The democracies of the advanced countries are severely undermined by the excessive power of the rich — power from their wealth. Each country should set a wealth cap of £10 million (or dollars or euros) on persons, continuously or annually applied, to enable meaningful democracy rather than plutocracy. The wealth received should be put into a Sovereign Wealth Fund, which can be expected to have an average annual return of around 5% after inflation, devoted to healthcare or pensions or similar:

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Motivation for a wealth cap

Concentration of wealth, hence power, contradicts democracy, which requires low inequality of power among citizens. Bernie Sanders' 2016 USA presidential campaign highlighted the most blatant manifestations of this contradiction (corruption, political donations, bought elections), proposing campaign finance reform. However, worthy as such reform would be, plutocrats would still rule as they:

  1. own the media, which directs the political discourse,
  2. fund think tanks that determine the intellectual zeitgeist around government and the civil service,
  3. employ internet shills and trolls, as done by Correct The Record, a pro-Clinton group, against Sanders; by near-billionaire Palmer Luckey against Clinton; and by the Russian state more permanently,
  4. pay for targeted advertizing based on social media surveillance: analytics companies owned by billionaire Robert Mercer have helped Trump win the USA presidency and the Leave campaign win Brexit.

Merely restricting certain uses of wealth is necessary but not sufficient. We must attack the wealth concentration itself if we want to defend democracy, as high wealth allows plutocrats to exert much more power than others without endangering their livelihoods. One cannot have plutocracy without plutocrats, so allow none.

With the power of plutocrats broken, policy that benefits the majority is more likely to be enacted. The relative power of unions and other civil society groups would increase, as may the power of the nation-state.

The level of the wealth cap

The wealth cap should approximate £10 million (or euros or dollars), though whether based on total assets or on net wealth is less firm. £10 million may be too high, but this is the rationale:

  1. It is a memorable, round number, so easier to campaign for.
  2. It assures financial independence; a barely competent money manager could live very comfortably, and idly, until death.
  3. There would be very few "losers", as such a high cap would apply to less than 0.1% of the population (in Western Europe, 0.3% in the USA): very few people for tax authorities to regulate, presumably much fewer than the inheritances each year.
  4. Sensibly-sized homes can be vastly overpriced in fashionable areas. The wealth cap must be high enough to not dispossess too many non-plutocrats who bought homes before their areas became fashionable, so £1 million is much too low.
  5. It is large enough to prevent asset price fluctuations from ruining financial independence: if assets worth £10 million double in value during a bubble, then are capped/sheared again and then the bubble pops (with the remaining assets worth £5 million), then the owner should still be very comfortable while idle. It also allows a large margin of error for valuation when imposing the wealth cap.
  6. Inflation should reduce it to a slightly better "real" value by the time it is enacted. Of course, a cap would need to vary with inflation later -- or with house prices (which may fall as the cap is enacted) or some hybrid index: houses are the biggest and most important assets for most people, and one's home is likely not sufficiently disposable or liquid to provide plutocratic power.
  7. It should limit plutocratic activism, that is, be small enough to significantly limit what a person could spend on politics without harming their standard of living.
  8. It should be small enough to significantly change company ownership, particularly media ownership. Care would be needed to keep (the appearance of) media independence, perhaps by distributing the media companies in equal shares to all citizens, and only allowing future sale or gifting to fellow citizens, to reduce foreign plutocratic influence — citizens can be more easily capped.