The longer term risk argument is interesting, but my pension investments would say otherwise. Also even if its 'only' zero sum, that money is still going somewhere, either allowing someone else to make a long term investment, or something more immediate.

What would you say are the "society wide impacts"? I tend to subscribe to the view that money is the root of all evil[1], so at the extreme, a 100% inheritance rate would solve the problem.

[1]In the sense that money leads to power, increased education opportunities for children etc etc.

A 100% inheritance tax would encourage wealthy people to consume their wealth, rather than invest it for the long term.

This will make the wealthy enjoy their wealth more, but it will make society poorer while also making it less free.

If you think about it, someone earning a lot of money but not consuming it engages in altruistic behavior. You earn money by providing goods and services for others, but then instead of enjoying the money, you work at investing it and managing it to provide even more goods and services for others!

Doesn't consuming wealth, rather than investing long term, end up as a net positive for society though? This may be a naive view, but it seems money placed as an investment has less of an impact, at least on the local economy, than money spent on more immediate things. At the very least it seems likely that money spent in the pursuit of consuming your wealth before death would result in it being somewhat more evenly spread amongst those who need the money, people working in bars, restaurants, manufacturing. Long term investments are more likely to end up being added to the coffers of large companies who may not even have any use for that money and just cycle it further round the investment economy to no real end.

I don't think so. Consider what happens to real resources. Consuming wealth is the equivalent of a rich person buying a yacht (i.e. having it built, paying all these people money) and then burning it down. How is society better off?

The scarce workers who would have been employed elsewhere, doing something productive, wasted their time building the yacht. The materials that went into it were wasted. The engineers, managers that oversaw its construction wasted their effort.

Consuming scarce resources, rather than investing them, by its very definition makes society poorer.

I think this is the right way of thinking (ie a materialist view, which looks at what an economic system means in real resources), but it's obviously more complicated than a binary choice between "rich people spending all their money on non-productive toys" and "rich people investing all their money into socially useful enterprises".

The invested (saved, not consumed) resources that rich people have won't necessarily go to socially useful enterprises. Instead, they'll probably be invested in things whose main purpose is to create more capital for the capitalist class to invest, not to decrease human suffering. The two things have historically been correlated, but there's no guarantee that this will last forever, and good reason to think that it won't.

At some point (and maybe we've already reached it) we will have enough capital for everyone in the world to live a maximally happy life. Arguably, any investment beyond that point (beyond what is necessary to maintain that capital sock, and perhaps grow it at the same rate as population growth) is malinvestment, since if our goal is to maximize human happiness, additional capital is useless beyond that point, so we should use those resources to do something else.

The obvious problem with this line of thought is determining when we've got "enough" capital, and therefore when we can stop playing capitalism and whack up the gains. Obviously 1918 Russia was the wrong time and place to do that, but hindsight is 20/20.

Another issue is that a lot of our capital stock is not in the form of physical stuff, but institutions, contracts, and relationships that a socialist revolution would actually destroy. The reason Amazon is worth so much money is not because of all the physical stuff it owns, but because of the structure, contracts, and relationships within the company itself allow that physical stuff to be more productive than other physical stuff employed by other firms, and indeed even by the laws that allow firms to exist at all. Any "revolution" will obviously severely disrupt a lot of these relationships, from employer-employee relationships, to government contracts, IP laws, etc. Indeed, that's the whole point of a socialist revolution, but similar things on a smaller scale are faced with almost any progressive policy proposal: changing the social contract to be more beneficial to workers and redistribute society's wealth can actually reduce the amount of wealth in the society. That doesn't mean we shouldn't do it, since less wealth distributed more evenly will probably be a net positive for the majority of people, but we can't pretend this problem doesn't exist. It's a conundrum that I rarely see the Left wrestle with, but I think we need to.

Well said.

Regarding wealth redistribution reducing wealth in society. Would you say that that is a short term blip, that may or may not lead to increased wealth in the future? A company restructuring can reduce productivity before increasing it.

Also you presuppose revolution, that isn't necessarily required. Post war Europe went quite far along that road democratically and peacefully, and seemingly in the short term successfully (I suppose the inverse of the scenario in my prior paragraph)

I'm not sure a private-sector restructuring is exactly the right frame for left policy change, since the whole point of these changes is to refocus ourselves away from the tyranny of constantly optimizing for productivity instead of happiness. Also, even in a successful corporate restructuring, there is pain all around (layoffs and capital losses) before there is any gain to anyone. This is the hallmark of disastrously unsuccessful left policies like the Cultural Revolution, where tons of people suffered but there was no real gain to anyone except perhaps a small minority of Party members for decades. In my view, a successful left policy change should make a minority "suffer", while almost everyone else benefits or, even better, make everybody better off with outsized gains to the worst off.

I'm not advocating a revolution, and meant to bring it up as one limit of left policy change. This exact problem (radical changes to relationships during a revolution destroying lots of wealth) is why I think a Russian-style revolution is a bad idea, unless the revolutionaries are making the conscious choice to create a post-revolution society that is drastically poorer than the pre-revolution one. I don't think most people (except extreme radicals) would support this goal. Any socialist revolution would therefore have to downplay or ignore this fact in order to succeed, which is precisely what happened in places like Russia, China, and Cuba in the 20th century. (To be fair, the Russians were the first to try this, so they didn't have anyone else to look at and learn this lesson.)

That doesn't mean incrementalist left policies don't have to grapple with the problem though. Single-payer healthcare, for example, would probably reduce the amount of wealth in society, since most of the value in private healthcare firms comes from the current structure of the healthcare market. A leftist should be OK with this and support single-payer anyway because most people will gain.

> To be fair, the Russians were the first to try this, so they didn't have anyone else to look at and learn this lesson.

They were well aware of this [1]. That's part of the reason why most leading revolutionaries, including Lenin, saw the spread of the revolution to western European countries as a requirement for their (edit: I meant to write "its", but "their" is probably more accurate after all) long-term success. IIRC he remained deluded in the prospects for this until his death.

[1]:

There's probably a more direct source for this but here's one I remember. This is from "The Conquest of Bread" (1892), albeit an anarchist rather than a bolshevik, Peter Kropotkin was famous enough during that time to prove the point:

It is evident, as Proudhon has already pointed out, that the smallest attack upon property will bring in its train the complete disorganization of the system based upon private enterprise and wage labour. Society itself will be forced to take production in hand, in its entirety, and to reorganize it to meet the needs of the whole people. But this cannot be accomplished in a day or a month; it must take a certain time thus to reorganize the system of production, and during this time millions of men will be deprived of the means of subsistence.

Fascinating! I have always understood the desire to spread the revolution to the West was straight from Marx, where the struggle against capitalism, a global system, must of course be a global one.

Coldly understanding that "millions of men will be deprived of sustenance" while the new Socialist system takes place, and yet doing it anyway, is I guess just a reflection of how steely-eyed these radicals were. Still, my point stands that this was not how it was sold to the masses. Going out with a message of "Out with the bosses, we'll take all the riches ourselves!" is a much easier sell than "Listen, I know you are all desperately poor and suffering, but that will have to get even worse, and a lot of you are probably going to starve, before it gets better if we're going to build socialism."

> I guess just a reflection of how steely-eyed these radicals were.

Yeah, I mean, there's a lot of factors to take into account during that time ofc, most social upheavals will not come with an attached short-term economic benefit. I do not think that they necessarily thought that most would simply die either, but experience a generally hard time rebuilding. Tsarist Russia was a powder keg that were likely to blow up even without the brutal version served by the bolsheviks.

You're right, I didn't really mean to address your initial point about that, I'm just cherry-picking and adding some thoughts. Propaganda will always emphasize the positives and downplay the negatives as you wrote. In fact, and maybe I'm getting a bit side tracked, but Lenin and others of the more cynical revolutionaries of that time, and probably before and today, thought it might be necessary for things to get worse to reach the conditions needed for the revolution to succeed. Of course there's some amount truth to that, but it's nevertheless very much in line with the terror that followed in the means to an end fashion. On the other hand, Bertrand Russell, for example, while agreeing on the need for communism thought the price to pay through these bolshevik methods were just "too terrible" to justify it. So the spectrum of revolutionaries during that time was quite wide.

I don't think either consuming or investing is inherently better than the other. investing all of your wealth and never consuming is pointless, why bother creating it in the first place? on the other hand, consuming all your wealth is also an obvious failure mode; eventually there will be nothing left. a successful society needs to strike a balance between investment and consumption. the steps to make this happen probably cannot be expressed in a short HN comment.

> Doesn't consuming wealth, rather than investing long term, end up as a net positive for society though?

Most of the time it's very opposite. Unless with "consuming" you mean donating.

I think there's an argument to be made that the opposite is true - if the wealthy are spending their money then it's going to someone, after all. That someone is likely home builders, artisans, restaurants, clothiers, etc rather than offshore tax havens.

Yes, the wealthy would presumably engage lawyers and business advisors to help their offspring and people they like create companies for the next generation.

Maybe my son would like to open a travel agency. Maybe then I'd like to use that travel agency almost exclusively so that I could keep tabs on his progress and offer my advice. Oh look, his travel agency, despite being extraordinarily expensive, is very successful and now I don't have any money left to pay inheritance tax on...

Well, that travel agency does end up paying corporate and then dividend taxes on the earnings... and anything paid out directly to the son as salary means income taxes.

My hypothesis would be that wealth would be more spread out. So you may have less concentrated long term investment, not necessarily less overall.

I'm interested how society would become less free. Would it not increase social mobility? Or are you thinking of something else?

See my reply above.

By less free, I mean that anyone who wants to leave their children the fruits of their labour is now unable to do so. The more restrictions on individuals, the less free a society is. And it is a very big motivator for some people - many people value the standard of living of their children higher than their own.

But I do get your utilitarian argument. After all, every next dollar of our wealth we value less than the previous one. So in this sense, I can see why you would think that redistributing that wealth would make the society better off overall. But I think you misjudge the effects of consumption vs investment and of the incentives on the overall wealth of a society.

> The more restrictions on individuals, the less free a society is.

I think this is a fallacy. Freedom, when defined this way (taken to its extreme), is not desirable for society as a whole. It only helps the wealthy and powerful and works against the poor.

If you are poor or indebted, you are not really free, even if there are no individual restrictions. People in need will probably be inclined to "freely" take out loans, giving up their freedom. Wealthy people may want to keep a good portion of society in need so they'll always be "freely" working for them.

Having to work full time for a salary to live a middle class life feels like unbounded indentured servitude sometimes. We have significant benefits over historical indentured servitude but the freedom is still lacking. 40+ hours of my week, including prime creative hours, for potentially 45+ years of my life are given to my employer so I can live in a decent house, buy healthy food, pay for my family's needs, travel once or twice a year, etc. I am giving up time/energy I'd rather give to my family and creating art/innovative technologies from the thousands visions and ideas I have every year. My situation, though far from unique, is one I've gotten myself into. Getting out now requires me to put my personal desires aside for many years, maybe decades, while working to become wealthy enough to hopefully enjoy true freedom while I am still young and energetic. Who knows if that will pan out. The alternatives are lower pay, more "free" time, or intermittent bursts of high pay/free time. Neither of those are freedom (fiscal autonomy) in my mind, only an illusion of it. I could talk about this all day but I'll stop there...

Have you heard of the FIRE movement? Basically, if you save 30-50% of your pay by reducing expenses, you can shorten that 45 years very considerably.

It generally involves becoming less materialistic than the average American, though.

Ah ok get you.

The fruits of your labour argument is a good one which is why I would advocate a 100% inheritance tax.

I'm less convinced by your freedom argument, taken to its logical conclusion, murder should be legal because you're removing the rights of the murderer to do what they want. So I guess it comes down to where you draw the line?

Consumption v investment. There are good arguments each way, I don't know if higher inheritance tax would lead to higher of either. I think they tend to form a balance though.

The line for personal freedom is always where it infringes on the rights of others. Keeping your own wealth or passing it on per your own wishes after your death does not infringe on anyone else's rights. Taking someone else's wealth away from them infringes on their rights.

That's an argument against all taxes.

It can be, yes.

And yet, there's a difference between, say, a 30% inheritance tax and a 100% inheritance tax. The 100% tax means that you cannot leave anything to your children. The 30% tax means that you cannot leave all of it to your children. One is more prohibitive (and therefore infringing) than the other.

And also the line that prevents you taking the freedom argument to it's logical conclusion that murder is acceptable.

> Also even if its 'only' zero sum, that money is still going somewhere, either allowing someone else to make a long term investment, or something more immediate.

I'm not sure I understood your point correctly, but most wealth that is passed between generations is passed in the form of investments, not cash, so that wealth is performing the same societal benefit as your pension. What I meant by long term risk was that rich kids can afford to start businesses, because if they fail, they can fall back on their family's wealth to bounce back.

I would avoid adopting the world view that money is the root of all evil (or leads to power...). If you gave everyone $1B, no one would be measurably more powerful than they are today, because everyone else can afford the same things they can, so prices would rise until an equilibrium is achieved (same goes for educational opportunities, etc, unless you cap teacher pay effectively holding teachers back).

Again, a 100% inheritance rate would make society more equal by taking away opportunities from those who had ancestors that worked hard to provide that opportunity for them, not by giving more opportunity to those who weren't so fortunate.

Inequality is way deeper than money; finding blame in capitalism is alright, if you want to fight inequality and corruption you have a wildly different enemy than mere money

So what should the father do? Just give his money to the state when he dies? Spend it all?

Yes.

If you take the view that the state requires $X per year to function. If the money doesn't come from inheritance tax, it has to come from somewhere. I don't know about you, but I'd prefer to pay my taxes when I'm dead.

If they want to spend it, fair enough.