A social capitalism manifesto

A bit of an off topic post, I was not sure to send it to my list of investors. But if it can have an impact, I view it as important to share it.

Summary.

A Capitalism redistribution plan can redistribute large wealth and include excluded people while maintaining it’s industrial creation power. My redistribution plan is ethical and practical. I humbly ask people of influence to look at this.

This is not an scientific article, I own my publication and I do not need to put scientific paper references. The idea is the big picture.

Starting point:

1-Communism failed everywhere. Restricting wealth creation also never leads to prosperity.

2-Capitalism works at building material prosperity in general. It however creates pockets of unused wealth, wealth that is too big for billionaires to spend on reasonable material things (more than several houses and vehicles, plus employees). This wealth sits unused. What I mean by unused?

3-Billionaire wealth is invested in stocks of their own company for the most part. They do not have billions of money in bank accounts. It is shares of their company. It has a stock market value based on buyers and sellers but ultimately based on the future profits of their companies. (Similar also for private companies).

If we target billionaires from profitable companies such as Google or LVMH or AB-Inbev, these companies are mature, pay dividends (or could) and do not need the billionaires ownership to function.

4-I assume that most billionaires stay billionaires because they want to keep stakes in the companies they created or inherited and control the company strategy. I do not know any billionaire but my guess is that for most, it’s not about the spending power of having 2 versus 20 billions, but it is about building and growing their company. Owning 200 millions instead of 30 billion dollars should not change their lifestyle much (for most).

The idea is simple. The government should take their company stock based on the billionaire nationality/residence and redistribute them to all citizens/residents, or all poorer citizens. It should be stock going straight to the citizens/residents accounts.

BUT, it should leave the billionaires controlling the companies, their lifework, so they can still manage the companies and have fun developing them. The billionaire would keep some supervoting shares. The citizens would get non voting shares but with a dividend right.

For example. The billionaire goes from a 30 billion dollars ownership to 1 billion, or 100 million, depending on his lifestyle or depending on the scheme adopted by the local government. But he would still have his board seat and board salary, or CEO seat and salary. That would go into a few millions a year. Plus some shares worth millions. That should be enough!

The billionaire should view it as a ultimate life achievement. The billionaire should be happy to be now building for poorer people investments accounts. The social value of helping their fellow country people should be viewed as higher than having a great net worth in a ranking.

We could have rankings of net worth generated for others and have billionaires fighting to be on top of this ranking. The society should cheer for the billionaire to keep developing the company for them.

Technicality 1. Some selling restriction must be in place so that the poorer people don’t all sell their shares on the first day in order to get a few thousands, crashing the price, selling for a bargain to rich people, and remaining poor. We could potentially have the investment blocked until retirement using current mechanisms in place in many countries, but with the dividend free to be spent. We could also block stock buybacks for these companies so that people could receive a small dividend while they cannot sell.

Technicality 2. It should only be for billionaires of mature companies. If you go into smaller and early wealth, it will disrupt the system at some level. Some people with smaller wealth could volunteer for the scheme to share their wealth if they wish to. They would join the leaderboard and people should value this gesture socially.

Limits: Doing some quick math with LVMH as an example, it will not make everyone rich, far from that. And not all countries have an LVMH. The sums varies for each country. It will provide some side income and some extra wealth to people, but will not remove inequality. Some people will still have great houses and lavish travel and some will still be quite poor but will have just a little more.

Limit: Isn’t a wealth tax better? A wealth tax does not directly give the money to the citizens but to a state that in my opinion can manage the funds in a bad way, such as lavish projects, high salaries, projects with no direct benefits for the people, or even corruption with some friends companies getting contracts to ..do some stuff. It would lead to endless debates on how to use the stocks and dividend income. The idea is to give capitalist assets to people so they also really enter the system they live in. Even giving to charities is less beneficiary I think. The idea is about sharing capital. Not owning capital is the problem.

Limit: It does not address inequality between rich and poor countries. I’m sure something can be figured out for that at some stage.

The first billionaire volunteering to get a scheme like this to work would remain in history as an example. Will France lead the world with such a proposition? I am French. Thomas Piketty also. We like to Think Different (TM). I don’t agree with all of his statements, but he is the main one going out in the world questioning inequality and looking at potential solutions. Maybe this idea can reach him. Me, as someone that knows the stock market quite a bit, and others like me, can look at inequality reduction ideas that are using capitalism tools and their inherent power.

I think that going after the “unused” billionaire wealth is a easy first step. I do think that some inequality is necessary for society to function but that more can be done to reduce it.

Bernard Arnault is also French. Bernard, you could make history and set an example for the world. If you want, I rewrite it in French for you another day :).

It’s getting late. Sending. I don’t know where this will go, but please share, if it can reach someone who will raise the question further.

PS:I normally write about stocks