In this episode of Democracy in Question, Shalini Randeria speaks with Austrian-German activist and philanthropist Marlene Engelhorn about inherited wealth, democratic legitimacy, and the concentration of power in contemporary societies. Engelhorn explains why inheriting a vast fortune made her uncomfortable, arguing that wealth acquired by birth rather than merit represents a fundamental democratic injustice. She discusses her involvement in the Tax Me Now initiative, which calls for stronger taxation of large fortunes and inheritances, and reflects on how the super-rich are socialized to view their privilege as normal while often overlooking the societal structures that sustain their wealth.
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S11E10 transcript
[00:00:00]
Shalini: Welcome to Democracy in Question, the podcast series that explores the challenges democracies are facing around the world. I am Shalini Randeria, Professor of Sociology at the Central European University in Vienna, Senior Fellow at the Albert Hirschman Centre on Democracy at the Graduate Institute, Geneva.
This is the tenth episode of Season 11 of Democracy in Question. I am really pleased to welcome as my guest today, Marlene Engelhorn, a young Austrian- German philanthropist and activist who has made headlines by giving away, in 2024, almost all of her large inherited fortune. She co-founded an initiative called “Tax Me Now”[i], demanding that governments tax inherited wealth.
She was [00:01:00] joined in lobbying for this high inheritance tax initiative by some two hundred and fifty others, among them Abigail Disney, heiress to the Disney fortune, and Valerie Rockefeller. Marlene has been extremely vocal in the European media about the need to democratically legitimize the enormous wealth concentration that we are witnessing today[ii].
She has argued strongly that it leads to a concentration of power in our societies, which is highly corrosive for democratic decision-making. The manner in which Marlene decided to give away her inheritance after the tax justice initiative failed to bring results has also generated much public debate.
Philanthropists usually donate to their own pet causes and favourite organizations. Instead, Marlene chose to innovate using a fascinating democratic experiment. She facilitated the organization of a council for redistribution, [00:02:00] an Assembly of Austrians that distributed for her the twenty-five million euros that she entrusted to it.
The council met in Salzburg in Austria over six weeks to deliberate on the beneficiaries, some eighty organizations that they chose, while Marlene removed herself entirely from its decision-making process. She has meanwhile written a book titled “Geld. Übermorgen[iii]”, so in English, “Money Day After Tomorrow”, and she portrays herself in a play that deals with the question of inherited wealth and its redistribution as well.
In twenty twenty-two, she won the Human Act Award for her advocacy. In this very personal interview, I begin by asking Marlene to describe her own socialization in a very wealthy family and how that affects the perception of those who take [00:03:00] such privilege for granted. We discuss her failed inheritance tax initiative, her decision to give away almost her entire inheritance, and then go on to a series of more general questions.
How and why did she choose a representative Assembly of residents in Austria to make the decision over the distribution of her fortune? What did it mean for her to give up her power of decision-making over her own inheritance to people whom she didn't know at all? And what insights has she gained from this unusual, bold experiment?
In retrospect, would she have done anything differently? And what role could such citizen assemblies play more generally in complementing democratic processes of decision-making?
Shalini: Thank you very much, Marlene, for being here with me today.
Marlene: Thank you for having me. I'm happy to be here.
Shalini: Let's start on a somewhat personal note. You were enormously lucky to inherit a rather large fortune, which most people would [00:04:00] have spent on a luxurious life for themselves, or at best would have donated a small part of it to some causes that they themselves felt personally close to. But you first started a public campaign demanding that your inheritance be taxed. Could you talk about your initiative for the inheritance tax and where the idea of starting such an initiative come from?
Marlene: Most people don't inherit. I think that is very important to remember. It's not something that will befall 99% of the population, but it's really only the one percent. Those within the one percent, like me, who might inherit a multi-million fortune, that they then spend on themselves is due to the fact that they are so completely detached from society, while at the same time remaining incredibly dependent on social infrastructure and social cohesion and political structure and everything that goes with that.
[00:05:00] The way they spend is then on, well, their preferences. I don't distinctly remember the announcing of that inheritance. I think it was via email, but I remember that I wasn't happy. I know that you should be grateful and that you should be super happy about it, especially because for most people, this would be enormous luck, sheer luck.
But I was furious because I knew it was injustice, pure injustice. Why would a person, just because they're born in a certain family, have this amount of fortune, this amount of power? I don't want any people to be in this position of power and have that power over me, so I cannot wholeheartedly grant it to myself.
And so, I tried to figure out what to do with it, and that led me to talk to very interesting and intelligent and kind people, and they were very patient with me, and I learned and I listened. It was political education, and that's when I realized that if I wanted to do things properly, it had to be democratically done.
[00:06:00] And so taxation really is the most democratic tool you can use in order to organize redistribution and also depersonalize it and make it not about the individual at hand. A certain limit has to be handled and regulated in a certain way in order to make sure that it benefits all of society and not just that particular individual. Taxation was the most fair and applicable tool. I didn't have to invent anything or come up with anything original. I just had to copy what was being worked for by activists. I joined these forces, and I hope I did a good job of it. And I'm not done also.
Shalini: What you did was, along with some twenty other millionaires, to initiate the “Tax-Me-Now” movement, and it did have some traction with especially German-speaking millionaires. Could you say something about how the initiative unfolded? Do you see allies elsewhere in the United States where, of course, there are very huge personal fortunes in the first, second, and third [00:07:00] generation? There is a different tradition that of philanthropy, which is a different trajectory from public taxation on wealth.
So, do you think the taxation model is likely to be emulated elsewhere? And when you say you've been talking to a lot of people, have you been talking to economists like Piketty[iv] or Gabriel Zucman[v], who have also been calling for levying wealth tax on the super-rich?
Marlene: Lots to unpack here. So, thanks for that very broad question. I think everybody who is politically active knows this for a fact. You can't do anything alone. It's impossible. And that's also very good, frankly. I think it's good that you have to find allies and that you have to find people that work alongside you in a project and eventually an organization, maybe a movement, maybe.
Tax-Me-Now is an initiative because we were a lot of wealth holders who attended the same conference in February 2021, and [00:08:00] the people who are the donors of that foundation are usually already aligned politically on issues that are more progressive. And they had a workshop about tax justice, and it turned out that those who attended it were very interested and keen in following up on that conversation and self-organized follow-up meetings, and that's how Tax-Me-Now was born as an initiative. I am not very active right now anymore, but they've done a lot of media work.
I have done a lot of media work in order to make sure that this topic becomes centre stage, especially because we know that as rich people, we're going to be favoured by the media in a way that all sorts of political movement leaders can only dream of. And purely because we're rich, what is going to give us centre stage is our wealth. Our wealth will make us the ones that people want to listen to for reasons frankly I don't quite understand, but I understand these dynamics, how it works. I played a part in it. There are allies, and they are hard to find because everything in your socialization when you are socialized very rich, very privileged, is [00:09:00] against sharing privilege, is against granting equal rights.
Because you protect your comfort zone, you protect your privilege, not necessarily in order to take away from others, because you're ignorant to the fact that in order to have a privilege, you have to take from others. You have to take their rights. You have to take equality out of the equation. And so, you're getting socialized in order to only focus on your own position and your own point of view. You are socialized out of realizing that your wealth completely depends on the labour of so many people that you probably will never meet in all of your life. You will never look into their eyes. The gains from their labour will end up on your bank account simply because your name is under the right kind of contract and their name is under the wrong kind of contract.
Which also brings me to Katharina Pistor's brilliant work, The Code of Capital, which explains so minutely how capital and capitalism is coded into our legal system And through changing these legal frameworks, we can actually change capitalism itself and ideally maybe overcome [00:10:00] it because we should evolve out of this very brutal economic model.
Also, the one percent, the richest one percent is not one unified group, one block of people who have the same opinions. They're very different. They're politically also very different. You have progressive people, which doesn't mean that they necessarily will speak up publicly, but they might want to join an initiative, might want to join behind the curtains and helping to organize things, and that's what we do at Tax-Me-Now.
Centre stage on media, on platforms, that's a different story. Not everybody wants to do this, and I think it's a shame, but at the same time, these places should be given to those who are doing the work anyway, especially activists in social movements.
Shalini: When you talk about socialization, the question that occurred to me was: how is one socialized when one is super rich? What is the story one tells oneself about this inherited wealth and privilege? Why is it that it's somehow something that one deserves? Or one doesn't even ask the question of what [00:11:00] is deserved?
Marlene: Yeah, I think that's more it. We don't ask ourselves whether or not we deserve it, but we have to immediately start creating a narrative. That is a very weird way of thinking about it because first you have to say, especially with inherited wealth, it's not your fault, which implies it's also not your merit. So, if it's not your fault or your merit that you inherited wealth because this is simply given to you because of your birth, which nobody can plan for, and also you have to abide by a certain set of usually very conservative rules within your family. Some might be excluded from inheritance if they fail to abide by these rules. It's rather rare because it usually creates public attention, which we want to avoid at all costs. But it does happen. A trans-kid in a rich family might not get inheritance simply because of who they are.
But that aside, you immediately engage in, "Okay, it's not my fault, but also not my merit, which I don't want to admit, but then I have to prove that somehow it is." And so a lot of [00:12:00] people who inherit wealth immediately go into very high profile jobs. When you're already born into the, the CEOs, the C-suite of those family business, which is nothing but the dynastic corporation, might as well take that very comfortable spot and work yourself from one burnout into the next, proving essentially that you are worth what you got through the kind of work that you do. And it creates an incredible fragility around your merit and around your accomplishments, which makes you feel that since you're constantly proving merit through one burnout after the next, it creates this idea of, "Nobody can ever criticize me because I'm doing everything. I'm doing everything all the time."
Also, you might be the best CEO in the world. You're also born into one of the richest families of the world, and if nobody wants to admit to themselves that they are in an unjust position because it hurts your ego. Nobody wants to admit they are privileged because it hurts. And so there is an enormous amount of defence mechanisms, emotionally, personally. On top of [00:13:00] that, you have this wealth defence industry, which is basically all of your legal counselling, your tax advisory that will take care of your assets, that will take care of your tax and take care of pretty much everything.
The richer you get, the more they become like nannies of your wealth and nannies of your wealth-related self-esteem. You can call them at any time. They will look at anything for you. They will do a family office, but it's not a co-working space for a family. No. It's a bunch of lawyers who are sitting in very luxurious office suites taking care of millions and billions of wealth that is going to be invested all over the globe, making sure that the revenue that you get from that invested wealth is going to skyrocket over the next years as best as possible. And it's not a bank that does it, but like regular, you don't do financial advisory at your bank with your financial advisor there. You do it through that legal system, so you can access private equity market, you can access funds where the entry ticket is three hundred grand. Stuff that is called super innovative. So, you have this wealth defence industry, and you have this socialization of [00:14:00] growing up with as little understanding as possible of what the 99% live through.
Let's take my example, right? I grew up in a mansion. We didn't call it a mansion. We called it a big house. When I was eight, I had a birthday party, and I had seven friends of mine, and one of them did not grow up wealthy, even though they also went to the same private school that I went to, again, private school and private kindergarten. But because of their parents who taught at that school, they could, with a middle-class salary, still enter that school. And they said, "You're living in a mansion." And I was shocked, and I didn't understand. But already when I was just eight or nine, a child, I understood that you have to camouflage your wealth.
And later on, I asked myself, "Should I not invite people in order to make sure that they couldn't see what this wealth looks like?" You're supposed, after the private school, to go to private universities, to elite schools, which tell you that you are there because you're the most brilliant, and it's not true. You're there because you're the richest, because that's how you can pay for this kind of education, or you can pay for the kind of circumstances you need to grow up in, [00:15:00] in order to enable yourself to become part of that. And there is always a small portion in these schools who does not come from wealth, and that excuses for elite universities to say, "We're open for everyone. Every brilliant mind can have their chance with us."
Look at them and be honest about the fact that they disproportionately have the one percent. They are not disproportionately better at anything. They are richer than anyone else, and that's the key thing. What it boils down to is that you will become obsessed with the fact that your ideas about the world are excellent because you got the best education, and you understand the world better than anyone else, and you understand the responsibility that you have when you have a lot of assets that you need to invest. You need to be responsible, right?
At the same time, nobody questions that you're owning the planet, which gives you a position that is kingly and shouldn't be, at least not in democracy. And it brings you to favouring philanthropy over tax systems because tax systems take away control from private super wealthy individuals and put it back into public hands, which means [00:16:00] that the only way you can affect what is done is through going the democratic route, which means one vote per person instead of one vote per Euro. And that is a reality that most incredibly rich people can't stomach because they're so fragile, and it's a huge problem.
Shalini: That's a very interesting observation about socialization and the psychological insecurity which comes with this amount of wealth. Let me return to the, your personal engagement after the unsuccessful initiative for wealth taxation. You made two rather unusual decisions.
You announced not only your intention to give away ninety percent of your inheritance, but also not to give it away to causes which were dear to your own heart. Instead, you decide to embark on a bold and innovative experiment So [00:17:00] why did you decide to establish a participatory procedure using a Citizen’s Assembly which would decide on the fair distribution of your wealth[vi]?
Could you say something about how you organized this process of choosing fifty Austrian citizens whom you entrusted with this responsibility while not participating yourself in their deliberations, except for naming the total budget?
Marlene: When I started doing the public speaking work, at the same time also launching the initiative Tax-Me-Now, I did announce publicly that I was going to give at least ninety percent. Later on, I realized I could easily give even ninety-five percent. And then when I got the inheritance, I realized I could get as close as possible to a hundred, which is my goal and which is ideally going to be reached next year if all still goes as well and as planned right now. I just want to make sure that this is clear because I was [00:18:00] guesstimating those ninety percent because I didn't even know the number yet when I started. I just knew it was going to be an enormous sum. And I did start also on the whole tax justice campaigning, and if I could not do anything that was not going to be aligned with that. I had started privately redistributing. I had tried to do it as transparently as possible, always giving every organization the option to publish my name everywhere and anywhere they wanted in order to make sure that they can also be held accountable in terms of where their funds are coming from, which a lot of them did. They put it in their reports. Some even did very active public campaigning around the fact that I was giving them money. I wanted the public eyes and ears looking at what I did because it's so important that we are aware of how money is moving, who moves it and where to and why, in order to criticize it when it goes the wrong way, so to speak.
In order to remain in line with my principles, I knew that I couldn't [00:19:00] force taxation because I do believe in democracy. That also means that the democratic process will take time. I have to respect that. I spoke especially to two people about this idea because I had read about the Civic Assemblies in Ireland, which led to actual referendum and actual social change. It's such an interesting tool.
And one person, a very dear friend, said, "Marlene, if you want to do this, you want to take this seriously, figure out who does it and ask them." She got me to be in touch with the FORESIGHT Institute[vii], who are conducting Citizens Assemblies, and got me to talk to them, asking, "Is it possible to organize that privately?" And they were like: "Frankly, nobody did it before, so we don't know. We can try." And the other friend who also I spoke to said, "Look, Marlene, nobody needs you in this. There's already so many organizations out there that do an excellent job, and if you want that to be done, you don't need to create your own thing. You can just give them your money and leave them be. Leave them just to do the work that they are already doing."
With the Citizens Assembly, I could use my public [00:20:00] image and tie redistribution that is voluntary to what should be structural. And that's how this idea got born. I asked FORESIGHT Institute to please find people and find a good team and make sure that you get people that you can work with, and this is your budget, three million, and this is the budget for the Civic Assembly, twenty-five million. And the three million, you can spend them as you please. I trust you. I don't want to mess with the process by putting my opinion centre stage in the organizational process.
So, I took myself out of that as fast as I could, trusting a wonderful team. And FORESIGHT created a process around it, which started by asking the Ministry of Internal Affairs for data, ten thousand addresses, random addresses of people living in Austria who are at least sixteen years old, because that's the voting age. I chose sixteen years and living here but not needing the Austrian passport because I think that is absolutely [00:21:00] unfair to people who are contributing to the society and have no political power but should. And because it affects their lives, why wouldn't they sit at the table? Because it's a data protection issue as well. You have to prove legitimate interest. But there is a legitimate interest in discussing wealth inequality, so we need that in order to set up a Civic Assembly. And since they have a good track record of doing that, they're a trusted organizational partner. That's why we got to ten thousand addresses, and then it was about actually piecing this thing together and writing a letter that was as clear as it was neutral.
It invited everybody who got the letter to participate, no matter if they agreed or disagreed with me on all of my policy ideas and all of my public speaking. No matter what you think on wealth inequality, whether you think it's good or bad or, or neutral, you're invited because we want to have a representative body of fifty people, and that means we need to represent the criticism.
We need to also represent those who don't even criticize, but just frankly think it's stupid, and also people who don't reflect on it, but just [00:22:00] think it's wonderful and don't even give it a second thought. We want all of these people, but according to representative levels of Austrian population. We sent out ten thousand letters, and we did that at the same time as the press conference on ninth of January twenty twenty-four because we wanted people to be sure that when they got the letter that they knew it wasn't a scam.
In that letter it read, "You will be paid for your efforts." We wanted to make sure that people could double-check whether this was a scam or not and google it and figure out immediately this is actually legit. Usually, you can count on around 5% return responses, and we got fourteen hundred twenty-four, almost tripling that average.
I think it both shows that it's key to pay people for their efforts just out of a matter of principle, and it's key to address wealth inequality because people are very interested in it, and it's key to invite participation. Truly, honestly, genuinely invite participation. If you provide a good framework, people are eager to participate.
That was also one of the first things that came out when the Citizens Assembly [00:23:00] started. People were like, "It's the first time I feel that my voice is worth something," which in a democracy is really problematic if that kind of experience is needed. Or it could be the entryway of creating more Citizens Assemblies in order to make this experience a normal experience. Ideally, I think one day you should get as many invitations as possible regularly in your mailbox for Citizens Assemblies where you're like on jury duty. I would prefer that situation to the kind of participation level that we have right now.
So, the FORESIGHT Institute collected these fourteen hundred twenty-four responses, collected data, nine data points like income, gender identity, migrational background, all sorts of things. All of it is in the report. It's online[viii], and they matched representation of the Austrian population with a deviation of only 1.8% at the end, which is basically spot on.
And part of it, I think, is due to the fact that we offered money to pay for the work that was going to be asked of the people in order to show we realize that this is work. You're sacrificing six weekends. That's a lot of time for a lot of stuff that you [00:24:00] need to do. And even if you just come in order to get paid to do democratic work, you still have to do the work, and you will still experience being part of a big process, no matter your motives, to figure out this question and handle this task.
And I think all of that together just proved that if you have a good team of dedicated people and an enormous budget, frankly, you can have a Citizen’s Assembly. Budget-wise, I gave them three million, but they used it very wisely and very diligently. They used 2.1 million. Budget is also online.
Shalini: So, you chose not even to attend the deliberations of the council?
Marlene: No, I was at the first meeting. I came for one hour to give a little speech, basically saying, "Thank you, good luck." Doing a little Q&A, having a coffee break with everybody, people wanting to say “Hi” and take pictures, and then I wanted to leave immediately to make sure that they knew it's their space. I don't know if you're familiar with founder's syndrome.
Founder's syndrome is something that happens a lot in the philanthropic world, where basically a foundation already has the [00:25:00] name of the person. A lot of foundations do that, and then they are messing with everything, even if they are not qualified, just because they own it. Ownership is getting mistaken for merit or for work. Just because you pay doesn't mean that you should take all of the decisions, because you might not be qualified to make good decisions. Even if you don't feel comfortable with some of them, maybe you want to trust the people that you hire to do the work. But so, founder's syndrome is that you pour all of yourself into the project so much that you handcuff your team into, at the end of the day, executing your will, whether you are doing it yourself or not.
And in order to get out of it, I wanted to make sure that also physically I was not in these spaces. At the beginning, there's also, they said that in the report, people were asking themselves, "What would Marlene do? What would she think?" It's a process, and also to realize that at the beginning you have these thoughts and it's okay and it's normal to eventually grow out of it and be like: "No, she has given this project to us. This is our job and our task now. Just because she initiated [00:26:00] it doesn't mean that she has to mess with it. We can make this our own." And this level of ownership, to me, is crucial also in democracy, to realize that the creating of the social fabric and the cohesion is done through democratic procedures, through participation.
There has to be a level of ownership. And so, I wanted to make sure that I leave them alone because it was theirs to do and mine to follow in the media like everyone else.
Shalini: Marlene, if I understand the report and the press reports on this correctly, they identified some eighty organizations to which they would then distribute the twenty-five million entrusted to them by you. But the organizations would receive money spread over a few years so that it's not a one large sum which comes to them at once. They adjust their own work and are making use of this money over a period of time, which I think is a very good idea.
Were there any surprises for you in the kinds of [00:27:00] organizations that were chosen? In hindsight, looking at the whole process and its results, it was all happening under very watchful public scrutiny, would you do anything differently?
Marlene: So first of all, regarding the modalities, the members decided that the organizations chose modalities because they know how they need the money, that they can choose how it's going to be paid out. And the options were: you can get everything at once or you can get everything at once, but maybe you want to have it January next year. Or you can have a multi-year grant, and you can choose one year, two years, three, four, or five years, and you can also choose how large the amount is. You can have increasing amounts, same amounts, whatever, or a fluctuation of amounts. The money was dedicated to them to their structural needs as best as possible.
That brings me to the question, the choices not of the organizations, but of the modalities. I was surprised. I was so happy. I was so thrilled that they [00:28:00] chose to leave decision-making also in the hands of those who should then eventually do the actual work of putting that money to good use. The criteria that they decided upon to have some kind of catalogue of criteria in order to make those decisions, how they decide, that was also a beautiful process.
It really reinforced a lot of my beliefs that if you take people seriously and if you ask a proper task and you pay them well, they will do a good job most of the time. We'll learn from it usually. We can actually trust people with so much more than we tend to want to do in our society. People are clever, especially when you put them together in a room and make sure that they're not just from the same bubble. Then they become cleverer when you have diverse groups working on a project.
That was a beautiful reinforcement of my belief. Everybody who looks at the list will have a different idea of who should have gotten money and who is missing, and everybody does that. And same for me, I would have chosen a different list. Everybody would have chosen a different list, but that's the point.
This is exemplary. This is not going to fix all of the issues, but it's a very clear [00:29:00] pinpointing of fifty members of our society where we need money to go in order to fix the issues of social justice, of tax justice, of racial justice, and those organizations are just one list, and it's representative, it's exemplary. And yeah, I think the list gives you what Austrian society in twenty twenty-four would have wanted money to be spent on publicly
Shalini: The council, its processes and its results were extensively covered in the Austrian and German-speaking media. Hopefully, it sets a larger process in motion. The question for me here is about what you think could be the long-term consequences of the success of such a project?
Is it likely to lead to rethinking the societal implications of unearned wealth more generally? You are rightly concerned, Marlene, about the political and societal implications of enormous wealth [00:30:00] concentration. But how may your efforts lead to a continuing political process on debating these issues crucial to our democracies and to our societal wellbeing?
Marlene: It cannot initiate much that hasn't already begun. It will be a long fight and struggle for social justice. I think just because a Citizen’s Assembly has never been organized privately doesn't mean that I invented the Citizens Assembly. I copied a model. The Citizen’s Assembly was not even a recent idea.
It's already adding to a continuity of progress and of social change. Conservative forces are the ones resisting this progress and this change. The Assembly has done one thing which it has proven what my two friends told me, that rich people are utterly unnecessary to the redistribution of wealth. You don't need their egos. You don't even need their ideas. We [00:31:00] redistribute everything towards the top richest percent, the top one richest percent. And to correct that dysfunctional distributive cycle is politically essential because there are people who are born in poverty because nobody chooses that. Wealth concentration is impossible without poverty.
Wealth in society is squeezed out of the people who are of the working classes, the middle classes, as well the public hands, are squeezed out with force, and it's not necessarily brutal force. I can choose to let the balloon go and have air be distributed within that balloon equally. These activists are the people that I trust most in their analysis. People who suffer from poverty, from disenfranchisement. Listen to these people because they will tell you where we're headed, and they will tell you what needs to be done. At best, the assembly has proven that if you get a representative part of a population, they will actually make good choices. They will in the future as well.
Shalini: Let me end by asking you a broader question still. Let me put it this way. One of the arguments you've been making against this enormous wealth [00:32:00] concentration is about the pernicious effects it has on democracy. Now, usual European response to it is to say, "This is true of the US because of the kind of financing of elections and party politics in the United States, and because even the elections of governors and judges have to be financed in the US, and that is done by the super-rich."
So, someone like Elon Musk recently, who bankrolled the Trump campaign to the tune of two hundred and eighty-eight million, also immediately exercised enormous political influence openly after President Trump invited him to do. And that the argument here in Europe is that this kind of relationship between wealth concentration and democracy is not possible in Europe because there is a different kind of political system.
But there are more subtle forms by which the super-rich exercise political influence. [00:33:00] Or would you say that no democracy can survive with this kind of inequality, even if it doesn't necessarily buy political influence, because enormous wealth concentration and inequality is just corrosive of the social fabric?
Marlene: Okay. I think what you said is very important. Elon Musk exerted obviously and openly his power. The power that the incredibly wealthy have over governments is as old as governments. And I think the question of whether it's open or not, whether it's obvious or not, that depends on who you ask. People who are disadvantaged and disenfranchised socially and marginalized, they feel this every day.
Finally, the white middle classes are waking up to it. I think this is a very important thing. I agree that wealth concentration, it will be harmful because wealth concentration essentially means concentration of power. Because if extreme wealth was not extreme power, it would have no appeal. And it might not be land wealth, it might be [00:34:00] owning labour, which is a more legal form, or owning information, owning data, which is one of the reasons why we have all of this debate around AI right now that is surging. Who gets to use what kind of data, what for, and process it in what way?
And that is an essential evolution in wealth concentration because eventually people can't own anything anymore that you can take from them. I think we must understand the West as not one entity, but as a way of understanding a particular approach to capitalism and a particular approach also to climate change and to all sorts of social injustices and tensions, and we're not that different from the US. We might be a little subtle, we pretend that we are, but look at German politics, look at Austrian politics for that matter. Just in terms of numbers, eighty-four percent of billionaire wealth in Austria is inherited wealth. So, we already have established a neo-feudal class system, whether we like it or not.
In Germany, it's pretty much the same. The German inheritance tax system is like Swiss cheese. It's full of [00:35:00] holes. No super-rich person in Germany actually pays their inheritance tax. From four hundred billion euros that are being transferred every year in Germany through inheritance and gifts, only two percent of that end up in the public hands. How does it work? It works through loopholes. For instance, two examples I think they give you a best idea of why the German inheritance tax doesn't really work, even though it's better than none. If you inherit more than three hundred apartments, you're considered a business, and you don't have to pay tax.
The bulk of German wealth is family businesses, which is dynastic corporations. So basically, when that gets transferred, and it is worth more than twenty-six million, then you can choose a date to prove whether or not you actually have liquid wealth in order to pay your tax. And so, you choose a date. It's a date of your choice. It's a little tricky, but essentially you choose a date, and by that date, you basically rearrange your wealth so that you [00:36:00] can't actually pay out of pocket. That means, for instance, you can, you can have a loan. I mean, because your collateral would be your business, right? So you have a loan that you take, and then you buy a lot of shares on the financial market and also sorts of things.
And then you're like, "Ah, I have all these stocks and shares, and I have this loan, and I can't pay on that date," right? And so they basically cut your tax, even if the day after you sell all of that stocks and shares again and repay that loan and go get your extreme wealth. We're talking more than twenty-six million net worth. That means after you get all of the debt out of it, right?
Shalini: But then taxation alone is not going to solve our redistribution issue unless we have an extremely well-working inheritance tax system?
Marlene: Yeah, I think we need very good taxation laws and good regulation, but it's not like we're out of ideas of how to do this. There are so many experts working on this. You talked about Piketty and Zucman. Wealth inequality gets worse every year [00:37:00] because at best they put the brakes on that system, but they don't even disrupt it because wealth grows by seven percent every year on average in Austria. And let's say you have an ambitious wealth tax that will demand that you pay two percent.
That's called ambitious, right? Basically, that means from that seven percent, you take away two, you're left with five percent of growth in wealth. That's not including your income, which you also have because you're super wealthy. So again, you have been born into the C-suite, or at least you have access to excellent education and will most likely end up in a very well-paid job.
You will still have growth of five percent of your wealth every year, while at the same time, wages only grow by three percent, and then you have inflation, right? So, if you wanted to change anything about just that level of inequality and growth of inequality, you would have to tax wealth at a rate of at least five percent, actually, to really make a meaningful difference in terms of [00:38:00] halting.
But yeah, so at the end of the day, what it boils down to, democracies can't stomach wealth concentration because it undermines democracy, and it essentially recreates a feudal system. And who gets to channel that power, and how do you channel that power? That's basically the structure, the regime that you choose.
Democracy is the most equitable choice you can make. And as soon as you have people in power who are not legitimized by the people, they will need violence in order to keep power. You also see that in austerity politics. It's a way that power resorts to violence in order to make sure that people remain small and don't reclaim rights, the power that should be theirs in democracy, claiming the lives that are theirs and the realities that they should be living, which are lives of being able to have good living standards.
We have a power issue. It's rooted in wealth concentration. If we don't address it, it will spill over in all sorts of other injustices that we face, and there is an [00:39:00] enormous racist component in this.
Shalini: Thank you so much, Marlene, for this insightful, very personal conversation on your unease about your own large inherited wealth and the need for its democratic redistribution. Our discussion has also touched upon some of the fundamental questions of wealth inequalities and the concentration of power that ail our democracies today. Thanks so much for being with me.
Marlene: Thank you for your patience.
In this highly personal conversation, Marlene Engelhorn describes why she felt so uneasy about inheriting a large fortune by mere accident of birth. A fortune, as she says, based on the labour of others. Hence, in her view, her inheritance was undeserved in a society in which most people inherit hardly anything. She gave us some fascinating insights [00:40:00] today into the socialization of the super-rich from their childhood onwards. It makes them take their enormous privilege for granted but also inculcates a sense of psychological insecurity.
As adults, they then begin to believe in their own merit by constructing narratives justifying their wealth and why they deserve it due to their own hard work in positions that they are given in the family business. Marlene points to the workings of what she calls a ´wealth defence industry´ that consists of so-called family offices full of professional lawyers, accountants, investment experts involved in managing wealth globally to optimize its returns for their clients, and of course, shielded from taxation.
She explains why the owners of wealth, the so-called high-net-worth individuals, prefer philanthropy as a mode of [00:41:00] redistribution rather than taxation, which would place their wealth into public hands. Philanthropy allows them instead to retain complete control over the nature of their political and other donations.
Since Marlene felt that accumulated wealth should benefit society as a whole, she first co-founded an initiative, the Tax-Me-Now initiative, along with some other heirs demanding that their inheritances be taxed. We learn how she went about finding a democratic modus to redistribute her wealth by way of setting up a representative council for redistribution.
It then deliberated on the organizations to which the twenty-five million euros she entrusted to it would be donated. Recognizing the work that went into that effort to redistribute fairly and the responsibility that the fifty members of the council shouldered, it was important to her that they be adequately remunerated for the six weekends [00:42:00] of work that they had put into the project.
She shared with us the rigorous process of collective deliberation and decision-making on the modalities of giving and the choice of the eighty beneficiary organizations. Having removed herself entirely from the process in view of a trenchant critique of the so-called founder's syndrome, she chose to respect the decisions which were arrived at collectively and democratically by members of the council, even though, as she says, she herself may have made some different choices.
We heard from Marlene Engelhorn also some powerful arguments on how the enormous concentration of wealth in our societies influences political decision-making. It thus corrodes our democracies and is equally detrimental to societal well-being.
This was the 10th episode of Season 11. Thank you very much for listening. Please go back and listen to any [00:43:00] episodes you might have missed, and of course, let your friends know about this podcast if you've enjoyed it. You can stay in touch with the work of the Central European University at www.ceu.edu , and the Albert Hirschman Centre on Democracy at www.graduateinstitute.ch/democracy
[i] Cf: https://www.taxmenow.eu/
[ii] See for example: https://www.theguardian.com/news/article/2024/jun/18/green-and-social-groups-to-benefit-from-25m-fortune-of-austrian-heiress-marlene-engelhorn
[iii] Engelhorn, Marlene (2024): Geld. Übermorgen, Munich (Piper).
[iv]Piketty, Thomas (2022): A Brief History of Equality, Harvard University Press.
[v]Zucman, Gabriel (2026): We Need to Tax Billionaires. London (John Murray Press/Basic Books).
[vi] Cf. the detailed report by Joshua Yaffa: How to Give Away a Fortune, The New Yorker, September 2, 2024. At: https://www.newyorker.com/magazine/2024/09/09/how-to-give-away-a-fortune
[vii] Cf. Alle reden miteinander. Niemand wird ausgeschlossen. [All are talking to each other. Nobody is excluded]. Article on the procedures and impact of the “Rat für gute Rückverteilung”[Good Advice for Redistribution], https://www.foresight.at/news/alle-reden-miteinander-und-niemand-wird-ausgeschlossen
[viii] The comprehensive final report, including strategies employed, arguments within the group “Good Council for Redistribution” as well as the recipients of the distributed money can be retrieved at: https://guterrat.info/en/die-ergebnisse/