A New Year's Resolution for the Rich
While the United States has suffered the worst recession in living memory, I find that I have very few financial concerns. Many of my friends are in the same position: Most of us attended private schools and good universities, and we will be able to provide these same opportunities to our own children. No one in my immediate circle has a family member serving in Afghanistan or Iraq. In fact, in the aftermath of September 11th, 2001, the only sacrifice we were asked to make for our beloved country was to go shopping. Nearly a decade has passed, with our nation's influence and infrastructure crumbling by the hour, and yet those of us who have been so fortunate as to actually live the American dream--rather than merely dream it--have been spared every inconvenience. Now we are told that we will soon receive a large tax cut for all our troubles. What is the word for the feeling this provokes in me? Imagine being safely seated in lifeboat, while countless others drown, only to learn that another lifeboat has been secured to take your luggage to shore...
Most Americans believe that a person should enjoy the full fruits of his or her labors, however abundant. In this light, taxation tends to be seen as an intrinsic evil. It is worth noting, however, that throughout the 1950's--a decade for which American conservatives pretend to feel a harrowing sense of nostalgia--the marginal tax rate for the wealthy was over 90 percent. In fact, prior to the 1980's it never dipped below 70 percent. Since 1982, however, it has come down by half. In the meantime, the average net worth of the richest 1 percent of Americans has doubled (to $18.5 million), while that of the poorest 40 percent has fallen by 63 percent (to $2,200). Thirty years ago, top U.S. executives made about 50 times the salary of their average employees. In 2007, the average worker would have had to toil for 1,100 years to earn what his CEO brought home between Christmas in Aspen and Christmas on St. Barthes.
We now live in a country in which the bottom 40 percent (120 million people) owns just 0.3 percent of the wealth. Data of this kind make one feel that one is participating in a vast psychological experiment: Just how much inequality can free people endure? Have you seen Ralph Lauren's car collection? Yes, it is beautiful. It also cost hundreds of millions of dollars. "So what?" many people will say. "It's his money. He earned it. He should be able to do whatever he wants with it." In conservative circles, expressing any doubt on this point has long been synonymous with Marxism.
And yet over one million American children are now homeless. People on Medicare are being denied life-saving organ transplants that were routinely covered before the recession. Over one quarter of our nation's bridges are structurally deficient. When might be a convenient time to ask the richest Americans to help solve problems of this kind? How about now?
It is easy to understand why even the most generous person might be averse to paying taxes: Our legislative process has been hostage to short-term political interests and other perverse incentives for as long as anyone can remember. Consequently, our government wastes an extraordinary amount of money. It also seems uncontroversial to say that whatever can be best accomplished in the private sector should be. Our tax code must also be reformed--and it might even be true that the income tax should be lowered on everyone, provided we find a better source of revenue to pay our bills. But I can't imagine that anyone seriously believes that the current level of wealth inequality in the United States is good and worth maintaining, or that our government's first priority should be to spare a privileged person like myself the slightest hardship as this once great nation falls into ruin.
And the ruination of the United States really does seem possible. It has been widely reported, for instance, that students in Shanghai far surpass our own in science, reading, and math. In fact, when compared to other countries, American students are now disconcertingly average (slightly below in math), where the average includes utopias like Kyrgyzstan, Azerbaijan, Albania, Kazakhstan, and Indonesia. President Obama was right to recognize this as a "Sputnik moment." But it is worse than that. This story was immediately followed by a report about giddy Creationists in the state of Kentucky being offered $40 million in tax subsidies to produce a full-scale model of Noah's ark. More horrible still, this ludicrous use of public money is probably a wise investment, given that such a monument to scientific ignorance will be guaranteed to attract an ovine influx of Christian tourists from neighboring states. Seeing facts of this kind, juxtaposed without irony or remedy at this dire moment in history, it is hard not to feel that one is witnessing America's irreversible decline. Needless to say, most Americans have no choice but to send their children to terrible schools--where they will learn the lesser part of nothing and emerge already beggared by a national debt now on course to reach $20 trillion. And yet Republicans in every state can successfully campaign on a promise to spend less on luxuries like education, while delivering tax cuts to people who, if asked to guess their own net worth, could not come within $10 million of the correct figure if their lives depended on it.
American opposition to the "redistribution of wealth" has achieved the luster of a religious creed. And, as with all religions, one finds the faithful witlessly espousing doctrines that harm almost everyone, including their own children. For instance, while most Americans have no chance of earning or inheriting significant wealth, 68 percent want the estate tax eliminated (and 31 percent consider it to be the "worst" and "least fair" tax levied by the federal government). Most believe that limiting this tax, which affects only 0.2 percent of the population, should be the top priority of the current Congress.
The truth, however, is that everyone must favor the "redistribution of wealth" at some point. This relates directly to the issue of education: as the necessity of doing boring and dangerous work disappears--whether because we have built better machines and infrastructure, or shipped our least desirable jobs overseas--people need to be better educated so that they can apply themselves to more interesting work. Who will pay for this? There is only one group of people who can pay for anything at this point: the wealthy.
To make matters more difficult, Americans have made a religious fetish of something called "self-reliance." Most seem to think that while a person may not be responsible for the opportunities he gets in life, each is entirely responsible for what he makes of these opportunities. This is, without question, a false view of the human condition. Consider the biography of any "self-made" American, from Benjamin Franklin on down, and you will find that his success was entirely dependent on background conditions that he did not make, and of which he was a mere beneficiary. There is not a person on earth who chose his genome, or the country of his birth, or the political and economic conditions that prevailed at moments crucial to his progress. Consequently, no one is responsible for his intelligence, range of talents, or ability to do productive work. If you have struggled to make the most of what Nature gave you, you must still admit that Nature also gave you the ability and inclination to struggle. How much credit do I deserve for not having Down syndrome or any other disorder that would make my current work impossible? None whatsoever. And yet devotees of self-reliance rail against those who would receive entitlements of various sorts--health care, education, etc.--while feeling unselfconsciously entitled to their relative good fortune. Yes, we must encourage people to work to the best of their abilities and discourage free riders wherever we can--but it seems only decent at this moment to admit how much luck is required to succeed at anything in this life. Those who have been especially lucky--the smart, well-connected, and rich--should count their blessings, and then share some of these blessings with the rest of society.
The wealthiest Americans often live as though they and their children had nothing to gain from investments in education, infrastructure, clean-energy, and scientific research. For instance, the billionaire Steve Ballmer, CEO of Microsoft, recently helped kill a proposition that would have created an income tax for the richest 1 percent in Washington (one of seven states that has no personal income tax). All of these funds would have gone to improve his state's failing schools. What kind of society does Ballmer want to live in--one that is teeming with poor, uneducated people? Who does he expect to buy his products? Where will he find his next batch of software engineers? Perhaps Ballmer is simply worried that the government will spend his money badly--after all, we currently spend more than almost every other country on education, with abysmal results. Well, then he should say so--and rather than devote hundreds of thousands of dollars to stoking anti-tax paranoia in his state, he should direct some of his vast wealth toward improving education, like his colleague Bill Gates has begun to do.
There are, in fact, some signs that a new age of heroic philanthropy might be dawning. For instance, the two wealthiest men in America, Bill Gates and Warren Buffett, recently invited their fellow billionaires to pledge the majority of their wealth to the public good. This is a wonderfully sane and long overdue initiative about which it is unforgivable to be even slightly cynical. But it is not sufficient. Most of this money will stay parked in trusts and endowments for decades, and much of it will go toward projects that are less than crucial to the future of our society. It seems to me, however, that Gates and Buffett could easily expand and target this effort: asking those who have pledged, along with the rest of the wealthiest Americans, to immediately donate a percentage of their net worth to a larger fund. This group of benefactors would include not only the super-rich, but people of far more modest means. I do not have 1/1000 the wealth of Steve Ballmer, but I certainly count myself among the people who should be asked to sacrifice for the future of this country. The combined wealth of the men and women on the Forbes 400 list is $1.37 trillion. By some estimates, there are at least another 1,500 billionaires in the United States. Something tells me that anyone with a billion dollars could safely part with 25 percent of his or her wealth--without being forced to sell any boats, planes, vacation homes, or art. As of 2009, there were 980,000 families with a net worth exceeding $5 million (not including their primary residence). Would a one-time donation of 5 percent really be too much to ask to rescue our society from the maw of history?
Some readers will point out that I am free to donate to the treasury even now. But such solitary sacrifice would be utterly ineffectual, and I am no more eager than anyone else is to fill the pork barrels of corrupt politicians. However, if Gates and Buffett created a mechanism that bypassed the current dysfunction of government, earmarking the money for unambiguously worthy projects, I suspect that there are millions of people like myself who would not hesitate to invest in the future of America.
Imagine that Gates and Buffett raised a trillion dollars this way: what should we spend it on? The first thing to acknowledge is that almost any use of this money would be better than just letting it sit. Mindlessly repairing every bridge, tunnel, runway, harbor, reservoir, and recreation area in the United States would be an improvement over what are currently doing. However, here are the two areas of investment that strike me as most promising:
Education: It is difficult to think of anything more important than providing the best education possible for our children. They will develop the next technologies, medical cures, and global industries, while mitigating their unintended effects, or they will fail to do these things and consign us all to oblivion. The future of this country will be entirely shaped by boys and girls who are just now learning to think. What are we teaching them? Are we equipping them to create a world worth living in? It doesn't seem so. Our public school system is an international disgrace. Even the most advantaged children in the United States do not learn as much as children in other countries do. Yes, the inefficiencies in our current system could be remedied, and must be, and these savings can then be put to good use--but there is no question that a true breakthrough in education will require an immense investment of further resources. Here's an expensive place to start: make college free for anyone who can't afford it.
Clean Energy: As Thomas Friedman and many others have pointed out, our dependence on nonrenewable sources of energy is not only bad for our economy and the environment, it is obliges us to subsidize both sides of the clash of civilizations. Much of the money we spend on oil is used to export the lunatic ideology of conservative Islam--building mosques and madrassas by the tens of thousands, recruiting jihadists, and funding terrorist atrocities. We should have devoted ourselves to a clean-energy Manhattan Project thirty years ago. Success on this front would still yield enormous wealth in this country, while simultaneously bankrupting the Middle Eastern states that only pretend to be our allies. Our failure to rise to this challenge already counts as one of the greatest instances of masochistic stupidity in human history. Why prolong it?
I am aware that a proposal of this kind is bound to seem quixotic. But what's to stop the wealthiest Americans from sponsoring a 21st Century Renaissance? What politician would object to our immediately spending a trillion dollars on improvements in education and energy security? Perhaps there are even better targets for this money. Let Gates and Buffett convene a team of brilliant people to lay out the priorities. But again, we should remember that they could scarcely fail to improve our situation. Simply repaving our roads, the dilapidation of which causes $54 billion in damage to our cars every year, would be better than doing nothing.
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