Archive for July 21st, 2012

There’s Nothing Wrong with Being Rich

One of the frustrating aspects of this election is how the right has used the rhetoric of “class war” to try to make it seem like the Democrats are anti-wealth.  Using terms like “envy, jealousy” or even a charge that Obama and the left “hate the rich,” they paint a picture of a bunch of snarling socialists angry that they couldn’t succeed and plotting to take the wealth hard working Americans struggled to create.

Of course, that’s so far from reality as to be laughable.   Unfortunately when hundreds of millions of dollars, scores of pundits and even the most popular news network in the country amplifies and promotes such rhetoric, it’s easy for reality to get lost in the noise.

It is not bad to be rich.   It is good, honorable and worthy of praise to work hard, take chances, succeed and then be able to provide well for your family.   It’s also impressive and good for the economy to have icons like Bill Gates, Warren Buffet and Steve Jobs who may earn more than they’d ever need, but do so having contributed greatly to what this country has become.   Their individual efforts are a great part of the collective good that America has achieved.

However, what people don’t like is injustice.   Not a whiney “it’s unfair that the CEO gets $4 million and I work hard and only get $60,000.”   Yeah, that may contain a lot of unfairness when looked at the level of abstract morality, but given the way the system operates it’s often a necessary and even beneficial unfairness.    By injustice I mean a real sense that some people are able to bend and even shape the rules of the game to their advantage in a manner that harms others and the country as a whole.

Yes, you can pass down your wealth, but achievement and work should do more than birth to determine success

One reason people supported Barack Obama in 2008 was due to a belief that something had gone very wrong in the US.  Jobs flowed overseas, the middle class dwindled, and Wall Street engineered an inside job that, while barely legal (and sometimes not) hurled the global economy deep into crisis.   They hoped an outsider with a vision of change could shake up the institutions and resurrect the American dream.

Four years later people realize that the idea one man could do that was naive.     The way his efforts to compromise and find middle ground were rejected by a Republican leadership bent on reclaiming power made things worse, but given that this is a global crisis, the Democrats are wrong to say GOP obstructionism is why there hasn’t been more improvement.   Crises like these are driven by forces beyond the control of even governments.   A rebalancing of the global economy takes time.

The problem with Romney and the GOP agenda is that it’s backwards looking.   It seeks to resurrect the deregulatory mentality of the last thirty years and trust the markets.   And while there are a large number of people committed to that free market ideology, the arguments to support it are meager.   The evidence is strong that de-regulation failed, and that tax cuts lead not to more jobs but to chasing bubbles.   The growing gap between the very rich and the rest is impossible to ignore.

As society grows wealthy all workers and owners should improve; if one group gains at the expense of the other (not due to their own efforts), that’s wrong.

Rather than recognize that the free market alone can’t solve this crisis, the GOP so far has doubled down on ideology.   The only way they can pull it off is to wage class war – to say it’s the Democrats and the “poor” against Republicans and freedom.   A class war rallying cry that the Democrats represent the takers, while the Republicans represent the makers.   A simple dichotomy where you can’t choose rational regulation and an overhaul of the tax code with both sides compromising.  No, compromise seems to be seen as capitulation.   It’s either you choose socialism and envy of the wealthy or freedom and praise of the rich.

That’s a false dichotomy consisting of two bad choices.   Socialism doesn’t work, big government is dangerous, and very few Democrats want to tax the rich into oblivion.   Indeed, all but the most radical tax hike proposals still leave rates below where Ronald Reagan fought to put them back in the early eighties.   Rather, the argument is:  1) the wealthy have benefited disproportionately over the last 30 years and need to help pay for trimming the deficit; and 2) the wealthy benefit greatly from the way their lobbyists have rewritten the tax code and created the capacity to pay a far smaller share of their income than do average middle class folk.

Point two is the most salient, and that’s why Romney’s tenure at Bain and his tax documents are very important.   They illustrate the point Obama is making — that the system is structured against the middle class in favor of the very wealthy. The very wealthy are not suffering.    Pointing that out isn’t class war, trying to protect unjust structural attributes that benefit one group over another is.

The Democrats have to be clear:  wealth is not bad.   After alll, many very wealthy, successful people support the Democrats.  Steve Jobs supported President Obama, as does Warren Buffet.    We need a system that truly rewards innovation and hard work, not lobbying efforts and inside information.   We need to produce stuff, not bizarre financial instruments with the capacity to obliterate credit markets.

Mitt Romney famously said that corporations are people.   Well, so is government.   Both big corporate actors and big government represent centralized power with the capacity and information to do things that most average folk can’t do.   But governments are supposed to act according to the will of the people with rule of law as the goal; corporations act by the will of the shareholders with profit the goal.   Governments shouldn’t be in bed with corporations because the power of those two together shove out average folk and the middle class.

When that happens politics just becomes what the Romans called panem et circenses — bread and circuses.   Make sure the people are fed and have some spectacle to jolt their emotions.   Gladiator games or talk radio.   Chariot races or talking heads screaming at each other on CNN.    True accountability disappears; democracy is replaced by marketing.   If we go that route we’ll fall deeper into crisis while, as Don Henley put it:

Although released in 2000, Henley’s LP prophetically foreshadowed this crisis

Ah, it’s open season here my friend
It always is; it always has been
Welcome, welcome to the U.S.A.
We’re partying fools in the autumn of our heyday
And though we’re running out of everything
We can’t afford to quit
Before this binge is over
We’ve got to squeeze off one more hit
We’re workin’ it


We’ve got a whole new class of opiates
To blunt the stench of discontent
In these corporation nation-states
Where the loudest live to trample on the least
They say it’s just the predatory nature of the beast

But, the barons in the balcony are laughing
And pointing to the pit
They say, “Aw look, they’ve grown accustomed to the smell
Now, people love that shit
And we’re workin’ it.”
Workin’ it

We got the short-term gain, the long-term mess
We got the suffocating, quarterly consciousness
Yes man, run like a thief

– Don Henley, “Working It” from Inside Job