Why We Can’t Afford the Rich

by Dusty Sklar

Discussed in this essay: Why We Can’t Afford the Rich, by Andrew Sayer. Policy Press at the University of Bristol (reissued by Policy Press, c/o University of Chicago Press), paperback edition, 2016, 448 pages.

WHO ARE THE RICH, and why can’t we afford them? It’s a long story, according to Andrew Sayer, Professor of Social Theory and Political Economy at Lancaster University in the UK -- 444 pages long, to be exact. In his new book, Why We Can’t Afford the Rich, he tells us that the rich are most likely men, the wealthiest among them in the financial and property sectors. They’re the top 1% that we’ve been hearing so much about, their share of wealth increasing so astoundingly in recent years that it leaves the rest of us scrounging. It is their welfare that politicians are ever mindful of, their media which bolsters them.

Why have the rich grown so much richer over the last four decades? Sayer cites the growing dominance of the financial sector as a factor, just as it was in the Great Depression of the 1930s. He and a number of other economists believe that the roots of the current economic crisis go back to the 1970s, when the Bretton Woods agreement, which had regulated the international monetary system since 1944, was unilaterally terminated by the Nixon administration (1971). Also crucial was the free-market economy championed by Margaret Thatcher and Ronald Reagan in the late 1970s and 1980s, which was based upon the assumption that markets are the best form of economic organization and require privatization, deregulation, and flexible labor markets. Technological change and globalization have also lowered wages in the industrialized countries.

Sayer presents the argument that “basically, the rich get most of their income by using control of assets like land and money to siphon off wealth that others produce. Much of their income is unearned.” In his book, he reveals the crippling and unfair means by which the 1% manage to personally gain wealth that’s been created by others’ labor. Land, which includes natural resources, is perhaps the 1%‘s most important source of wealth. Speculation on commodity prices or derivatives is also a way in which the wealthy engage in “value-skimming,” as Sayer terms it. The higher you rise within the top 1%, the greater is their reliance on unearned income from capital gains, dividends, stocks and other financial assets. At the same time, the rich are able to conceal their worth and exert tremendous power over the political process.

Nor does Sayer buy into the fable that the rich are wealth creators, and he points out the difference between work that is useful and improves people’s lives and income that comes about through the monopolization of a scarce resource. On the contrary, Sayer views the rich as creators of inequality, climate change, and champions of unsustainable growth. He debunks the idea that markets “supposedly reward efficiency and penalize inefficiency and thereby incentivise us to improve.”

DONALD TRUMP, for example, accused of paying no taxes, boasts that he’s proud of gaming the system. He candidly admits: “One of the big assets of real estate: you are allowed large deductions.” Trump’s tax advisers are inventive, putting goats on a New Jersey golf course to take advantage of farmland tax relief, for instance. He’s been called “one of the major welfare kings of America” because of his talent for playing the government for profit. Trump brags about it: “I fight like hell to pay as little [tax] as possible,” he has said.

According to Jack Blum, a Washington, D.C. lawyer and expert in financial crime, “Real estate is the gold mine of gold mines for people who know how to maneuver through it. The potential for shenanigans is virtually unlimited, much more than other sectors.” Then there are the offshore tax havens. Apple alone has an estimated $180 billion offshore. Mitt Romney parked a great deal of his money in Bermuda.

Vilification of the rich, particularly investment bankers, has certainly increased since the 2007 crash. We are still suffering the effects of a lingering recession. Yet, says Sayer, “according to recent surveys of public attitudes, [people] are even more critical of those at the bottom, scorned as ‘welfare moms’, ‘chavs’, ‘trailer trash’, ‘scroungers’, and so on. What’s more, it seems that as societies become more unequal, its members become less critical of inequality!” Those who caused the financial crisis have shifted the cost to the rest of us and then have the gall to blame the welfare state for our distress. Many believe that the super-rich are specially endowed, knowing things that are veiled from the rest of us. The truth is that merit and effort play less of a role than power and good fortune.

Vilification of the poor is rather more prevalent. America, the wealthiest nation in the world, also harbors the deepest poverty of any developed nation -- a distinction about which neither Hillary Clinton nor Donald Trump has much to say. Nobody talks anymore about the lack of jobs. If you’re out of work, it’s your own fault. You’re probably a loser. Sayer points out that the word “loser” is a term of abuse rather than compassion. The cheats in our society are not considered the tax evaders or bribers of politicians, but those who must turn to the government for help.

SADLY, this is not a new phenomenon. As far back as 1759, philosopher and political economist Adam Smith wrote: “This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or at least to neglect, persons of poor and mean condition . . . is . . . the great and most universal cause of the corruption of our moral sentiments” (from Smith’s The Theory of Moral Sentiments).

Sayer’s proposed remedy is increased taxes on the wealthy, more regulation of the financial industry, and greater participation of employees in business ownership. But most important is concern for the public good and the moral vision to see each of us as part of an interdependent social network.

Dusty Sklar is a contributing writer to our magazine and the author of Gods and Beasts: The Nazis and the Occult, as well as numerous stories and articles. Some of her articles for us have dealt with American corporate collaboration with Nazism, the American eugenics movement’s influence upon Nazism, and Mahatma Gandhi’s views on Zionism and the Holocaust.