The Gospel of Wealth
The West is an ever increasingly hostile environment for those who understand the virtues of capitalism and profit from it. The Occupy Wall Street movement, the growing hatred toward the 1%, the War on Cash, and even Pope Francis’ War on Capitalism all send an alarming signal to the remaining capitalists of the world. The free market in the Land of the Free and throughout the West isn’t so … well … free, anymore. Too many people mourn the death of the American Dream without realizing that its passing has come as a consequence of their attack on capitalism.
America was once the home of capitalism at its finest. From that era have come some of the greatest rags to riches stories of the American Dream. Andrew Carnegie’s story is one of them. Carnegie was a capitalist giant in an age of US history when capitalism was king. The son of Scottish immigrants who moved to the United States in 1848, Carnegie was a hard worker and a passionate learner. Though he began spending most of his days working for $1.20 an hour, his hunger for learning was fed through the books he read thanks to a wealthy man who opened his library of 400 volumes to working boys each Saturday night.
Over the years, Carnegie made his way up the ladder of success. He became superintendent of the Pittsburgh Division of the Pennsylvania Railroad Company at a young age, began investing in his early twenties, and eventually got involved in the ironworks industry. He soon left his position at the railroad, developed a steel rolling mill and built and expanded his company over the years.
Carnegie was an industrial success, a product of pure capitalism, and is recognized as the driving force behind the expansion of the US steel industry at the end of the nineteenth century. While many critics of capitalism would have him demonized in the history books as an industrial tycoon, Carnegie left behind a legacy of philanthropy — one he based on his personal philosophy as outlined in “The Gospel of Wealth.”
Written in 1889, Carnegie’s “The Gospel of Wealth” still contains financial wisdom any aspiring capitalist should analyze and put into practice — whether they ever intend to become a philanthropist or not. One of the most important points he made was one that many people in the US have forgotten: the benefits of capitalism. He argued that the contrast between the millionaire’s palace and the laborer’s cottage was merely a measure of the change which comes with civilization. This contrast was not to be deplored, but welcomed and recognized as something beneficial, and even essential for the progress of society. The material development and improved conditions that come in the wake of capitalism — despite the inequality it creates — makes life better for society as a whole.
Yet, all the poor working class Americans of the 21st century with TVs, iPads, and smart phones will never recognize capitalism’s general advancement of society because the mentality of entitlement has taught them that they are the victim.
Yes, despite the incredible material comforts that have made the life of even the poorest among us more lavish than that of ancient kings, the advancements of capitalism are still stained by the inequality that so often grows out of the free market.But Carnegie knew that this inequality was the price society pays for the law of competition, and that it was a price worth paying.
What to do with excess wealth
Carnegie also recognized that those who rise to the top by virtue of the free market will soon have more money than they could possibly ever spend on themselves.His question, then, was what the wealthy were to do with their fortunes, especially when taking into consideration the fact that one day the possessor of such wealth would die. He argued that there were really only three ways to administer surplus wealth: it could be 1) left to the families of the descendent, 2) used for public services (i.e. taken by the government at death through the estate tax or voluntary donation) or 3) administered by the possessor during their lifetime.
Of the first two options, Carnegie was skeptical. He felt that leaving one’s wealth to family was more of a disservice than a blessing, and stated that “the thoughtful man must shortly say, ‘I would as soon leave to my son a curse as the almighty dollar.’” Man must earn his wealth, not inherit it. And, of the second option of leaving wealth at death for public use, Carnegie argued that this was only an option for those who were content to wait until they were dead before becoming of much good in the world. He also claimed that those who earned such wealth were the individuals in possession of the exact skills needed to administer it. He also pointed out the great waste in so-called charity programs where money was spent so unwisely that it produced the very evils it was aimed at eliminating. Sound familiar?
So Carnegie argued that the best means of administering your excess wealth was to use it during your lifetime. His conclusion was to use it for charitable purposes that aimed at helping those who would help themselves.
By the time of his death in 1919, Carnegie had funded the construction of 3,000 public libraries and either funded and/or founded several universities. In all, he had given away $350,695,653 (roughly $76.9 billion adjusted to 2015) of his wealth.
Your Wealth, Your Decision
Now, I am not going to tell you as Carnegie did that you should spend your excess wealth on projects that will improve the general condition of the human race. Nor am I going to tell you not to if that is what you wish to do with it.
But I am going to agree with Carnegie in his applause of capitalism and his conclusion that you should not wait for your wealth to be used by the government at your death.
Because — whether you want to believe it or not — you will die and the government will take your money.
In fact, the United States government will take 40 per cent of it. And, yes, that’s one of the highest rates in the world. The fourth highest to be exact (tied with the UK).
The beauty of being a capitalist, however, is that you are not bound by the borders in which you were born. Countries and the estate tax laws they wield have borders, you don’t.
Once you go beyond the lines that are drawn on maps — the lines that make up countries and house Big Government — you’ll discover that there is a lot more freedom for you and your wealth on this planet. There are even countries that won’t take your money when you die.
Not a cent.
You read that right: there are countries on this rotating chunk of rock that will not charge you a single penny for dying. There are a lot of them, if truth be told; and you can take advantage of that by diversifying your wealth on an international scale. Just since 2000, eleven countries and two jurisdictions have repealed their inheritance or estate taxes. And these are places where you probably wouldn’t mind keeping your money while you’re alive to begin with — countries like Singapore and Hong Kong. Even tax-happy governments like Norway and Sweden — not shy to use revenue from tax rates as high as 60% for their own brand of social welfare — have done away with the estate tax.
In other words, you have a lot of options.
So don’t wait until you’re on your death bed to think about the eternal destiny of your wealth. Make active decisions now to ensure that your wealth does what you want it to do and goes where you want it to go while you're here and when you're gone.
If not, the government will decide for you.