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Monday, October 29, 2007

Below the Fold: A World without the Rich

Michael Blim

Can you imagine a world without the rich?

You might say that the rich we have had as long as we have had the poor. As the incredulous swell in an old wine commercial said to the ingénue: “How do you think I got so rich?”

Most Americans today accept the rich as they do death and taxes as another one of life’s annoying basic facts. It is unusual for Americans to realize that we as a society are responsible for their existence. We believe what they tell us. Once again, an old commercial suffices: As John Houseman, bow-tied, and quintessentially the patrician Harvard law professor he once played put it about his client: “At Smith Barney, we make money the old fashioned way – we earn it!”

(Parenthetically, who among the moneychangers would dare run this ad now?)

We need not countenance their existence forever. One need not bring back Stalin to reduce or eliminate the rich. Scandinavian countries do quite well in minimizing their presence. And there is little mystery in how to reduce or eliminate the economic power of the rich. Steeply progressive income taxes, elimination of inherited wealth through estate taxes, and income redistribution along with a robust welfare state can do it.

If Americans examined the deeper damage that the rich do to society, perhaps they might be willing to try cutting the rich down to size.

Let’s look at how the rich damage American society.

First, they burn up resources. Andrew Hacker in a recent issue of The New York Review of Books paid tribute to John Kenneth Galbraith’s The Affluent Society for its scathing critique of the lifestyles of the rich and its condemnation of how they squandered national resources on personal consumption. These resources, Galbraith argued, could be better put to solving the country’s social problems. As noted above, there are remedies that Americans thus far refuse to apply, and they are as obvious as they are ignored.

Second, the rich corrupt the major institutions of American society. It bears repeating that the rich don’t get rich or stay rich simply by making better widgets and saving the profits from their corporate endeavors. They make legislatures dysfunctional, regulatory authorities their watchdogs, and professions their poodles. They corrupt presidents. They even corrupt each other, as corporate heads are bribed with board positions and in turn protect the interests of the company that bribed them.

Consider their corruption of several essential marketplaces for goods and services. What is the recuperative value of a luxury hotel inside a major hospital, complete with chef and concierge services? That depends, I suppose, on what is being recuperated. In the hospital’s case, they recover money, they claim, and lots of it, when compared to serving those Medicaid-assisted poor and the Medicare-dependent elderly and disabled. Instead of lamenting low Medicaid and Medicare reimbursements, they are pandering to the rich. Often it is for more than just money for services rendered. There are new hospital wings and prestigious care centers and institutes to think about, and who better to hit on but the rich who have just spent a week at the local Plaza Hotel hospital?

If pampering patients makes them get well, then how can it be denied to others? But that isn’t the point of the white glove treatment, is it?

Even as doctors desert careers in internal medicine owing to perceived lower pay and longer hours, other internists open boutiques, shrink their practices to a quarter of their former sizes, and charge $3000 per person annual membership fees (See my column “Is There a Doctor in the House?”). Every time internists create boutiques, they diminish the number of doctors, already declining, that provide medical care for everyone else.

The rich even corrupt careers like hospital administration. A recent Boston Globe story disclosed that the presidents of Boston’s major teaching hospitals make near or over a million dollars each a year (NB: without bonuses added). The last time I checked, hospitals of this sort were non-profit institutions. One would think that the boards of these non-profit hospitals would blanch at paying them a million, if only for fear of bad publicity. Yet, as the boards are composed mostly of very rich people, they by practically class instinct would acknowledge that someone whom they employ with so much responsibility deserves a comparable reward. This, after all, is their divine right to ungodly compensation too, so the divine right must be defended everywhere, or it will eventually obtain nowhere.



The rich corrupt universities. Elite schools become elite schools because they service the elite. If that seems tautological, that’s because it’s causal, not casual. The rich made elite schools with their money, and the payback for their accumulated billions, according to Daniel Golden, Wall Street Journal reporter in his new book The Price of Admission, is legacy admissions for their heirs. The subtitle of his book could be “how George Bush got to Yale,” and perhaps how he managed to actually get “C” grades. (You have heard of the gentleman’s “C” haven’t you?) Golden shows how elite schools take in hefty percentages of legacy undergraduates. He also shows in the case of Duke how the university effectively solicited bribes by admitting rich students with the expectation that endowment money would follow from them and their families.

And we thought we lived in a meritocracy. Horatio Alger was right: the best way to succeed in business is to marry the boss’ doctor – or, it seems, play lacrosse at Dartmouth with his son.

But there is a third and perhaps the most insidious way whereby the rich corrupt American society. They corrupt the nature of society itself by turning their corrupting powers and dubious satisfactions into cultural standards for the rest of America. The great if largely forgotten social critic Thorstein Veblen in The Theory of the Leisure Class (1899) made this point precisely and with disarming if utterly cynical simplicity. Wealth, Veblen argued, was a source of honor, and thus having it created an invidious distinction. Others emulated the rich to achieve wealth and status. Seeing this, the rich manifest their dominance through conspicuous consumption, which also has the happy effect of controlling and corrupting American institutions, as I have suggested above in the cases of elite higher education and medical care.

Thus, for instance, philanthropy, though universally considered generous and altruistic, has a predatory component. It is, as the French sociologist Marcel Mauss would have noted, a gift that demands reciprocation – in this case power – in return. When Mike Bloomberg gives upwards of a billion dollars to the Johns Hopkins medical colossus, he receives respect in return, and probably influence in the future direction of the institution. Bill Gates, to take another case, is now one of a handful of the world’s most influential people directing global world health initiatives. Warren Buffett has decided that his friend Bill, Gates that is, should use his wealth in Gates-sponsored initiatives too. All of this is done without a whimper about the loss of democratic control of our priorities, and without a whisper of the impropriety of handing over state and in Gates’ case global sovereignty to the rich.

The rich also receive sanction for their wealth and the means by which they made it. Gates’ Microsoft may have been found by the European Community to have used monopoly power to kill off its competition, but this fact is buried on the financial pages. His philanthropy is strictly page one. And the rich actually claim their legitimacy from beyond the grave, a power for which every legacy student at Harvard rejoices. Everyone remembers that the great Andrew Carnegie, either out of soulful suffering or by virtue of his attachment to the strictures of Scottish Protestantism, gave away his total fortune. Those beautiful rural town libraries and several foundations are the result. Few remember how his steel company was responsible for the bloodiest and most lethal counterattack on a union strike in American history. With money, the rich not only predate the rest of society, but also produce a sanctifying grace that absolves their sins.

Go thou and do likewise, the rich can be heard to say. Instead of stripping the rich of their predatory and envy-making wealth, several hundred million Americans put their hopes and dreams into a chase after wealth and an orgy of conspicuous consumption. No more just social order emerges. No, instead the rich and their divine right are affirmed. After all, how can you be against wealth and predatory power if you chase it? Millions of American lives are wrecked in emulating the rich and pursuing their path. Millions more may not emulate the rich, but the rich and their wannabees economically and socially run them over anyway in the great chase for wealth and power. The poor, the working classes, hell, everyone in the bottom four fifths of American society are exploited by the rich at the same time they are upbraided for falling behind. You’d have to be a swell not to notice that the rich create a standard of living that only the rich can afford.

Ponder this and this observation of Thorstein Veblen’s:

“The fact that the usages, actions, and views of the well-to-do leisure class acquire the character of a prescriptive canon of conduct for the rest of society, gives added weight and reach to the conservative influence of that class. It makes it incumbent upon all reputable people to follow their lead. So that, by virtue of its high position as the avatar of good form, the wealthier class comes to exert a retarding influence upon social development far in excess of that which the simple numerical strength of the class would assign it. Its prescriptive example acts to greatly stiffen the resistance of all other classes against any innovation….” (Penguin Books, 1994, 200)

Feel stuck?





Posted by Michael Blim at 12:53 PM | Permalink