Monday, October 29, 2012

Where the Money Went

The conventional wisdom is that the rich are overtaxed, and that this is “crowding out” investment. That if you just turn over tax money that goes to waste to the rich, they will spend it in ways that will benefit us all. The wealthy pashas will allocate wealth much more wisely than “corrupt” governments, which waste it on things like infrastructure, public universities, high-speed rail lines and subsidies for solar energy and affordable housing. But where have the trillions in tax cuts really gone in a country with Great Depression levels of unemployment and underemployment and people dying from lack of health care? Here area few things the wealthy have spent their extra tax bonanza on.

Billionaire Bill Koch's new Colorado town is a private Old West marvel

KEBLER PASS —There's a new town in Colorado. It has about 50 buildings, including a saloon, a church, a jail, a firehouse, a livery and a train station. Soon, it will have a mansion on a hill so the town's founder can look down on his creation.

But don't expect to move here — or even to visit.

This town is billionaire Bill Koch's fascination with the Old West rendered in bricks and mortar. It sits on a 420-acre meadow on his Bear Ranch below the Raggeds Wilderness Area in Gunnison County. It's an unpopulated, faux Western town that might boggle the mind of anyone who ever had a playhouse. Its full-size buildings come with polished brass and carved-mahogany details and are fronted with board sidewalks and underpinned by a water-treatment system. A locked gate with guards screens who comes and goes.

Read more: Billionaire Bill Koch's new Colorado town is a private Old West marvel - The Denver Post 

Oracle founder Larry Ellison buying Hawaiian island of Lanai

Ellison agrees to buy 98% of Lanai from L.A. billionaire David Murdock, who controls Dole Food and many other businesses. Local observers value the deal at more than $500 million.

Ellison, the founder of Oracle Corp., has agreed to buy 98% of the island of Lanai from David Murdock, a Los Angeles billionaire who controls Dole Food Co. and many other businesses under Castle & Cooke Inc.

Lanai, the sixth-largest Hawaiian island at 141 square miles, was once a pineapple plantation and is still sparsely inhabited. According to documents filed with Hawaii's Public Utilities Commission, the purchase will include two resort hotels and two golf courses with clubhouses.

The sale price has not been disclosed, but local observers value the deal at more than $500 million. That's a large real estate transaction by any standard, though not earth-shattering in the realm of trades among wealthy investors.

Steve Jobs' Yacht and the Price of Inequality

Dutch blog One More Thing has photos of Steve Jobs' mega-yacht, designed by Phillipe Starck and only completed posthumously. It's a valuable reminder of the best argument for reducing economic inequality.

Jobs is a good case for this precisely because he's widely acknowledged to be a good businessman. He didn't get rich running some kind of scam or exploiting regulatory arbitrage. From the Apple II to Pixar to the iPhone, Jobs made money by ushering into existence things that people wanted even more than they wanted money. It's a great story of entrepreneurship and capitalism. And yet at the end of the day what you have is an enormous boat with six iMacs on board. The absurdity of these watercraft and the fact that there's clearly a large positional element to the race to acquire them (the goal is to have the awesomest yacht in the marina not necessary to meet any absolute standard of yachtness) shows that beyond a certain point it becomes extremely difficult to transform additional money into additional happiness.

As Brad DeLong writes "The time and energy and work devoted to making, toasting and serving a $40 bagel at the Four Seasons Hotel on 57th Street in Manhattan would, in a more equal America, buy a full dinner for four at Sizzler Steakhouse for a family to whom going to Sizzler is a once-a-month treat - and thereby produce more human happiness."

By the same token, one man's super-yacht could have been more spacious accommodations for a dozen regular families.

And then there's all the money spent on life-extension, offshore private islands and trips into outer space.

I guess we can see where Romney's trillions in tax cuts will end up.

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