By now, most of the liberal blogosphere has seen Elizabeth Warren's clear and convincing invocation of the social contract as the basis for taxing the wealthy. Taxing the wealthy is not class warfare, Warren insisted (with a firmness that is long overdue on the Left), the wealthy became wealthy because of a society we all paid for and therefore, the wealthy owe a debt to society, which will enable the next generation to have the same opportunities today's wealthy enjoyed:
I hear all this, you know, “Well, this is class warfare, this is whatever.”—No! There is nobody in this country who got rich on his own. Nobody. You built a factory out there—good for you! But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.
In my opinion, this is really, really significant (which, I suppose, means I come down on the "narrative matters" side of the debate that the Left has been kicking around since Drew Westen's controversial piece).
I'm currently reading David Graeber's, Debt: The First 5,000 Years. At bottom, debts and contracts are the same thing - they're obligations. When we specify the terms of the "social contract," we're defining the obligations of the members of society. What Graeber documents is that conquerors often claim the moral high ground by insisting the conquered are indebted to the conquerors: "We could have killed you, but we spared your lives. Now you owe us." However, the language of debt invariably gets turned around and the conquered ask: "Who really owes what to whom here?":
[I]n order to be able to run a regime based on violence effectively, one needs to establish some kind of set of rules. . . . In a way it doesn't even matter what they are. Or, at least, it doesn't matter at first. The problem is, the moment one starts framing things in terms of debt, people will inevitably start asking who really owes what to whom. ~ Graeber, p. 8.
Isn't this what happened? The wealthy have seized power over the past 30 years and they have justified their unprecedented largess in terms of debt. In their narrative, they are the "innovators" and "job creators" who are responsible for society's prosperity; accordingly, society owes them their obscene wealth. This is why they shriek and become bizarrely wounded when we fail to appreciate their contributions:
It's confusing to see the snarling red faces of America's financial overlords. Of all the people on earth, what do they have to be angry about? They almost obliterated the world economy, and as punishment, we opened up the U.S. treasury and told them to haul off as much as they could carry. Meanwhile, everyone else is just praying the Medicare age won't be raised beyond 82.
However, their fury makes perfect sense if you understand that they live inside an all-enveloping fantasy world. You may have seen that Paul Ryan was recently spotted downing two $350 bottles of wine with Cliff Asness, a hedge fund manager. When a woman approached and criticized them for that kind of extravagance as Ryan plots to slash all social spending, Asness apparently said to Ryan "fuck her"....
So far so normal in 2011. But I don't think anyone's noticed . . . Asness is a protege of Fama, who's an extremely schmancy figure in right-wing economics. . . . And here's the significance of that: Fama was recently spotted confidently telling everyone that the sky is green:
But suppose we buy into the more common negative current view of finance. There is still a big open question. Beginning in the early 1980s, the developed world and some big players in the developing world experienced a period of extraordinary growth. It’s reasonable to argue . . . financial markets and financial institutions played a big role in this growth. . . .
As Paul Krugman pointed out, that's obviously false—developed world economies have grown more slowly since 1980 than before. . . .
But here's what you have to understand: in the teeny-tiny world in which Cliff Asness and Eugene Fama live . . . the sky actually does look green. While the U.S. economy grew more slowly starting in 1980, it did grow, and almost all of the growth in income went to people like Asness and Fama. Since they're such a small group, they and everyone they know has been doused with a gushing firehose of money. And because they have no imagination and no curiosity about anyone outside their mental circle, they assume that must mean that the rest of the world has gotten doused too. Moreover, it's all due to them and the "financial markets and financial institutions" they've created.
And that's why Asness and co. are burning with rage at any suggestion that maybe society should put some limits on the number of Indonesian street children they're allowed to eat. They've worked so goddamned hard for decades, manfully enriching all humanity with their brilliance, and merely asking for the smallest sliver of the extraordinary bounty they've created—and THIS is the thanks they get?
But, as Graeber predicts, at some point - and the cratering of the world economy seems an apt time to reevaluate - the conquered come to question the justice of the arrangement. "Hey wait! Society isn't prosperous because of you. You're prosperous - indecently prosperous - because of society! We don't owe you. You owe us!"
It's a critical turn and I haven't heard anyone express it more clearly and plainly than Elizabeth Warren. Seen in this context, I can understand why they're making near-hysterical, breathless accusations of class warfare. They should be afraid.
Cross-posted at Plutocracy Files.