The Problem with the Rich

A common misconception on the left is that the rich simply inherent all of their wealth. Mitt Romney, so they say, only got to where he is because of his rich daddy. If he had started poor, like everyone else, he never would have become the incredibly wealthy man that he is today.

Unfortunately, this just isn't true. As Robert Frank helpfully points out, only 9 percent of the net worth of the top 1 percent was inherited (as of 2001). Of course, no one would deny that there is an advantage to being rich. But what happened in the last 30 years in the US has very little to do with people being richer than others. Even in your story about the casino, the money isn't actually inherited. It was earned, regardless of whether the way of earning it is offensive or whether the odds were already stacked in someone's favor (the second part is closer to the truth than the first). If the problem was only inheritance, it could be solved pretty quickly with an aggressive estate tax. Nor would it lead to situations where a small elite continue to skyrocket away from general populace. The problem of inequality is much deeper and much pernicious than just inherited wealth.

George Romney was well off, but he would barely be considered that rich nowadays. He comes from an era where a CEO earned only 40 times more than the average worker. He wouldn't seem all that different than what most people call upper middle class today. The most, MOST, anyone earned back then was about 250,000 a year; and that's in today's dollars.

The problem with Mitt is not that he started well, we're always going to have that, but that he was able to game the system to make unimaginable sums of money for himself and other rich people. Let CEOs give birth to other CEOs, as long as they're all earning 40 times more, like in the past. But now, now they make 3,500 times more than the average worker. That's not some "natural" thing. That's not a "market" reward for higher productivity. That's the result of specific changes in policy. That's the result of the efforts of specific groups to get government to create obscene awards for people like Mitt Romney and Dick Fuld and John Thain and Jimmy Cayne.

The Right tends to put forward the argument that its not "equality of outcomes" that matter, but "equality of opportunity." That hides the fact that the outcomes delivered by the system have fundamentally changed. Some people are rewarded on a scale unfathomable to others. And while they trumpet along about free markets and battling the "evils of socialism," few people seem to be noticing that they're rewriting economic rules to make sure they always profit.

Dan Ariely presented this table originally on his blog. It can be found here.

That's why "we built this" must be the most hilarious slogan any party has put forward. Especially since it's coming from a Republican party that has specifically used government to make itself rich. The stadium they held their little conservative rally in was paid for with taxpayer money. Just like so many of those Republican-owned sports teams are supported by taxpayer money. Many of the businessmen that they paraded across the stage enjoyed government-backed loans. Just like all those whiney financiers made their money through deregulation. And like all how those CEOs who got their compensation rules changed to pay themselves otherworldly amounts of money.

That's not capitalism. There's no worthwhile innovation there. It's all about manipulating the rules to make sure you get to operate in a protected bubble while everyone else fights to survive.

So don't rail against Mitt Romney or others like him for being born rich. Rail against Mitt Romney because he represents the most insidious sides of our "market" economy. He's a man who made the vast majority of his money by gaming the corporate tax system, who considers it patriotic to aggressively avoid actually contributing to the system that made him wealthy. Mitt Romney represents a type of world-view where the rich get to enjoy endless government largesse that is paid for by the suffering of the rest. That's where the casino metaphor is apt. Government is picking winners all the time, just as those doing the picking deny it actually happens. This is what needs to change. It doesn't matter if your rich or poor, we all should be treated the same. Right now, we're not. It's not even close.