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June 09, 2007



Are you saying you are gifted with the ability to decide who deserves their wealth and who does not? Sounds a little bit authoritarian;)

I value the work my "middle manager" does at £50,000. Why should I pay him less?


You have brought up this subject before - your dislike of rent-seekers and your like for wealth creators.

So, can we have a debate about who is who? I recall in a previous blog you identified City folk as non rent-seekers - but have changed tack today!


The difference between a rent-seeker and supplier of genuinely productive and scarce services is often hard to spot - even by employers. For this reason, it's hard (impossible?) to devise a tax system that distinguishes the two. But I don't think this invalidates the basic principle, that a given income can arise in several ways, some of which are more moral than others, does it?

Neil Harding

Perfectly sums up my view - just to add we would ALL be happier (including the rich) if our society was more equal (and that wouldn't be difficult to change considering the top 50% have 96% of the wealth).

Brooklyn Girl

A middle manager who owes his £50,000 a year salary to hierarchy and rent-seeking offends me more than a trader who's made much more in competitive markets.

A £50,000 annual salary does not make a person rich. That is peanuts in the world of really rich people. Add a couple of zeros, and then you're in the ballpark.


Chris, I think it does invalidate your principle.
Going back to your "middle manager". As my employee I see him as a wealth creator, at least £50k+ worth, otherwise I would not employ him. Only I can make that judgement. Does that make me less moral because my choice of wealth creator does not match yours?


One of the features of the city is that a lot of traders, quants, and other high earners come from ordinary backgrounds and ordinary schools and have been able to pocket a small fortune through their own efforts, (and some luck).

I appears that the nice lady from the expensive posh school doesn't like the oiks earning the kind of money her family are used to, and thinks their earnings should be taxed. Thanks New Labour.

As often happens, if you want to see a society that is truly committed to breaking down class barriers you have to look to the USA, where there's a few multi-millionaires who have suggested taxing inheritance to avoid dynastic wealth, instead of taxing earnings to supress social mobility.

Maynard Handley

So what do you think of money aquired through luck --- say winning the lottery?

What if the money was now through good investments? Easy to say (and often true) that was also luck. But what if the "luck" was to ignore the hysteria around you (dot com bubble then, real estate now) and spend some time learning and thinking about reality rather than simply swallowing whatever the TV happened to be spouting?

Does Jobs deserve whatever he has made through Apple? If he does actually have a hand in the options backdating, does that change?

I'm very sympathetic to your larger cause of "unworthy wealth" at the emotional level, but I'm not sure that it's a coherent idea.
It seems to me that the best one can really do is a tighter version of what we have now --- inheritance tax with fewer loopholes, more aggressive enforcement of white collar crime (with less of the "technicalities" crap that makes much of what is done legal), but less moralizing about "worthy" vs "unworthy" wealth.


Kit,is your middle manager employee actually a wealth creator, or an income generator? They are not necessarily the same thing.


Maynard Handley - good questions. It would be a bit rich for anyone in the city to complain about Lottery winers.

Nasim Taleb has a few things to say about the role of luck in Finance in "Fooled By Randomness".


"through their own efforts, (and some luck)."
SOME luck? It's mostly luck. I claim no moral merit in having been clever when I was young - sheer bloody luck. In having loving, intelligent parents - ditto. Good health, energy, meeting a wonderful girl - all of it luck in large part. If you don't think it's luck, you may learn better when some of your luck deserts you.


Dearieme you may claim no merit in having been clever when young, but we all know that to be an academic you still have to put the hours in, understand what's required and know when you've delivered it, and that's not down to luck.

As an academic you may remember the MIT summer students who played blackjack table in casinos for big money. They worked as a team; one of them counted the cards, and when the odds were good gave a signal so the others put big bets on. They made money through understanding the odds, not by being lucky.

Finally, your neighbour mortgages themselves to the hilt, walks down to the casino, and puts it all on Black, and ...

If they lose, or win, do they deserve the outcome? Do they deserve the consequences of either outcome? Would you do that? To win at a game of luck you have to be able to take the consequences no matter what they are, and chosing to do that isn't down to luck.


Is because they are rich that they must pay taxes? Should not be a further reason for that?


well people in the city do pay tax. The issue is high levels of tax set deliberately to penalize "obscene" levels of income.


Quinn, your question makes my point. Only I know if he is a wealth creator or income generator. Chris's tax system could never distinguish between the two. And as to who decides my manager's "moral" status - God only knows;)

Roger Thornhill

There is no answer to this quandry. Almost all "valid" wealth creators will do everything they can to enable their children to inherit their wealth. It is human nature and not one I think you should try and oppress. The issue to me is to not make wealth a way to subvert the law or corrupt the government.

I don't agree with your kick at Bill Gates etc. - how DARE he be born into a capitalist society! you may as well have said. Better he be born into a monochromatic collective, eh? That does not make him unworthy per se. What makes him unworthy is the utter shyte he and his pestillential and unimaginative company produces.

BTW, Kit/Quinn. The middle manager is neither wealth creator nor income generator, but just a loss/cost reducer...if you are lucky.

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