Too much wealth?

by Linda Beale

Too much wealth? more dialogue on the issue

Several days ago, Jim Maule ran a post on the disproportionate number of wealthy Congress members–44% are millionaires, compared to about 1% of the population at large. A Tax Policy Determination Clue (Jan. 6, 2010). I picked that post up in the context of noting a number of links addressing the issue of wealth–what is rich, who’s rich (Jan. 7, 2010), and what are we doing about it.

One of my frequent readers, Peter Pappas, didn’t much like my comment that such disproportionate wealth in Congress was ultimately “bad news for ordinary Americans.” He didn’t comment on my blog or email me (as he sometimes has) but instead wrote a scathing critque on his own blog, in which he (i) accused me of hating the wealthy (using “evil rich” to categorize the topics of two posts I noted as worth reading, whereas anyone who has read much of my writing knows that I neither think the rich are evil nor think that the rich should get a pass on paying their fair share just because they have lots of capital), (ii) missed the point entirely of my fellow Angry Bear Tom Bozzo’s post , which suggested it worth noting –in considering what makes someone “rich”– that there are some who live off of capital income from financial assets and that salary as a percentage of income goes down precipitously as capital income goes up precipitously, which creates a significant cut off point in determining who is “rich” at the intersection of the two rapidly changing lines, and (iii) (after throwing around a few labels like “left wing” and “strawman argument”) proceeded to make the unsupported blanket and absolute assertion that “American millionaires … know what it’s like to struggle [because] their ‘unordinariness’ is less a byproduct of their wealth than it is a byproduct of the fact that, through diligent study, hard work and intelligence, they have managed to lift themselves out of the ranks of the ordinary and mediocre.” This is followed by another assertion later on–”why is it difficult for left wingers to acknowledge that wealthy people got that way through perseverance, hard work and sacrifice?” See Two Professors, an Angry Bear, and Hate the Rich Syndrome, Jan 8, 2010.

Huh? What about inherited millions? What about the lessening mobility between the ranks of ordinary (middle class) and the wealthy? What about the way the extraordinarily wealthy have outdistanced even the relatively wealthy? What about the fact that CEOs now average about 400-500 times the annual incomes of typical workers in their firms, whereas 40 years ago it was around 20 times? Did this concentration of wealth come about through “hard work, perseverance and sacrifice” or is much of it owed to the wealth of the prior generation and the ability of someone born into relative ease to make even more (with an elite college education, important contacts, and all the other appurtenances of wealth to boost the value of the money), as Maule also asks (see link below)? Aren’t there studies showing that most people who actually move up in the ranks of the upper class started out there to begin with–that a person whose father is decently well off has a much better chance of moving up than a person whose father is not? Except for the odd lottery or casino bet that pays off, there just aren’t many opportunities for an underprivileged kid from a low-income ghetto to even get a college education, much less move up the ladder of success, for all we like to claim we are more mobile than other societies. Getting started in a business? Takes someone to fund your startup costs–family and friends that are already middle class or already upper class must provide a great boost, don’t ya think?

Even those who do make it to millions may well have engaged in the “selfishness and greed” that Pappas says we “shouldn’t whine…about”. Well, I beg to differ. Admittedly, not every millionaire got there through selfishness and greed, but clearly much of the way wealth is accumulated is through greedy policies (firing workers, rather than reducing dividends to owners and salaries to upper class managers; moving from one locale to another to exploit a pool of needier workers; breaking unions to be able to offer even less in benefits, polluting rather than undertaking environmentally sound measures, etc.). To the extent that wealth is acquired by exploiting the poor, the naive, and the gullible or by polluting the world we live in or by taking subsidies from communities and then leaving them holding the (empty) bag, there is something wrong and we should point it out, perhaps even adopt tax and other policies that make it much more difficult for those with power to exploit those who do not have power (such as steeply progressive tax rates, more substantial estate taxation, higher taxes on polluters, facilitating unionization to give employees some power to push back against the greed of millionaire CEOs and owners, etc.).

The fact is, everybody can’t be millionaires in this country, and the fact that someone is or isn’t a millionaire has very little to do with whether that person has worked hard, shown perseverance and sacrificed. Pappas’ “rant” (his own term) in defense of the rich seems very ill-considered. We should be thinking about how to create a good standard of living for all, rather than defending the egregious examples of wealth accumulation that make it ever harder to sustain democratic institutions that can work for the benefit of all rather than the benefit of the powerful few. That is why I have chosen as the theme of this blog “democratic egalitarianism”–a philosophy that encourages policies that are directed towards sustaining democratic institutions and that recognizes that every policy will be redistributionist though many redistribute upwards (from middle class workers fired to managers and owners with higher capital gains that are preferentially taxed) rather than downwards (from the wealthy to those in the lower middle and lower classes). If we aren’t, as a society, making every attempt o move towards a fairer society with broad-based growth and reasonable distibution of resources, in my view, we will inexorably move towards a much less fair society in which the resources are constantly allocated to the advantage of the wealthy and powerful.

I see that Maule responded, asking “If a Wealth-Dominated Congress is So Great, Why are Taxation and Other Policies such a Mess? (Jan 13, 2010). Maule says much of what I say here and focuses on whether having wealthy and “successful” people in Congress is really better for the country than having more “ordinary” people who haven’t been able to acquire significant wealth. He concludes that this Congress could learn from the practical experience and wisdom of ordinary people. I heartily agree.

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