Why Sam Altman’s proposal of American Equity Fund would be detrimental to society and why it would not work
We could do something called the American Equity Fund. The American Equity Fund would be capitalized by taxing companies above a certain valuation 2.5% of their market value each year, payable in shares transferred to the fund, and by taxing 2.5% of the value of all privately-held land, payable in dollars.
Good intentions, bad solutions.
1. Wrong incentives
If you are getting shares or money yearly because Amazon / Apple / Alphabet / Microsoft / Facebook is over a certain market cap, you are definitely not going to like any upcoming competition to those giants. You (and others benefiting from the ridiculous bigness of these corporations) would have an incentive to not use, find flaws and smear the alternatives.
2. Corporations would just break up into smaller pieces
Alphabet Inc. would become Google Search Inc., Google Drive Inc., Youtube Inc., Gmail Inc. etc.; you get the idea. They would keep breaking up to not exceed a certain market cap. At the end of the day, 51% of voting shares would still belong to Larry and Sergey in all of those.
Any imposition of taxes based on some cap (let it be market or revenue) will be futile as history has clearly shown. Businesses will inevitably find ingenious ways to circumvent these and as always, the consumers and the workers will pay the price for these bad ideas.
So, what should be done?
The one thing I agree with Sam is that technological progress will keep going up and most likely faster than ever before.
But will only the rich benefit and average people will be left behind? That’s what Karl Marx was afraid as well. But this has not happened yet although it has been predicted many times with each technological advancement. What did happen then?
What happened instead is actually quite the opposite. People on average have been getting more prosperous, more secure, and freer than ever before. It’s actually quite magical what humanity has achieved since the middle of the 18th century.
Conclusion
I don’t think we have a problem. On the contrary, it’s been getting better. More and more people participate in the stock market, more and more people own assets, more and more power is distributed.
We don’t need governments to babysit us. It will be alright.
Milton Friedman — Why Tax Reform Is Impossible: https://www.youtube.com/watch?v=TruCIPy79w8
