Don’t tax the rich

Stop them from being so much richer in the first place

Image: Jeff Bezos

According to capitalism, this homo sapien’s efforts are worth more than what other animals of the same species would need millions of years to achieve

If Jeff Bezos had never existed, would the world be that different? There probably wouldn’t be a specific company called Amazon, but how likely is it that we would see a company similar to Amazon in it’s place?

Pretty likely, I think, given that Amazon was not the first company to offer online book sales, and that competitors like Rakuten exist today that would rush to fill the void if Amazon faltered. The shape of online shopping would probably be different, in that the scale of the companies involved could be bigger or smaller, there might be more or less competitors, different sets of services, and so on. n the balance, the world would be marginally different, but arguably no worse or better off. I think it’s incredibly likely that most ideas and inventions and businesses that exist today would have come about one way or another.

I don’t think the world needed Jeff Bezos in particular to create the service that Amazon provides. Which is not to say that Jeff Bezos doesn’t deserve some credit for having turned out to be the particular human who managed to create the thing he created. Somebody has to actually do the work and face the challenges, and that person who did it should probably get compensated.

It’s a philosophical exercise to ponder the interchangeability of big innovations or ideas and the people who had them. On the other end of the spectrum, though, when we talk about the people who do not rise to fame and fortune but just do their work, like the people in the Amazon warehouses, it seems to me that it’s the default assumption that they are interchangeable. Is that fair?

I have worked in a managerial capacity a few times in my life and I can say with complete confidence that getting and retaining the right people for a job is arguably one of the biggest challenges for any company. Even if they have all the right technical skills, their attitude and interaction with other people, which is near impossible to objectively measure or anticipate, has the potential to make or break a teams productivity.

With some jobs, like at an Amazon warehouse, the kind that simply haven’t been replaced by automation yet, I would argue these human variabilities still matter. So long as you’ve got a situation where you are currently using a human, you’ve got a potential for someone to be good or bad at it. They can be late to show up for their shift on the line, or they can be extra productive and make more units per hour than people around them.

And before we get to harsh on people for “only” doing things that robots might do better, the same could be said for high level decision making where dispassionate AI might over take any and all humans. It’s already arguable that AI is better at some things we would have assumed requires a talented, educated, or otherwise special human. Diagnosing patients, figuring out which players will help a sports team more, and market analytics. The sad fact is that there is nothing that humans do that doesn’t have the potential to be eventually replaced by machines.

For a company to work, every employee at every level has to be functional, so why do we buy into this idea that there is a dividing line somewhere that says some people make the company happen, and some people are just hands and eyes that merely execute the needs of the higher ups? A dividing line that says some people should just be paid the lowest possible amount to make sure they don’t revolt or die of starvation before showing up to work tomorrow, and others should be vastly overcompensated so that we can be sure we’re retaining “the best people”?

There’s a lot of talk these days about the billionaire class and whether or not they should even exist. John Oliver referred to Jeff Bezos as a “glich in capitalism”. Guys like Warren Buffet say they want to be taxed more.

There’s an idea, that I agree with, that wealth is pooling into the pockets of too few individuals, and its indicative of a fundamentally unfair system, as well as having pragmatic dangers for a society. If you press them too hard, the lower classes revolt, don’t you know.

The main solution that I see discussed is to try and reach into the pockets of the wealthy and scoop that money out to redistribute it. This angers a lot of the people who accept so much injustice because they believe they could be rich too some day, even though they almost certainly never will be. It also angers the already wealthy, because obviously. And it also angers people who are short sighted idiots, who often try to go by the term “libertarian”, who think that governments shouldn’t be the ones who decide where anyone’s wealth goes. Because having money and power pool into the pockets of idiots who build rocket ship toys, which is what Bezos is doing, in spite of all the better able groups already doing that, is so much better.

I actually kind of agree that a government can’t inherently be trusted, but I also don’t think a government can be inherently distrusted either. It’s just a tool, and like any tool, whether it does good or bad is determined by how you use it. Right now, one of the ways that tool is being used is to make people think that it’s government, as an institution, that drives the policies that hold us all back, and not the wealthy lobbyists whose votes and influence count more than those of us without money.

What I’m wondering, though, is, instead of working so hard at figuring out how we go about taxing the rich, why not try to avoid their creation in the first place?

Going back to my premise that Amazon would exist, more or less, even if Jeff Bezos didn’t, and that the employees on the floor matter more to Amazon’s success than just being the functionaries they’re treated as now, then Amazon, as an entity, exists as a result of all of their efforts.

Of course, some efforts do matter more than others. I do think there’s some merit to the idea that Jeff Bezos was, in this universe, the one who did come up with Amazon and steered it to success, and so he deserves a higher share of the returns. Higher than a guy who wasn’t so concerned about, say, which warehouse he worked at, he just needed a job, and Amazon was hiring.

I want to pause, though, to emphasize, that just because that guy is less bound to Amazon than Bezos doesn’t mean we should reduce him to just being this piece of shit anonymous replaceable cog that we need to think of as an operating cost to drive down as much as capitalism can. Yes, under certain conditions, he would probably be able to switch to working at a different warehouse, and his skills are transferable, and Amazon could replace him. But is Jeff Bezos so different? If he got the offer to work at another company, for example to just leave Amazon and go full on into making rockets, are we sure he wouldn’t? Would Amazon wither and die without him? Wouldn’t the board just hire some other rich douchebag to replace him? I used to be in the world of high tech startups, and most of the people in it aspiring to be the next Bill Gates or Mark Zuckerberg don’t actually care how they become billionaires, so long as they do. Most of them are solutions looking for problems that don’t really exist, driven by a desire to be on the cover of Forbes.

I think there’s a continuum of relative connection to a company, and some people are more connected and I don’t have any problem with them getting more profit. It’s a matter of degree, though. My fundamental premise is that everyone who works at a company are all part of why that company creates any and all profits, and that profit is currently being divided in a way that doesn’t reflect everyone’s relative contribution.

Going by the numbers I’ve seen that I think are recent enough, the lowest paid full time worker at Amazon makes about $30,000 USD a year. Jeff Bezos has a sum total of $165 billion USD in wealth. Which means, for his lowest paid worker to get as much out of Amazon as Bezos does, that worker would have to work five and a half million years. Longer than humans have been a species.

There is a little bit of fuzziness to account for in that Bezos’s worth comes in the form of stock, which he couldn’t immediately liquidate without devaluing it in the process. But, these are the numbers we’ve got to work with, and they’re representative enough of the disparity of wealth return to mean something. Obsessing over details much finer than this is how people avoid talking about class differences.

Anyway, another way to put it is to say that, according to how capitalism values their efforts, Bezos is 5.5 million times more important to the success of Amazon than his lowest paid worker. Like I said, I agree he has more to do with Amazon’s success than a lot of his workers, but I don’t think it’s five million times more. He’s still a hairless monkey like any of the rest of us, there’s only so much he could have done to bend the universe to his will.

According to Forbes, the average CEO in the US makes 361 times the wage of their employees. That assumes a paycheck of about $38,000 USD for the worker, a little higher than Amazon’s lowest paid person. And it assumes an average CEO pay of just under $14 million USD.

But, that’s just pay, as in the amount written on your cheque every month. The real money is in ownership. Apparently Bezos’s annual salary is only around $80,000 USD a year. The vast majority of his wealth is all in the stocks he owns.

In capitalism, ownership is everything. You own what you create, but doesn’t everyone in your company help create it?

If you told me Jeff Bezos was 361 times more important to his company than any one employee, I might agree with that. That’s the story told by the wages. But when you tell me he’s five and a half million times more important than any one employee, I start to think something is out of whack.

Instead of laws to try and force richer people into sharing the money that got into their pockets, I think there could be something to enforcing the idea that corporate entities have to maintain a consistent proportion of the returns of the business between their highest and lowest paid members.

Just as a crazy thought experiment, let’s say you had to ensure, by law, cultural convention, and any other enforcement needed, that the lowest earning employee received no less than 1/1000th of what the highest earning executive received. Bonuses, stocks, pay, all of it counts. Any and all wealth of the company is factored in.

I’m going to simplify the situation a bit in using Amazon as an example, because I don’t think it’s possible to know the relative status of every single employee there. Maybe since it’s a publicly traded company that kind of thing can be found out, but the math is going to be too complicated for this blog post, and too unnecessary to make my point.

Let’s just go with the fact that Amazon has 250,000 workers. And one Jeff Bezos. For how much wealth the company gives its workers, let’s say we’ve got $30,000 USD in annual salary for all the workers, which is $7.5 billion USD. And then there’s Bezos’s $165 billion USD. Altogether, my simplified Amazon has generated $172.5 billion USD. That’s not sales revenue or anything, that’s just what everyone in the company gets to keep after all is said and done, after the pay has been given out and the stocks allocated. There’s also the issue of time, as Jeff has presumably been with the company since its inception and most employees came on later.

I think the numbers in the sources I’ve looked at are pre tax income, but that aspect doesn’t matter for this hypothetical as, since I’m talking about not taxing the rich especially, then taxes would affect everyone equally. Personally, I think there’s a case to be made that all tax should be on consumption, not income, so let’s not get into all that.

If it was law that Amazon had to give Bezos no more than 1000 times what any one employee got, and conversely each employee made 1/1000th of Bezos, then if my math is right, each employee would end up with about $687,000 USD, and Jeff would have $687,000,000 USD. That’s not necessarily their pay cheque at the end of the year, that’s how much they’d have in both liquid cash and in stock, and like Bezos now, they wouldn’t be able to just liquidate it any time.

Obviously there would be a lot more devils in the details to implement a situation like that, but nothing that I think is more than just algorithms, and no more bureaucracy than enforcing the current system.

The point is that instead of having someone make money, then take that money back, and argue about how it gets used, maybe it would be better to think about how wealth is generated in the first place. A system that enforced proportional revenue would be no more or less rational than enforcing minimum wages or any of the other legal constraints that prevent purely unfiltered capitalism from fucking everyone as hard as it would otherwise.

I actually don’t think this kind of approach would be a solution for all the problems that currently exist between classes. You would still have people working at some companies that are way less profitable than others, earning far less. But would the world be worse of if we had hundreds of thousands of millionaires instead of dozens of billionaires?

Just a proposal.