Bill Gates Alex Wong Getty Images

Bill Gates disapproves of Thomas Piketty’s method of leveling the play-field – levying a capital tax – and proposes a different tack: a progressive tax on consumption.

While I agree with both Gates and Piketty that extreme economic imbalances are bad for the society I profoundly disagree with both about how we should deal with them.
First things first. Extreme economic imbalances being bad has nothing to do with morals and very little to the fact that the poor feel bad when exposed to the excesses of the ‘filthy rich’.
They are bad simply because the dirt poor cannot express their creative potential and because the rich end up concentrating too much of the decision power. The society as a whole – including the super rich – looses, specially on the long run.
Taking the decision power from the hands of the super rich and giving it to the governments, through increased taxation, would only complicate matters. Not to mention the byzantine mechanism needed to enforce Bill Gates’ consumption tax.
Encouraging the rich to donate more would somewhat alleviate the problem but not much since until the money were distributed, if ever, the decision power would still remain too concentrated for our own collective good.
How about those same very rich people, now that enough of them have understood the perils associated with extreme economic imbalances, simply setting an example and start calculating wages using a completely different principle than is used today?
What if instead of ‘as low as the market allows’ they would ‘compensate’ their employees, all of them, as generously as their businesses can reasonably afford to? Somewhat in line with what Ford did back at the start of the XX-Th century, with more than excellent results for both sides? And does again now!

And how about the same rich and powerful individuals using their ‘political muscle’ and insisting on better governance? After all if their businesses and trust funds would have been run as most governments are run today they would have gone under a very long time ago…
And then, after the governments would have been ‘fixed’, and tax money not wasted anymore, how about the very same 1% start paying in earnest their ‘normal’ taxes, like the rest of us?

Surprise, surprise…

The real dangers of extreme economic imbalances: https://nicichiarasa.wordpress.com/2014/10/29/extreme-fragility-dead-ahead/
Why Ford increased wages back then: http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/
Ford increases wages now: http://www.wsj.com/articles/ford-to-move-hundreds-of-entry-level-workers-to-higher-pay-rate-1423026005