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MICHAEL LEWIS, NEW REPUBLIC
Billionaires: Reflections on the Upper Crust by Darrell M. West (Brookings)
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Drawing on the work of Thomas Piketty and Emmanuel Saez, Darrell West, a scholar at the Brookings Institution, notes that the concentration of wealth in the top 1 percent of American citizens has returned to levels not seen in a century. One percent of the population controls a third of its wealth, and the problem is only getting worse: from 1979 to 2009 after-tax income for the top 1 percent rose by 155 percent while not changing all that much for everyone else. By another measure of inequality, which compares the income controlled by the top 10 percent with that of the bottom 40 percent, the United States is judged to come forty-fourth out of the eighty-six nations in the race, and last among developed nations. But the object of West’s interest is not the top 10 percent or even the top 1 percent, but the handful of the richest people on the planet—the 1,645 (according to Forbes) or 1,682 (the Knight Frank group) or 1,867 (China’s Start Property Group) or 2,170 (UBS Financial Services) people on the planet worth a billion dollars or more. (The inability to identify even the number of billionaires hints at a bigger problem: how little even those who claim an expertise about this class of people actually know about them.)
Billionaires seems to have been sparked by West’s belief that rich people, newly empowered to use their money in politics, are now more likely than usual to determine political outcomes. This may be true, but so far the evidence—and evidence here is really just a handful of anecdotes—suggests that rich people, when they seek to influence political outcomes, often are wasting their money. Michael Bloomberg was able to use his billions to make himself mayor of New York City (which seems to have worked out pretty well for New York City), but Meg Whitman piled $144 million of her own money in the streets of California and set it on fire in her failed attempt to become governor. Mitt Romney might actually have been a stronger candidate if he had less money, or at least had been less completely defined by his money. For all the angst caused by the Koch Brothers and Sheldon Adelson and their efforts to unseat Barack Obama, they only demonstrated how much money could be spent on a political campaign while exerting no meaningful effect upon it.
As West points out, many rich people are more interested in having their way with specific issues than with candidates, but even here their record is spotty. Perhaps they are having their way in arguments about raising federal estate tax; but the states with the most billionaires in them, California and New York, have among the highest tax rates on income and capital gains. If these billionaires are seeking, as a class, to minimize the sums they return to society, they are not doing a very good job of it. But of course they aren’t seeking anything, as a class: it’s not even clear they can agree on what their collective interests are. The second richest American billionaire, Warren Buffett, has been quite vocal about his desire for higher tax rates on the rich. The single biggest donor to political campaigns just now is Tom Steyer, a Democrat with a passion for climate change. And for every rich person who sets off on a jag to carve California into seven states, or to defeat Barack Obama, there are many more who have no interest in politics at all except perhaps, in a general way, to prevent them from touching their lives. Rich people, in my experience, don’t want to change the world. The world as it is suits them nicely.
One trouble for a writer who wants to see the concentration of wealth at the very top chiefly as a political problem is that the politics of the very rich are not all that predictable or consistent. Obviously billionaires are not perfect reflections of the societies they inhabit, but it’s not insane to consider that their quirks and proclivities might be politically self-canceling, like the irrationalities of consumers in models in classical economics, and so might be assumed away. Even on the most obvious political issues, on which you might think all billionaires could agree, they are often at war with each other. In the end, West more or less concludes that even if money cannot directly rig the democracy, and buy political outcomes, the public’s perception that it can will lead to public cynicism, and corrode the democracy. That may be true. But it tells you something when someone sets out to write a book about the effects of rich people on politics and can’t do any better than that.
And it raises a bigger question: just how influential are the very rich? They are much in the news; often they own the news. But what are their deeper effects, as a class, on the rest of us? There was a time in America when a few rich people could elect a president (see McKinley), but they haven’t been very good at that lately. When was the last time a billionaire wrote a seminal book or achieved some dramatic scientific breakthrough or created some lasting work of art? Acts of the imagination are responses to needs and desires. The Knight Frank real estate agency’s report on billionaires describes them, nauseatingly, as people “driven by desire.” But desire, at least the profitable kind, is exactly what you lose when have more of everything than you could possibly need—especially when you are born with it. Ditto the willingness to suffer in the pursuit of excellence. The American upper middle class has spent a fortune teaching its children to play soccer: how many great soccer players come from the upper middle class? The more you think about the very rich, the more tempting it is to take the other side of this argument. True, people occasionally become very rich by changing the world as we know it, but in these cases money is the effect, not the cause. Mark Zuckerberg wasn’t rich when he created Facebook, and neither were Sergey Brin and Larry Page when they created Google.
Just not as easy as it seems to use money to change the world, even when what you are doing with the money is giving it away. West has a good chapter on billionaires’ activist philanthropy but, as any billionaire will tell you, this is as much a story of frustration as of success. (Zuckerberg has discovered this in the Newark public schools.) The big surprise about money, in this age of grotesque and growing economic inequality, may be its limits. At any rate, it’s not at all clear how the swelling heap of money controlled by the extremely rich is changing us.
Read more at MICHAEL LEWIS, NEW REPUBLIC