A simple way of putting this is that humanity can live on its income even with zero wealth, but it can’t live on zero income no matter how much wealth it has.

True wealth is production, not paper

Incidentally, this is one of several reasons that wealth taxes don’t tend to raise a lot of money. When you start taxing financial assets, those assets become less valuable to investors, because owning those assets now means getting taxed. So the market price of the assets drops, which reduces the amount of tax revenue from the wealth tax.

In other words, the total amount of wealth the world could actually spend all at once is a lot less than the $454 trillion it has on paper. Selling off many of the world’s assets at once would crash the price of those assets, and a lot of that $454 trillion would just vanish into thin air.

Suppose there are 1 million total shares of stock in Noahcorp, but that only 1000 shares of Noahcorp get traded on any particular day. And most Noahcorp shares just sit in people’s accounts and never even get traded at all. Now suppose that the 1000 shares that DO get traded go for $300 a share. Mark-to-market accounting means that we value all 1

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The wealth of America’s billionaires was estimated at around $5.2 trillion in 2023, while federal government spending was about $6.4 trillion. Confiscating every last penny from Jeff Bezos, Elon Musk, and all the other billionaires wouldn’t fund the U.S. government for one year. And of course you could only do it once.

This is why despite what some silly people say on social media, confiscating rich people’s wealth wouldn’t be nearly enough to fund the government.

Most economic debates are about income , not wealth. When we talk about income taxes, or welfare benefits, or labor’s share of national income, we’re talking about the amount of goods and services that get created every year, and how those goods and services get allocated among the various people in a society. But in the 2010s, we saw a lot of... See more