The World Would Be a Better Place Without the Rich

They coarsen our culture, erode our economic future, and diminish our democracy. The ultra-rich have no redeeming social value.

Champagne is served during the From Dust To Gold preview party at the Palms Casino Resort on May 17 in Las Vegas. David Becker / Getty

Do we need — does progress demand — grand private fortunes?

Cheerleaders for grand fortune regularly make this case. The prospect of becoming phenomenally wealthy, they avow, gives people of great talent a powerful incentive to do great things. The enormous wealth these talented accumulate, the argument continues, propels philanthropy forward and benefits individuals and institutions that need a helping hand.

Even the idle rich, as conservative patron saint Frederick Hayek once insisted, have a socially constructive role to play. Wealth gives them the freedom to experiment “with new styles of living,” new “fields of thought and opinion, of tastes and beliefs.” The wealthy enrich our culture.

These defenders are wrong. The awesomely affluent have no net redeeming social value.

Their presence coarsens our culture, erodes our economic future, and diminishes our democracy. Any society that winks at the monstrously large fortunes that make some people decidedly more equal than others is asking for trouble.

But the trouble the rich engender often goes obscured. Most of us will spend our entire existences without ever coming into contact with anyone of enormous means. In the daily rush of our complicated lives, we seldom stop to ponder how those lives could change without a superrich pressing down upon us. So, let’s ponder.

An obvious initial question: Why do so many of us always seem to be rushing? Why are we stretching ourselves so thin? The answer we tell ourselves: We’re doing so much, we’re working so hard, to ensure our families ever more happiness.

But all our hard work, notes Cornell University economist Robert Frank, increasingly ensures nothing of the sort. Frank asks us, as an example, to contemplate the modern wedding, life’s signature happy day. What Americans spend on average for weddings, he points out, has tripled over recent years. “Nobody believes that marrying couples are happier,” observes Frank, “because we spend so much more now.”

So why do we spend more? “Because people at the top have so much more,” he notes. They’re spending more on their own celebrations, and they set the consumption standard, unleashing what Frank has labelled “expenditure cascades.” People at every income level feel increasing pressure to reach the higher consumption bar those directly above them have set.

Sometimes we buy things because we truly need them. But grand concentrations of private wealth, even in these situations, end up undermining the quality of our everyday transactions.

Cheerleaders for grand fortune, predictably, claim the opposite. We all benefit, they argue, when the wealthy go shopping. Bold new products typically cost a pretty penny — and only wealthy consumers can afford them. By paying that high price, the wealthy give exciting new products a foothold in the marketplace. Eventually, this “product cycle” theory holds, the prices of these products will start falling, and everybody gets to enjoy them.

Economists who examine consumption patterns tell a different story.

The more that wealth concentrates, Robert Frank notes in his 1999 classic Luxury Fever, the more retailers tend to lavish their attention — and their innovating — on the luxury market. Year by year, products come to embody ever “more costly new features.”

But the superrich don’t just drive prices up. In the communities where these rich congregate, they suck the vitality out.

America’s “ultra-high net worth” individuals own on average nine homes outside the United States. Most of these homes lie empty for most of the year. Their streets go lifeless. In London and other world capitals, entire well-to-do neighborhoods have become luxury ghost towns.

In Manhattan, developers catering to the superrich have spent recent years building incredibly tall — and thin — ultra-luxury “needle” towers. The narrowest of New York’s needles, rising seventy-seven stories, rests on a base only sixty-feet wide.

Why such a slender profile? Why so many floors? Developers are simply following the “logic of luxury”: the superrich are willing to pay a premium — up to $90 million and more — for lofty condos that take up entire floors and offer spectacular views looking in any direction.

The rest of us pay a price for those views. New York’s luxury towers are blocking out the sun in Central Park, Manhattan’s historic commons. The superrich are altering our lived environment for the worse.

And not only along the canyons of New York. The lush lives these rich lead are consuming our planet’s resources at a rate that’s speeding the degradation of our natural world.

Between 1970 and 2000, the number of private jets worldwide multiplied by ten times over. These luxury planes emit six times more carbon per passenger than normal commercial jets. Private yachts that stretch the length of football fields burn more than 200 gallons of fossil fuel per hour. The top-earning 1 percent of households, one Canadian study has found, generate three times more greenhouse gas emissions than average households — and twice as much as the next 4 percent.

Those in the global 1 percent, Oxfam calculates, may well be stomping a carbon footprint 175 times deeper than the poorest 10 percent. Another analysis concludes that the richest 1 percent of Americans, Singaporeans, and Saudis on average emit over 200 tons of carbon dioxide per person per year, “2,000 times more than the poorest in Honduras, Rwanda, or Malawi.”

Our global environmental crisis would not, of course, suddenly melt away if the world’s most affluent suddenly ended their profligate consumption. But the wealthy pose our single biggest obstacle to environmental progress.

Great fortunes both rest on environmental degradation and blind the wealthy to it. The rich, observes the Global Sustainability Institute, have the resources to “insulate themselves from the impact of climate change.” Grand fortune also immunizes them from carbon and other environmental taxes that may affect people of modest means. The rich, the Institute notes, “can afford to pay to continue polluting.”

In a world of billionaires, all our problems become more difficult to address. Democratic political systems operate under the assumption that gathering together to collectively debate our common problems will eventually generate solutions. Unfortunately, in deeply unequal societies, this assumption does not hold.

The superrich inhabit their own separate universe. They have their own problems, and the rest of us have ours. The rich have the resources to make sure their problems get addressed. Ours go begging.

Take the morning commute. The Washington, D.C. area, one of America’s most deeply unequal metro centers, has some of America’s worst traffic congestion. No coincidence there.

In starkly unequal urban regions, the wealthy bid up the price of close-in, conveniently located real estate. Rising prices force middle-class families to move farther out from job centers to find affordable housing. The farther people live from their work, the more traffic. Those American counties where commuting times have increased the most just happen to be those counties with the largest increases in inequality.

How could we ease congestion? We could build new roads and bridges or, better yet, extend and improve public transportation. But both these courses of action typically involve tax dollars, and the exceedingly rich usually blanch whenever someone proposes tax-funded solutions, mainly because they figure that sooner or later people will want to tax them. So officials in Greater Washington — and other unequal metro areas — have come up with solutions to traffic congestion that avoid any need to levy big new taxes.

Enter “Lexus lanes,” segregated stretches of highway that pay for themselves by charging motorists rising tolls as traffic increases. This system works wonderfully — for motorists of means. Affluents don’t particularly care how much in tolls they have to pay. They just want to get where they’re going as quickly as possible. With Lexus lanes, they do. Everybody else sits and stews in traffic.

Meanwhile, Washington’s subway system — 117 miles of rail — has become a public embarrassment, with long delays, rising fares, and nagging safety problems. The system’s chronic underfunding reflects a national trend. US investments in infrastructure have fallen off dramatically, from 3.3 percent of GDP in 1968 to 1.3 percent in 2011, a long-term decline that began at almost exactly the same time as inequality in America started rising. The US states where the rich have gained the most at the expense of the middle class turn out to be the states that invest the least in infrastructure.

One explanation: Working- and middle-class people have a vested interest in infrastructure investment. They depend on good public roads, schools, and parks. Wealthy people don’t. If public services frazzle, they can opt out to private alternatives.

And the more wealth concentrates, the more our political leaders tilt the wealthy’s way. The wealthy do not like paying for public services they don’t use. Political leaders don’t make them. They cut taxes and deny public services the funds they need to thrive. And so, we get more Lexus lanes that give the wealthy speedy commutes — and remind the rest of us that only the rich ever really win in societies as unequal as ours.

Would the rest of us win more often in societies without a superrich? Well, defenders of the rich caution, any society that grinds down grand fortune would also be grinding down the billions that make philanthropy possible. Who would want to do that?

Philanthropy, proclaims one 2013 study from the global bank Barclays, has become “near-universal among the wealthy.” Most wealthy worldwide, pronounces Barclays, share “a desire to use” their wealth for “the good of others.” Headlines regularly trumpet this good at every opportunity. Bill Gates fighting neglected tropical diseases! Bono fighting poverty! Diane von Furstenberg pledging millions for parks!

Philanthropists’ publicists have skillfully clouded the core facts: the superrich as a class don’t actually give all that much — and they get back plenty from what they do give.

At first glance, the basic giving numbers in the United States look impressive. In 2015, gifts of $100 million or more alone totaled over $3.3 billion. But the aura of generosity fades the moment we start contemplating what the superrich could be contributing. In 2013, for instance, America’s fifty largest charitable donors gave away $7.7 billion in charitable gifts, a 4 percent increase over the year before. That same year, the wealth of the Forbes magazine billionaires list increased 17 percent.

So, the rich don’t give all that much to charity. What do they get in return for what they do give? For starters, tax breaks. Costly ones. The general rule: For every three dollars that 1 percenters in the United States contribute, the federal government loses one dollar in lost tax revenue.

America’s wealthiest also get the heartfelt thanks of institutions near and dear to their hearts.

The superrich have a sweet spot for cultural palaces. Los Angeles will soon be home to the Lucas Museum of Narrative Art, a billion-dollar edifice that will house the Hollywood memorabilia of the billionaire filmmaker behind Star Wars. Los Angeles already also hosts The Broad, a $140-million contemporary art museum funded by billionaire Eli Broad that opened in 2015, and the Marciano Art Foundation, a newly completed museum that billionaire retailers Paul and Maurice Marciano have installed in a grand old Masonic Temple.

Meanwhile, despite a state law that requires California public schools to offer music, art, theater, and dance at every grade level, arts-education programs in the budget-strapped public schools of Los Angeles remain woefully “inadequate,” the Los Angeles Times reported late in 2015, with thousands of school children “not getting any arts instruction” at all. Nationwide, budget cutbacks have left millions of children without art education, especially in communities of color. In 1992, just over half of African-American young adults studied art in school. By 2008, that share had dropped to just over a quarter.

Millions for showcasing Star Wars memorabilia, pennies to help poor kids create and enjoy art. Even some billionaires find these sorts of philanthropic contradictions difficult to swallow. As financial industry maverick Bill Gross notes: “A $30 million gift to a concert hall is not philanthropy, it is a Napoleonic coronation.”

What else do the superrich get from their philanthropy? They get control over the public policymaking process. The think tanks, institutions, and organizations the wealthy underwrite shape and distort our political discourse. They define the bounds of what gets discussed and what gets ignored.

The foundations our mega rich endow, notes policy analyst Joanne Barkan, fund researchers “likely to design studies that will support their ideas.” These foundations engage “existing nonprofits or set up new ones to implement projects they’ve designed themselves.” Projects in place, they then “devote substantial resources to advocacy selling their ideas to the media, to government at every level, and to the public,” even directly bankrolling “journalism and media programming.”

Peter Buffett understands this dynamic from the inside. He runs a foundation created by his father Warren Buffett, by some accounts America’s most publicly spirited billionaire. In elite philanthropic gatherings, notes the younger Buffett, you’ll see “heads of state meeting with investment managers and corporate leaders,” all of them “searching for answers with their right hand to problems that others in the room have created with their left.” And their answers, Buffett charges, almost always keep “the existing structure of inequality in place.”

Peter Buffett dubs this comforting charade “conscience laundering.” Philanthropy helps the wealthy feel less torn “about accumulating more than any one person could possibly need.” They “sleep better at night.”

Through all this, income and wealth distribution remain a concern that few philanthropic foundations dare to address. America’s Foundation Center recorded nearly four million foundation grants in the decade after 2004. Only 251 of these referenced “inequality.”

Some philanthropic heavies, most noticeably the Ford Foundation, have recently announced a commitment to addressing inequality. But philanthropy’s observers remain skeptical about how much difference this will make. Societies most dependent on philanthropy, notes foundation veteran Michael Edwards, remain the most unequal, and those nations — mostly in Scandinavia — that have the highest levels of equality and social well-being have the tiniest philanthropic sectors.

Generations ago, during the original Gilded Age, the millionaire soap manufacturer Joseph Fels announced to Americans of his deeply unequal time that philanthropy was only “making matters worse.” Fels urged his fellow millionaires to fight for a new America that would make the superrich “such as you and myself impossible.”

His advice remains sound. We could survive without a superrich. Indeed, we would thrive without them.