Expropriating the rich

There are many out there who insist that we really must, just must, expropriate the rich. We’ve even seen one buffoon state baldly “We must tax the rich because they are rich”. It’s also noted, a la M. Piketty, that the rich have been expropriated. Unfortunately, he gets the mechanism entirely wrong.

The premise of my recent paper (Taylor 2021) is that the rapid decline in British agricultural prices in the last quarter of the 19th century, which shrank not only the income of aristocratic landed estates but also the income of ‘commoner’ (i.e. non-aristocratic) families who owned land, led to a significant proportion of male aristocrats marrying American heiresses with rich dowries as substitutes for the traditional source – namely, brides from British families with landed estates but no titles.

British agricultural prices began their drop in the mid-1870s for several reasons, from the development of US railroads and prairies to the advent of steamships, all of which led to the UK market being flooded with cheap prairie wheat.

Agricultural land prices declined precipitately as a result of those changes. One marker of how much they did is that by the 1920s the income from an agricultural estate would not even maintain the buildings which the prices of a century before had been able to build.

But by the timing of this we can see that it wasn’t wars, taxation or government action - with one exception - that led to this expropriation of the landed classes. M. Piketty is wrong in his analysis. It was that technological change, the flood first of produce from the US and then, in the 1890s, from the Ukraine, that did. The government action was the revocation of the Corn Laws in 1846 which meant government got out of the way and allowed the technological change to so alter the wealth distribution. Those conservatives opposing the change were in fact right, the common man gaining cheaper bread would change their fortunes.

This is something that has a lesson for today’s social justice warriors. Technological change is what promotes social mobility by altering the value of assets and income streams. In a time of technological change one cannot remain at the top of the societal pile by simply sitting, lumpen, on the useful assets of the previous economic model. In our current day we could note that it is the geeks inheriting the earth but their time will pass too, as did that of merely owning land.

That lesson being that those who desire more of that social mobility need to support the system which best promotes technological change - that is, of course, free market capitalism. Those those arguing for social mobility need to be arguing for more free market capitalism and a lot less protection of the incomes and assets of the current generation of top dogs.

Oh, and that lesson of how to actually deal with those entrenched asset holdings. The way to expropriate the rich is to compete it out of them, not confiscate it.