or your zip code. A system where everyone had the opportunity to live a long and healthy life, regardless of their financial circumstances. It's heartbreaking to think that in our current system, so many people struggle to afford basic medical care, while a select few have access to the best health care money can buy. It's a stark reminder of the inequalities that exist within our society. But limiting extreme wealth could help us move towards a more just and equitable health care system, one that prioritizes the well-being of all its members. It's about recognizing that health care is a fundamental human right, not a privilege reserved for the wealthy. Exactly. And then there's the environment. We've talked about how limiting wealth could potentially shift consumption patterns, but how else could it impact our efforts to protect the planet? Well, with less extreme wealth concentrated at the top, it's possible that we would see a shift away from unsustainable consumption patterns. Right. People might be less inclined to accumulate excessive amounts of material goods, which could reduce our overall environmental footprint. And it could free up resources to invest in renewable energy conservation efforts and other initiatives that protect the planet for future generations. Exactly. It's about recognizing that the health of our planet is inextricably linked to the way we distribute wealth and resources. So as we wrap up our deep dive into limitarianism, I think it's important to remember that these are just a few examples of how limiting extreme wealth could potentially transform our world. It's about opening our minds to new possibilities and recognizing that the way things are isn't the way they have to be. We have the power to create a more just sustainable and equitable future. And that starts with each of us. So to our listener, we want to leave you with this final thought. As you go about your day, think about what a world with limited extreme wealth could look like. What would it mean for you, for your community, for the world as a whole? And what role might you play in making that vision a reality? Remember, change doesn't happen overnight, but it does happen. And it often starts with a simple question. What if? Thanks for joining us on this deep dive. We hope you found it as thought-provoking