The head of the fourth biggest and fastest rising political party in the world’s second most powerful economy is a racist. An aide to the Prime Minister of one of the world’s most promising societies is caught on camera kicking a protestor to the ground. The world’s largest democracy proudly elects a man who rode a wave of religious extremism. The head of yet another is a man whose calls for ethnic purity are becoming more strident. And that’s leaving out the rise of extremist parties in Greece, the U.S., France, and elsewhere.
What’s going on here?
Here’s my crude, rude version of events: history is repeating itself.
We’ve seen this before: a broken financial system that has created huge economic imbalances. Debtor nations that owe creditor nations impossible amounts, who would have to gut their very societies, and the futures of the people in them, to pay off those impossible debts. And debtor nations and citizens alike that are angry — furious — at the injustice of it. Out of this dangerous cocktail rises extremism, and eventually, war.
The great John Maynard Keynes saw all this as plain as day — after World War I, he predicted that a debt-saddled Germany wouldn’t take it lying down. After World War II proved him right — when not only Germany, but other economically gutted nations succumbed to nationalism and fascism — Keynes tried to design a new global financial system, creating the IMF and the World Bank. Their goals were to prevent exactly the vicious cycle above: imbalances, debt, servitude, extremism, and violence. The IMF was to prevent the buildup of debts and credits; and the World Bank was to invest the surpluses of rich countries in poor countries. We can argue, half a century later, about the sins of these great global institutions — yet, contrary to what today’s conspiracists and fantasists believe, they were not created to oppress; but precisely to prevent oppression from darkening into vengeance.
Yet, today, the situation Keynes foresaw is repeating itself — only more subtly. The problem today isn’t a small number of creditor nations, to whom the vast benefits of global wealth are flowing. It is a small number of super rich individuals: oligarchs, monopolists, scions. In a sense, the same problem, of vast, unjust imbalances, has reemerged; this time beyond national boundaries. Today, the super-rich and their empires span multiple nation-states; whisked from home to home and country to country by private transport, they use different infrastructure (who cares if roads and airports are crumbling when you’ve got a helipad?), play by different rules (do tax laws really matter if your assets are all offshore?), and even different methods of wielding political influence (why knock on doors when you can fund your own super-PAC?).
While the super-rich are vastly disproportionately enjoying the fruits of global prosperity, too many are being left behind. What is common in societies with extremists on the rise? The poor and the middle feel cheated — because they are. In the sterile parlance of economics, their wages aren’t comparable to their productivity — but more deeply, their lives are literally not valued in this system. And so they turn, in anger and frustration and resignation, to those who promise them more.
In all these societies, social contracts prize growth over real human development. Economies “grow”; but the benefits of growth are enjoyed vastly disproportionately by a small coterie of people — usually those politically connected; at the very top of a socially constrained pecking order; a caste society. We are told this is capitalism; in fact, it’s a perversion of free markets I call “growthism.” And while the size of TVs and shopping malls may improve for the poor and the middle, life usually doesn’t. They feel stuck — one paycheck away from penury; one illness away from bankruptcy; one dull, meaningless day at a time at a deadening job. The economy may be growing; but their well-being is not improving; they are asked to work harder and harder; but they do not grow smarter, richer, tougher, wiser, fitter. Their human potential — the one great gift each of us may be truly said to own — is being stifled.
This, then, is a broken global financial system. It is broken in the sense that the social contract it offers is a fools’ bargain; in which the blind pursuit of growth is asking too many to watch too few get unimaginably rich, while their own human potential is thwarted. And as Keynes foresaw, a financial system that breaks down and corrodes social contracts inevitably fuels great tensions between societies. It leads to vicious spirals of extremism, nationalism, and ultimately, perhaps, war. And today, we seem hell bent on playing out that greatest of human tragedies again; judge for yourself where in that downward spiral we appear to be.
So. My story goes like this. Economies stagnate in real human terms; a tiny few get very rich; life stands still for most; economists call it “growth” and declare it success. Stagnation sparks anger: extremists stoke it; and so the world is ablaze in a new age of extremism.
All as predictable as the sunrise.
And yet. Extremists are hucksters: alchemists of prosperity. They promise us something for nothing; plenitude without peace; taking without giving; that all is a zero-sum game; that we must bully and bluster our way into human possibility. And so we are worse than fools if we are seduced by them; we are cowards.
The paradox of prosperity is this. Imagine a lush field that goes fallow. The tribes begin fighting over the last few dried, cracked stalks of wheat. They fight one another tooth and nail. Until, at last, one is victorious. The field is theirs; but there is no longer any wheat; just handfuls of dust. The others starve. They will do anything for the dust. Until one day, a man says: “Why, the dust! It is rightly ours! Let us take it from them!” And so they do. And the spiral of violence and impoverishment never ends.
One day, generations later, the starving tribes wonder: Why didn’t our grandfathers plant another field?
The paradox of prosperity is this. It is at times of little that we must plant the seeds of plenty; not fight another for handfuls of dust. And it is at times of plenty when we must harvest our fields; and give generously to all those who enjoy the singular privilege of the miracle we call life.
(Nope, extremists; that’s not communism — not government redistribution of dust. It is, as Keynes foresaw, just common sense).
I believe a very great deal about the unsure path of human history will be decided in the uneasy years to come. And so I believe our challenge is nothing less than this. A story as old as time; and as familiar as twilight. To stop fighting over fistfuls of dust, and decide to plant another field instead.
Is there such a thing as too rich?
Like most reasonable people, I agree whole-heartedly that people who accomplish greater, worthier, nobler things should be rewarded more than those who don’t. I’m not the World’s Last Communist, shaking his fist atop Karl Marx’s grave at the very idea of riches.
So. Perhaps I’ve asked an absurd question. Perhaps there’s no such thing as too rich — anywhere, ever. But try this thought experiment: Imagine that there’s a single person in the economy who is so rich he’s worth what everyone else is, combined. If there were such a person, he’d be able to buy everything the rest of us own. In time, his family, inheriting his wealth, would become a dynasty; and he could, by bestowing favors, direct the course of society as he so desired. In all but name, such a person would be a king; and no one else’s rights, wishes, desires, or aims could truly matter. And so no society with such a person in it could be reasonably said to be free.
It seems to me, then, there is such a thing as too rich, at least for people who wish to call themselves free. The only question is: Where is the line is drawn? How rich is too rich?
Imagine that you’re so rich you can afford the finest of every good in the economy. The best education, the best car, the best champagne, and so on. Would that be a justifiable level of wealth for a person to not just enjoy — but to aim for? A lot of people would probably say yes.
Now imagine you’re so rich that you can buy the finest of every good in the economy not just once — but 10 times over. Everything. The 10 finest homes. Meals. Doctors. Servants. Entire wardrobes. Apartments, mansions, investment portfolios. The 10 best yachts. Ten private jets. Would that be an excessive level of wealth?
Suddenly, such a level of wealth begins to sound not just unreasonable, but senseless. After all, what possible purpose could owning 10 gigantic homes, yachts, or jets serve? Why should anyone want to be that rich? Not just rich — but super rich?
What is it that induces a sense of repugnance in many of us — in most sensible people — about not just riches, but super-riches? Why is it that when an invisible line is crossed, our attitudes to wealth transform from admiration, to repulsion?
The doctor; the businessman; the neighborhood banker — all these are likely to be merely rich; and probably, many would argue, justifiably so. Their riches can be evidently seen to reflect a contribution to the common wealth. There is a purpose to their work, which requires long years of training and discipline, to which society rightly assigns a steep value.
But to paraphrase the famous line from F. Scott Fitzgerald: the super-rich are very different from the merely rich. The super-rich are not just worth millions; but billions. And they are not doctors; businessmen; bankers. They are hedge fund tycoons; “private equity” barons; privateers who have bought the natural resources of entire countries whole; CEOs with golden parachutes the size of small planets. And their wealth is questionable; not just in moral terms, but also in economic ones. For what useful purpose do speculation, profiteering, and company-flipping serve? In what way do they benefit the societies that incubate them?
The rich, if they do not plant prosperity’s seeds, at least tend to its branches — but the super-rich appear to be merely picking off the choicest fruit.
When societies allow the rich to grow into the super-rich, they are making a series of mistakes. The mistake is not just that a class of super-rich are fundamentally undemocratic because they hold the polity ransom. The mistake is not just that a class of super-rich is fundamentally uneconomic because the super-rich hoard vast amounts of capital, starving the economy of investment, opportunity. The mistake is not just that a class of super-rich is fundamentally inequitable because it is essentially impossible that any human being has single-handedly truly created enough value to be worth tens of billions. The mistake is not just that a class of super-rich is fundamentally unreasonable because there is no good reason for anyone to want such extreme riches. The mistake is not just that a class of super-rich is fundamentally antisocial, for the super-rich will never have to rely on public goods in the same way that the merely rich still need parks, subways, roads, and bridges.
All those are small mistakes. Here is the big one.
When societies allow the rich to grow into the super-rich, they are limiting what those societies can achieve.
Imagine a bountiful forest. And then — no one can say quite why — a small handful of the trees suddenly grow tall. Much taller. They became so tall and strong and broad that they block the sunlight from all the other trees. The other trees begin to wilt, and wither, and disappear. Their roots crack, and split, and turn to dust. And one day, not long after, even the roots of the tallest trees can find no water, can grip no soil. They begin to fall. Soon the whole forest becomes a desert.
A dry academic term like “income inequality” doesn’t really begin to cover it, does it?
When super-riches grow unchecked, no one wins — not even the super-rich themselves, in the long run. Everyone’s possibility is stifled when the invisible line from rich to super-rich is crossed. And that is precisely why no society should desire a class of super-rich; for it assures us that a society’s human potential will be eroded. And that is precisely why the moral sentiments of most reasonable people are instinctively, naturally opposed to the idea of super riches.
At this juncture, I’m sure that defenders of free markets will complain: Who are you to say that anyone shouldn’t be super-rich? But it is precisely defenders of free markets who should object most vehemently to the super-rich. I defy you to find me a fully-fledged member of the super-rich today who isn’t a monopolist, a scion, an oligarch … or all three.
Is there such a thing as too rich?
Here is my answer: No forest should become a desert.
If there’s one thing I hate these days, it’s discussing the U.S. economy.
Will raising wages by seventeen cents destroy humanity? Will edible deodorant add 0.000007 percent to GDP? If we resurrected giant man-eating dinosaurs, could we use them to keep our warehouse pickers in line? Isn’t it awesome when the Dow hits a record high (but everything else flatlines or shrinks)?
I feel like I’m listening to a debate on the noble merits of true love between the Real Housewives and a bunch of broseph PUAs.
By my count, there are five dirty secrets about the economy we’re not supposed to know.
Number one. The biggest falsehood of all? That fixing it is something like teleporting to Jupiter: impossible! Beyond us! Science fiction!
Contrary to nearly everything you hear on the subject, my humble suggestion is this: fixing the U.S. economy isn’t impossible. It’s not even that difficult. It’s straightforward; about as complicated as tying your shoelaces if you’re wearing Velcro sneakers.
The US is a rich country that’s beginning to resemble, for the average person, a poor one. Its infrastructure is crumbling. Its educational systems barely educate. Its healthcare is still nearly nonexistent. I can take a high-speed train across Europe in eight hours; I can barely get from DC to Boston in nine. Most troubling of all, it is poisoning its food and water supplies by continuing to pursue dirty energy, while the rest of the rich world is choosing renewable energy. The US has glaring deficits in all these public goods — education, healthcare, transport, energy, infrastructure — not to mention the other oft- unmentioned, but equally important ones: parks, community centers, social services.
So the US should invest in its common wealth. For a decade, and more. Legions of people should be employed in rebuilding its decrepit infrastructure, schools, colleges, hospitals, parks, trains. To a standard that is the envy of the world — not its laughingstock.
Why? If the US invests in the public goods it so desperately needs, the jobs that it so desperately needs will be created — and they will be jobs that (wait for it) actually create useful stuff. You know what’s useless? Designer diapers, reality TV, listicles, reverse-triple-remortgages, fast food, PowerPoint decks, and the other billion flavors of junk that we slave over only to impress people we secretly hate so we can live lives we don’t really want with money we don’t really have by doing work that sucks the joy out of our souls. You know what’s useful, to sane people? Hospitals, schools, trains, parks, classes, art, books, clean air, fresh water … purpose, meaning, dignity. If you can’t attain that stuff, what good are five hundred aisles, channels, or megamalls?
So: invest in public goods; employ armies to build them; create millions of jobs. And they won’t be the dead-end, abusive, toxic McJobs that have come to plague the economy; they will be decent, well-paid, meaningful jobs which people will be proud to have.
Dirty secret number two: This is a bogus recovery—and it’s going to poison society, unless we are wise enough to recover from the recovery. The rich are getting vastly richer, to the point that it’s absurd that anyone should be so rich. But the average household is getting poorer; and the poor are getting trampled. The US is becoming a caste society; and the divisions between the castes are widening. Investing in basic goods is the only way—the only way — to lift millions out of the ruins of imploded lives, and into prosperity again. Yes; the only way.
Selling doggy dating apps for billions while the average household can’t afford healthcare and education isn’t an economy — it’s a travesty. Too many of our growth industries produce low-paying service “jobs” that amount to essentially being maids and butlers to the super-rich. Sound like a healthy economy to you? I didn’t think so. Hence: invest in the basic building blocks of society — if, that is, it’s a functioning society we wish to enjoy.
Where will the money come from? Dirty secret number three: It doesn’t matter. Print it. Borrow it. Tax it from the super-rich, in whose coffers it’s merely sitting idly. It does not matter one bit. It’s a second order question. If the U.S. doesn’t invest in public goods, it will not prosper; and if it doesn’t prosper, it cannot pay off the debts it already has. Conversely, if it does invest in public goods, and creates millions of decent jobs, the source of investment will matter little; for the economy will have grown and people will be prosperous. We can debate until kingdom come whether to borrow; print; tax; and we should. But we are having a fake “debate” if we pretend that we cannot invest in society first; and then wring our hands that society is falling apart.
Key word: pretend. Here’s dirty secret number four. The pundits don’t want you to know any of the above. They want you to believe that fixing the economy is unfeasible. It’s not. It’s simple. It’s straightforward. It’s obvious. It’s a problem whose solution is as plain as the sky on a perfect summer day.
So why don’t the pundits want you to know any of that? Duh. Because if you did, well, then they might be out of jobs. Here’s what they’re already out of: ideas, time, options, and most importantly, credibility.
Every quarter now, for more than half a decade, pundits and economists have dropped their jaws and proclaimed that they’re shocked. Shocked! That the economy’s still broken!
If every month for years, your doctor frowned, and said, “I’m shocked! The meds aren’t working!”… you’d probably find a new doctor. Maybe it’s time we did the same with pundits and economists.
Remember this old story: a Soviet citizen arrives in the US at the height of the cold war. On arriving, he’s taken to the grocery store. He looks around, eyes wide, and exclaims, bewildered: “But there are no bread lines! How can this be?”. You see, everything he’d been told about the US was a lie. It wasn’t a land of decadence and barbarism; but, at that time, a land of plenty, of opportunity.
Now, in a grand irony of history, the shoe’s on the other foot. Here’s my new version of the story above.
I live in Europe and the US. I tell my friends in the US that in Europe, if you’re disabled, or seriously ill, or just elderly, many national health services will send carers to your house. That’s right; your house. To … care for you. Like the Soviet citizen of yesterday, my American friends of today say, bewildered: “But how can this be?! That’s impossible.”
Wrong. It’s not impossible. It’s precisely how real prosperity happens.
And in that parable is the story of how economies grow into prosperity. A job is created; and not just a McJob; the carer earns an income; the sick are nurtured; the economy doesn’t just grow; but it creates real human prosperity.
An economy is not just a bunch of Very Serious and Highly Intelligent economists debating how many angels can dance on the head of pin — sorry, I meant another variable in an equation in a model. It is lives. Human lives.
So here’s dirty secret number five.
We don’t live the lives we were meant to by merrily shoving Artificially Fried Chicken Flavored Dorito Slurpees down our gullets while watching our societies crumble. We live them when we build things. Great things. Worthy things. Noble things. And the greatest, worthiest, and noblest of all things that mankind has ever built are not apps, drones, corporations, or profits. They are societies in which every life counts. In which every life is truly, fully lived.
So here’s my challenge to you. You know all the dirty secrets now. Live like they weren’t.