Wealth and privilege

I’m living in a Fellini film right now – alas, without the postwar Italian film stars and casual elegance, but with all of the absurdity, including the occasional unwanted bacchanal, bacchanals being particularly ill-suited to sheltering in place.  But they happen nevertheless.  I’m living in a palace by a lake, but it’s owned by a prince who feels unconstrained by commonplace rules, and every now and again he shows up in his Ferrari, accompanied by friends and family in Bentleys and Range Rovers, bringing platters of barbecue (the southern US equivalent of antipasti, I suppose), and proceeding to celebrate life with boats and jet skis and pool floaters and beer.  As he is my patrone, I can only stand two meters away and encourage him, give him advice as to markets and contracts and the correct fuel mix on an inboard engine, and marvel.

We live in an age of wealth, which is, oddly, a relatively novel age.  Wealth represents private property, the accumulation of capital.  My patrone has, more than most people of his wealth that I’ve met, more than earned it: he’s an inventor, he built his business from nothing, he relied not on family influence or inheritance but only on his natural talents, including both intelligence and a gift for gab and a burning desire to get wealthy and a willingness to bow down when appropriate to those who were wealthy before him. I don’t begrudge him any of his wealth, but I’m still uncomfortable living off of it. I’d much rather be in my house in Scarborough, roughly one tenth of the square footage of this one in north Georgia that he’s allowing me to stay in, and live off an income a half as large. Although I’m not sure either my dog or my son would agree, and in these odd days, finding the job that will pay even a third of what I’m making now is a challenge.

The dog and the boy, of course, are young, and neither one are yet morally aware – my son hopefully will become more so as we spend more time together, the dog probably will always be stuck in a place of “more deer good, less deer bad” determinism, alas, but I’m working on it. To them wealth seems as seductive as the apple of the Tree in Eden. You can see my son almost drool at the Ferrari, at the 30 foot Chris Craft runabout we’re allowed to use, at the pool and hot tub and koi pond area that he calls “The Resort”. I do my best to focus him on worksheets and online quizzes, but the toys are, really, so good. I can’t blame him.

Meanwhile, after he goes to bed, I watch Mad Men – which I’ve seen before, but I now get to watch it in leisure – and what strikes me is actually how very few of the people in this mid 1960s show are personally wealthy.  They spend a lot of money, sure, but most of it isn’t theirs: it’s company money, which in turn is client money, which in turn isn’t the client’s representatives money, it’s corporate money.  Sort of curious the other night, I looked up the marginal income tax rates in the mid 1960s.

Let’s say you were an upper middle class professional back then – the equivalent of a Don Draper in the early episodes.  Not a partner, but definitely well paid, enough to have a house in Cos Cob and to think carefully between a Buick, a Lincoln, or even stretch it out and think about a Cadillac.  You’d probably be pulling down around $35,000 a year, or maybe even $50,000.  Your marginal tax rate – depending on whether you filed head of household, married filing jointly, or, if you’re into later seasons and Don’s divorced, single – would have been approximately 60%.  Go back into the early 50s and it would have been pushing 75%.  Your overall tax rate would have been just shy of 50%.  And that’s before New York city and state taxes.  Figure another 8% or so and Don’s taking home less than $20,000 on his $50,000 haul.

Don’t get me wrong – it’s still pretty good when your high end car is six grand at most and steak costs 80 cents a pound.  But Don’s not thinking about wealth accumulation at that point.  What he’s thinking about is his expense account.  He’s thinking about the fact that he can take his wife (or, er, secretary, as the case may be) on a trip to Rome and not pay for it because the company will bill it to the client.  He owns a house and a car and puts his kids through school on his salary, but all of those things are paid for – by everyone – in lousy, small, after-tax dollars.  They live, on the other hand, on sweet, sweet expense accounts.  Their clients pay – but that’s okay because after all, it’s not their money, and since corporate tax rates are just as excruciating, it’s better to bury the bottom line in advertising costs and travel and entertainment than pay a dividend that will only be consumed by the same marginal tax rate.  The men of Madison Avenue – and their clients downtown, and on Park Avenue, and God forbid in the emerging suburban execu-parks – all lived a life of pre-tax expense account privilege, even if they didn’t really generate much personal wealth for themselves.

It’s not that uncommon, really.  In most eras of human history, people didn’t have wealth in the sense of a permanent store of value that could be freely exchanged between generations – that is, across time – or to different countries – that is, across space.  In the time between conference calls, homeschooling, cooking, and dog walking, I’ve had the good fortune to be able to reread War and Peace, Tolstoy’s classic, as well as some other books of the same era.  In 19th century Russia, your wealth was not transferable at all.  Even the princes and noblemen couldn’t simply bequeath their estate; they could only do so at the whim of the czar.  Their wealth wasn’t mobile, nor was it transferable.  Yes, they had their income, but that was only in the current year; in the next, the czar could levy whatever sum of men, women, children, gold, land, buildings, forests, whatever he needed.  Yes, you enjoyed the privilege of the income right now, but the wealth, well, no. The wealth was not even temporary: it was evanescent.

The growth of liberalism – that strange cocktail of private property protected by the monopolistic control of violence owned by the state which guaranteed both ownership and the reliability of the currency of exchange – over the past four hundred years has been uneven and it remains so.  But I think what it really has been is not a battle between capitalism and communism (Ricardo versus Marx), or the community and the individual (Saint-Simon versus Rand), or the establishment and the vanguard (Burke versus Robespierre).  Rather, it has been a struggle between those who wish to hoard wealth, and those who wish to distribute privilege.  The two concepts are, really, at odds – not to say that they are mutually exclusive, but the reductio ad absurdum of each denies space for the other.

Privilege is by definition dispensed by a higher power: it is a gift granted from above, one which can be taken away at will.  That power might be an autocrat – Alexander in Tolstoy’s novel – or it might be the taxation powers granted to Congress in Mad Men’s postwar America.  In any event it is capricious and not owned by the people to whom the privilege is granted, at least not for longer than the moment it is enjoyed.  Part of the dramatic fun of both War and Peace and Mad Men is seeing individuals who are truly despicable lose their privileges: Pierre’s uncle Prince Vassily doesn’t wrestle out the inheritance from Pierre’s estranged father; Pete Campbell is always falling short and always on the short end of the stick (well, until the end).  But the privileges nevertheless are granted from above, and not really from anything other than a kind of power behind a curtain.  In Tolstoy’s Russia, the power was given by God – it’s the Crown – but in pre-Reagan post-war America, it was basically just a kind of vig, dispensed by executives who didn’t really own the wealth itself – the shareholders had that, and they couldn’t move it without losing most of it to the government – but only had the power to shower it via salaries (with diminishing marginal value) and expense accounts and perks as they saw fit.

This gives rise to a fundamentally different kind of power relationship: that of patronage.  To acquire social prestige – which in all ages is dictated by one’s ability to access luxury goods, sex, and mind-altering substances – one has to curry favour with those who are in a position to dispense with privilege.  It might be momentarily denominated in currency, or not: it could be simply access to the right club, or the right school, or the right pew at the right church.  It could simply be access to those in power: you can’t talk to the king, or the chairman, or the treasurer, unless you genuflect appropriately and say the right things.  But the essence of the relationship is one of servant – or slave – and master.

Wealth, on the other hand, is far more egalitarian.  Wealth dispenses with the idea of servitude and simply says: here’s my bank account, let me in.  This is, in many ways, the essential revolution of the last four hundred years.  It is the ultimate “screw you” to privilege, and indeed one senses in the conservative backlash to liberalism the sense of offence felt by those who had built life philosophies on the foundation of privilege.  If I can take enough of the limited resources of the world, and if the world can be structured so as to prevent that taking from being taken again by the common weal or by the autocrat or by the revolutionary – then I can break the wall of privilege and “win”.

The back and forth struggle – between socialism and capitalism, to use those commonplaces – is really about that.  Socialism grants privilege to the state, endowed either by the Party (all praise Comrade Stalin, or Mao, or whatever), or by the democratic will of the electorate (all praise the Democratic Socialists, or the Liberals, or the NDP), or by the bureaucracy (all praise the Internal Revenue Service Technical Circular 1997-19).  Wealth is swept aside by a pen stroke – or a bullet, depending on the regime – and society gives some mechanism power to decide who gets the dacha.  Capitalism, on the other hand, destroys privilege, and lets everyone compete for the fixed set of resources we face today and if you don’t win, then sorry, too bad, you get to grovel for pennies as an Uber Eats delivery person and die in your bed because you can’t afford to go to the hospital and no one, anywhere, will care.

I’m not saying privilege cares, but usually, privilege regimes do build into their DNA a kind of social support network.  After all, they sort of have to: if they don’t, people will rise up, and there are always more people without privilege than there are people who can dispense it, except in the weird equilibrium achieved in some Nordic countries where privilege is so extraordinarily diffused as to be almost meaningless – but that only evolved because everyone is named Jorgensson and therefore everyone assumed they were someone’s cousin and either deserved privilege or could ask for it.  I’ll get back to that in a moment.  But in typical, large scale societies – say Russia, or Great Britain, or Canada, or the United States – you either had to have some kind of a cushioning effect (typical), or some kind of defining myth of uplift (the unique invention of the North Americans, but notice I’m calling it for what it is, a myth) to float the system above the threat of violent revolution.

Wealth also has a built in safety valve: people who are rich regularly make bad decisions and become poor.  Or at least no longer rich.  For every Jeff Bezos, there’s a Bernie Madoff or a Jeff Skilling, or even better, there’s a bankrupt former real estate developer – any middle-aged upper middle class person knows at least a half dozen of them – who provides the comic and moral relief to the lower class who, really, has only a snowball’s chance in hell of making into the upper echelons of wealth.  But we’re all paid in dollars, so in theory, we can all get there…. right?  Failure, in this regard, is an actual positive good: if successful people can fail, then my failure is nothing to worry about… right?

Neither system has any real moral substance.  With time to descend into Internet wormholes, I’ve come back to some conservative philosophers – Burke, de Maistre – who defend the privilege-based ancien regime as being structured around a kind of natural morality, but this fails any thoughtful analysis: their natural morality requires not only a God, but a God who endowed a given man (inevitably a man) at a given moment in time with authority to rule over a given set of other people.  Given that this same God sacrificed his own son in an earth-shattering gesture of humility, doesn’t this premise of endowing a non-God-son person with absolute power seem a bit out of character?  I mean, come on Edmund – give it at least a decent effort.  Privilege can only be asserted, it can’t be justified.

Wealth, on the other hand, reduces our existence on earth to a primal, zero-sum game of competition for limited value – but not really.  It actually requires us to first buy into the zero-sum game and establish a set of procedures for protecting the integrity of the game’s rules.  It requires us to agree that money is worth “something” and we will all work to maintain that value.  It requires us to agree to certain police powers which then protect that value.  And it requires us to de-value externalities which might threaten the value of our unit of exchange by making it sort of irrelevant, in situations like falling in love, or breathing clean air, or thinking about the ability of someone two hundred years from now to fall in love and breathe clean air.  Wealth requires a whole set of assumptions that, really, aren’t that far morally from requiring that there exists a supernatural being who wanted the Romanovs to have the powers of life and death.

I don’t know that there has emerged a Hegelian “new synthesis” between these two poles of yet – although I’ll confess that I think Hegel is a bit of a wanker, so the idea that there will emerge a third way a la Tony Blair is not what I’m looking for.  What I do think is that the recent economic collapse is sort of indicating that neither regime has any real forward viewpoint that’s worth thinking about.  Competing for limited resources is stretched to its limit in a pandemic, much as it is in a famine or any other societal collapse: it reveals us as hoarding, manipulative, awful, immoral beings, and it reminds us that, with the exception of the psychopathic and narcissistic few (some of which may have been elected to high office, unfortunately), we don’t want to be that way.  But dispensing privilege feels no better: ethically, the person who decides who gets a ventilator is as damned as the person who is told there isn’t enough kit.  Both systems are inadequate for a world of abundant potential, of finite resources, and the desire to love our fellows in a world of infinite complexity.

Interestingly, putting aside the horrific sexual harassment and racism and whatnot that’s given all the lurid detail it deserves in Mad Men, I think postwar America got close to the right answer: liberal government, combined with high tax rates, combined with a ridiculously porous business tax regime.  What that effectively created was an environment of quasi-democratic privilege dispensed by tens of thousands of companies, each subject to shareholders or policy holders or the like, instead of by a central power or dictator or party; without the accumulation of wealth – except in limited, exceptional, and probably deserving circumstances where someone or some company invents something spectacular. I say all this having worked for most of my career at large corporations, who did the privilege dispensing back in the post-war America that I describe above.  I’m all too familiar with how petty, venal, and self-aggrandizing such organizations are – but then again, society in any age is petty and venal; we are human beings, and our organizations reflect our natures.  What I think America got right, at least for a little while, was in its diversification of privilege, and its rightly aggressive dunnage of the personal accumulation of society’s collective value.

But also, that system gave a chance for individual success, and as I said before, I don’t begrudge the riches reaped by my employer.  He’s done amazing things for the world, and he deserves some measure of approbation, and since we’re in America, I guess it will come in the form of greenbacks.  But I’d feel better if he had to pass through the eye of an 80% marginal tax needle to enjoy it, or put differently, if he had to pay all of his personnel a bunch more just to keep his after-tax reportable income low enough to escape a nasty audit.

All that being said, though, there’s a failure in every system.  And I don’t really know how to do much except take deposits, make loans, and cook dinner.  On that note: tomorrow evening, at 3pm Pacific time, 6pm Eastern time, 11pm London time, midnight Paris time (if you’re up), raise a glass and celebrate the eighth year of my son’s life on this earth.  It’s better now because he’s here, and let’s all help him make our future even better.  Cheers!