| Monday, April 28, 2014 | Issue #2280 | |
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Three Cheers for Confiscation! Alexander Green, Chief Investment Strategist, The Oxford Club
 If you are wealthy - or even aspire to be - listen up.
There is a growing movement in the U.S. that sees you and your way of thinking as the enemy. They see the economy as a zero-sum game where your economic success only comes at someone else's expense. And they want to use the hammer of state to change that.
Exhibit A: A new book by French economist Thomas Piketty, Capital in the Twenty-First Century, is a runaway hit. It is not just perched at No. 1 on the Amazon.com list of best-sellers. It is completely sold out, even though it is in its fourth printing.
Trust me, this is not a thriller you'd take to the beach. It is a dense, academic book tracing the distribution of income and wealth for various countries back to the 1800s. The author recognizes that, in a free-market system, different people of different abilities - through a combination of education, determination and, yes, some luck - will achieve highly unequal outcomes.
His proposed solution? I can assure you it has nothing to do with reforming public education, revitalizing the economy or simplifying the tax code.
The Death of Cable TV
 In the months ahead, one company is going to "kill the industry as we know it."
We call its radical new invention "NuCable" and it's going to change ALL of our lives.
It's all set to go down... and early investors could easily TRIPLE their money! | |
Soak the Rich
Despite the fact that every transaction in a capitalist system is a voluntary one, he believes the haves are stealing from the have-nots. And he doesn't mean metaphorically.
He calls the wages of high-income earners "largely arbitrary." He says no CEO could ever justify his or her pay based on performance. And he declares that most fortunes are due to nothing more than inheritance (more commonly known as "the lucky sperm club"), flaws in corporate governance, luck or "outright theft."
His solution is tax rates of 80% on anyone making $500,000 or more, rates of 50% to 60% on incomes as low as $200,000, an annual wealth tax of 10% on large fortunes and a one-time assessment as high as 20% on much lower levels of existing wealth.
I did mention he was French, didn't I?
Piketty believes capital is the enemy. And he breezily assures the reader that confiscatory tax rates won't hamper innovation, entrepreneurship or the risk-taking essential to economic growth. Moreover, he doesn't propose soaking the rich to improve economic opportunity, rebuild our infrastructure or even enhance social justice. He straightforwardly declares that he wants to put an end to high levels of accumulated wealth, which he calls an affront to democracy.
I Had It Backward
From this vantage point, I was awfully naïve as a young man.
Back then, whenever I saw someone who had achieved great economic success, I instinctively thought, "There goes someone who must have studied hard, worked diligently and taken some big risks." I didn't just admire them. I wanted to be like them. Their success was a source of inspiration and motivation. And I assumed that if I were ever going to be successful, I'd have to form and abide by the same habits.
According to Piketty and his ilk, I had it all backward. These people were my oppressors. The reason I had less was because they had more. I should have been envious. I should have been resentful. I should have been angry.
Most of all, I should have voted for the government to take their wealth at the point of a gun and redistribute it... to people like me who didn't have much.
In a society as rich as ours - where no one lacks food, shelter or incentives - "income inequality" is a bogus issue.
Poverty is a problem. Social mobility is a problem. (We need to make it as easy as possible for people from all economic backgrounds to rise and succeed.) But the fact that Bill Gates and Warren Buffett have a lot more than me? That's not a problem.
And it's as true today as it was when I didn't have two nickels to rub together. Apparently, I'd make a very poor Frenchman.
Good investing,
Alex
Editor's Note: "Fighting" for the lower class has become the hallmark of Obama's presidency. But we say he faces a much bigger problem... one that could soon cost him the Oval Office. In fact, the biggest presidential disaster in history could hit the news any day. Click here for the details. | |
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A coming $91 trillion market shock - lasting just 3 minutes - could gut our Social Security system once and for all. If you're at or near retirement age, you need to know what's coming. And there's still time to prepare. Here's the shocking truth, from America's most conservative income investor... including his recommendations for surviving the possible crisis. | |
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It was a big week for earnings, with announcements from General Motors, Microsoft, Boeing and more. But those weren't the only stories shaping the markets. Here are some snippets you may have missed... Read On... | |
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