The Patriotic Millionaires Are Full Of Shit. Obviously.

Paying more taxes is easy

This has to be one of the least sympathy inducing articles ever - rich kids worried about their inheritances. We’re about to have that grand generational shift apparently, trillions upon trillions are going to move from the people who made it to the Lucky Sperm Club.

Woes.

The traditional answer to this is to leave those inheritees be and they’ll blow it all on hookers and coke soon enough. The standard deviation of soon enough is pretty big - the folk tale is clogs to clogs in three generations but the Hervey’s managed to wait until the 7th Marquess for it all to get - quite literally in that case - blown. But, you know, it does eventually happen. There are no really old fortunes.

This isn’t, perhaps, enough for the hurry hurry of the modern world. Thus we get people like this:

Tax, of course, could — should — play a huge part in all this. “Philanthropic donations are a drop in the ocean compared to what even quite minor tax increases on the richest in society would provide,” Lewis says. Patriotic Millionaires is calling for a hike in taxation for the super-rich — and its members aren’t limited to millennials. They include Guy Singh-Watson, founder of Riverford Organic Farmers; Graham Hobson, founder of Photobox; the Perry family, from the posh ready-meal business Cook; and Ian Gregg, whose father founded Greggs.

“At the moment philanthropic donations amount to about £10 billion per year,” Lewis says. “A wealth tax of 1 to 2 per cent on assets over £10 million, which would affect only the wealthiest in the UK, would raise more than double that. Closing tax avoidance loopholes would raise much more than this.”

As I pointed out in the same newspaper, The Times, two decades back, this is purest bollocks. For it’s entirely easy to pay extra tax if that’s what you wish to do:

Cheques, by the way, should be made out to “The Accountant, HM Treasury”, and sent to 1 Horse Guards Road, London SW1A 2HQ.

Job’s a good ‘un. Except, back then, near no one did. I managed to get the numbers out of The Treasury for the previous year - it took some months as they were amazed that anyone had even thought of checking this - and a whole 5 people had paid that extra tax. Four of whom were dead, leaving bequests. That is, the UK, that year, contained one whole person willing to pay higher tax than duly and justly levied upon them. Some flood of patriotic millionaires there was not.

Matters do not seem to have improved greatly:

But something is not working. The accounts of the Debt Management Office for the year ended 31 March 2020 show that it received donations or bequests totalling just £48,957. While that’s a large percentage increase on the £11,069 received during the year ended 31 March 2019, by any standards these figures are tiny.

Not the sorts of amounts likely to make a great impact upon a lifetime’s supply of coke and hookers, is it?

One correct answer to these claims by the Patriotic Millionaires is therefore that they’re full of shit. In slightly more technical language they’re doing ethical performativity. There’s always a difference between expressed preferences - what people say - and revealed preferences, what people do. What people really believe is in what they do - but it’s entirely possible that saying the right things, even if not doing them, will get you invited to the right sorts of parties. You know, the ones where someone else pays for the hookers and coke. So, people say things they don’t do for reasons of societal enrapture. Hardly an uncommon human activity, that.

But that poseurs are full of shit isn’t an exciting enough proposition for us all to write/read a piece about it. We need to go further. So, we shall - what should these folks actually be doing?

They calculated that he could keep up his lifestyle in London while making his money work harder, with the end goal of giving away 80 per cent of his wealth by the time he is 85, or “more if I live longer”. But he’s clear that it’s not as if he has moved into a tent and is living off food banks. “I can keep what I need — I live in a big house in London, I send my children to private school, I love to travel,” he says. “But I now maximise the impact [of my wealth] by taking real risks, by making philanthropic donations and impact investments.

Those last two words - impact investments. By which I don’t mean into B Corps, or non-profits. I certainly don’t mean donating cash to the usual upper middle class grifts - Oxfam is little more than indoor relief for the dimmer children of the Haute Bourgeoisie after all and the same is true of the entire raft of the sector. Something for Tarquin and Jocasta to do before they raise their nappy free children around the rural Aga.

The thing these people have is capital. So, invest the capital. And invest it in things that are set up as capitalist enterprises. No, not because they want or need to make more money themselves - although if they do they can just do this all again - but because profit is the proof of value being added. That’s what it is - the excess of the value of what is produced over the value of the inputs consumed to produce it. We do actually want societal resources to be deployed in a manner that adds value. So, if we’re trying to make society better then we’ve got to use the measure we’ve got of adding value - profits.

Now, they are saying that they don’t want to simply “invest” because that just preserves their wealth and privilege. So, go out into start up investing. Near all of these fail, so that’s one way of getting rid of the cash. Enough succeed that over a series of them there should be a total return - which can, as above, then be turned around and used again.

But rather more importantly there are a whole series of problems that can be usefully addressed with the willingness to lose a bit of capital. Willingness to risk losing perhaps.

Sure, of course, there’s that whole VC and private equity industry out there looking for useful things to invest in. There are still little holes in that industry where a different type of money could be usefully deployed. Say, one that isn’t looking for 10 bagger returns. Perhaps profitable, yes, but one where the profit is measured by more than just that fiscal profit. Or, and this will seem an oddity, smaller amounts of money.

That oddity is that those investment funds are large and they pay their people well - $100’s of ks a year. Which means that an investment of $500k (say) doesn’t work. The costs of evaluating it using labour that expensive just doesn’t work out.

I think it unlikely that other industries are particularly different from the one where I’ve specialist knowledge - weird metals. And I could come up with several little ideas that need testing out, the testing out being a useful deployment of those willing to be lost but adding societal value funds.

For example, the big problem in rare earths - and this will become most apparent in the recycling of rare earths when we all start doing that - is in the separation of them, one from each other. Currently that uses a $billion plant. And you’ll not - or at least not want to - insert a few tonnes from here or there of recyclable material into that $billion plant. So, we need, or desire at least, a small scale method of separating rare earths. There are a couple of pilot scale experiments that should be done. In the £250k to £500k range would be about right for financing. They should in fact work, be profitable. But that’s not a sum that any mining finance house would want to invest. The final market’s not large enough for something to potentially be a 100 bagger and so on. But it would be a useful deployment of small scale risk capital.

Or slightly larger, there’s long been a suggestion about processing red mud (the wastes from alumina production). Lots of experimentation too. All sorts of ideas. But someone needs to take it from lab bench work to pilot stage. Actually buy a furnace and get on with doing it in the real world. Or maybe you think that gallium and germanium, it’s a bad idea to be relying upon China. The raw material there is fly ash from coal burning (or that red mud if you want) and $5 million would build a small extraction plant. Producing 1 or 2% of global demand, say. Could be a nicely profitable little business even if it’ll never scale - the no scaling being why it’ll not gain access to the more traditional forms of finance. Even xenon, perhaps we shouldn’t rely upon Ukraine? The raw materials there are just air (yes, really, atmosphere) plus really, really, cheap electricity. Didn’t Abu Dhabi have a utility scale solar that came in at $0.014 per kWh? That would work. Again, not scaleable, not going to interest Silicon Valley (even though the xenon is sold into the chip making market) but something that could be usefully done.

And that’s just me, a dilettante in the weird metals market. Willing to wager that there’re just such opportunities in every market out there.

You think you’ve got too much money? So, start up businesses that solve these sorts of problems. Businesses that add value but which aren’t funded by the usual sources as they’re just interesting, not potentially amazing. Do it for money too - because if you make it you can do it all over again.

And whatever the fuck you do don’t just sign it over to Tarquin and Jocasta. Oh, and tax is an irrelevance.