How Much Money Is Enough Money?

Some of the wealthiest people on earth still work hard most days to increase their wealth. They maintain sizeable investments and still commit their time and energy towards making more money. So, how much money, really, is enough money? How much money should be enough for any single individual? 

If you have tried asking just a few people this question, you will get different answers that may surprise you. While many will agree that there is such a thing as being excessively wealthy, there will always be disagreement on where the line should be drawn. A few will insist that there is nothing like excessive money. 

Ideally, people’s answers to this question depend on their political philosophy. A libertarian, for instance, will insist that everyone is entitled to keep the fruits of their labor. He/she will assert that ‘taxation is theft,’ and insist that no one has the right to put a limit on the amount of money another can make and keep, as a matter of principle. 

When you pose this question to a liberal thinker, he/she may try to convince you that the most important thing is to achieve a reasonable outcome for everyone and curb excesses that can result in a waste of society's resources. They will argue further that individuals’ abilities and talents should be commensurately rewarded, but not so exorbitantly that it can jeopardize society’s economic or political wellbeing. 

John Rawls, the moral and political philosopher, once offered one of the most brilliant arguments in this regard, using his ‘original position,’ thought experiment. The exercise requires that you design a hypothetical society of your own: you are to make the laws and cultural norms. Then comes the catch; you won’t know the place you will occupy in this society with regards to sex, age, intelligence, race, education level, income level, political stance, spiritual beliefs, and more; at least not until you have set the unbendable rules. Rawls called this stipulation ‘veil of ignorance.’ 

The experiment will always prove that an objective creator, even burdened with self-interest, will design a just society with rules that eliminate unfair advantages. The sort of wealth that jeopardizes common good will definitely qualify as an unfair advantage. 

There is another little experiment that can give you a clearer idea of how much personal wealth can be considered enough. Trying it out with your friends and family will give the best result, but you can also ponder on it personally to get some level of clarity. 

Name Your Price 

Consider yourself as one of five people selected by a mysterious philanthropist to be part of a contest. Five of you are remarkably in the same financial and physical situations. You are also the same age, have the same number of children, and live the same low-risk lifestyle. You will all be approached privately by a representative of the mysterious philanthropist and asked the same question: 

How much money would you have to be paid straightaway to retire right away and never receive any money again in your life? 

Here comes the catch; the person who makes the lowest request among the five of you will be offered a check of the same amount while the other players will get nothing. The money is also expected to grow at the rate of inflation, meaning that its value will remain the same even if you lock it up for years. Again, this is a secret ballot, so there is no way you can see what the others have requested, and no one can see yours. Remember that you will live off whatever you are given for the rest of your life.

So, how much will you ask for? 

Enough is Enough 

Imagine such an offer without a contest to determine a winner. You will most likely ask for the moon. Since there is a contest and you may lose, you will be forced to ask for a satisfactory amount that is not unreasonable. 

If you can conduct this experiment several times and get an average of the winning bids, it will represent what we can call ‘enough money to retire comfortably.’ This can then serve as our ‘Enough Money.’ Anything higher can be called excessive wealth, beyond which the extra income can be taxed at a 100% marginal rate. 

Let’s get back to you. Under the strict rule of the game, can you ask for a billion dollars? No one who wants to win will dare that. If you are like most people, your bid will be between $5 million to $10 million. If we can be honest; most of us will take $10 million dollars under the conditions in this experiment without looking back.

The point is this: it doesn’t really make sense that everyone is entitled to accumulate as much as he/she can accumulate. The fact that you can doesn’t mean you should, especially if there is a chance that it will affect society negatively. Talk about the mortgage interest tax deduction in the United States, which basically reward wealthy homeowners and inflate the housing market, at the detriment of public revenue. 

Practicality 

As much as we will want some sort of balance in society, it is impractical to put a sort of 'wealth ceiling.' What happens when someone's home appreciates to the level that their net worth exceeds the limit? It will be unfair to try to confiscate their money or assets just to keep them under the ceiling. Again, 'wealth ceiling' will discourage creativity and innovation. Some of the brightest minds will not be motivated to take risks needed to make breakthroughs.

As sad as it may sound, there are a few ways to control the quest for excessive wealth. In Fact, it will really come down to individuals making the right decisions about how much wealth to pursue. The government can make some policies, but they are unlikely to address the issue of opulence squarely. Common sense is key to personal control.