The rich man’s burden
The New York Times is on a trend-reporting spree again, which means that over the next couple of days you will all read articles in “lesser” magazines and newspapers all echoing the original article. This time, my beloved NYT has decided to talk about obscenely wealthy people, using what is surely the catch phrase of the month, ”The New Gilded Age.” The first article appeared on July 15 (it might be TimeSelected by now, irony of ironies; google it or email me if you can’t read it) and it profiled several billionaires whom the author thought were representatives of this throwback era, particularly because of their disdain for regulation and their philanthropy. According to the article, “Only twice before over the last century has 5 percent of the national income gone to families in the upper one-one-hundredth of a percent of the income distribution — currently, the almost 15,000 families with incomes of $9.5 million or more a year.” So brush up on your favorite over-used Mark Twain quotations ladies and gentleman, because we are now in the New Gilded Age. And like Carnegie and Rockerfeller, the new tycoons of today do not particularly concern themselves with economic inequality, but believe that:
1) Their incomes are justified because CEOs are unique (like Derek Jeter according one exec), and the profits that their leadership has accrued for their respective companies
and that…
2) Giving their fortunes away to charitable organizations is preferable to being heavily taxed
Now, although I am inclined to do so, it would be unfair to label these guys corporate fat cats, since based on the evidence from the article, a great number of them are committed to serving their communities and have donated vast amounts of their incomes to particular causes. Warren Buffett is the best example of this, having pledged 85% of his fortune to charities including the Bill and Melinda Gates Foundation (another example of corporate philanthropy) and pledging that after he dies, whatever he still possesses will go to charity.
So my questions are for anyone interested are:
1) Are the high (some, like me, would say exorbitant) incomes of CEOs justified, or do they, as COSTCO CEO James D. Sinegal, argued, ‘’send the wrong message through a company, …. that all brilliance emanates from the top; that the worker on the floor of the store or the factory is insignificant” ?
2) In your eyes, does their philanthropy make up for the fact that under the current administration, they pay a minimal amount of taxes? (Sanford Weill of Citigroup, a benefactor of the Carnegie Foundation, said ”I want to give away my money rather than have somebody take it away”)
And 3, do you agree with the opinion expressed by one critic interviewed for the article, fmr American Airlines CEO Robert Crandall, that ”The way our society equalizes incomes is through much higher taxes than we have today. There is no other way.” ? (emphasis added)
I know the readers of this blog hold a myriad of opinions in terms of the whole “regulation vs. unfettered market” argument, so I am very interested to see what direction this discussion will take. On his blog, Altercation, Eric Alterman discussed the same article (albeit, with a decidedly pro-reg slant) and he had some interesting opinions regarding the distribution of wealth in this country.
on August 11th, 2007 at 3:12 pm
<p>I need to preface my response by saying that initially I intended to do legitimate research (i.e. I contacted the GAO and asked them for a few numbers specifically figures on how much the gov spends on overhead vs program cost). My recent stay in the hospital has prevented me from spending much time on this, so I am just going to go with my gut. Another disclaimer, I am on Rush Limbaugh style painkillers at the moment (though a lesser dose)…</p>
<p>2 and 3) I think in many ways robust philanthropy does offset the lower degree of taxes. In one fell swoop the Bill and Melinda Gates foundation did as much to combat aids as the U.S. government (both donating 1 billion). This makes me think much better of the profits He made while revolutionizing the computer industry (though even that was a fantastic contribution to society).</p>
<p>If anything, I think we should increase the incentives for people to donate to non-profits, especially creating large funds to sustain them. Though bereft with their own problems, I’d rather not leave our education, healthcare, environmental (both conservation and preservation) and other systems in the hands Washington D.C. politicians. That being said, projects like <a href=”http://www.socialmarkets.org/” rel=”nofollow”>Social Markets, which encourage transparency in the non-profit industry</a>, should be encouraged and supported.</p>
<p>1) CEO’s make exorbitant amounts of money. At the same time, look at the compensation that politicians receive. On the books, the <a href=”http://www.lib.umich.edu/govdocs/fedprssal.html” rel=”nofollow”>President makes $400,000</a> and rank and file <a href=”http://usgovinfo.about.com/library/weekly/aa031200a.htm” rel=”nofollow”>Members of Congress make $165,000</a>. One thing that I find ironic is that U.S. businesspersons are leading the world, while U.S. politicians are inept. I understand this is not a 1 to 1 comparison, but there is something about pay does seem to attract bright people.</p>
<p>So having given my opinion to Rudo’s questions, the question I want to know from the next person is, “What are the relative overhead costs of the private industry, non-profits, and local state and/or federal government?”</p>