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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.