Our young whizzes will be making the rich richer for decades to come.
The richest among us have always loved to claim they have more talent—more smarts—than the rest of us. They can do things the rest of us can’t. They fully deserve, in other words, the grand fortunes they’re so busily amassing.
Those of us who worry about the inequality those grand fortunes create have never swallowed this deservedness claim. We’ve spent massive amounts of our time demonstrating how grand fortunes reflect all sorts of dynamics—from exploiting workers and shortchanging consumers to monopolizing markets and paying off politicos—that have nothing to do with talent and brilliance.
But we skeptics about the talents of our super rich, in our haste to expose the hollowness of their claims, have by and large been glossing over the one tie that does exist between talent and grand fortune. Grand fortunes distort where talent goes.
Those talented young people could be helping our beleaguered world better cope with climate change or identifying where new medical interventions could be making a real difference.
Talent like the smarts of the 14 Pacific Rim university students that the investment empire of billionaire Ken Griffin recently brought, as Bloombergreports, to a five-star Hong Kong hotel as part of an 11-week intern program.
These 14 math and computer whizzes—all “handpicked” from 69,000 applicants by Griffin’s Citadel and Citadel Securities LLC—are each making $120 an hour for their internships, about $19,200 a month. They’re learning how to put their considerable intellectual talents to use on behalf of hedge fund traders and assorted other high-finance movers and shakers.
And these interns are learning all that in fabulously lavish surroundings, amid trays of crab meat salad and mini croque-monsieurs. Griffin’s financial empire has spared no expense.
“There’s only,” as Kristina Martinez, a Citadel human resources exec, explains, “a finite pool of truly exceptional students.”
These exceptional students can work an algorithmic magic the rest of us—including the deep pockets who run Citadel and other giant hedge funds and market makers—simply can’t match. They have an incredible amount of talent to offer, and our high-finance elites are doing their best to lock that talent up for the foreseeable future. Our young whizzes will be making the rich richer for decades to come.
That talent could, of course, be spending the new several decades in an entirely different fashion. Those talented young people could be helping our beleaguered world better cope with climate change or identifying where new medical interventions could be making a real difference. They could be optimizing the efficiency of supply chains and making our economies more productive.
But this talent will be doing none of that. This talent will be making the rich richer because, in a staggering unequal world, the rich can buy up a wildly disproportionate share of what our most talented have to offer. What a waste of talent, and this wanton waste will continue as long as we let wealth concentrate in the pockets of the already fabulously rich.
Citadel’s Ken Griffin, for his part, is currently sitting on a fortune worth some $37 billion. He could be getting by quite satisfactorily with a fortune only a fraction of that size. And if he and his billionaire pals did have to make do with considerably smaller fortunes, the rest of us—in nearly every aspect of our lives—would soon find ourselves doing considerably better. In a fundamentally more equal world, we could all begin to do better for each other.
And how can we create this better, more equal world? Figuring that out doesn’t require the world-class brainpower of the interns that Ken Griffin’s Citadel brought into Hong Kong’s five-star luxury. Figuring that out only requires good public policy sense, the sort of sense that oozes out of progressive analysts like Dean Baker of the Washington, D.C.-based Center for Economic and Policy Research.
Baker has been pointing out, for some time, that paying taxes has essentially “become voluntary” for America’s rich. As he quite accurately notes: “The government is losing hundreds of billions every year because rich people don’t pay the taxes they owe.”
One key reason why: Current tax law has our corporations paying taxes on their profits, but, as Baker notes, corporate accountants get to manipulate the amount of profit the IRS gets to tax, a reality that “leaves enormous room for gaming the tax code.” Corporations naturally—and gleefully—exploit this state of tax affairs “to the fullest extent possible.”
The Biden administration’s Inflation Reduction Act enacted last year suggests the beginnings of a more effective approach to taxing how our CEOs do their corporate business. We could base the corporate income tax on corporate annual returns to shareholders, the money corporations shell out in dividends and share buybacks, plus any capital gains from the increase in value of a corporation stock.
“No muss, no fuss,” says Baker. “We can put the whole tax gaming industry out of business.”
The new tiny annual tax on stock buybacks that appears in the Inflation Reduction Act points us in this promising—and equalizing—direction.
But we’ll never move particularly far in that direction without one other element we’re now missing in the United States: a mass movement committed to campaigning for a just distribution of the wealth our labor creates. The rise of that movement doesn’t require genius either. Just plenty of gumption.