By Eugène E.
I was just reaching the last pages of Winners Take All: The Elite Charade of Changing the World when the planet learned that a Manhattan condo had just been sold in the US for a record sum to beat all record sums. At just under $240 million, it was the most expensive home sale in the US. The buyer was a billionaire hedge fund manager. At the same time, less than 500 miles away in Washington, D.C., a food bank was offering victuals to federal employees and their families, who had found themselves strapped for cash as a result of the longest government shutdown in US history. Whatever you might say about the saving habits of those whose government jobs should, in theory, offer decent saving opportunities, the sight of federal employees looking for free provender in the capital of the world’s greatest democracy was an arresting one. Anand Giridharadas might have found it a loss less arresting, though. In Winners Take All, his audacious 260-page takedown of the prevailing economic order, Giridharadas tries those whom it has become fashionable to call the elites. The verdict he delivers is a searing one.
That economic and social inequality in the US – and in other parts of the developed world, for that matter – is a growing problem is hardly big news. If that were all there were to the book, there wouldn’t be much of a book. But Giridharadas takes it further. He points out that efforts undertaken by the elites – citizens of so-called MarketWorld, as Giridharadas aptly calls the crowd at the top – to make the very unequal world a little more equal are, however sincere and well intentioned, counterproductive. Indeed, this is perhaps the most striking thing about many of the privileged characters populating his book: they mean well. Their desire to right the wrong comes off as remarkably sincere. They are under no illusions about the existence of a major problem. What they fail to acknowledge is that they themselves are part of this problem, and that the extraordinary power that their wealth confers on them is the main driver of the very inequality whose growth they want to stymie.
The failure to acknowledge the role that these elites play leads to a distorted view of the situation and their own place in it. That this should be so is understandable and perhaps even inevitable. That our governments, administrators, and institutions have mostly outsourced decision-making and problem-fixing to these people – the same people who have disproportionately contributed to the problem and continue to do so – is scandalous. Tasking MarketWorld with the job of making the world more equal is akin to appointing mobsters to fight organized crime. Successful resolution of the crisis of widening inequality, therefore, hinges on reducing the outsized influence of MarketWorld and giving other stakeholders a greater say in the distribution of wealth. It’s either that or we’ll soon see pitchforks in the streets.
The arguments are presented deftly, but it’s hard to escape the presence of tunnel vision in the text. By choosing to make economic life the center of gravity in social affairs, Giridharadas falls into the same intellectual trap that has ensnared so many commentators and observers, who believe that man is rational and the only reason why people vote for rabid populists and fiery gadflies is that the economy is in the doldrums. This kind of vision entirely ignores the need for people to have values, icons, and mythology. In the absence of those, people are left to confront emptiness; emptiness makes people flaccid and weakens their immunity system, making them less resistant to savvy political operators and their demagoguery.
Both Trump and Brexit are mentioned in Winners Take All as electoral examples of the fallout of economic inequality. There’s no doubt that class resentment and inequality played a role in the election of Trump and in the success of Brexit, but it is facile to claim that neither Trump nor Brexit would have happened, had wealth distribution been more equitable in both countries. Successful, hardworking people voted for Trump, and affluent constituencies in the UK voted to leave the EU. It is hard to explain why they voted the way they did without taking into account social and cultural considerations. To read Winners Take All, though, you wouldn’t suppose that these exist.
Giridharadas writes: “In our present age of anger, so many people seemed to intuit that their leaders becoming fellow travelers of billionaires and millionaires did have some effect on what they believed . . . It [that intuition] had helped . . . Donald Trump’s unlikely election victory – made all the stranger by the fact that Trump incarnated the very problem he named.” The fact that a billionaire real estate mogul won the election by thundering against the elites is indeed very strange – unless you choose to entertain the assumption that many of the people who voted for him are gormless sheep easily susceptible to discount-store rhetoric (an assumption that, unsurprisingly, Giridharadas does not entertain), or unless you’re willing to consider that Trump’s appeal to voters was not rooted exclusively in preoccupations with their economic welfare (an assumption that Giridharadas does not consider).
Many years ago, I read Adventure Capitalist by Jim Rogers. A former hedge fund manager, Rogers had undertaken a round-the-world journey in a custom-built Mercedes to see the planet and assess the investment potential of all the places on the itinerary, and he wrote a book about the experience – Jules Verne meets high finance. There were some eminently revealing passages. In Iceland, Rogers was dismayed to find that schoolchildren still had to learn Danish because Iceland had been a Danish colony for a long time, just as he found it baffling that schoolchildren in Ireland were forced to learn Gaelic. He did not understand why anyone would bother with these antiquated languages when so few people in the world spoke them. In his opinion, this kind of curriculum undermined students’ competitive advantage; they should have been learning Spanish or some Chinese dialect instead. For men like Jim Rogers, there’s no place in the world for cultures and traditions; there are only competitive advantages.
Giridharadas seems to have a richer view of the world, yet there is a certain lack of nuance in Winners Take All. Holding the elites and the system that has engendered them as solely responsible for the ravages of inequality, he doesn’t explore the link between economic neoliberalism and social ultraliberalism. One wonders if Giridharadas even suspects that there might be a link to begin with. History tells us that there is. Society needs to accommodate the requirements of its economic life. The 19th century witnessed the consolidation of states in the West (think Germany or Italy) and growing nationalism; to some extent, this was because the economic landscape of the Industrial Revolution and the period that followed it favoured consolidated nations rather than fragmentary clusters of duchies and princedoms (imagine what it must be like for a company involved in international trade to deal with a welter of sovereign states, each one with its own custom regulations and dialect, and think how much it easier it is when all these states are amalgamated).
Likewise, the economic framework of these past decades, with its focus on credit and rampant consumerism, required a society that was fluid, hedonistically inclined, and anti-hierarchical. The disappearance of borders, traditional values, and age-old points of reference, a society in which cultural heritage became something of a liquidation sale event, was necessary to grease the wheels of the ultraliberal economy. This is not to deny the benefits of this economy. It has lifted millions out of poverty. But if one is to criticize the neoliberal economy, one might also probe the neoliberal society and outlook that have complemented the current economic order.
Giridharadas does not do that in Winners Take All. As far as ultraliberal values are concerned, he seems to be supportive. In fact, the book is underwritten with some of the beliefs that ultraliberals hold so dear – beliefs such as the one that takes to task the (ageing) white man, that sempiternal bugbear of Western ultraliberals, for all the problems on planet Earth. The world suffers from being too white and too male – this is never said explicitly in Winners Take All, but the undercurrents are unmistakable. Giridharadas writes about a woman who initially started out as a waitress at Hooters, but who went on to enjoy a dazzling career, eventually earning an MBA and being recruited by a private equity firm to manage one of the firm’s portfolio companies. Hooters was the place that launched her career, but Giridharadas ignores that, as he ignores her assertions that Hooters is not a place that exploits women, but one that employs them. He writes: “She [the woman in question] did not open herself to questions about her company’s negative contributions to a larger system that was abstract and hard to make sense of.”
One does not need to endorse Hooters’s business model to ask what negative contributions Giridharadas has in mind, exactly. Is he criticizing the sex appeal factor at the heart of the company’s model? You can question the tastes of both the company and its patrons but, given the overall cultural proclivities in the West, accusations of exploitation of women in the case of Hooters are redolent of hypocrisy, however appreciated they might be in some districts of ultraliberal discourse. Hooters is certainly distasteful, but so are many other things about contemporary American culture, an eminently exportable culture with highly ambivalent and often contradictory attitudes to sex. Giridharadas is happy to train his guns on the commercial side of it, but steers clear of broader cultural issues.
Although some of the stewards of the digital economy are mentioned in Winners Take All, the technological progress that has made the digital economy possible does not occupy the central place that it should in the narrative. For all its massive benefits, the darker side of this progress should not be overlooked – and there is a darker side. First, the last wave of technological progress has accelerated the speed of change and exacerbated the inequalities inherent in a winners-take-all model, where most of the rewards and benefits accrue to a small group of individuals, while a growing number of people are left with little or nothing at all. If the current economic order is indeed much more of a zero-sum game than it used to be in the past, as Giridharadas seems to suggest, there is a reason why it has coincided with one of the most significant technological revolutions in human history.
Second, this wave of technology has fuelled the rise of surveillance capitalism, turning privacy into a luxury good, and completely upended the traditional dynamics of retailer-consumer relationships. As Shoshana Zuboff, the author of The Age of Surveillance Capitalism, puts it, “Once we were the subjects of our lives, now we are its objects.” Pretty much. Third, it has fostered and encouraged short-termism. Text messages, social networks, the celebration of the “now” so actively promoted by the new technology to the detriment of the “beyond” – none of that is especially conducive to long-term projects. The commitments of an economy based on the short term to reducing inequality in society are bound to be modest.
Finally, this wave of technology is threatening to make man obsolete. By destroying jobs and developing artificial intelligence, the new economic paradigm is rewriting the rules that govern human affairs. For the first time since the sun rose on human civilization, we are forced to contemplate a future in which men may have to compete not with other men, but with machines – hardly a winning proposition. Even if some of the scenarios floating around are overly pessimistic about the triumph of AI, there’s a very real possibility that, in much of the developed world, large swathes of the population will be out of work. It is unclear how they will survive financially if this widespread lack of gainful employment does come about.
What is society to do when many of its members are condemned to unemployment and idleness, and how does it prevent the disorder and revolts that might ensue? A mind with an Orwellian bent might imagine pointless wars breaking out in various corners of the world, which can absorb the unproductive and restless. Or perhaps society can try to deaden the affected population with vapid diversions that will enshroud it with a fog of oblivion. Anticipating the culture that gives everyone a chance to “go viral”, if only for a few hours, the radical French intellectual Guy Debord prophesied the emergence of a “society of the spectacle” as a new mutation of capitalism; the society of the spectacle would offer participation to everyone. Pointing out that contemporary society is more or less already there, the philosopher John Gray suggests that the society of the spectacle might be one way to prevent restive groups from reaching for pitchforks.
It is worth quoting Gray at length (the excerpt is from The Soul of the Marionette): “With automation advancing rapidly, there may be a decreasing need for human beings in the productive process. It is the need to continue consuming that is central to the economy. Hence the culture of celebrity, which by offering anyone fifteen minutes of fame reconciles everyone to the boredom in which they must pass the rest of their lives.” This might turn out brilliantly prescient yet.
Without getting too futuristic, it should be clear by now that addressing inequality will require judicious management of the technological forces sweeping away old societies and displacing many of the workers in these societies. Winners Take All would have benefitted from underscoring the urgency of the need to restrain the more pernicious aspects of the development of the “app economy”.
Additionally, while we justly criticize the toxic components of the “app economy”, we should not overlook our own responsibility in contributing to its growth. It is easy to place the blame squarely on self-serving elites who create cutting-edge technology that will consign many of us to society’s basements, where we can shuffle about in the cloisters of desuetude. But that is to ignore our own participation in and enthusiasm of the new order. It is always tempting to conjure some cabal plotting in the background, particularly as we’d rather forget that we as users are also enablers. Simply put – and this is one of those things that, in a world of breathtaking complexity, can be put simply – no one is forced to use Facebook or spend hours fumbling with one’s smartphone. These are choices that we make. I am not advocating our turning into Luddites, obviously; in the 21stcentury, it is impossible anyway. I am merely making the case for becoming intelligent users of technology. It’s about time.
Winners Take All, however, focuses on the “cabal” part of the story. Giridharadas is not averse to doing his fair share of scapegoating (given the author’s commitment to equality, I am willing to assume that the share is fair). This is ironic, since many of the people who agreed to speak with him – citizens of MarketWorld – at least show awareness of the problem and a demonstrable willingness to do something about it, confirmed by the masochism associated with having your name appear throughout this kind of text. Giridharadas concludes the book with the opinions of Chiara Cordelli, a political philosopher at the University of Chicago and a vociferous critic of the existing economic order. Her criticisms are trenchant; the tone, however, made this reader uneasy.
She says, for example: “If you are an elite who has campaigned for or supported the right policies, or let’s suppose that you are not causally complicit in any direct sense, still, it seems to me that you might owe a responsibility or duty to return to others what they have been unfairly deprived of by your common institutions.”
How wealthy should one be to consider himself one of those benevolent elites? And how much should be returned? The rich should feel guilty about being rich; they should apologize for being rich; and they should return to society what was taken from it. This is rhetoric that is as hollow as it is malignant. It is the kind of rhetoric that demands that Europeans atone for colonial adventures undertaken three centuries ago, the kind of rhetoric that wants such demographic groups as white males to feel guilty for being white males, the kind of rhetoric that starts with songs of justice and ends with the blade of the guillotine. I am not trying to shore up sympathy for wealthy elites, but I would prefer to stave off revolutionary eidolons with their bloodstained banners.
For several months now, France has been gripped by social unrest and protests. The so-called yellow vests movement exploded after Macron’s government had proposed a hike in fuel taxes (since cancelled). Naturally, the movement did not come about because of the proposed hike, which simply happened to be the last straw. This was a result of months, possibly years, of simmering discontent. Donning the yellow high-visibility vests that motorists in France are required to have in their vehicles by law, hundreds of thousands of people took to the streets. While the heterogeneity of the movement makes it somewhat difficult to describe the typical gilet jaune, it seems that the demonstrators tend to be disaffected residents of more peripheral areas; they are the ones with most to lose in the new economy. Their grievances are understandable, their anxieties are natural, and their desire to express both is legitimate. The movement illustrates what happens when the ruling class abandons those it’s supposed to protect. It also reveals the risks and dangers of mob rule.
In the several months that they have been protesting, members of the movement have vandalized property, physically assaulted journalists and law enforcement officials, and even managed to harass a well-known intellectual (Alain Finkelkraut was doused with insults with a strong whiff of anti-Semitism about them). This is inevitable. It is not that the movement is violent or bigoted; it’s simply a movement of the streets. Nothing good has ever come out of mass riots in countries where freedoms were not in question. In democratic societies, it is not the business of the streets to pass legislation; when the streets do take over that mandate, expect if not the worst, then certainly the end of civic society. It is no accident that one of the demands made by so many in the yellow vests movement is for the democratically elected president Macron to resign. Rule by the mob is rarely about democracy, much less about freedom.
What’s to be done to reduce inequality? Giridharadas is right to argue that the search for solutions should be performed by the political apparatus, insofar as this apparatus is truly representative of all of society’s stakeholders, and not by MarketWorld, as is the case today. Beyond that, there’s not much in the way of prescriptive measures. To be fair, prescriptive measures are not the stated objective of the book.
There is, of course, plenty that can be done to fix the yawning gap between haves and have-nots.
Some years ago, a friend of mine had to call a credit reporting company to obtain some clarification regarding his credit report. This friend, a Canadian, was stunned when his call was routed to a call center overseas and when he found himself obliged to give out his personal information to an agent in India. The credit history of an individual is the ultimate indicator of that individual’s financial health; it affects his ability to get a credit card, obtain a loan, and get a job that requires, say, handling money. Without a credit history, the individual is a nonentity in a certain sense. Why is information of this nature about a Canadian citizen stored, maintained, and kept by a commercial enterprise with headquarters in the US and a client service center in India? Is it, he asked himself, too much to expect this sort of data to be firmly in the domain of, well, the Canadian government? He was taken aback, but there was nothing surprising there. This is a result of the deeply entrenched belief that the private sector can handle every sphere of our lives better than the public sector, and of the ensuing rush of governments to offload critical operations on to commercial entities.
The myth of the omnipotent invisible hand, therefore, needs to be reviewed; the sanctity of the market has to be desanctified. Lobbying should be severely curtailed. In certain crucial areas that should have never been entrusted to the private sector, judiciously applied dirigisme might need to make a comeback. Tax regimes ought to be reviewed and possibly overhauled. Certainly, we should question the appropriateness of preferential tax rates as applied to passive income. The idea behind such preferential tax rates is that investors receiving passive income (e.g., in the form of dividends, interest, etc.) will have more funds available to reinvest in the economy and, perhaps, more funds to spend on goods and services, thereby stimulating the domestic economy. This made sense in a less globalized world; it makes far less sense today, when a wealthy American living off passive income can “reinvest” the money by buying a pied-à-terre on the French Riviera or in New Zealand. The benefits to the domestic economy are unclear in that situation.
It works the same way with preferential corporate tax rates. Supposedly, low corporate tax rates motivate companies to make new investments and, therefore, create new jobs. Again, this seems to be a lot less relevant in a world of outsourcing and global capital; moreover, companies might use excess funds generated by lower tax rates to arrange share buybacks or pay special dividends to shareholders. If an American-based company whose largest shareholder is a faceless investment fund in, say, the UK, disburses a special dividend to its shareholders to put a surfeit of cash reserves to good use, it is not evident that this would be accretive to the American economy.
There’s another avenue that might be explored. It could be helpful to review our notions of corporate accountability. In 2015, Volkswagen was rocked by a scandal. The company was accused of having manipulated emissions tests in order to make some of their vehicles appear more eco-friendly that they were in reality. Volkswagen eventually agreed to pay some $22 billion in fines and settlements, an astronomical sum. Let’s think this through. Likely it was a small group of people that had full knowledge of what was going on (indeed, only a handful of individuals were charged). Yet who suffers the most? When a company is slapped with billion-dollar fines, it is that much poorer. All of its employees get hurt (even though most of them had not an inkling that something untoward was going on). All of its shareholders get hurt (think of a small-town retiree who owns 100 shares of Volkswagen in his retirement portfolio and who sees the value of his investment take a hit as the share price plunges). There’s a knock-on effect that will affect innocent people in all kinds of ways.
At the same time, one wonders whether those who did know would pay any damages. The crime is the work of several individuals; the responsibility is collective. I am not so dewy as to miss the point of the concept of limited liability, which encourages enterprising individuals to take risks they would not otherwise take. But perhaps it is worth considering a certain shift in responsibility from abstract entities to concrete individuals. Malfeasance, when it takes place, is always committed by people. It is not right when others have to pay for it.
These suggestions and proposals are purely conjectural; they are not dispensed as biblical commandments and should not be taken as the Holy Gospel. What’s certain is that bold reforms are necessary. In the movie Wall Street, the unscrupulous financier Gordon Gekko, rendered wonderfully by Michael Douglas, says that greed is good. The line is as memorable as it is untrue. Greed is certainly not good. It is, however, perfectly human. By nature, we are a greedy species. It’s how we are, and there’s not much that can be done about it. Human nature can’t be changed.
But it can be managed. The responsibility for that management devolves upon political leaders and supporting institutions, whose task it is to restrain human greed and codify our values in a way that protects society from rapaciousness. As Giridharadas reminds us in his timely Winners Take All, in this area the powers that be are missing in action, having transferred control to MarketWorld. It is high time that society wrestled this control away from the moneyed classes and moved it back to the traditional centers of power, where they belong.