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How to spend it: The shopping list for the 1%. In an age of astonishing wealth, nothing reveals the lives of the ultra-rich like the FT’s unashamedly ostentatiously luxury magazine.
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- Title
- How to Spend It: the shopping list for the 1%
- Authors
- Andy Beckett
- Published
- Jul 19 2018
- Word count
- 3706 words
Can someone shed some light on what the justification is for anyone to be in control of the amounts of wealth in possession of the super-elite? What on Earth is the reason anyone could ever need that much money? It seems like beyond a certain point, it would lose all meaning and become nothing more than some sort of competitive bragging right.
Edit: to clarify, I'm not asking rhetorically or to start some sort of argument. I'm just genuinely curious, and my empathy stops short of understanding on this point.
Honestly, I think to people with that amount of wealth, it starts to be seen as a high score of sorts.
There's also a perspective shift, caused in large part by the amount of class stratification we have. If your net worth is say $10 million, your social circle likely consists of other people in roughly the same financial circumstances. You might know people with a net worth of $100 million and think to yourself "I'm doing alright, but I couldn't buy that second yacht the way the Joneses have". You might know people with a net worth of "only" $1 million and think "wow, if I really screwed up my business, I might end up like that poor fellow."
However, chances are that hypothetical ten-millionaire isn't close friends with any of the 40% of Americans who can't come up with $400 to cover an emergency. They've lost perspective on just how much money they really have, and how privileged they are. That leads to scenarios like "you can't increase my taxes! I'm working hard and still just scraping by on what I've got!" no matter how high someone's income or wealth is.
I've been in that particular yacht before, for longer than I'd care to admit. The Jones's second yacht sure is looking real purdy. Although I can't say that this particular item would be particularly appealing to me...
I suppose it makes sense though. If humans are capable of adapting to harsh conditions, poverty, famine, and war, and still be able to find good in the world, then it stands to reason that they'll also be able to settle in to unreasonable wealth and still find mundanity and suffering.
Because they pulled extra hard on those bootstraps.
Real talk: there is no reason besides pride and greed. When they sit on that much wealth, one can’t even wave their hands and say that they’re making jobs.
Oh dear, I hope they didn't get a hernia. Boot straps are tricky little devils.
The amount of money that is stagnating could be put to use for such amazing purposes. They could prove the value of capitalism and of themselves so much more effectively if they would just put it to good use.
I'll try to defend billionaires. Let's break them into two categories, self-made and inherited wealth.
Self-made
Think of a dollar as an IOU note. I mow your lawn and you give me a dollar. I have done some work for you and you have indicated the value of that work by giving me a note indicating you are indebted to me.
With this conception of dollars it's easy to see that a person who has earned many dollars has actually given away much in value. If society as a whole has sent you lots of money it's because you've sent society lots of value.
Bill Gates started Microsoft and made ninety billion dollars. He didn't take that money from people. He created software people wanted and people gave him money for the software. He's adding value to the system and collecting dollars as a result.
With this understanding your question is "Why should we allow people to make massive contributions to society?" And the answer is then easy - because we want to improve society so we should permit and encourage massive benefits to it.
Inherited wealth
This definitely feels less fair. The children of billionaires didn't do anything incredibly valuable themselves, so why should they be fantastically rich?
The answer is that their wealth is a logical extension of the idea that we should let people do what they want with their money and that includes giving it to their children.
Self-made billionaires X starts a hugely successful business which helps society. X uses his massive wealth to secure a life of leisure for his kids, grandchildren, and great grandchildren.
Okay, that's not exactly fair, but X gave society a lot so we have no reason to violate the principle that people should be allowed to spend their own resources as they wish.
We should stop things like rent seeking, regulatory capture, criminal wealth, money controlling politics, etc. I don't think there's anything wrong with people being really rich though.
Where this falls apart is that no one becomes a billionaire, or even a millionaire, just by mowing lawns.
Instead, you might become a millionaire by starting a landscaping business, and becoming one of our society's fabled "job creators" by hiring other people to do the mowing. There's no inherent problem with this. People want to hire someone to do landscaping, you can provide that service.
However, what happens all too often is that business owners build their wealth by applying negative externalities to their labor force. Workers might not be paid a living wage, such that they need food stamps, subsidized housing, or other government assistance programs to survive.
These negative externalities apply in other areas as well. The landscaping business that made you a millionaire might overuse pesticides and herbicides, damaging the environment. Those are costs to society that aren't necessarily reflected in your bottom line.
Then the problem is compounded by these businesses lobbying against minimum wage increases, against labor standards, against unionization, in general against any regulation that seeks to limit the externalities they place on society. Not every business does this, of course, but enough of them do - and the ones that are successful at it tend to grow in power and influence and displace the ones that don't.
The usual pushback is that paying the workers a living wage will cut into profits too much, forcing businesses to either pass costs onto consumers or close their doors entirely, which would "destroy jobs".
I call BS on this. If paying your workers enough to live on makes your business unprofitable, your business is unprofitable period. It's only being propped up by a convoluted form of corporate welfare in which government assistance programs make up for your low wages. You deserve to go out of business and let creative destruction put a more sustainable business in its place.
And in the scenario we're talking about, I have little sympathy for a billionaire saying margins are razor-thin and they can't afford anything more. Jeff Bezos is worth umpteen billion dollars while workers in his warehouses are peeing in bottles on the warehouse floor. If more stringent labor standards required restroom breaks long enough to realistically use the restroom, maybe Amazon's profits would suffer and he'd only be worth umpteen - 1 billion dollars. That's a tradeoff that I think we as a society should be happy to make.
Entirely missing from your discussion of this is the estate tax, or the "death tax" as it is incorrectly named by its opponents. Inherited wealth is fine, up to a point. People using their wealth to lobby for the repeal of the estate tax, in order to pass unlimited amounts of money on to their children, is not. That leads to a society that starts to resemble feudalism with a permanent aristocratic class.
I feel like this isn't always the case, but it is certainly a major factor in many cases. I hadn't really thought of it quite that way before, so thanks for pointing that out.
Some companies like Costco reportedly treat their labor force well and still make billions. Hypothetically, if a company truly internalizes all their costs and still makes ridiculous amounts of money, would the executives "deserve" it in that case?
I'm certainly in favor of more companies like Costco and fewer companies like Walmart.
I think discussion of "deserving" wealth as a yes/no binary is the wrong question.
Costco's success is in part a product of the society we've created. This was the subject of Obama's much-maligned and much-misunderstood "you didn't build that" comment during the 2012 election cycle.
Costco can't exist without a road and highway system for deliveries to their stores. Costco sells stuff imported from China and other countries, so they rely on the US Navy maintaining blue-water capability and keeping shipping lanes safe. They sell school supplies, so they rely on public schools existing to drive that demand. They sell meat that's been USDA inspected and certified, so they rely on that inspection process being rigorous enough that consumers trust it.
And so on down the line, for every business you can think of. Amazon doesn't exist if the government doesn't fund basic research into what became the internet. Their 2 day shipping relies on air freight in many cases, which is not possible without our federally-run air traffic control system. Many Amazon deliveries are done by the USPS.
Do those executives "deserve" the money they make as profits? Sure. Do they deserve 100% of their profits? No. Some of those profits are "deserved" by society as a whole, and are necessary for the upkeep of that society. The mechanism we've figured out for doing that is taxation.
So if a company treats its workers fairly and pays taxes fairly - meaning it doesn't play silly games like the "Double Irish with a Dutch Sandwich" to avoid paying taxes, and doesn't bribe legislators to reduce their taxes - then I've got no problem with them.
This better sums up with I meant as well! :D
Like prices (including that for labor), wealth has nothing, at all, to do with reward or how much someone subjectively deserves or needs it.
I guess I'm not as much asking about whether anyone deserves that amount of money because that's a fairly straightforward opinion. There is division on the topic, like sides to a coin, but generally speaking it seems that people either feel that it's a reward and deserved, or that it's excessive and dangerous. I personally can't fathom any measure of work, cleverness, luck, or birthright to warrant such a degree of wealth.
I'm more curious what use it could possibly be, in their minds. I might be weird on this (and really, there's no way for me to verify), but I feel like after a certain point I wouldn't even want any more money. I just spent the past half hour trying to figure out what I could possibly do with it. Bezos level wealth could double the education budget (PDF) in the US for the next 10 years. Or give each of the 566,000 employees of Amazon a $250,000 bonus and still have nearly 8 billion dollars left.
That's a house. Each. For half a million people. At least in some places, anyways.
Sorry I'm getting a little carried away. This isn't directed at you. I just don't understand why anyone would feel like they need that money for themselves. It's such a strange mentality to me and I'm just trying to make sense of what could be going through their heads. What is there left to want?
You are equating net worth with liquid assets. The vast majority of Bezos' net worth is tied up in his ownership of Amazon. If he started liquidating that into cash, the stock value would decrease significantly before he could convert it all into $150B of liquid assets. He is worth that much because he owns Amazon, but Amazon is worth that much because he owns it. If he starts liquidating, the value will fall due to the market reacting to the news.
Fair point. But I was also just playing around with different ways to illustrate that amount of money because it helps me to visualize it in more concrete terms.
I can. Bezos worked hard, was clever, and had some luck. He took a lot of risk and it paid off. He deserves his fortune. Now, does that give him the right to influence politics in Seattle? No. Additionally, Amazon is well on its way to become a monopoly, I truly hope someone steps in then and breaks them up.
Space travel? Ocean exploration? Charity? I don't think it's fair to ask them to just give away all their money. Bezos is responsible for 566,000 employees and who knows how many suppliers, don't underestimate this.
Not in Seattle :)
They probably don't feel they need it. It just stems from their entrepreneurial successes... Also, look at the positive side and look at the amount of money Bill Gates & Warren Buffet are giving away to charities.
I've wondered if we could build a system that forces philanthropy.
Set some form of income cap that's in the tens of millions for personal wealth. Anything earned above and beyond that cap is separate from personal wealth and earmarked for philanthropy. Some people would advocate it goes to the government like taxes or to various public services, but I don't really like the idea of just turning it over to the government. I'd like the person(s) who earned it to be the ones to decide where it goes.
Naturally they'd reinvest it into their own empires if they were told they had to give it away, so that needs to be prevented somehow. If it was given away in a no-strings-attached manner (meaning that legally, it's a gift, and nothing is required of the recipient) that would probably help. No contracts, no expectations, just money donated to whatever project(s) that person deems worthy. They could even be allowed to hand it out to their own employees as a bonus.
Could we get these hyper-competitive people to, instead of bragging about their property and wealth high-score, instead compete over who supported the most transformative projects?
This sounds all well and good when we're talking about a person, but when it's a corporation things get a lot more complicated. :/
Bill Gates and Warren Buffet have been trying to lead by example to that end, iirc.
There's no justification for the existence of billionaires. Anybody who has that much money either got lucky, or got rich by shafting people.
After everything else in this thread (and every other one of these conversations I've had), this pretty much sums up my feelings on the matter.
For me, it always comes down to a question of how well the profits are distributed among the workers. So many people get caught up on the idea of the person on top being "deserving" of reward, but usually disregard the efforts of the workers who made it possible. Or, as @spit-evil-olive-tips elucidated elsewhere in this thread, the increasingly neglected infrastructures our economic well being require. I can't find a justification for extreme wealth at the pinnacle of a company when there is poverty at its foundations.
Profits be damned. As a worker I want a bigger cut of the gross revenue, not the net profit. The rent-seeking parasites who own the company can make do with the profits after everybody who actually does the work gets theirs.
Also, the lower you are on the hierarchy, the more you should get paid. The CEO should have the lowest salary, because he doesn't have to answer to anybody but the board. The entry-level employees ought to get the highest salaries, because their jobs are the most tedious and offer the least autonomy.
As a worker, I am usually willing to take cuts when necessary and let payments come when convenient. But I tend to work in a pretty different environment than corporate office settings. It's much smaller and more personal. Sometimes for me, demanding pay might mean that a bill for the company goes unpaid because there's almost never a healthy buffer. I'm willing to make allowances whenever possible, but that also means that when I have needs to be met that I'll be trusted and looked after in kind.
Corporations have very few legal incentives for this kind of dynamic, but plenty of moral/ethical incentives, as well as productivity. Secure, content, looked after, and generally taken care of workers are more focused and productive. But corporations, in their pursuit of the almighty profit god, often only follow the legal incentives and let the well being of their workers fall by the wayside.
I don't know that I'd call myself a capalist or a socialist or anything else. I just wish people would look after each other a little better. I don't mind, personally, if a CEO makes something extra for being on top. But only if and when everyone else is looked after. The notion that a captain goes down with the the ship is very similar to where the "buck stops". It's an acknowledgement of responsibility for the well being of people in your care. And as far as I can tell, it's becoming more and more of an antiquated concept that is easily dismissed in pursuit of grandiose wealth.
No one can objectively ‘deserve’ any amount of money.
Maybe they had a good idea, maybe they were smart or maybe they were a scumbag who would do anything for money.
Either way, they did something different and got that amount of money, it wasn’t given to them. Problem is, often the ultra-rich does everything they can to stop someone else getting as rich as they are or to conserve their own wealth, that’s the real problem.
Maybe beyond a certain point it ceases to symbolize materials and begins to symbolize power, and with that transition some sort of hoarder instinct kicks in. It's possible to have too many material possessions, but is it possible to have too much power? I'd say so, but most people probably don't think so.
A solution (kind of) would be introducing mandatory consuming laws (like in Brave New World) but for the ultra-rich.
By ultra-rich, I mean people who net over 1m$ per year. This would actually force 'trickle-down economics' and not make it the butt of a joke.
This is an interesting idea, but how practical would it be? I mean, what could you as an individual actually spend billions a year on, in terms of material goods and such rather than influence garnering? I highly doubt that in terms of consumption, a billionaire is all that different from a multimillionaire, in spite of the orders of magnitude that separate them.
You can spend nearly unlimited funds on infrastructure. It wouldn't be super beneficial to the individual, but if you're looking to burn billions, you could subsidize a hyperloop or something.
So much of the infrastructure here in the states is in desperate need of modernization. All the talk about robots taking over jobs makes me chuckle. There is so much work to be done. All we need is the funding in the right places.
But at that point, by having mandatory spending that's nonetheless at the sole discretion of the billionaires, you're basically shifting to a planned economy, except with the people planning it being random rich people instead of elected officials or educated experts.
No, they still would consume according to regulations and all of these loopholes would(should?) be closed by the hypothetical law, I don't mean there should be just one rule in the law.
Also, emphasis on the "net", the forced consuming would be the money after tax, so it would be government regulated planned economy + forced consuming.
Exactly.
I have absolutely no problem with anyone having an insane amount of money if they made it all legally. Now, what I do have a problem with is:
Then contact your representatives and have them do something about it. Have them support generic drugs for life threatening medicine. Having 1 specific (probably US) example here doesn't change my view :) If you're talking about all the recent news about the medicine price hikes in the US, well... your system doesn't work imho.
Why would something being legal mean that it's ok? Do you just mean that the money shouldn't be taken away from them? In that scenario I can understand and agree. Although I would still say that insane amounts of wealth accumulation is a problem and laws should be changed to control for it.
I don't understand this reasoning? I'm talking about making money (becoming rich) within the legal framework set up by the law in a country.
This is were we disagree :)
I think we agree then? In that people are fine trying to amass as much wealth as possible within the legal framework. That behavior is 100% ok and pretty much exactly what we want. Although yeah, we probably disagree that the law should try and limit excessive wealth accumulation.
In a capitalist system the ideal situation is one in which the ultra-wealthy use their amassed wealth to invest in things beyond the reach of the regular wealthy, in practice this is done by corporations more so then people. I don't quite remember the source but for a while there was also a strongly held belief in the US that the rich would use their wealth to help people organize politically or engage in philanthropy, because a stable society is in their best interest. Other then that the idea is that this huge wealth will be spent and thus create jobs for people catering to rich tastes.