“The Show-Off Society”: In A Highly Unequal Society, The Wealthy Feel Obliged To Engage In ‘Conspicuous Consumption’
Liberals talk about circumstances; conservatives talk about character.
This intellectual divide is most obvious when the subject is the persistence of poverty in a wealthy nation. Liberals focus on the stagnation of real wages and the disappearance of jobs offering middle-class incomes, as well as the constant insecurity that comes with not having reliable jobs or assets. For conservatives, however, it’s all about not trying hard enough. The House speaker, John Boehner, says that people have gotten the idea that they “really don’t have to work.” Mitt Romney chides lower-income Americans as being unwilling to “take personal responsibility.” Even as he declares that he really does care about the poor, Representative Paul Ryan attributes persistent poverty to lack of “productive habits.”
Let us, however, be fair: some conservatives are willing to censure the rich, too. Running through much recent conservative writing is the theme that America’s elite has also fallen down on the job, that it has lost the seriousness and restraint of an earlier era. Peggy Noonan writes about our “decadent elites,” who make jokes about how they are profiting at the expense of the little people. Charles Murray, whose book “Coming Apart” is mainly about the alleged decay of values among the white working class, also denounces the “unseemliness” of the very rich, with their lavish lifestyles and gigantic houses.
But has there really been an explosion of elite ostentation? And, if there has, does it reflect moral decline, or a change in circumstances?
I’ve just reread a remarkable article titled “How top executives live,” originally published in Fortune in 1955 and reprinted a couple of years ago. It’s a portrait of America’s business elite two generations ago, and it turns out that the lives of an earlier generation’s elite were, indeed, far more restrained, more seemly if you like, than those of today’s Masters of the Universe.
“The executive’s home today,” the article tells us, “is likely to be unpretentious and relatively small — perhaps seven rooms and two and a half baths.” The top executive owns two cars and “gets along with one or two servants.” Life is restrained in other ways, too: “Extramarital relations in the top American business world are not important enough to discuss.” Actually, I’m sure there was plenty of hanky-panky, but people didn’t flaunt it. The elite of 1955 at least pretended to set a good example of responsible behavior.
But before you lament the decline in standards, there’s something you should know: In celebrating America’s sober, modest business elite, Fortune described this sobriety and modesty as something new. It contrasted the modest houses and motorboats of 1955 with the mansions and yachts of an earlier generation. And why had the elite moved away from the ostentation of the past? Because it could no longer afford to live that way. The large yacht, Fortune tells us, “has foundered in the sea of progressive taxation.”
But that sea has since receded. Giant yachts and enormous houses have made a comeback. In fact, in places like Greenwich, Conn., some of the “outsize mansions” Fortune described as relics of the past have been replaced with even bigger mansions.
And there’s no mystery about what happened to the good-old days of elite restraint. Just follow the money. Extreme income inequality and low taxes at the top are back. For example, in 1955 the 400 highest-earning Americans paid more than half their incomes in federal taxes, but these days that figure is less than a fifth. And the return of lightly taxed great wealth has, inevitably, brought a return to Gilded Age ostentation.
Is there any chance that moral exhortations, appeals to set a better example, might induce the wealthy to stop showing off so much? No.
It’s not just that people who can afford to live large tend to do just that. As Thorstein Veblen told us long ago, in a highly unequal society the wealthy feel obliged to engage in “conspicuous consumption,” spending in highly visible ways to demonstrate their wealth. And modern social science confirms his insight. For example, researchers at the Federal Reserve have shown that people living in highly unequal neighborhoods are more likely to buy luxury cars than those living in more homogeneous settings. Pretty clearly, high inequality brings a perceived need to spend money in ways that signal status.
The point is that while chiding the rich for their vulgarity may not be as offensive as lecturing the poor on their moral failings, it’s just as futile. Human nature being what it is, it’s silly to expect humility from a highly privileged elite. So if you think our society needs more humility, you should support policies that would reduce the elite’s privileges.
By: Paul Krugman, Op-Ed Columnist, The New York Times, September 25, 2014
“The Poor Door”: A Symbol Of A Truth We All Know
A few words about the “poor door.”
Maybe you already know about this. Maybe you read on Slate, saw on Colbert or heard on NPR how a developer qualified for tax benefits under New York City’s Inclusionary Housing Program by agreeing to add to its new luxury building on the Upper West Side a set number of “affordable” apartments. How the company won permission to build that building with two entrances, one in front for the exclusive use of upper-income residents, another, reportedly in the alley, for residents of more modest means.
Hence, the “poor door,” though the term is something of a misnomer. While the premium units with the Hudson River views would probably strain the average budget at a reported sale price of $2,000 a square foot, the 55 “affordable” apartments overlooking the street are not exactly priced for the family from Good Times. We are told they are expected to draw small families earning up to $51,000 a year — not enough to contemplate putting in a bid for the Knicks, but more than enough to ensure you don’t have to squeegee windshields for pocket change.
Anyway, Extell Development apparently thinks it too much to ask the well-heeled to use the same door as such relative paupers. Observers have responded with outrage. A New York Times pundit called it “odious.” CNN called it “income segregation.” The Christian Science Monitor called it “Dickensian.”
The door is all those things, yes, but it is also the pointed symbol of a truth we all know but pretend not to, so as to preserve the fiction of an egalitarian society. Namely, that rich and poor already have different doors. The rich enter the halls of justice, finance, education, health and politics through portals of advantage from which the rest of us are barred.
Politicians who send you form letters line up to kiss Sheldon Adelson’s pinky finger because he has access to that door. O.J. Simpson got away with murder because he had access to that door.
Over the years, I’ve met a number of wealthy people. I have envied exactly one: Tom Cousins, the Atlanta developer who founded the East Lake Foundation, a combination social experiment and real estate development that transfigured a blighted and impoverished community, raising test scores, banishing crime, lifting incomes, changing lives.
I envied him not his money, but the privilege he has had of using that money in the service of other people. What joy and satisfaction it must give to know your wealth has made a difference in the world.
The “poor door” reflects a different ideal. Unfortunately, this is the same ideal one too frequently sees reflected in the nation at large. In our elevation of the do-nothing-of-value, contribute-nothing-of-value, say-nothing-of-value likes of Paris Hilton and Donald Trump to the highest station our culture offers — celebrity — we betray not simply a worship of wealth for its own sake, but an implicit belief that net worth equals human worth. And it does not.
It’s only money. Money is neutral. It’s what one does with money that defines character.
I begrudge no one whatever luxuries fortune makes possible. Enjoy the French chalet if it makes you feel good and the wallet allows. But the poor door seems to me a bridge too far. Were I as rich as Bill Gates plus the Koch brothers multiplied by Oprah Winfrey, I don’t think I’d want to live in a building of separate but unequal access, a building built on the tacit assumption that I would be — or should be — mortally affronted at sharing a lobby with someone just because he had fewer material trinkets than I.
The very idea offends our common and interconnected humanity. In the final analysis, we all entered this life through the same door. And we’ll leave it that way, too.
By: Leonard Pitts, Jr., Columnist, The Miami Herald; The National Memo, August 4, 2014
“Hedge Funds Versus Kindergarten”: There’s Nothing Natural Or Moral Going On Here
The inequality issue is one in which economic and moral considerations can quickly become tangled. That’s particularly true at a time when defenders of free-market economics are increasingly prone to advance the argument that the “natural” distribution of resources via unregulated markets is a measure of the actual value of each person’s contributions to society, with any redistribution representing virtual theft.
Consider this data point from Ezra Klein today at Vox:
Alpha magazine is out with its annual “rich list” detailing the successes of the highest earning hedge fund managers in America. The news once again is that it’s good to be a successful hedge fund manager: the top 25 earned a collective $21.1 billion this year.
Even within that group there’s considerable inequality. The top earner, David Tepper, took home $3.5 billion which is about five times as much as either of the two men tied for the tenth slot.
How does that look in context? Well, it’s about 0.13 percent of total national income for 2013 being earned by something like 0.00000008 percent of the American population. Another way of looking at it is that this is about 2.5 times the income of every kindergarten teacher in the country combined.
Now I am open to the argument that hedge funds are at least a marginally useful lubricant to the efficiency of the U.S. and global economies. But you cannot tell me a handful of hedge fund managers add more to the wealth and productivity of America than all the kindergarten teachers combined. There is nothing “natural,” much less “moral,” about a system that distributes the fruits of the economy in that manner.
By: Ed Kilgore, Contributing Wroter, Washington Monthly Political Animal, May 6, 2014
“Money Can’t Always Buy Respectability”: Sterling Shielded His Racism With Wealth, Until People Finally Couldn’t Take It Anymore
Pat Buchanan had an interesting column about Donald Sterling and his long history of racism, often self-proclaimed. His point: follow the money.
For years, Sterling has been in court for discrimination and he has made racist comments on the record. He was fined nearly $3 million by the Justice Department for discriminating against blacks and Hispanics in his housing units. Yet, because of his vast wealth, people seemed to look the other way. The Los Angeles chapter of the NAACP was even about to give him a Lifetime Achievement Award.
I don’t often agree with Buchanan on such matters, but he had a point. Why do the Duck Dynasty boys continue to skirt any serious repercussions from racist comments? Why does A&E keep them on and others ignore the racism? Follow the money.
Big, wealthy franchise owners often don’t pay for their outrageous comments and actions. Take Donald Trump – his buffoonery knows no bounds. It really is only when wealth and power with good sense confront wealth and power with bad sense that we see change.
A friend sent me a review of the court case from 1970 when the Kenwood Country Club in Bethesda, Md., was forced to change its discrimination policies. I remember it because my old boss, Sen. Frank Church, along with others such as former Republican Sen. Robert Griffin, Federal Communications Commission Commissioner Nicholas Johnson and Rev. Richard Halverson (later Senate chaplain), filed a suit against Kenwood.
The tony neighborhood of Kenwood had a long history of covenants prohibiting sales of homes to anyone who was not “Caucasian” – no blacks, no Hispanics, no Asians, no Jews. Not only was membership denied in the Kenwood Club, but as a member you could not even bring a non-white guest to the club. Many were unaware of this until a women member wanted to have a Wellesley College lunch in 1968 and invited the then-Mayor Walter Washington as the speaker. No can do, said the club.
The result was the successful lawsuit and the resignation of members such as Secretary of State William Rogers, Secretary of Defense Melvin Laird, former Postmaster General Edward Day and the President of George Washington University, Lloyd Elliot. Wealth and power confronted wealth and power. But that was more than 40 years ago and maybe it is time that we don’t just ignore the slights and side comments and behavior of the Donald Sterling’s of the world, but rather stand up to those who think they are untouchable because of their bank accounts.
Many still believe they can buy respectability. Many believe they can accumulate great wealth and escape responsibility for their actions. It is a shame that we still have to follow the money, even if it finally was successful with Donald Sterling.
By: Peter Fenn, U. S. News and World Report, May 1, 2014
“Cliven Bundy And The Entitlement Of The Privileged”: What He Learned From The Koch Brothers
Nevada rancher Cliven Bundy’s 15 minutes of fame are up. He was a Fox News poster boy when he refused to pay fees for grazing his cows on federal land and greeted federal rangers with the threat of armed resistance. But when he voiced his views on the joys of slavery for “the Negro,” his conservative champions fled from his side.
What is interesting about Bundy, however, is not his tired racism but rather his remarkable sense of entitlement. His cattle have fed off public lands for two decades while he refused to pay grazing fees that are much lower than those he would have to pay for private land (and lower even than the government’s costs). “I’ll be damned if this is the property of the United States,” he says, claiming he won’t do business with the federal government because the Constitution doesn’t prohibit Americans from using federal lands.
As we’ve seen in recent years, this sense of entitlement pervades the privileged. Billionaire hedge fund operator Stephen Schwarzman feels so entitled to his obscene hedge fund tax dodge – the “carried interest” exemption – that he viewed Obama’s call to close the loophole as “a war. It’s like when Hitler invaded Poland in 1939.” Tom Perkins, co-founder of venture capital fund Kleiner Perkins Caufield & Byers, considers mere criticism of the wealthiest Americans akin to the persecution of the Jews in Nazi Germany.
When Republican Dave Camp, the chairman of the House Ways and Means Committee, had the temerity to propose a surcharge on the biggest financial houses (those with $500 billion in assets or more), to correct for the subsidy and competitive advantage provided by being “too big to fail,” Wall Street went ballistic. Republicans were told the spigot of political fundraisers would be closed until they recanted their heresy. “We’re going to beat this like a rented mule,” boasted Cam Fine, head of the Independent Community Bankers of America.
Big Oil feels so entitled to its multibillion-dollar annual subsidies, that Jack Gerard, president of the American Petroleum Institute, even denies their existence: “The oil and gas industry gets no subsidies, zero, nothing.” The more than $4 billion that the most profitable companies in the history of the world receive annually from U.S. taxpayers are apparently entitlements, not subsidies.
No one exemplifies this sense of entitlement more than the billionaire Koch brothers, self-proclaimed libertarians who pour hundreds of millions of dollars into supporting think tanks, lobbies and candidates who will protect their right to pollute our air and water while leaving taxpayers to pay billions of dollars to repair damage done. Owners of companies that have serially violated environmental, health and safety laws, the Koch brothers have played a major role in propogating the views adopted by rancher Bundy.
Mitt Romney, the Republican candidate for president, infamously denounced the 47 percent as “takers,” even while revealing that he paid a low 14.1 percent income tax rate. As Bundy dramatized, the real “takers” aren’t the poor and the vulnerable. Indeed, worse-off Americans are so disabused of any sense of entitlement that millions don’t jump the hurdles needed to receive the benefits for which they are eligible.
No, the real “takers” with a stunning sense of entitlement are the biggest corporations and banks, the richest Americans. They view their tax dodges as an inherent right, their inherited estates as a birthright. They treat the public commons as a resource that they should be free to plunder and regard any regulations that would protect those resources as an infringement on their liberty. Corporations are now arguing in court that that the First Amendment gives them the right to evade the law.
But, as Sen. Elizabeth Warren (D-Mass.) noted in her speech to the Democratic National Convention in 2012, the entitlements of the elite are increasingly under question:
“People feel like the system is rigged against them. And here’s the painful part: They’re right. The system is rigged. Look around. Oil companies guzzle down billions in subsidies. Billionaires pay lower tax rates than their secretaries. Wall Street CEOs — the same ones who wrecked our economy and destroyed millions of jobs — still strut around Congress, no shame, demanding favors and acting like we should thank them. Anyone here have a problem with that? Well, I do.”
And, as polls show, so do the vast majority of Americans. Just as Bundy discovered his casual racism was unacceptable, he will learn that his privileged sense of entitlement earns similar scorn.
By: Katrina vanden Heuvel, Opinion Writer, The Washington Post, April 29, 2014
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