Bill Koch's Wild West village tells us all we need to know about taxing the rich

It's a simple question: would you prefer lasers or a Wild West gated community?

The Denver Post brings us the news that Bill Koch – one of the Koch brothers, the right-wing billionaires who are trying to buy the American political system as though it were just another corporate acquisition – is recreating a 50-building old West town on his estate.

Nancy Loftholm reports:

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.

As Matt Yglesias points out, this is pretty close to the best demonstration of the declining marginal utility of wealth there could be. He writes:

As people get richer and richer, it gets harder and harder to think of cost-effective ways of spending the marginal dollar on amusing yourself. When you take from the rich and give to the poor, you end up generating a lot of extra welfare as people who don't have very much can have their lives greatly improved at relatively low cost.

Money is literally more useful in the hands of the poor than in the hands of billionaires. If someone is struggling to afford enough food to survive, you can vastly improve the quality of their life by giving them enough money to buy a loaf of bread. But while it's possible to imagine that life gets noticeably better when you trade your first class plane tickets for a private jet, the amount of money it requires to get that improvement could make an equivalent difference in the lives of many more people who can't afford air travel.

This is basically the justification for progressive taxation. At a certain – relatively low – level, the discrepancy in marginal utility of income is high enough that it is prima facie just to redistribute. If a marginal pound can do 100 times as much good in the pockets of someone on the minimum wage than in the pockets of someone on £1m a year, then there needs to be a very good reason why it shouldn't be transferred from one to the other.

Thankfully for the millionaires, there is: incentives. The amount of wealth in the world at this very moment isn't the only important thing to take into account; the other is where extra wealth is going to come from.

The facile claim that lies at the heart of the Laffer curve is that, if marginal tax rates are 100 per cent, people won't bother working. So if we try to apply our naïve redistributionism to the real world, we would end up taking most of the wealth of the developed world and sending it overseas, which would most likely end up in the global economy shutting down; not the best outcome for anyone.

If we just ended there, the analysis would be little deeper than the most thought-free attacks on socialism.

But in fact, there is more to say, thanks, again, to the Koch brothers. Just as they demonstrate the existence of declining marginal utility of wealth, they also demonstrate the existence of motivations for work beyond mere wages.

The Kochs don't work for money: they work for influence. Money is a useful means to that end, and it can also enable them to build crazy villages on their estates. But anyone looking at their actions can infer what they really want.

Similarly, do you think Richard Branson would stop Bransoning around (it's a verb now, look it up) if he made less money doing so? Or is he interested in fame, adventures and prestige projects as much as he is in earning his salary?

This is the reasoning behind the French finance minister's announcement two months ago of a potential salary cap for the country's state-owned companies, which include EDF, Areva and SNCF.

Certainly, no one questions the advantage of a salary cap when it comes to the very specific sector of "being a politician"; for all the acknowledgement that we need to attract the best candidates, it is understood that people become MPs for reasons beyond a desire for a good paycheck.

So why not cap salaries? Or, if that's too much, why not copy the lead of the 1974 government, and introduce an effective top rate of 98 per cent – a cap in all but name.

Such a cap would have a number of positive side-effects, including reducing inequality and ending the distortionary effect the "super-rich" can have on a community, but the main advantage it could have depends greatly on how organisations respond to it. If the wage-pool of the top executives were reduced tenfold, that money could be redistributed to other workers, which would be great, or it could be hoarded, which would be not so great.

But there is a third possibility. Yglesias suggests that extremely high marginal tax rates – which fill the same role as salary caps – were responsible for Bell Labs, the famous corporate R&D department which developed, amongst other things, radio astronomy, the transistor, the laser and UNX. [He wrtml):

If you're a corporate executive and you know that 90% of any additional income that you pay yourself is going to go to the federal government, suddenly using the corporate account to buy yourself fun new toys instead looks like an appealing alternative. And what could be more fun than a giant wacky research lab!

And presented as a choice like that, it suddenly becomes a whole lot less clear that high tax rates, at the very top end, are such a bad thing. Crazy gated Wild West vanity project, or lasers? I know what I choose.

Welcome to the Wild West. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Appearing in a book is strange – being an actual character must be stranger

Much as it jolts me to come across a reference to my music in something I'm reading, at least it's not me.

I was happily immersed in the world of a novel the other day, Rachel Elliott’s Whispers Through a Megaphone, when suddenly I was jolted back into reality by my own appearance in the book. One of the characters hears someone singing and is told, “‘It’s Leonora. She sings with her window open.’ ‘She’s good – sounds like Tracey Thorn.’ ‘She does, doesn’t she.’”

It was as if I’d walked on stage while still being in the audience. It’s happened to me before, and is always startling, a kind of breaking of the fourth wall. From being the reader, addressed equally and anonymously, you become, even momentarily, a minor character or a representative of something. In this instance it was flattering, but the thing is, you have no control over what the writer uses you to mean.

In David Nicholls’s Starter for Ten, set in the mid-Eighties, the lead character, Brian – a hapless student, failing in both love and University Challenge – hopes that he is about to have sex with a girl. “We stay up for an hour or so, drinking whisky, sitting on the bed next to each other and talking and listening to Tapestry and the new Everything But the Girl album.” Ah, I realised, here I represent the kind of singer people listen to when they’re trying, though possibly failing, to get laid.

Fast-forward a few years, to the mid-Nineties of Bret Easton Ellis’s Glamorama, a book constructed from lists of people and things, clothes and music, which apparently indicate the vacuousness of modern life. “I dash into the Paul Smith store on Bond Street, where I purchase a smart-looking navy-gray raincoat. Everything But the Girl’s ‘Missing’ plays over everything” and later, “In the limo heading toward Charing Cross Road Everything But the Girl’s ‘Wrong’ plays while I’m studying the small white envelope . . .” Here I’m being used to represent the way bands become briefly ubiquitous: our songs are a soundtrack to the sleazy glamour of the novel.

These mentions are all fine; it’s only the music that features, not me. Spotting yourself as an actual character in someone’s novel must be more shocking: one of the perils of, for instance, being married to a novelist. I think of Claire Bloom and Philip Roth. First she wrote a memoir about how ghastly it was being married to him, then he wrote a novel about how ghastly it was to be married to someone very like her. Books as revenge: that’s very different indeed.

Few people who had ever met Morrissey emerged from his memoir unscathed (me included), but particularly Geoff Travis of Rough Trade. He was hung, drawn and quartered in the book, yet seems to have maintained a dignified silence. But it’s hard knowing how to deal with real people in memoirs. In mine, I chose not to name one character, a boy who broke my 18-year-old heart. Feverish speculation among old friends, all of whom guessed wrong, proved how much attention they’d been paying to me at the time. I also wrote about my teenage band, the Marine Girls, and then sent the chapter to the other members for approval. Which led to a fresh outbreak of hostilities and not-speaking, 25 years after we’d broken up. Don’t you just love bands?

Worrying about any of this would stop anyone ever writing anything. Luckily it didn’t deter John Niven, whose scabrous music-biz novel, Kill Your Friends, mixes larger-than-life monsters such as the fictional A&R man Steven Stelfox with real people: and not just celebs (Goldie, the Spice Girls), but record company executives (Ferdy Unger-Hamilton, Rob Stringer) known best to those of us in the biz, and presumably thrilled to have made it into a book. John confirmed to me recently: “In the end I got more grief from people I left out of the book than those I put in. Such is the ego of the music industry. I heard of one executive who bought about 30 copies and would sign them for bands, saying, ‘This was based on me.’ You create the Devil and people are lining up to say, ‘Yep. I’m that guy.’”

In other words, as I suspected, there’s only one thing worse than being written about. 

Tracey Thorn is a musician and writer, best known as one half of Everything but the Girl. She writes the fortnightly “Off the Record” column for the New Statesman. Her latest book is Naked at the Albert Hall.

This article first appeared in the 06 April 2016 issue of the New Statesman, The longest hatred