{"id":469,"date":"2024-04-15T12:00:00","date_gmt":"2024-04-15T12:00:00","guid":{"rendered":"https:\/\/moneywithkatie.com\/the-limit-does-not-exist-or-does-it\/"},"modified":"2025-09-03T18:50:28","modified_gmt":"2025-09-03T18:50:28","slug":"the-limit-does-not-exist-or-does-it","status":"publish","type":"essays","link":"https:\/\/moneywithkatie.com\/essays\/the-limit-does-not-exist-or-does-it\/","title":{"rendered":"The Limit Does Not Exist\u2014or Does It?"},"content":{"rendered":"
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A few months ago, a 93-year-old billionaire<\/span><\/a> donated $1 billion of her wealth to a medical school to make it free for its students\u2026forever. <\/p>\n

It might seem counterintuitive that a billionaire making medical school free in perpetuity could inspire conversation about wealth limits, but in her piece for The Atlantic, columnist Christine Emba notes that it\u2019s \u201cstaggering that a decision as society-shaping as dissolving the debt load of thousands of potential doctors could depend on the whims of one individual, and that one person has the resources to implement such a policy on their own, needing no one else\u2019s input or approval.\u201d <\/p>\n

I find this thought exercise fascinating. Indulge me, will you?<\/p>\n

Emba\u2019s broader discussion entertains a viewpoint called \u201climitarianism,\u201d which suggests imposing limits on individual wealth. This is, of course, a political and financial lightning rod (have you already scrolled past the rest of this essay to punch Reply<\/em> and fire off a retort at the mere mention?!). <\/p>\n

But it\u2019s one of the most engrossing questions we face as a highly sophisticated society: How much is too much? <\/strong>I think it\u2019s fair to say that the primary argument for the \u201cno limits\u201d status quo is that by capping wealth, you cap incentive, and without incentive, people will stop innovating\u2014that there is some indirect societal value that is created by allowing individuals to personally accumulate hundreds of billions of dollars. <\/p>\n

But let\u2019s assume for a moment that there is<\/em> some limit beyond which the scales tip, the point at which it\u2019d be better for society as a whole if no one<\/em> individual continued to become exponentially richer, but if that money were used to, say, rebuild decaying public infrastructure or invest in the development of new technology (like the internet<\/span><\/a>!) or make higher education free for everyone. <\/p>\n<\/div>\n

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\n \u201c<\/span>Presumably there is some point beyond which society begins deteriorating from inequality; when the net effect becomes negative.\u201d<\/span>\n <\/p><\/blockquote>\n<\/figure>\n
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Both of Emba\u2019s \u201cbeside the point\u201d concessions in her piece\u2014that the value of the limit itself is \u201carbitrary\u201d and \u201ccontext-dependent,\u201d not to mention nearly impossible to enforce in our current fiscal system\u2014actually seem to pose the most interesting philosophical challenges of all. <\/p>\n

How would we even begin to identify such a threshold? It reminds me a little of the fabled Google interview questions (how many gumballs can you fit inside a school bus?<\/em>). Maybe it’s less about the number itself, and more about the reasoning we use for getting there. Presumably there is some<\/em> point beyond which society begins deteriorating from inequality; when the net effect becomes negative (one could argue we’re already there, and have been for quite some time).<\/p>\n

Far from being beside the point, this question is central. Where does the accumulating weight of society\u2019s needs eclipse one\u2019s individual right to be incentivized by still more personal wealth accumulation? <\/strong>Is it better to allow a civilization to topple, for an exploited underclass to rise up and overthrow its oligarchic clown state government, than for a centimillionaire to get cut off after their first hundred million?<\/p>\n

The question of incentive, by the way, intrigues me in and of itself: Even the staunchest defenders of limit-free wealth accumulation will probably concede that there\u2019s such a thing as diminishing marginal returns. Money has long been immaterial to people like Jeff Bezos. I find it dubious that capping the personal wealth of these masters-of-the-universe types would mean they\u2019d hang it up and stop working on drone shipping. Consider this data visualization<\/span><\/a> that compares his $185 billion to a measly million and report back. It\u2019s almost inconceivable to me that his next incremental dollar could meaningfully incentivize him, but maybe I\u2019m na\u00efve.<\/p>\n

Then there\u2019s the fact that the vast majority of our society would never even come close to breaching such a proposed limit (90% of American households<\/span><\/a> have less than $1.5 million in wealth, most far less; the legal limit tossed out in the piece is more than $10 million, an amount that would land you among the richest 1%). For that reason, it seems to me this issue receives a defense disproportionate in both size and intensity to the number of people who would be impacted, like a group of dudes who clock in at 5\u20198\u201d vehemently arguing about instituting a height limit of 7\u2019 in the NBA.<\/p>\n

Because of my profession, I\u2019m tempted to tap financial planning\u2019s 4% rule<\/span><\/a> as a grounding force. If my lifestyle costs $160,000 per year, my personal maximum is probably somewhere around $4 million. I can live my ideal life on $4 million in perpetuity, so accumulating, say, $10 million would represent more than I could reasonably need, as well as (probably) an indication that I\u2019ve not been very generous. But this rule doesn\u2019t quite work without raising additional questions: You could argue that spending $160,000 per year is also<\/em> wasteful. Where do choices morph from reasonable to excessive? This feels entirely subjective, and while there\u2019s probably a creative equation that would triangulate the point at which we\u2019ve allowed Katie to stockpile one too many pairs of designer shoes, my imagination fails me.<\/p>\n<\/div>\n

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\n \u201c<\/span>In a sense, it takes the \u2018pie getting bigger\u2019 metaphor that\u2019s often used to justify extreme wealth accumulation and enforces it directly.\u201d<\/span>\n <\/p><\/blockquote>\n<\/figure>\n
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There are also some creative solutions I find fascinating, like tying the ceiling to the floor. For example, \u201cThe richest person in a given society is only allowed to have X times as much wealth as the poorest.\u201d In other words, if you want to get richer, it can\u2019t be at the expense of those among us with the very least. Currently, the richest people in the US are roughly 1,000,000x richer than the median<\/em> American ($200 billion<\/span><\/a> to approximately $193,000<\/span><\/a>). It\u2019s the sacred pizza party rule as economic policy: Nobody gets thirds until everyone has their first. (Read: I can\u2019t buy my fifth beach house if there are still tens of thousands of people sleeping in their cars.)<\/p>\n

In a sense, it takes the \u201cpie getting bigger\u201d metaphor that\u2019s often used to justify extreme wealth accumulation and enforces it directly: Sure, you can have a bigger slice\u2026but first you must <\/em>actually create a larger pie. <\/em><\/p>\n

The second- and third-order effects of such an arrangement might yield some desirable results. If I\u2019m a business owner running a successful firm and I know my own personal wealth accumulation can\u2019t surpass a certain point, I\u2019m more incentivized to spend that money in other ways. Maybe I pay my workforce higher wages or I do a shared ownership model or I invest more heavily in R&D, rather than buying another boat. (This is where the question of incentive arises again: The limit would have to be high enough to incentivize entrepreneurs to take the risk in the first place.)<\/p>\n

While we\u2019re at it, I\u2019ll tell you what argument I don\u2019t find compelling: That the ultra-wealthy\u2019s adept deployment of loopholes is a reason to ignore the question entirely. We don\u2019t say, \u201cWhy ban drugs? There\u2019s no point in making a substance that\u2019s harmful to society illegal, because drug dealers will just find other ways to make and sell them.\u201d We know that making addictive substances legal and easy to obtain leads to more abuse and death (see also: the tragic opioid crisis) and that introducing friction to the process of obtaining anything tends to blunt its effects. (I\u2019ll admit this analogy isn\u2019t perfect. Just making drugs illegal doesn\u2019t really solve the problem, so much as it\u2019s a good faith effort to contain it and create disincentives.) I also don\u2019t find the slippery slope argument to be all that persuasive. \u201cIf we set the limit at $10 million, what\u2019s next? $5 million?\u201d I mean, maybe\u2014but we don\u2019t do away with seatbelt laws because we\u2019re afraid they\u2019re going to start making us wear Michelin man suits.<\/p>\n

There\u2019s a part of me that wonders if people wouldn\u2019t actually be happier<\/em> if there were some sort of limit. The other night before bed I was scrolling the r\/fatFIRE subreddit, an anonymous watering hole for (supposedly) ultra-high net worth individuals interested in sharing their innermost turmoil with one another. The average post sounds something like this: \u201cI\u2019m 45 and I have $30 million. Is that enough? I\u2019m not sure if I should grind it out for a few more years or call it a day. Oh, yeah, our annual spend is about $200,000. Two kids. Paid-off house.\u201d <\/p>\n<\/div>\n

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\n \u201c<\/span>If you couldn\u2019t go out and accumulate more, would you actually feel more peace and freedom, than if faced with the daunting prospect of endless ascension?\u201d<\/span>\n <\/p><\/blockquote>\n<\/figure>\n
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While I\u2019m not totally convinced these aren\u2019t a bunch of Robinhood bros cosplaying Conflicted Rich People, there are an astounding number of posters who have accumulated more money than any one person could ever spend who seem existentially miserable in their quest for more. What if that decision were settled for us? <\/p>\n

In other words, if you couldn\u2019t<\/em> go out and accumulate more, would you actually feel more<\/em> peace and freedom, than if faced with the daunting prospect of endless ascension? (I don\u2019t know.) It reminds me of the paradox of choice\u2014when you have too many options (or, in our case, when you have an infinite amount of money to chase), you\u2019re actually more<\/em> likely to feel dissatisfied.<\/p>\n

That\u2019s to say nothing of the visible results of such an arrangement. I remember visiting San Francisco in 2016 and observing a person sleeping in the doorway of Louis Vuitton. A shopper toting several enormous orange shopping bags no doubt full of thousands of dollars\u2019 worth of leather goods swung open the door and physically stepped over the sleeping person on their way out. It\u2019s hard to imagine a version of the United States without poverty, but I find it hard to believe our collective psyche isn\u2019t negatively affected by so much conspicuous suffering.<\/p>\n

Finally, there\u2019s the question of enforcement. Even if you somehow managed to do away with offshore bank accounts and the type of asset protection that currently allows people to shield their wealth from governing bodies, there isn\u2019t currently\u2014to my amateur knowledge\u2014any way for a government to know the exact net worths of its citizens. Most of the data we see in studies (like those by the Federal Reserve) is self-reported via surveys. Unlike income, which must be reported every year, wealth is a little more nebulous. Theoretically it could be pieced together via financial statements or loan applications, but at scale, this would seem an impossible effort. (Currently, the only data I could find from the IRS that estimates personal wealth does so using a small selection of estate tax returns every three years when people die, not a live estimate of the entire population.)<\/p>\n

All this to say, I\u2019m curious: Is there a level of wealth attainment that you would personally<\/em> begin to feel funny about?<\/strong> A level beyond which you\u2019d feel as though you<\/em> crossed some ethical line? I find that this microcosmic question generates even more captivating answers (and justifications!) than the broadest interpretations of a societal wealth limit. <\/p>\n<\/div>\n

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>
\n \u201c<\/span>I find that this microcosmic question generates even more captivating answers (and justifications!) than the broadest interpretations of a societal wealth limit.\u201d<\/span>\n <\/p><\/blockquote>\n<\/figure>\n
\n

After all, the idea that \u201cthere are no ethical billionaires\u201d\u2014which basically means there\u2019s no way to become a billionaire without screwing over a bunch of people along the way, either by acts of commission (like wage theft) or omission (like a serial lack of philanthropy)\u2014is more or less conventional wisdom in the Zillennial comment sections I frequent. <\/p>\n

But it\u2019s a phrase that\u2019s easy to wield from the moral high ground of being Decidedly Not Billionaires. None of us expect to become billionaires, so we maintain a safe distance from the accusation. So, the natural question follows: What makes centimillionaires any more<\/em> ethical? Or even just plain old multimillionaires? So debonair! The lower the limit, the itchier we become. (Or, if we\u2019re talking about Rihanna or Taylor Swift, downright apologist\u2014I mean, what\u2019s a billion dollars these days?<\/em> I ask, upper lip sweating, shoving my Fenty lip gloss and Eras Tour shirt out of frame. With inflation these days, a billion ain\u2019t what it used to be!<\/em>) <\/p>\n

Like I said, it makes for an interesting thought experiment.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

A few months ago, a 93-year-old billionaire donated $1 billion of her wealth to a medical school to make it free for its students\u2026forever.  It might seem counterintuitive that a billionaire making medical school free in perpetuity could inspire conversation about wealth limits, but in her piece for The Atlantic, columnist Christine Emba notes that […]<\/p>\n","protected":false},"featured_media":2501,"template":"","meta":[],"categories":[12],"tags":[],"class_list":["post-469","essays","type-essays","status-publish","has-post-thumbnail","hentry","category-economy"],"yoast_head":"\nThe Limit Does Not Exist\u2014or Does It? - Money with Katie<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/moneywithkatie.com\/essays\/the-limit-does-not-exist-or-does-it\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Limit Does Not Exist\u2014or Does It? 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