Are rich people presumptively bad?

Matt Levine makes a very interesting point in his newsletter this morning:

One deep theme of this column is that “greed” is overrated as a driver of bad behavior. People who want to make a lot of money are fine, as people go; it’s the people who want power that you should worry about. A hedge fund manager once quoted Samuel Johnson to me: “There are few ways in which a man can be more innocently employed than in getting money.” You can see this play out in the CEO resignations. Are the CEOs of big companies the conscience of America, the leading moral lights of our time? No, of course not. They are just people, and rich ambitious people at that. But they are not comfortable with Nazis and white supremacists, and so they abandoned an administration that equivocated on Nazis and white supremacists. It looks impressive by contrast with the political leaders who won’t abandon that administration. But of course they won’t: The pursuit of power requires more compromises, and is more corrupting, than the pursuit of money.

This touches on a debate I’ve been having with many different people since I started Cause & Effect. The main thing I’ve been reporting on is philanthropy, and philanthropy almost by definition is a rich-people hobby, and a lot of people really don’t like the rich!

Invariably, it’s one of the first questions I get when I talk about a rich person who is making the world a better place. Well, how did that person make their money? Are they just trying to assuage their guilt? By putting their name to good causes, are they attempting to launder their public reputation? What’s noble about that?

This line of questioning does not just come up with respect to people like the Koch brothers, who run a filthy industry which undeniably makes the world a worse place. If anything I hear it more often with regard to hedge-fund types – people who generally made their money trading various types of securities and derivatives.

It’s not easy to make the case that making a lot of money in the markets is a particularly evil act. But here’s the thing: generally, people don’t bother to make that case at all. They just assume that behind every great fortune there lies a great crime. (Incidentally, that quote does not come from Honoré de Balzac, in case you were wondering, even though Mario Puzo said that it did.)

We’ve now reached the point that even if you know nothing at all about who rich people are or how they made their money, not even their names or nationalities, it has become no big deal to refer to them as “scum”.

There are two related reasons for this. The first is the financial crisis, which had many causes but which is popularly blamed on “Wall Street”, which basically means any large pool of capital. And the second is the terrifying and seemingly unstoppable rise of inequality, in just about every country in the world but especially in the USA.

At some level, of course, inequality is the fault of rich people: if there weren’t so many rich people, and if they weren’t so rich, then we’d have much less inequality. And the way that rich people stack the political deck in their own favor is well documented. So as a class, rich people deserve a lot of blame: they do seem much more interested in perpetuating and increasing their own wealth than they are in reducing poverty and inequality.

Meanwhile, at the individual level, no rich person is going to view it that way. Joe Stiglitz is a rich person, and he has no love for rich people as a class, but he doesn’t blame himself for what the rich have wrought. After all, he’s fighting against it! And the same goes for every other rich person you’re likely to meet.

That’s why the Bernie Sanders message, of bashing “millionaires and billionaires,” resonates: it’s clear that the country has been run by and for the rich for many decades, and that they’ve left hundreds of millions of Americans behind while making hundreds of billions of dollars for themselves. These polarized times don’t lend themselves to distinctions between the Good Rich and the Bad Rich. It’s a lot easier, and not exactly false, to declare that it’s time for the 99% to take over and for the the 1% to leave quietly.

This hasn’t yet become an institutional impediment to philanthropy, but I suspect that it will. Mistrust of the rich is growing, and philanthropy is plagued by an institutional lack of accountability.

The first impulse of philanthropists, when faced with anger against the rich, is to take a “not all rich people” stance – a position which generally goes down about as well as the “not all men” or “not all white people” stances. That’s especially true because the one thing that rich people generally never do, no matter how righteous and progressive they might be, is give up control of their money. They might give a lot of it away, but by golly they’re going to be the ones ultimately deciding where and when and to whom.

That’s why I’d love to see a more democratic form of philanthropy, one where decisions are made more by consensus and less by a dollar-weighted societal algorithm. One of the first things that philanthropists learn is humility: they might want to change the world, but most of the time they don’t, or can’t, or only achieve small effects at the margin. So, given that, why not accept the fact that letting other people control the money is unlikely to result in an appreciably worse outcome?

I’ve said that Jeff Bezos should sell his shares in Amazon and give the cash to poor people; the same is true, mutatis mutandis, for most other rich people too. The rise of inequality is making society worse, and the obvious solution is redistribution of wealth from the rich to the poor, who will generally make pretty good decisions about what to do with the money. (They won’t donate it to Harvard, for starters.) At a societal level this should happen through taxation, but that’s no reason for it not to happen at the individual level as well. Because ultimately, the only way that philanthropy is really going to be able to shed its aura of noxious elitism is if the rich give up the reins of control, and allow the poor to make many, many more allocative decisions.

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