Tuesday, June 27, 2006


Paul Campos Continues His Intellectual Decline

I didn't used to look forward to writing about local law professor Paul Campos' weekly column in the Rocky Mountain News, but that's because, in the past, Campos wasn't a complete lefty loon. He has been on a roll lately, like here.

...without the organized resistance of the Democratic Party, America's robber barons and corporate overlords will steal everything that isn't nailed down.

Who are America's robber barons? It seems to me that the really rich have generally been great philanthropists. Does he mean multi-billionaire Bill Gates, who has announced that he will leave the business world in a couple of years to devote himself to giving his money away effectively? Maybe he means Warren Buffett who has announced he's going to give the bulk of his fortune to Gates to give away. Sadly, Professor Campos can't find the space to name a single robber baron.

Then there's this gem:

...eliminating the estate tax will transfer wealth from more than 99 percent of the populace to a tiny slice of the richest Americans...

What? Stopping the government from taking money at the death of a hard working, successful person will transfer wealth from the poor and middle class to the rich? How? Sadly, again, the law professor deigns not to explain himself. I, for one, doubt he could. Our government's job, as monstrously expanded as it is, is not to act as Robbin Hood. We've agreed that the government can tax our income, but once is fair (and a flat rate is fairer). Taking a second cut just because it can is not proper government action, it's robbing the rich without the possibility of prison. Stopping the reverse transfer from the rich through the government to the poor through wasteful and failed programs is not transferring wealth from the poor to the rich. The rich got it on their own (and were taxed while doing it). Maybe Campos is of the mind that capitalism is theft? That would fit his charge that robber barons steal everything. I guess Campos is a communist.

It takes a great deal of education to make someone this stupid.

Clearly, it's the Democratic Party that will save the country from the excesses of its own biggest contributors. Democrats, from all the available historical evidence, are completely immune to corruption.

On a related note, the Brooklyn Bridge is soon to be moved to Page, AZ; shares are now available from your local bridge dealer and all Democratic Party offices.
Doug and Roger,

As I have previously advised, a million dollars does not go as far as it used to (go).

W/ an increase in the amount that can pass untaxed, the Estate Tax is good social policy. Think about it. The Uber Uber Rich--Warren Buffet, Bill Gates support it.

Money is power and it is a bad idea to consolidate either. If the Estate Tax is repealed and the Rule against Perpetuities is repealed, which it has been in a number of states, we will reacquire a fuedal system.

I was always under the impression that both of you believed in a meritocracy. If you repeal the Estate Tax and the Rule against Perpetuities, in one to two generations, authority and power will be consolidated in the likes of Paris Hilton and her money managers.

Think about Communism. It had some noble thoughts but was a bad practice. The same thing is true of consolidation of wealth. The truly wealthy recognize this.

Warren Bufffet will leave an estate of 7,5 billion or so after his divestment, I think , I could be wrong on the number, that will be subject to the Estate Tax. I don't know the numbers. I doubt the estate will be subject to a 75% tax, but suppose it it is. Tha would leave his heirs a mere 1.875 billion dollars w/ which to struggle through life.

You may not like the way the government spends money. We agree, perhaps for different reasons, that the governmant should not be fed on demand.

I challenge both of you to defend the complete repeal of the Estate Tax. Warren Buffet and Bill Gates are very smart guys who know how the cow eats the cabbage.

Do you want Paris Hilton running the show?

Gentlemen, it is time to stop being the opposite of Communists and to be realists.

Bravo Tony!

In case you are wondering who the robber barons are, read about the guy who is number one on my S*** list here

I guarantee you this Mr. Hurwitz does not vote Democrat.
Three generations.

With or without an estate tax, that's how long it takes to substantially dissipate an inheritance in most cases.

Since you raise the issue of feudalism, lets take a look at it:

In France, which did not have primogeniture, in each generation the estates were split among the various heirs of the noble. The result was the famously divided French nobility. So, how many large fortunes are kept as monolithic blocks in the US?

As to why Gates and Buffett (and probably Soros, for all I know) don't support ending the estate tax? You answer that yourself: it doesn't matter to them. First, they have the lawyers to ensure that the impact will be minimal. Second, even if they were to be fully penalized, their heirs would have plenty of money.

Now lets look at the people who would actually be materially penalized. Some 30 years ago, my grandfather sold his farm. At the time, he received about $1500/acre for the land. I don't know what the same land would sell for today, but if we take a straight inflation adjustment, I think that comes to around $4000/acre. A successful farm in that area is normally over a section in area (640 acres). That would be over $2.5M. Now let's say that the owner dies and wills that fully paid for farm to his two sons. Each will have to take out a mortgage for the taxes.

Their competitors, a corporate farm with equivalent economies of scale, will never have this same debt burden once their own land is paid off. Privately owned farms will go through this every 25-30 years.

Why is this uneven playing field reasonable? (You may infer my opinion if you wish.)

If you want to worry about the creation of a new feudalism, look at undying institutions. Henry VIII took a big whack at one of them in England. (Hint: it wasn't a noble family.)

The point of inheritance isn't to provide a free living for the descendants of the wealthy. It is to provide an incentive to amass wealth. While there are exceptions, most such amassing has externalities that are strongly net positive.

Whatever you might think about MSFT, it has provided a service for millions of people, jobs for at least hundreds of thousands of people, and dramatically increased the net wealth of the community. Providing the incentive to replicate that feat is crucial to the maintenance of a vibrant society.
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