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Wealth As a Means to an End—Amity Shlaes
These days, even conservatives think class warfare works. That’s the takeaway from a spate of conferences on the topic of wealth distribution that have been taking place across the country lately. It’s also the takeaway from Mary Kissel’s excellent recent video interview with Charles Murray for the Wall Street Journal. In the video, Murray cautions that class warriors succeeded in part because the American “upper class has given them a wide open target.” Murray continues with a warning about display of wealth: “it’s an American tradition that you don’t get too big for your britches once you get rich.”
Sort of. Conspicuous modesty is not an American tradition. It’s a Protestant tradition. That wealthy Americans tend to become Protestant once they are wealthy is a second tradition. Here Murray is remembering history selectively.
The Kardashians are like the characters in the old oil boom television series Dallas … who are like F. Scott Fitzgerald’s reckless Daisy Buchanan and the mysterious Jay, who “took out a pile of shirts and began throwing them, one by one, before us, shirts of sheer linen and thick silk and fine flannel…” The Gatsby characters, in turn, resemble the figures of the 1890s Gilded Age, whose banquets at Delmonico’s cost fortunes. One eyewitness, Ward McAllister, described a banquet at which the host paid for a replica of a park — including a 30-foot lake in which swam four live swans — in the middle of a vast central table.
Of course, such behavior always inspires critics. This year, it’s the French economist Thomas Piketty, author of the much-hyped new book Capital in the Twenty-First Century, who’s leading the charge against inequality. In the 1920s, it was figures like Sinclair Lewis. The “Gilded Age” was labeled “gilded” not only because gold connotes wealth, but also as criticism: “gilding the lily,” i.e., conspicuous consumption.
Still, my own take is that Murray is being too defensive. Once you even engage in the rich v. poor debate, you lose. It’s perhaps better to simply work on demonstrating how all such wealth benefits the rest of society.
Capital has to compound, as even Paul Krugman knows. For that reason, inequality can even constitute a benefit. As one of Krugman’s forerunners wrote of the economic growth in the nineteenth century period:
“It was precisely the inequality of the distribution of wealth which made possible those vast accumulations of fixed wealth and of capital improvements which distinguished that age from all others.”
That speaker, John Maynard Keynes, also noted that expensive dinner parties were not necessarily indicative of the wealthy squandering their money. Indeed, they were remarkably frugal overall. “Like bees, they saved and accumulated,” both for themselves and, in the end, for society. The Kardashians may live only to consume, but most of the wealthy — the kind who don’t get on TV — invest a great share of their wealth, allowing it to fuel broader prosperity.
Another reason to shift attention away from the class topic: the class warriors, articulate as they are, may matter less than they — or the rest of the media — think. Back in the 1920s, President Calvin Coolidge, the subject of my own recent work, was often attacked for aiding the rich. The 30th president’s reply was that wealth might not be the chief end of existence. It was important to consider the “things of the spirit.” But Coolidge also said that “we are compelled to recognize it as a means to well nigh every desirable achievement.” Speaking in January 1925 — just months before Charles Scribner’s Sons shipped out The Great Gatsby — Coolidge claimed that “there never was a time when wealth was so generally regarded as a means, or so little regarded as an end, as today.”
To our schoolteachers, who take pains to imprint Gatsby upon each cohort, Coolidge’s sounds like a preposterous claim. But the record of events suggests that more people in his period shared Coolidge’s view than shared Daisy Buchanan’s or Sinclair Lewis’s. Fitzgerald had penned Gatsby in 1924, completing much of the work (Piketty-like) in France. That same year, Coolidge, the conservative, low-tax candidate, won a presidential election, earning more votes than the Progressive Party and the Democrats combined. The victory proved resounding because Coolidge argued on his own terms — not Fitzgerald’s or Sinclair Lewis’s. That record suggests it is time for conservatives to invest in conferences not on wealth distribution but on wealth creation.
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Great post. Conservatives seem embarrassed to even engage in a debate to promote their own views…
Even in the middle of the Occupy Wall Street protests the assorted Marxists and Trust Fund Anarchists lowered their heads for a moment of silence when the death of Steve Jobs was announced. Americans still admire ambition and constructive use of wealth – they’re just tired of rent seeking, K Street profiteering, golden parachutes and bailouts orchestrated by the Chris Dodds, Jon Corzines, Harry Reids and Chuck Schumers of this country.
Two comments:
Personally, my feeling has been that “what good is money if it can’t get you what you want?”. Wealth should be a means to an end. Only in the last 10 years or so (I’m 65) have I felt like I have enough money to fund the lifestyle I want. I lived for many years saying “I can’t afford it” about most things. Not any more. I’m not squandering my wealth, but I don’t hve to scrimp any more.
Next, the big difference between liberals and conservatives is attitude toward inequality of wealth. Conservatives see inequality as an incentive for lower-wealth individuals to work hard, earn money, and join the 1%, and we think that everyone can do it.
Liberals see inequality of wealth as an excuse to confiscate wealth and earnings from those who have earned it, to bestow upon their favored victim groups. In short, liberals tear down the top, conservatives build up the bottom.
Great post. mitting agreed with everything up until the last part. I think we conservatives spend too much time emphasizing the purely mercenary benefits of free market capitalism, eg capitalism will make us richer. We need to spend more time emphasizing the moral superiority of free markets. Thatcher was very good at this. Robbing private Peter to pay collective Paul isn’t wrong because decreasing es productivity. It is wrong because stealing is wrong.
I think Jobs is admired because he was good at cloaking his ruthless pursuit of capitalistic glory in hippie garments and call it righteous – the exact kind of justified fascist behavior the left displays all the time.
Great Post. Thank you.
“ruthless pursuit of capitalistic glory?” Jobs, to the best of my knowledge, didn’t blow his money on boats or a collection of vacation homes or cars, he put it into building Apple, Pixar, and then Apple again. The week he died at age 55 Apple passed ExxonMobil as the most valuable corporation in America. Maybe he was a rotten human being, but a ruthless pursuit of capitalistic glory wasn’t his problem.
That is because it does.
It has often been the case with very rich people I know or have meet that money has not been their prime motivation .It is the act of being productive. The money follows and is more of a way for them keep score of their productivity. I have known several very wealthy people that have lived modestly. I also know several that have given the bulk of their money away before they died. Every one of these people were involved in some thing that other people wanted from them.
The point isn’t that he went in for luxuries, but that he was in the end in it for personal gain, perhaps the satisfaction of creating something successful/profitable/glorious, like many other great businessmen. But the CEO of an oil company, whose business and wealth benefit the world in innumerable ways, is demonized as a greedy profiteer. Jobs comes along and does the same thing, focuses all his energy on growing his business as opposed to philanthropy, say, but is viewed as a visionary/genius/all-around-great-dude because Macbooks/California/Turtlenecks are cool while Refineries/Texas/Suits are not.
The strength of Apple has always been marketing and brand recognition, and the same goes for its leader.
“That record suggests it is time for conservatives to invest in conferences not on wealth distribution but on wealth creation.”
I wish we could get this onto and into everything Republican. Forget everything else for a little while. Just focus on this. Don’t let the Democrats distract us. The economy is the country’s biggest problem right now.
The Democrats never say they are going to shut down an industry. They say they are going to save something or someone. Can’t we do the same thing? We can save something or someone by creating wealth, businesses, industries, and opportunities.
Ronald Reagan created two industries overnight: 401 (k)s and REITs.
It is possible to get this country going again in the right direction.
Doesn’t the essential political difference stem from the fact that the economy today is so thoroughly globalised that inequality and accumulation of capital in the US drives economic growth primarily in countries like China? Iow the poor in the US don’t benefit to the degree that the poor of China do – in fact the US poor may lose out.
Amity Shlaes:
The tricky part for having a conference on wealth creation will be to make clear that wealth is not an end but a means, albeit a very important means, to focusing on the “things of the spirit.”
A reductionist headline covering a wealth creation conference would likely read: Republicans Celebrate Money With Rich Donors. Perhaps if we dubbed the wealth creation conference Using Money to End Job-Lock the headline would read Republicans Panel Discusses Organic Innovation and American Art.
Most likely, however, the panel would just be ignored.
Still, my own take is that Murray is being too defensive. Once you even engage in the rich v. poor debate, you lose.
That was my take. I understood what he was getting at but he was using the Left’s premises to state his point (the rich are to blame). Also, I found his Bubble Quiz even further polarizing even though people liked it….it got lots of attention and sold his book, so it was effective but also sort of a sell out.
Only because we continuously give in, ‘one more time’, like the Republicans…see Bundy situation and ‘racism’. Too many in our media, along with the Left, have convinced too many to shut up. Many issues now can reveal to us how far we’ve been indoctrinated by PC and here we thought we were the ‘free’ ones…
We’ve talked about Piketty before (several times) on Ricochet.
The reason the inequality is growing is that capital is growing as fast as it ever did, but the job market sucks. The stupidity of the Paul Krugmans of the world (he’s got yet another condescending, straw-man piece today) is that their remedy is to tax down the wealthy, instead of promoting and improving the working class.
What infuriates me is that the overwhelmingly knee-jerk, reflexive liberal response to a poor job market is to … “invest” in education. For God’s sake, step back and look at the results, honestly. The bloated education monster produced the workers who are now (theoretically) the source of the problem is the exact same monster they want to give more money to.
It’s like they saw a gunshot wound and tried to heal it with a bigger shotgun.
Some growth takes place over seas because America has the highest corporate tax rate in the industrialized world. Certainly some jobs will always be cheaper in other parts of the world but this isn’t a losing proposition for America’s poor either: they eat, clothe, house and entertain themselves much more cheaply as a result.
Shlaes is correct – the real issue is wealth creation. Taking from the wealthy, sluicing it through a massive federal bureaucracy to dole out benefits to the poor is not a path to prosperity. Inequality is not linked to economic opportunity/mobility. Research has shown that in America there is a great deal of variability and mobility in and out of income brackets. Instead of focusing greedily on taking from the rich we should be focused on letting them expand opportunities (like energyproduction).
He also focuses on the gap between the two. It’s not even enough for him if income from work were to raise if the income from investment/capital raised more.
I’m also not sure if he addresses the issue that if investment/capitol do provide big returns this indicates that others are producing and consuming more in the process – creating more work and income for others.
When it comes to spending on essentials, there is little inequality in this country. Nearly all people have roofs over their heads, have enough food to eat, are getting their children educated, and are in reasonably good health.
The “inequality” is instead in some people’s greater ability to spend on discretionary items or to invest any surplus funds. It is far from clear why this should be at all equalized, given that this greater ability was acquired through greater talent, skill or even luck.
Petty Boozwha: #2 “the assorted Marxists and Trust Fund Anarchists lowered their heads for a moment of silence when the death of Steve Jobs was announced.”
Steve Jobs was a dedicated technologist making products for public consumption and getting rich off of it. He was, I believe, a billionaire.
He also had a reputation as an extremely difficult individual to work for, heaping disdain on his underlings for not bringing forth the level of technology he wanted.
He might be held up for his commitment to technology, at least his or Apples’ technology, but not so much for his appreciation for human beings as such. It seems that human beings were a means to an end.
p.s. I like the way you adapted the French for your last name. Clever. dt
A big problem that Conservatives have in dealing with wealth is the broad brush: we like to speak of the virtuous wealthy, but Exhibit A for the left is those who got theirs from some esoteric form of arbitrage, rent seeking, or theft. If your sole measure is dollars, they are all unfortunately in the same bag. Governmental dysfunctionalities that allow the creation or enhancement of wealth through the exploitation of special arrangements, relationships, legislation or tax incentives would be a good thing to shoot at. Especially if it took out a few liberal fat cats.
It’s going to take a candidate who can say “No one ever ended up better off because they tried to make a rich man poorer. Except maybe an IRS agent who got a bonus that year. Anyone in France end up richer because they took the heads off some kings? Anyone in Russia end up better because they took the Czar’s crown and carved off the jewels? My opponent can worry about taking away what some folks have already made, but I’d rather talk about how to help everyone else make more, and keep it.”
I actually heard a possible candidate’s voice in my head when I wrote that, but I’ll let you guess who.
PS Marvelous to see Ms. Shlaes here on Ricochet.
Not everyone can or will or needs to join the 1% but anyone can achieve a comfortable lifestyle. The key is to spend less than you earn and invest the difference wisely (I use PPF funds because I agree with their investment philosophy.) Then, after a few decades, you’ll be comfortable, not necessarily wealthy.
I told my kids not to aspire to poverty; money isn’t everything but lack of money isn’t anything.
Great article and I wholeheartedly agree. We can either play the scarcity game – I.e. zero sum game and bicker or play the abundance game – which begins with wealth creation. The world is on the verge of seeing their first trillionairs. Focus on growth andosiibilty, leaving the income inequality crowd to look small, petty and without vision…. Winning requires inspiration. Defensive ground inspires no one.
“You can’t help the weak by pulling down the strong.” –CC
Piketty and the reactions pro and con are a distraction from the real issue. There is no free market, competitive capitalism. The financial market that ‘allocates’ all this wealth went bankrupt in 2008, and vast amounts of capital was rendered worthless. And it still would be but for the $5 to 13 trillion dollars that has been printed and given to those who would otherwise be out of business.
We know what it will look like, we will be calling the lost decade the lost quarter century in a few more years. The Pikettyesque urge to plunder what is left over will simply make it worse and plunge even more people into poverty and despair. We know what that looks like as well.
The popular reaction to Piketty from all sides of the ideological divide has given me another piece of evidence for my theory: This won’t be over until there is nothing left to lose.
If Piketty really wanted to address inequalities, he could begin by asking why more than half the country enjoys the benefits of taxation entirely from the other half. Considering the bulk of the US budget is entitlements, none of which are solvent, and some of them are making payments to currently retired recipients out of the earnings of current workers, if we really want to talk about inequality – which is shorthand for whatever one individual perceives as “fairness”, a perfectly indefinable thing – then let’s talk about how much of the income and benefits of the poorest quintiles are funded entirely by those Piketty proposes to tax into submission.
In other words, he’s about expanding the wealth transfer. This will accomplish nothing. It will not enrich the lives of the poor, it will enlarge Leviathan, and it will reduce the available capital for investment that creates real jobs.
Piketty’s argument is a political one, not a practical or economic one. It can and should be laughed out of the reality it purports to intrude upon.
Lady Thatcher on the Ouija board here is cursing a blue streak. All I can make out is something about running out of other people’s money. Perhaps one day Piketty will find himself interned at a Medicare-driven nursing facility of the same quality I visited this week. Wait! There’s Jefferson, something about trembling and God being just.
And now the board has burst into flames. The irony of the hoi polloi going gaga over just the guy to undermine their lot in life for the foreseeable future is rich indeed. Oh, and the health insurance companies have read the polls and shifted hard to monster GOP contributions. I doubt they are pushing free market solutions or ObamaCare repeal with those big checks. Probably just locking in a few more years of “affordable” bailouts.
It’s one thing to be in Vegas, and with your own money, double-down on losing hands, every time. It’s quite another to ask a friend to contribute to this ineffective lunacy.
It becomes another thing, entirely, when instead of asking, the money is taken by threat of violence or incarceration, then thrown down onto a roulette board. All the outcomes show that this “throw money at the problem” technique does not pay off, it does not substantively change the lives of millions, other than creating the expectation that more money will be thrown at them, and now, that they deserve it.
I bought a copy of “Capital” on Amazon for $29. I read Chapter 1, skimmed Chapter 2 and put it up for auction on E-Bay. Got $41 for it. Who says the efforts of a progressive cannot lead to more wealth?