This is a review of the fascinating and important book, "Billionaires' Ball: Gluttony and Hubris in an Age of Epic Inequality" by Linda McQuaig and Neil Brooks. A Canadian version of this book was published in 2011 under the title "The Trouble With Billionaires."
Whenever I read a passage in a book that's particularly interesting or thought-provoking, I make a note of it in the margin. Many of my books have no such markings. This book is so interesting that I have marked up almost every page!
The two main ideas of the book are these:
1) billionaires didn't really "earn" all the money they have: even when they did accomplish something, those accomplishments were built on the efforts of others and on knowledge and infrastructure that society has developed;
2) the very existence of billionaires is a threat to our democracy: the wealthy use their wealth to buy power and influence.
Here are a few of the chapter titles, and my brief summary of those chapters:
"Millionaires and the Crash of 1929" - in the 1920's, millionaires colluded with politicians to deregulate markets and allow banks to engage in risky behavior; this helped cause the crash of 1929.
"Billionaires and the Crash of 2008" - during the Depression, Congress passed Glass-Steagall, which prevented banks from engaging in risky behavior; by 1999 billionaires and Wall Street persuaded Congress to repeal, Glass-Steagall; the crash of 2008 soon followed.
"Why Bill Gates Doesn't Deserve His Fortune" - Gates got lots of lucky breaks: rich father; attended one of the few high schools with computer access; came along just when the computer revolution was taking off (spurred largely by government-funded research); IBM happened to choose his software instead of his rivals' arguably superior software.
"Why Other Billionaires Are Even Less Deserving" - other billionaires (we're looking at you, John Paulson) made money by actually harming society.
"Hank Aaron and the Myths About Motivation" - do stupendously high salaries for today's superstars make people work harder than less-highly paid people in the past, like Hank Aaron?
"Why Billionaires Are Bad for Democracy" - even the ancient Greeks recognized that vast wealth concentrated in the hands of a few leads to concentrated political power in the hands of those same few; the wealthy tend to use their wealth to buy political power and influence, to the detriment of the rest of us - this is the very antithesis of democracy!
"The True Badge of Citizenship" - we are social beings, not individuals living alone in the wild, so we should regard taxes as the price we pay to receive the benefits living in a civilized society.
"Revamping the Ovarian Lottery" - Argues for a highly progressive inheritance tax, partly to prevent the rise of a permanent aristocracy based on inherited wealth; why should a few inherit vast fortunes - nearly tax-free - when the rest of us have to pay taxes on the money we earn by working for a living? An inheritance tax on the wealthy could provide education vouchers for college for everyone in the next generation.
Page 116 makes these two very interesting points:
a) Apologists for the wealthy tell us that the wealthy need lower taxes in order to motivate them to work harder. But those same people never make the argument that we should raise wages for low-paid workers to motivate them to work harder. This is a rather curious double-standard.
b) Moreover, McQuaig and Brooks suggest that, if taxes on highly-paid workers are raised, they might be induced to work even harder, in order to achieve the same after-tax income. Why is this highly-plausible argument missing from our public discourse?
Regarding Bill Gates: Thanks to his rich parents, Gates went to a wealthy private high school that had access to computers. This was very unusual in the late 1960's. After dropping out of Harvard, Gates founded Microsoft. IBM chose Gates' software over a competing operating system that was arguably superior. It may have helped that Gates' mother was acquainted with IBM's new President and CEO. One has to ask: where would Bill Gates be today without wealthy parents, family connections, and the computer revolution, much of which was supported by the federal government?
Here's a brief interview of Linda McQuaig discussing the Canadian version of this book; almost everything she says also applies to the U.S.:
Another issue raised in this book is how philanthropy by the rich is antithetical to democracy. When we pay money in taxes, it is the democratic process that decides how best to allocate those dollars. But with private philanthropy, the wealthy get to make the decision outside the democratic process; often, the dollars go to buildings with the donors' names on them, which is more of a purchase of naming rights than an act of charity. At Florida State University, the Koch Foundation even gets to screen prospective faculty members for the Economics Department! In this (28 minute) TV interview, McQuaig discusses how so-called "philanthropy" has undermined academic freedom and the independence of universities.
Bill Gates wasted over a billion dollars of his own (and school districts') money on so-called "education reform" promoting small schools. He may initially have supported this idea because he misunderstood basic statistics! See "The Small Schools Myth". After realizing its blunder, the Gates Foundation stopped promoting "small schools". Other billionaires who, like Gates, have no particular expertise in education, are using their wealth and power to promote their own charter school and privatization agendas. See, for example, "Bill Gates, other billionaires funding charter effort in Washington state".
Likewise, the very wealthy often give lots of money to cure diseases that are important to them. But are these necessarily the diseases that society should be focusing on?
I'll stop here, but there are many more thought-provoking ideas in this book. Read it! And be sure to have a pencil handy to underline all the interesting bits!