An Offhand Thought On Political Reform

In an overview of his five-part series on wealth and wealth taxation, The Hoover Institute's John Cochrane makes a fairly innocuous and casual statement: "Saez and Zucman want to confiscate billionaires' wealth, because they think billionaires have too much political power."

Years ago, I went on a half-vacation to El Salvador, during which I had the opportunity to hear a lot about recent (post-civil-war) Salvadoran history from the guides at several museums and tourist spots. It was said to me that, after the civil war, the Salvadoran government fired the entire police force and every politician in the country, and hired all new people; people whose families had not previously been in the police or the government. It was a fresh start, so to speak. (The Chapultapec Peace Accords.) I am not an expert in this subject, so I cannot say to what extent the "average Jose's" understanding of the Chapultapec Peace Accords aligns with the literal truth. That's not important. What's important was that it struck me as being an incredibly wise idea to bar prior politicians and their families from getting into politics.

It makes sense in El Salvador, because these politicians and policemen were precisely the aggressors who had stoked the flames of the country's terrible, terrible civil war. Surely it's an idea that wouldn't scale well to a relatively stable country like the United States. But that doesn't mean there isn't some wisdom to be gleaned from it.

Suppose, for example, that Saez and Zucman are correct when they note that billionaires have too much political power. One solution might be to eliminate billionaires. A different solution, however, might be this: impose strict limits on the political power of billionaires. If the problem is that too many billionaires influence government, then why not outlaw that kind of influence?

Perhaps there are gains to be made from barring billionaires from holding public offices or lobbying positions. Perhaps we could limit -- or eliminate -- the ability of politicians to invest in companies owned, founded, or run by living billionaires. Perhaps we could outlaw the kind of private meetings had between politicians and billionaires that are otherwise inaccessible to average, non-billionaire citizens. Perhaps we could prohibit the granting of major tax loopholes, credits, or waivers to billionaire-owned companies unless they are extended to all other businesses at the same time.

These limits would not necessarily need to be so strict as to strangulate a billionaire's ability to participate in the political system. Billionaires could still found non-profit organizations or fund academic research. They could still vote like the rest of us. But they would be prohibited from engaging in special audiences and agreements with the government at any level.

These ideas, too, would limit the political power of billionaires. We need not confiscate their money.

It's a somewhat natural impulse for people to believe that, if billionaires corrupt government, then we should simply do away with billionaires. I think it should be at least as natural an impulse to do away, not with the billionaire, but with the influence. Why do these propositions never seek to impose harsher limits and punishments on politicians? Why do we only ever punish one side of a two-sided corruption?

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