Being Held Hostage By Rich People

There is a certain species of argument that is frequently raised in response to attempts to restrain the influence and power of corporations and the wealthy. It is, roughly: you will fail, therefore you should accept things as they are and not try to tamper with them. If you try to, say, issue some sort of new tax, you will be told that the wealthy will take their money offshore, with the implication that you should therefore not issue the tax.

Of course, it doesn’t necessarily imply that at all: the argument is a non sequitur, because “X alone won’t work” doesn’t necessarily mean “X shouldn’t be done,” it might just mean “X shouldn’t be done without also doing Y.” If the argument is “corporations will simply get around this new regulation,” that isn’t necessarily reason not to pass the regulation, it might just be reason to figure out ways to make sure you can enforce it effectively.

But I want to focus on another aspect of these types of arguments: they always implicitly assume that it is necessary and unobjectionable to be held hostage by rich people. If we see that landlords are leasing out shabby and unsafe apartments to poor people, and we propose an ordinance increasing maintenance standards, the free-market economists might tell us that the new costs of maintaining the apartments will be passed on to tenants in the form of higher rents. We will, to use their favorite phrase, be hurting the very people we are trying to help. Note, though, that while that may be true, and it might be a good argument for not trying to use this ordinance as a means to this particular end, it also contains a startling implicit admission: landlords are sociopaths who won’t hesitate to hurt poor people if it means preserving their own wealth.

This is also the case with minimum wage and taxation arguments. If I say the minimum wage should be raised, you might reply that if we raise it, companies will simply fire employees to keep labor costs steady, and make the remaining employees do more work. And you might be right. But you are also admitting that companies put the preservation of profit above the well-being of their employees, and would happily ruin lives rather than suffer an increase in labor costs. Likewise, taxation: I propose to tax people’s wealth in order to open clinics in rural areas. You say that if we try to tax wealth, people will simply bury their money overseas and hide it in shell corporations. And you might be right, but you’ve also conceded that the wealthy are amoral and do not give a fig about depriving people of medical care if it means getting to continue sitting on an enormous pile of money.

The funny thing about these “it won’t work” arguments is that they often make the case for revolutionary socialism just as well as they make the case for inaction. “Landlords will do anything to their tenants before they suffer a hit in their own income” is an argument against passing a weak and ineffective regulation, but it’s also an argument that until we eliminate landlords from the world, poor renters are going to be in a constant fight to achieve even modest improvements in their living conditions. The people who make these arguments want us to reach the conclusion “Don’t even bother…” but if we examine them carefully, we can see that they can equally well mean “Don’t even bother… doing anything short of totally changing the economic system.”

There’s also good reason to believe that these arguments are often made in bad faith. That’s because they are always the same, regardless of the empirical facts. Albert O. Hirschman, in The Rhetoric of Reaction, pointed out that conservative arguments almost never change. They tend to be variations on three themes: perversity, futility, and jeopardy. Perversity arguments are of the sort that say “this is immoral and goes against God’s will/tradition/the state/etc.” (Think culturally conservative arguments against homosexuality.) Jeopardy arguments suggest that some proposed change would jeopardize what we already have (“you’ll hurt the people you’re trying to help”). And futility arguments contend that it’s pointless to try to act, because you won’t succeed (futility and jeopardy are often used in conjunction: you’ll fail, and you’ll make things worse). The perversity, futility, jeopardy framework is very useful, because it allows us to recognize that conservative arguments are often formed prior to any examination of the facts: whatever the change is, we will be told that it is futile and will only make us worse off. That’s why there’s good reason to be skeptical of them. They may be correct, but it’s also frequently true that the speaker doesn’t really care whether they’re correct, because being a conservative means constantly saying that some proposed change will do no good, is an abomination, and will actually hurt the people you’re trying to help.

We can see some of the usual argumentative tactics at work in Doug Schoen’s New York Times op-ed “Why Democrats Need Wall Street.” Schoen objects to the “reflexive anti-Wall Street posture” he sees growing on the left, one that “demonizes” the finance industry. Schoen makes an argument that if Democrats want to win, they cannot afford to alienate Wall Street. As he explains, the first reason for keeping ties to the finance industry is that money is an “ugly fact of politics” and “maintaining ties to Wall Street makes economic sense for Democrats and keeps their coffers full.” Note that Schoen might be right that refusing to criticize Wall Street makes “economic sense” for the party: if you criticize the rich, they are unlikely to donate to your cause. But Schoen is also telling us that we are essentially held hostage by Wall Street: if you tick them off, they’ll move their money to the other side, and then you’ll lose. It’s an admission that the United States is in no way democratic: it doesn’t matter what people want, it matters what Wall Street wants, because they have the money, and so the people have to please them. This is true regardless of whether the criticisms of Wall Street have merit; Schoen doesn’t really refute the charges that are made. Instead, his posture is pragmatic: it doesn’t matter whether you’re right, it matters that they have money and you don’t. Schoen decries the Democratic embrace of “stifling” regulations, meaning a refusal to let Wall Street do as it pleases without consequence.

Other parts of Schoen’s argument should be subjected to scrutiny. He claims that “as the party has left behind” a Wall Street-friendly position, “it has also found its way to its weakest electoral position — nationally and at the state level — since the 1920s.” But that decline in Democratic political power occurred during the tenure of an incredibly Wall Street-friendly president, one who prominently declined to hold the financial industry accountable for its role in the 2008 economic crisis. Schoen says that anti-business rhetoric distracts party leaders “from making growth the goal.” But growth isn’t the goal! Growth is a goal, but unless all people are benefiting equitably from that growth, it’s meaningless. Schoen says that Democrats “have simply had an ineffective, negative and coercive economic message. Advocacy of a $15 minimum wage and further banking regulation does not constitute a positive, proactive agenda.” But Democrats haven’t had an economic message; that’s one of the reasons people find them so limp and uninspiring. And it’s unclear how raising people’s standard of living isn’t a “proactive” or “positive” agenda. I am not sure what Schoen’s definition of positive even is, if it isn’t “find a policy that will make people’s lives better.”

The pattern of Schoen’s rhetoric is familiar: Resistance is futile. Wall Street is in charge, and you cannot tick them off. As I say, that may actually be true, and I’m not concerned to debate it here. But it’s amusing that people like Schoen think their arguments are somehow an endorsement of Wall Street, rather than an explanation of just how pernicious its stranglehold on political and economic life is.