In the July 15th New York Times, Louis Uchitelle has an excellent piece about some truly disgusting people. They’re the richest Americans, emblems of what Uchitelle calls the “new gilded age”. Read the whole article here, and marvel at billionaires who compare themselves to Derek Jeter and pine for the days before there was an income tax.
Other bloggers have already noted that the people in this story—like Citigroup CEO Sandy Weill and hedge fun honcho Kenneth Griffin—come off as egotistical jerks. But there’s a deeper lesson here about how irrational capitalism can be.
Apologists for capitalism like to say that without massive income inequality, people wouldn’t have any incentive to work hard or take risks. This implies that money is the only thing that motivates people. But how many doctors, or lawyers, or CEO’s, would say that they’re only in it for the money?
As to the last category, Uchitelle’s article would suggest that the answer is “not many”–unless, that is, they’re trying to come up with reasons why they shouldn’t have to pay high taxes. Take Griffin. First he says he’s not working just for the money:
Kenneth C. Griffin, who received more than $1 billion last year as chairman of a hedge fund, the Citadel Investment Group, declared: “The money is a byproduct of a passionate endeavor.”
Mr. Griffin, 38, argued that those who focus on the money — and there is always a get-rich crowd — “soon discover that wealth is not a particularly satisfying outcome.” His own team at Citadel, he said, “loves the problems they work on and the challenges inherent to their business.”
Surely, then, Mr. Griffin wouldn’t mind if we took just a little of that billion dollars to fund pressing social needs? Think again:
“The income distribution has to stand,” Mr. Griffin said, adding that by trying to alter it with a more progressive income tax, “you end up in problematic circumstances. In the current world, there will be people who will move from one tax area to another. I am proud to be an American. But if the tax became too high, as a matter of principle I would not be working this hard.” [emphasis added]
As a matter of principle? So, even though you don’t really do it for the money, high tax rates would violate your deeply held moral belief that billionaires shouldn’t have to share their loot with the common people? Stay classy, economic royalists.
To be fair, there are a few people in this story who don’t come off as grotesque elitists. Former American Airlines chief Bob Crandall argues that massive inequality is a bad thing and makes the sensible point that “The way our society equalizes incomes is through much higher taxes than we have today. There is no other way.” And Costco’s James Sinegal observes that, despite Mr. Griffin and his “principles”, CEO’s would probably work just as hard if they made “$10 million instead of $200 million.” But as long as they can grab more money, they will.
I don’t think this argument applies only to CEOs. Many of the highest paid jobs in our society are things that people do because they are intrinsically enjoyable, not because they are high-paying. (Conversely, the most dangerous and unpleasant jobs often pay the least.) The reason income is so unequal is not because of some objective truth about the workings of “the market”. It is simply that the rich have the power, and the poor do not. The only way to change that is to agitate and organize. And that’s why, as much as this article made me want to throw up, it also made me happy—because if you wanted to provoke a populist backlash in favor of taxing the rich, you couldn’t do much better than these jackasses.