The real lesson of Jeff Bezos' divorce drama? Soak the rich.
Mackenzie Bezos doesn't deserve $66 billion. No one does.
Jeff Bezos is the world's richest man, with a fortune estimated at about $137 billion. That makes his upcoming divorce, announced Wednesday, the subject of intense speculation. Bezos has allegedly been fooling around with Lauren Sanchez, herself the wife of big-shot Hollywood agent Patrick Whitesell, including lots of sexts — at least according to the National Enquirer (so take that with a heap of salt).
Either way though, this is a good piece of evidence in the case for confiscatory top marginal tax rates. Without them, a nation inevitably develops an aristocracy of wealth.
But first: The juicy divorce gossip. TMZ reported (so take that with another heap of salt) that Bezos and his wife MacKenzie did not sign a pre-nuptial agreement, and so according to Washington state law she might be entitled to half of the wealth developed during the marriage, making her instantly one of the world's richest people with $66 billion. But then again, as CNBC argues, MacKenzie might not want to dilute Jeff's control of Amazon, because that might spook investors and thus reduce the value of her assets (which would be mostly Amazon stock). Her lawyers thus might want to cook up some ownership arrangement that still allows Jeff to dominate his vast business empire, which might imply a smaller loss.
But let's first agree on this: It is flatly preposterous for such incomprehensible sums of wealth to go this way or that according to the personal foibles of one person. Think of the command of material resources $66 billion implies: It is $200 in the hands of every single person in the United States. It would buy 2.8 million Honda Accords. It's enough to build a decent high-speed rail system in the Northeast corridor four times over (if we paid reasonable prices for it).
However, the salacious gossip angle should not lead us to conclude that it is only a problem when tens of billions of dollars are disposed of because one faintly pathetic rich guy allegedly couldn't stop himself cheating on his wife with the former host of So You Think You Can Dance. It's still a problem to let any one person — with no democratic accountability and little oversight — to command that much wealth. Indeed, if anything it's worse when it's not flings and divorces driving events.
Consider The Washington Post, which Bezos bought for $250 million (or 1/264th of his ex-wife's possible fortune) back in 2013. He has by all accounts been a fairly hands-off owner — which is pretty far from the norm when ultra-rich people buy journalism publications. But Post employees still report subconscious pressure to take it easy on Amazon or avoid the subject altogether, because it's their own livelihood on the line. How could they not?
As Matt Yglesias points out, there are lots of excellent economic studies arguing for very stiff taxation at the top. One paper says the optimal point in terms of tax revenue is about 73 percent. Another says it would slash inequality by reducing the incentive of top executives to bargain for enormous salary packages. Another says it would discourage talented people from pursuing careers in banking, law, or business, and instead push them into research, teaching, or other more socially valuable jobs. (Better to have the smartest people cooking up vaccines instead of new subprime mortgage-backed securities.)
But another reason, simpler and perhaps more convincing, is about democracy. The United States is supposedly a democratic republic. The Bezos Post is only a tiny, tiny piece of the iceberg of rich people exercising enormously outsize influence over American society by throwing their money around — on hideously wasteful mega-estates, or buying the political system, or buying entire academic departments, or even running functioning businesses into the ground.
When liberals argue that the top marginal tax rate in Eisenhower's day was 91 percent, conservatives retort that barely anyone actually paid that rate at the time. But this is half the point of such an eye-watering tax rate — to prevent the formation of an ultra-wealthy caste which would inevitably dominate society and politics.
The very fact of someone being millions of times richer than the median household makes a hash of foundational American principles. The Declaration of Independence states: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed[.]" A nation which pays rapt attention to the divorce mechanics of its wealthiest inhabitants, for the logical reason that it probably matters more than the decisions of any representative, senator, and all but a few governors, is not really a republic. It is an oligarchy.