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“We need to be ready for a world with trillionaires in it. And that’s always going to feel deeply unfair. It feels unfair to me. But to drive society forward, you’ve got to let that happen.”—Sam Altman, founder of Y-Combinator
The other day, Will Wilkinson, the Vice President for Research of the Niskanen Institute, penned an op-ed for the New York Times demanding justice for the downtrodden: “Don’t Abolish Billionaires.” Many on the left—myself included—have long pointed out that it’s grotesque to let billionaires profit from the deprivation and suffering of others. A properly functioning economic system would prevent the accumulation of vast wealth and power in the hands of a tiny elite. Wilkinson believes that instead of recoiling in horror at wealth disparities, we should celebrate them as a sign of our flourishing. Indeed, they show we have reached “the historical pinnacle of policy success.”
The argument itself, like most defenses of the wealthy, is made lazily (the most prosperous countries have billionaires, therefore billionaires are critical to prosperity) and without any attention to the empirical literature on wealth concentration. Wilkinson stakes out his ground firmly in ethical territory: “It can be morally kosher to bank a billion and… the existence of virtuous three-comma fortunes is a sign not of failure but of supreme policy success.” He notes that all of the countries that top world rankings of the healthiest economies and societies, including the Nordic countries beloved of the left, permit billionaires to exist, then leaps from there to the groundless assertion that doing away with billionaires would jeopardize this wellbeing. That inference only makes sense if the existence of billionaires in those countries causes other people to be better off—something that neither Wilkinson nor anybody else has shown, and something that is inherently impossible to prove using only country-level data.
That’s why Wilkinson attempts to give life to this fake social science by selecting some individual billionaires to laud. Wilkinson names Dr. Gary Michaelson, a doctor who invented surgical treatments and medical devices that have enriched him to the tune of billions. You know who else patented medical treatments worth billions? The Sackler family, of Oxycontin infamy. Wilkinson asserts, again without evidence, that “the accumulation of these innovations over time is the mechanism that drives compounding economic growth,” but in fact the plague of opioid addiction off of which the Sacklers made their billions has done great damage to this country’s economy and, needless to say, to our society. For every good billionaire Wilkinson selects into his sample, I can name three bad ones.
But more to the point, here’s a dirty little secret about the economics profession, of which I happen to be a member: We have no fucking clue what causes economic growth. We’ve made great mileage asserting in public that it’s “innovation” and declaring that this or that policy we happen to favor would give us more of it, while our political opponents stand in its way. But “innovation” is just giving the residual from a regression of economic output on the factors of production a fancy name. Try as we have, and we have been trying for many decades now, no one, not one economist, has been able to do better than that. So for Wilkinson to derive policy implications—that billionaires must be preserved—from such an economic model, if it can be called that, without remotely acknowledging that his theory has been put to the test and failed many times, is not the public scholarship that any serious intellectual should be offering up.
The fact is, Thomas Piketty has already had the last word on this facile game of picking and choosing good and bad billionaires. His whole book Capital in the Twenty-First Century is worth reading, especially the section entitled “The Moral Hierarchy of Wealth,” but we’ll give a representative excerpt:
Every fortune is partially justified yet potentially excessive. Outright theft is rare, as is absolute merit… All too often, the global debate about great wealth comes down to a few peremptory—and largely arbitrary—assertions about the relative merit of this or that individual. For example, it is rather common to contrast the man who is currently the world’s wealthiest [as of 2013], Carlos Slim, a Mexican real estate and telecom tycoon who is of Lebanese extraction and is often described in the Western press as one who owes his great wealth to monopoly rents obtained through (implicitly corrupt) government favors, and Bill Gates, the former number one, who is seen as a model of the meritorious entrepreneur. At times one almost has the impression that Bill Gates himself invented computer science and the microprocessor and that he would be 10 times richer still if he had been paid his full marginal productivity and compensated for his personal contribution to global well-being (and fortunately the good people of the planet have been the beneficiaries of his “positive externalities” since he retired). No doubt the veritable cult of Bill Gates is an outgrowth of the apparently irrepressible need of modern democratic societies to make sense of inequality. To be frank, I know virtually nothing about exactly how Carlos Slim or Bill Gates became rich, and I am quite incapable of assessing their relative merits. Nevertheless, it seems to me that Bill Gates also profited from a virtual monopoly on operating systems (as have many other high-tech entrepreneurs in industries ranging from telecommunications to Facebook, whose fortunes were also built on monopoly rents). Furthermore, I believe that Gates’s contributions depended on the work of thousands of engineers and scientists doing basic research in electronics and computer science, without whom none of his innovations would have been possible. These people did not patent their scientific papers. In short, it seems unreasonable to draw such an extreme contrast between Gates and Slim without so much as a glance at the facts… Rather than indulge in constructing a moral hierarchy of wealth, which in practice often amounts to an exercise in Western ethnocentrism, I think it is more useful to try to understand the general laws that govern the dynamics of wealth—leaving individuals aside and thinking instead about modes of regulation, and in particular taxation, that apply equally to everyone, regardless of nationality.
Once you’ve read Piketty, you can’t take pundits like Wilkinson seriously.
The problems here go beyond flimsy argumentation. Op-eds like Wilkinson’s are part of an organized and well-funded effort to position the radical defense of wealth and privilege as “moderation.” Wilkinon’s Niskanen Institute is ostensibly designed to repudiate extremist policies. Niskasen was formed by a dissident faction from the Cato Institute, outraged by the naked power grab that Charles Koch made to control it about five years ago. Since their eventual namesake—a long-time right-wing economist in the D.C. orbit and Cato board member—died in 2011, the image they have presented to the outside world is one of chastened, but principled, refugees from the malign influence of the super-wealthy on our politics and public debate. They’ve published earnest, big-think “vision papers” like “The Center Can Hold,” a manifesto for a principled free-market “public policy for an Age of Extremes” that acknowledges that climate change is a thing and makes several other nods to elite liberal orthodoxy.
Some of the senior figures at the Niskanen Institute have long held exactly the sort of fancy D.C. dinners that you might have thought exist only in the fevered hive mind of the internet. At these, intellectuals from all sides are invited to noodle over big-I Important, middlebrow books and an endless flow of wine, ensuring trans-ideological solidarity come what may in the political sphere. I used to be invited to these things. Not anymore.
Most worryingly, Niskanen even shares funding sources with organizations on the elite left, ensuring that they will be loath to denounce the threat such a right-wing remnant poses to their mission in the years to come. This is more significant than simply a public relations insurance policy for Niskanen. Organizations on the left are ostensibly chastened by the failure of progressive politicians to ensure racial equality when they hold power. Scholarship on the racial discrimination baked into New Deal programs, the fact that subsidized federal home loans were available to the white middle class seeking to flee school and housing integration during the civil rights movement, and the long history of racialized mass incarceration as a policy implemented by both Republicans and Democrats are matters of grave concern for those organizations, at least in their public-facing materials. But in forming a trans-ideological anti-Trump alliance, the contemporary elite left risks replicating exactly the policies they are now apologizing for. The reason they were implemented in the first place was to keep intact a big tent coalition. When elite white progressives strategized in the past about how to do this, they always opted to elevate the elite white part of their identity as the mode of commonality to organize around, while compromising on the progressive.
Of course, on the right, we’ve seen this before—it reinvents itself over and over again to slough off the discredited and rancid politics it accumulates from long periods in power and the disasters that result therefrom. When the Civil War finally ended slavery in the south and ushered in a mixed-race democracy under federal protection in its aftermath, the Calhounist avatars of property ownership and small government took up the mantle of social Darwinism to cast Reconstruction as misguided “interference” in the south’s natural social order of racial hierarchy. When the Democratic Party constructed the New Deal out of the wreckage created by a decade of free market orthodoxy, business interests regrouped, licked their wounds, and started organizations like the Mont Pelerin Society, the American Enterprise Institute, and ultimately, the Cato Institute from which Niskanen sprung. These people sense a changing of the ideological order once again, the discrediting of the system the last generation of libertarian pseudo-scholars spent their careers putting in place. Now they venture forth with a new organization to make nice with the D.C. think tank elite and keep the flame of reaction alive.
A few years ago, Mike Konczal and I wrote a piece explaining exactly why their ideology can’t make sense of economic reality. But fact-based arguments can only gain a limited purchase in resisting the threat these people pose. Powerful interests with bank accounts fattened on libertarian ideology in action need them to exist, so they will continue to exist, economic reality and economic scholarship be damned. Thus, just today Niskanen held a conference “Beyond Left and Right: Reviving Moderation in an Era of Extremism,” featuring such luminaries of the last 20 years of policy success as Tony Blair and David Brooks. And they will get placed on the New York Times op-ed page decrying the populistic attack on the billionaire class and reclaiming the mantle of a sound, economically middle-of-the-road, business-friendly moderation. Elite liberals, understandably searching for allies who declare themselves disgusted with the status quo, may easily fall for such an act—we can all get together in shared superiority over the base conflict of passions and interests that motivate mass politics. But it’s a scam: It’s just rebranded far right Cato economics with a certain urbane affect.
In their disgust with the post-Civil-War rise of grubby political machines, many erstwhile abolitionist crusaders fell into an alliance of convenience with “Liberal Reform.” It was that era’s version of “socially liberal, fiscally conservative” businessmen who opposed Reconstruction and ended up criminalizing unemployment, publicly justifying the deportation of immigrants and the execution of trade unionists to preserve the social order, and pressuring universities funded by robber barons to throw subversive professors who doubted their received economic wisdom out on the street. During the civil rights movement, many one-time New Dealers like Supreme Court justice Felix Frankfurter and Federal Reserve chairman Arthur Burns proved easy to manipulate from the right with the “threat to the social order” caused by black people holding political power. This cross-elite solidarity ended up betraying egalitarian, democratic social movements and placing the keys to this country’s political system back into the hands of those who had destroyed it a generation earlier.
It’s always a trap. Today’s self-described moderate centrist libertarians represent a reactionary zombie politics that is good at eschewing the overt symbols of white supremacy and class domination while ensuring they remain intact through hard times. Far right ideas will then be better positioned to emerge once again into favorable political and ideological territory, and re-assert race and class hierarchy. We can’t let that happen in our own lifetimes. Fool us again? Shame on us.
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Originally posted by Current Affairs on 2019-02-25 14:25:20]]>