In Economic Inequality, Paul Graham – of Ycombinator fame – posted an astonishingly naive essay on income inequality. While many others have written take-downs (see here and here, of Mr. Graham’s factual and logical flaws, there’s another that deserves attention.
The role of entrenched wealth in creating a less just society
The stagnating incomes and declining social mobility of America’s shrinking middle class is well-documented. The role of entrenched wealth in making that so is less so.
The most visible example are the brothers Koch, whose billions have funded conservative think tanks, “astro-turf” advocacy groups like Americans for Prosperity, climate change denial, national debt scare tactics, and many political campaigns for decades. Their work led directly to the infamous Citizens United Supreme Court decision, gutting campaign finance laws.
Who on the side of working Americans is doing the same as the Kochs? Unions have been eviscerated, despite the fact that Europe’s biggest enconomy – Germany – is heavily unionized, with mandatory union representation on company boards. George Soros and Pierre Omidyar – both immigrants – do what they can, but despite their billions they are outgunned.
The Democratic party takes a lot of money from Wall Street and big corporations – they’ve got it, right? – and, most famously, not a single executive responsible for the Great Recession has faced legal action.
The difference is that the 0.01 percent take a long view – decades – while most Americans live paycheck to paycheck. Average Americans don’t have $800 an hour lawyers arguing their views in court or with regulatory agencies. Average Americans can’t call their Senator or Congressman at home to ask a favor or schedule a dinner. Average Americans don’t have Presidential candidates visiting their homes begging for money.
At the same time, average Americans are constantly told by media elites that “government isn’t the solution, it is the problem” encouraging fatalism and cynicism. News flash: America has – despite its many imperfections – the best government on earth. Which is why we are, at our best, a beacon to the rest of the world.
The Silicon Valley bubble
Not the economic one. The data-driven, engineering, “transformational power of technology” one.
That’s where Mr. Graham lives. While I love the Silicon Valley culture, Valley people should recognize that the wealthy of the world often operate in a less savory bubble: naked self interest, greed, self-absorption, and empathy-free.
The problem of storage in a democracy
One problem is the asymetric nature of public policy information. Problems are forgotten while the laws and regulations meant to manage them remain on the books.
Take the Depression-era’s Glass-Steagall act, which kept banking boring – and safe – for decades. After looking at the causes of the Great Depression, Congress passed that law to prohibit the abuses that led to the crash.
In the 1990s, after decades of propaganda funded by entrenched wealth, Bill Clinton signed a bill that repealed Glass-Steagal. It only took 10 years for Wall Street to use its new-found freedom to drive most of the world into a ditch.
Canada, which retained similar laws, didn’t have the housing crisis we did. Nor did they have to bail out their big banks. Today, even Clinton admits it was a mistake.
The StorageMojo take
It is the success of laws and regulations that allows the forces of entrenched wealth to argue that they aren’t needed. But as the recent conviction of a peanut company exec who recklessly shipped products that killed people shows, there are awful people that we need to be protected against.
Whether it is tobacco companies arguing against medical science, oil companies arguing against climate science, or banks arguing against economic experience, the wealthy and powerful are all too often happy to ignore the future misery of others in favor of this quarter’s profits – and their bonuses.
So, Mr. Graham, please step outside the Silicon Valley technocracy bubble and breathe the air the rest of us do. Open up an Old Testament and read what Isaiah and the other prophets said about the wealthy grinding down the faces of the poor.
Ask yourself, has human nature changed in the last 5,000 years? I don’t mind people getting absurdly rich. I do mind it when it leads to abuse of the less fortunate.
Courteous comments welcome, of course. When Martin Luther King Jr. was murdered, there were riots at my high school. Nine white kids managed to fold themselves into my VW bug. Extra credit: Watch the excellent Talk to Me, starring Don Cheadle, tonight.