Because capitalism is a system in which the rich get richer. This preferential accumulation of wealth where wealth already is is an inherent feature of capitalism.
The same kind of phenomenon can be seen in the population of cities for example: the more people there are in a city, the more other people are likely to move there.
So given that there is a runaway feedback loop that make the rich get richer faster than the poor get richer, and given that profound inequality is detrimental to the economy at large, it logically follows that there must exist some scheme to redistribute a part of the wealth of the extra-rich to the rest of society.
Taxation is (or should be) such a shame.
Note that there is no moral argument here. No finger pointing, no entiltement. Just a systemic view of things: it is detrimental to all to let a runaway feedback loop increase inequalities.
Except that huge inequalities exist in socialistic economies as well, and capitalism means the middle class of today live as well or better than the richest people in the world did in the 1920s.
I am not advocating switching to a planned economy. I'm just pointing out that any capitalistic system has a tendency to concentrate wealth.
I even acknowledge that the poor are getting richer. The problem is just that they are getting richer at a slower pace than the rich, and unless this problem is addressed through taxation, then it will lead to economic stagnation or worse.
If you want to address concentrated wealth address the tax system and real crony capitalism (not the fake kind that is used to slur Buffett). Eliminate patents, tariffs, tax businesses that receive government subsidies, etc.
Competition is the best bar to too much competition.
While I also long for the elimination of some of the things you list (mainly patents), I want to emphasize that even in a perfectly competitive and ideal market, the phenomenon of preferential wealth accretion would still happen.
Picketty's explanation is that capital's reward is higher than work's, but I'm not bent on defending that explanation (even if until a better one comes up, I'll stick to Picketty's).
As far as I know there is no counter example of the phenomenon itself (whatever the underlying reason is).
You can't stop some people from working harder or smarter than others, or saving money instead of spending everything they make. Those people will accumulate wealth far faster over time.
That is where you are mistaken. The people who will accumulate wealth the fastest over time are the people who already have wealth.
Even statistical anomalies like Bill Gates or Steve Jobs got more money, once they became slightly rich, from the capital they owned than from the work they produced.
Only because they didn't consume their capital, they kept it reinvested, and kept working. There have been thousands of business owners who could have become billionaires, but traded too much of their equity for a big house and expensive distractions.
> and given that profound inequality is detrimental to the economy at large
which has nothing to do with "liberty" - it's about "efficiency" or may be "equality" (of outcomes), but not "liberty" in any way.
(Also, there's a lot of valid criticism of Picketty that his supporters usually choose to completely ignore, but that's not the point of the argument anyway).
I don't understand your point about liberty. I did not talk about liberty. Could you please clarify ?
As for Picketty, the only serious criticism I'm aware of had to do with his explanation about why wealth begets wealth, not on the fact that there is a preferential accretion mechanism for wealth inherent to capitalism.
If you have any source or example where capital holders do not increase their share faster than non capital holders (say, e.g. workers) then I'd be happy to know about it.
If you work, you pay a load of tax, but if your income isn't primarily from salary or wages, you pay less through a variety of circumstances set up specifically to give you even greater advantages than being rich alone would provide. So now you're rich AND tax advantaged over the poor. A double whammy.
So the idea is that money creates even greater inequality, if you're born with money you have opportunities that poor people will never get even if they work their whole lives... because they're working. They'll never have the capital to exit that stage.
The point of "equality" meaning to make taxation on the rich more equal (or as you put it "taking their money") is so that everyone has an opportunity, not so that everyone has the same amount of money.
Further, in addition to there being advantages set up for the rich, we have built DISADVANTAGES into the system for the poor. A 100k job comes with medical insurance, but a min wage job does not. Minimum wage should mean the minimum needed to survive, not less. Not having to worry about medicine or a second job means you can spend some time working towards other opportunities.
> you pay less through a variety of circumstances set up specifically to give you even greater advantages than being rich alone would provide
The reason for that is not because "evil rich control Congress". It's because capital is much more mobile than labour and can move from one country to another much easier.
> is so that everyone has an opportunity
Opportunity at what point? When does the starting gun fire? Birth? But that would only explain the inheritance tax. If me and you start from the similar families and backgrounds, why should I give my money to you if I'm more successful - didn't we have equal opportunity?
Of course, people usually differ in their background. But this inequality comes from the greatest discrimination of all - all people in the world discriminating against people who're not their children or family. As long as this discrimination is allowed to exist, you _will_ have this sort of problems - and _equality_ of each individual's opportunity will always be at odds with his _liberty_ to pass over his resources (money, influence, relationships, status, education and intelligence) to his offspring. And people value this liberty to practice this particular discrimination very, very, very much.
How do you define a boundary at which those two competing ideas should meet?
Capital is more mobile... so we'll decrease the taxes on capital and increase the taxes on labor? If capital has built in advantages, it doesn't need extra legislative/taxation advantages added to it. Regular people need to pay rent and eat.
The bottom ~40% of American workers earn under $20K/year -- I have no problem with increasing the minimum wage to the point where people can actually pay rent and buy medicine, it's not like I'm asking everyone be given a helicopter. I have no problem taxing houses that are vacant year-round. Capital is wasted and hoarded many places to the detriment of the 99%, and not even to the benefit of the 1%.
Your comment about the starting gun, I think that if you lose your job you shouldn't immediately be homeless or sick because of it. Do we want to go back to living that poorly? Does it not matter as long as it's not happening to you? What if, one day, it does?
I don't want to live in a society where you can't walk to lunch without being asked for money by the homeless, where homeless people even exist, where the emergency room is always too slow because people can't go to a GP, where working 40 hours a week doesn't mean you'll be able to get a house or food, or where two parents must both work full time to break even to the detriment of the nation's children. I'd rather pay a little more tax. I'd rather my capital be a little less mobile. We'll still have the most billionaires, the most valuable companies, and all of that.
There must be some floor threshold below which we're not willing to go as a society. Why have a minimum wage at all? Why have medicaid or guaranteed hospital access? The question is where should we put that threshold, my position is it isn't high enough.
Then again maybe all of this is a straw man, we could leave taxes as they are if we reallocated 50% of the military budget... we'd still have the biggest and best military in all of world history.
One more thing: there is more to capital motion than taxes, too, and the USA http://www.doingbusiness.org/rankings -- look at all the places we're ranked 30th to 50th in the world. So perhaps we can increase taxes while simultaneously increasing capital motion.
In the end, life's better if you're a little less greedy, who wants to be the richest man in a slum? Is it better to have a million dollars in Somalia or 100k in Boston?
> Capital is more mobile... so we'll decrease the taxes on capital and increase the taxes on labor?
Yes, because otherwise it will go away from "us". "We" don't put in laws and taxes for the whole world, "we" are countries that are competing one against another for that capital.
> I have no problem with increasing the minimum wage to the point where people can actually pay rent and buy medicine
More like "increasing the minimum wage to the point where people are replaced with automation or people from working at other places".
> What if, one day, it does?
Oh, but it just recently did. I lived a couple of months with friends, got into credit and used tax returns. I didn't even used any unemployment help, as I consider the whole concept unethical, although I could. Believe me, for me, it's not a hypothetical situation.
> where homeless people even exist
Then donate your own money to them. But what you're advocating instead is forcibly taking _other_ people's money so that they can pay for _your_ view on what society should look like.
> where working 40 hours a week doesn't mean you'll be able to get a house or food
Working hours don't contribute any value to the society - services and products are. I don't care how much did you work when I'm paying my money. Can you rephrase this in terms of actual services and products provided?
For example, if you told me that "working 2 shifts as a pediatrician" doesn't get you house or food, then I would agree that the country where it happens has a problem.
> or where two parents must both work full time to break even to the detriment of the nation's children
Children should be a luxury. I am right now in a pretty good financial situation, on a software engineer's salary, and I still don't feel like I can afford a child. If somebody is making a very poor financial decision to buy a luxury yacht that he can't afford, you don't feel sorry for them - why a different treatment for someone who gets a child?
> I'd rather pay a little more tax. I'd rather my capital be a little less mobile.
Go donate to a charity then. Invest your pension savings in a company that you consider "ethical". But although you're talking about "your" tax and "your" capital, you use these arguments to advocate what should be done to _other_ people's taxes and _other_ people's capital.
> Why have a minimum wage at all? Why have medicaid or guaranteed hospital access?
Beats me.
> we could leave taxes as they are if we reallocated 50% of the military budget... we'd still have the biggest and best military in all of world history
You would also have a lot of very angry veterans though. It is my understanding that about ~50% of american "military" budget actually goes to all kinds of pensions and compensation - cutting this doesn't exactly fit your ethical model, does it?
> In the end, life's better if you're a little less greedy, who wants to be the richest man in a slum? Is it better to have a million dollars in Somalia or 100k in Boston?
That's a question that every man should answer for himself. All your arguments are about enforcing your ethical system on other people, who may or may not agree with it.
It seems patently obvious that I'm being trolled or you're delusional about the viability of a libertarian society, but I'll make two final points:
Fortunately, most people don't agree with you, so we don't live in a hellhole.
You don't seem to understand that society is a whole unit, if you don't have a car, it doesn't mean you shouldn't pay for roads and that roads provide you no utility, the food you buy when you walk to the shop comes on a truck.
It seems that you believe only money, products, and services have value, and that people have no inherent value. Again, it's extremely fortunate that most people disagree with you.
Why the talk about "equality" always comes down to forcibly taking other people's money?