Paul Krugman quoted John Maynard Keynes, who in his 1936 masterwork The General Theory of Employment, Interest and Money wrote, “The outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.” This is the kind of statement that drives conservatives crazy. How can he say that? Doesn’t that man know anything about economics?! But it is dead on, of course.
The main problem I have with economic conservatism generally is that it simply assumes that the market correctly picks winners and losers. But that isn’t even true if you accept that the winners and losers are correct. We have a political system that allows the winners to continue to enrich themselves through political favors. In fact, it is hard to find a rich person who has not made a very large amount of money directly from government contracts and various forms of special treatment.
My biggest problem, however, revolves around who the winners and losers are. It isn’t because I disagree with who ought to win and who ought to lose, although I certainly do disagree. My problem is with conservatives’ general unwillingness to admit that we have a society that selects for a certain kind of winner. And there is a reason that they are reluctant to admit this. Doing so has policy implications. If different political and economic structures select for different kinds of people, it does not justify the enormous amount of inequality in the world, because the distribution is largely an outgrowth of how the game is set up.
You probably saw the story last week, World’s Richest 85 People Now Worth Same Amount as Poorest 3.5 Billion. And you probably saw the followup, Reality TV Star Kevin O’Leary: It’s “fantastic” That 85 People Have More Wealth Than 3.5 Billion. O’Leary is typical of conservatives who think that all that is stopping a small town boy in Somalia from becoming rich is the lack of enough really wealthy people in distant lands to look up to. Now it would be one thing if those 85 people started off as a random sample of the world’s population, but of course, they don’t.
Consider Mr. O’Leary himself. He was born into the middle class in Canada where everyone gets basic medical care and education. After getting his bachelor’s and MBA from public universities in Canada, he started a business. Of course, his mother had $10,000 to give him to start the company. That in itself is a huge advantage. But the company was a success. It was, not surprisingly, doing nothing more than packaging up freeware and shareware that other people who had real skills created. Still, I don’t doubt that O’Leary is a smart and capable manager. But his success is owed to two very big things: his many and continuous environmental advantages, and luck.
O’Leary is estimated to be worth $300 million. But it just so happens that at this very moment, I am working with a brilliant young man on a high tech start up. It is, even now, far beyond anything that O’Leary could ever do. And we do hope that some day we can make some money with it or at least leverage it into a job. But we don’t look up to people like O’Leary, much less Carlos Slim Helu. People like that aren’t innovators. They are people who take the innovations of people like my partner and monetize them. To a large extent, we do the work just to see if we can.
But our society does not reward us a great deal for our work and initiative. And the more “advanced” our economy gets, the more that’s true. In fact, you can see it every week on O’Leary’s own show, The Shark Tank, where actual entrepreneurs stand up in front of a bunch of rich people and try to get money. Like most “reality” shows, it seems totally fake to me. What’s more, it doesn’t have much to do with how venture capital works. But it shows the way the game works: capital gets huge rewards, even though there is actually a lot of capital floating around with nothing to do. What the rich really want are safe investments that pay a lot of money. And we have a system set up so that they generally can get just that, even though that’s not supposed to be how it works. Seeing the show, I’m often struck with the fact that the “sharks” in the chairs are usually passing judgement on their betters.
It provides a great example of what’s wrong with our society. It is often the case that one of the “sharks” gets offended when one of the presenters turns them down. I’ve even seen one shark be offended on behalf of another shark, “You mean you’re going to turn down his offer?!” How dare they! Because in the world of the conservative, the rich aren’t just rich, they are better. And so they spin this yarn of bullshit about the “free” market and its magical powers. Thus, it isn’t necessary to provide actual opportunity to everyone. All they have to do is provide the example of the “Great 85” or the “sharks” and their wise beneficence. But the truth is just as Keynes pointed out. We have an economy that is an “arbitrary and inequitable distribution of wealth and incomes.”
Afterword
Just to be clear: I am not saying that bringing an innovation to maker is worthless. Not at all! But our society rewards that part of the process as though it were the hardest or most elusive part. But it isn’t. Everyone knows that it isn’t. But that has been the way that the system has been set up, and so people accept it as the way things ought to be. But it is a choice. Unfortunately, it is a choice that keeps making the already rich richer. If Kevin O’Leary had to come up with a great new idea for a business, I think he would be stumped.
