Friday, October 2, 2015

Let's deter the rich from having kids

As Piketty's Capital in the 21st Century so painstakingly argued, inherited wealth is a primary driver of global inequality and poverty. Today, he writes, "inheritances (of fortunes accumulated in the past) predominate over saving (wealth accumulated in the present)." Elsewhere, Matt Bruenig gives a sense of the scale of the problem: "the wealthiest 1 percent of families have received, on average, $2.7 million in inheritance" - about 447 times what the least wealthy receive.

Clearly, any economic agenda aspiring to reduce inequality and poverty has a significant interest in doing what it can to minimize inherited wealth among the rich. So why not do what we can to deter the rich from having kids?

This of course is a mirror of the recently popular scheme of funding contraception to keep the poors from making so many welfare babies. What I find interesting is that we literally never talk about this, even though it relies on the exact same rationalizations as the other scheme, and has significant additional advantages.

As the argument goes, it's completely legitimate to implement class-based population controls as long as they are not coercive. Obviously providing free contraception will not be a particularly effective approach for the rich, but one can imagine all kinds of alternatives. For example, the government could provide a tax benefit for wealthy, childless parents who voluntarily undergo free sterilization. It could actively promote the virtues of sterilization for the rich in aggressive, massively funded public service announcements and marketing campaigns. And government prosecutors could as a matter of policy always offer sterilizations when plea bargaining with the rich.

A crucial point here is that because inheritance among the rich is such a costly problem to society, absolutely extraordinary investments and measures are justified in curbing it. Just consider Fred Koch, for example, who left a $5.6 billion estate when he died. The potential returns on investment here are huge. An even more crucial point is that when the investment is successful it's also somewhat temporary, since it isn't trapped as unproductive, inherited capital.

There are of course some complications with this approach, but they don't strike me as particularly decisive. For example, if your goal is to prevent any inheritance, you would hypothetically have to deter the birth of any potential inheritors. This certainly expands the program, but we are still talking about potential heirs to just 1% of the population. Moreover, there's probably reason to suspect that this kind of deterrence can work in degrees if we assume that the rich are more motivated to hoard wealth for immediate heirs than for more distant relatives. I suspect you would also want to create some supplementary programs to deal with other avenues of inheritance, like adoption and nepotism, but we can still leverage many of the same incentives.

Again, it's notable that we never see technocratic capitalists consider population engineering for the rich, even though the rationale is almost completely identical. By the way, another advantage to targeting the rich is that it completely avoids the standard concerns about economic coercion that naturally emerge when you engineer a system that encourages - er, "facilitates" - the most powerless people giving up even more.