Latest / Merryn Talks Money / Why Democracy Needs the Rich: John O. McGinnis on Wealth, Power and Pluralism

Transcript

Why Democracy Needs the Rich: John O. McGinnis on Wealth, Power and Pluralism · Merryn Talks Money

• 0:02
  Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Merrion Drugs Money,
• 0:14
  Speaker 1: the podcasting which people who know the markets explain the markets.
• 0:17
  Speaker 1: I'm merri in sum Set Web and this week I'm
• 0:18
  Speaker 1: speaking with John McGinnis, law professor, author and former US
• 0:22
  Speaker 1: Justice Department official. John has just published his book Why
• 0:25
  Speaker 1: Democracy Needs the Rich, which I suspect some of you
• 0:29
  Speaker 1: will find slightly controversial. We are speaking at a time
• 0:32
  Speaker 1: when everybody, possibly on both sides of the political divide,
• 0:36
  Speaker 1: are being fairly critical of the rich of billionaires, trying
• 0:39
  Speaker 1: to find a way to make them pay more tax
• 0:41
  Speaker 1: one way or another, and perhaps maybe to talk less.
• 0:44
  Speaker 1: So we are going to get into how John feels
• 0:47
  Speaker 1: the rich are essential to improving society and are even
• 0:51
  Speaker 1: essential to the continued existence of democracy. John, Welcome to
• 0:56
  Speaker 1: Marrin Drugs Money.
• 0:56
  Speaker 2: It's wanted to be here now. John.
• 0:59
  Speaker 1: When we talk about the rich being vital to democracy
• 1:02
  Speaker 1: on this podcast, which by the way, we do quite
• 1:04
  Speaker 1: a lot, we take it from the angle that it
• 1:07
  Speaker 1: is the rich who supply the finance to pay for
• 1:11
  Speaker 1: the things that they're not so rich vote for. So
• 1:14
  Speaker 1: that is how the very rich support democracy saves if
• 1:17
  Speaker 1: you look at it in the UK, for example, the
• 1:20
  Speaker 1: top one percent of our taxpayers pay twenty eight to
• 1:23
  Speaker 1: twenty nine percent of all our income tax, and if
• 1:25
  Speaker 1: you add their capital gain tax on top of that,
• 1:28
  Speaker 1: they're after about thirty three percent of the entire tax
• 1:31
  Speaker 1: take comes from one percent of the people. You go
• 1:34
  Speaker 1: to the top ten percent sixty percent of all income tax,
• 1:37
  Speaker 1: and even if you go to the top fifty percent,
• 1:39
  Speaker 1: it's ninety percent of all income tax. So over fifty
• 1:42
  Speaker 1: percent of households in the UK don't contribute anything at
• 1:45
  Speaker 1: all when it comes to tax. In fact, they are
• 1:47
  Speaker 1: mainly a negative impact on tax revenues. So if you
• 1:50
  Speaker 1: look at it like that, we say, how could you
• 1:52
  Speaker 1: manage without the rich? They actually they are the ones
• 1:55
  Speaker 1: who pay for what we vote for, and that that's
• 1:58
  Speaker 1: how democracy works. And then we look on the other
• 2:01
  Speaker 1: side and we have this constant dynamic in the UK
• 2:04
  Speaker 1: rising taxes, particularly rising taxes on the very rich. Our
• 2:07
  Speaker 1: tax base is very narrow, and a lot of our
• 2:09
  Speaker 1: rich on now moving abroad. They're saying lightly enough, I'll
• 2:11
  Speaker 1: go somewhere else, and then a lot of our demos,
• 2:15
  Speaker 1: our voters say good riddance to them. We didn't need
• 2:18
  Speaker 1: them anyway. And your premise is not that it's not
• 2:23
  Speaker 1: that it's only the money, it's that there's something else
• 2:27
  Speaker 1: that they offer a democratic society. So why don't we
• 2:30
  Speaker 1: start there with that broad overview.
• 2:33
  Speaker 2: So what I begin with is what they offer is
• 2:36
  Speaker 2: essential democracy, is pluralism, a variety of views, variety of
• 2:40
  Speaker 2: independent views, and the rich are extremely important in that respect.
• 2:45
  Speaker 2: I begin by turning on its head the argument the
• 2:49
  Speaker 2: rich are prom for democracy because they have too much
• 2:53
  Speaker 2: power in democracy. And my point is there are many
• 2:56
  Speaker 2: groups with lots of power, and therefore the question really
• 2:59
  Speaker 2: is do the rich have more power than the average person.
• 3:03
  Speaker 2: They do, but there's so many other groups, and they
• 3:06
  Speaker 2: act as a counterweight or a balance to that. Because
• 3:10
  Speaker 2: the most important people in democracy, the most important influence
• 3:14
  Speaker 2: in democracy, are what I call the professional influencers, the
• 3:19
  Speaker 2: people for whom influencing our culture and our democracy, that's
• 3:23
  Speaker 2: their job. The journalists, the academics, the entertainers, and to
• 3:30
  Speaker 2: some degree, the bureaucracy. And they have one thing in
• 3:34
  Speaker 2: common political views that are quite homogeneous, at least in
• 3:38
  Speaker 2: the United States, and I think in most other industrial
• 3:41
  Speaker 2: democracies they lean pretty sharply to the left, and that's
• 3:46
  Speaker 2: a problem because that means you might not get a
• 3:49
  Speaker 2: wide enough variety of views. And this idea that there
• 3:53
  Speaker 2: is some group who really have a lot of influence
• 3:57
  Speaker 2: in democracy other than the rich, and they're really the
• 4:00
  Speaker 2: essential thought leaders in democracy is a very old one.
• 4:03
  Speaker 2: It goes back to one of your poets, English poets,
• 4:06
  Speaker 2: Samuel Coleridge, who calls them the clericy, and his recognition
• 4:11
  Speaker 2: was that after the decline of the nobility and the clergy,
• 4:15
  Speaker 2: there were going to be other people who were going
• 4:17
  Speaker 2: to be very influential. And what it turns out is
• 4:20
  Speaker 2: just like the clergy and the nobility, they're very tightly
• 4:24
  Speaker 2: networked and therefore they have very similar views. And what
• 4:28
  Speaker 2: the rich do is they're not all to the right,
• 4:31
  Speaker 2: but they have a very wide variety of views in
• 4:33
  Speaker 2: the United States that are quite balanced in their views.
• 4:36
  Speaker 2: But what's important is they give a voice to the
• 4:39
  Speaker 2: right and indeed often rather eclectic of views that might
• 4:43
  Speaker 2: not get otherwise heard in a world where the professional
• 4:47
  Speaker 2: influencers held a more unified sway.
• 4:51
  Speaker 1: Yeah, don't. Can I take you back a little bit,
• 4:53
  Speaker 1: because the key point here is this idea that academics,
• 4:59
  Speaker 1: civil services, journalists, etc. Tend to lean left and so
• 5:06
  Speaker 1: at balancing voices required, and I know that this is
• 5:09
  Speaker 1: definitely the case. For example, in US university is one
• 5:12
  Speaker 1: of the things you quoted, nine out of ten academics
• 5:14
  Speaker 1: will say that they are left leaning in their political views.
• 5:17
  Speaker 2: But we should start.
• 5:18
  Speaker 1: By questioning why that is. So? Can we start there
• 5:22
  Speaker 1: by going back a little and saying, why is it
• 5:24
  Speaker 1: that all these groups that are very influential in our democracies.
• 5:28
  Speaker 2: I think their variety. This is not one answer, but
• 5:30
  Speaker 2: one answer is actually that precisely because they're professional influencers
• 5:36
  Speaker 2: of the state, they like a larger state that raises
• 5:40
  Speaker 2: them in status as opposed to people in the market.
• 5:44
  Speaker 2: And I think that's a very important aspect. I think
• 5:47
  Speaker 2: a second aspect is a very old problem envy. Most
• 5:52
  Speaker 2: of these people grew up with the people who become wealthy.
• 5:56
  Speaker 2: They were also very good students, and sometimes there are
• 6:00
  Speaker 2: the better students. They've become academics because of that, and
• 6:04
  Speaker 2: that's upsetting to them. And then finally, I think there
• 6:08
  Speaker 2: is just an idea because if you're an influencer, you
• 6:11
  Speaker 2: think the way of structuring the world is with central
• 6:16
  Speaker 2: ideas and an idea of a quality and not a
• 6:20
  Speaker 2: sort of trial and error, more empirically based ideas, so
• 6:24
  Speaker 2: more top down enthusiasms that naturally come to you. So
• 6:29
  Speaker 2: all of those reasons, I think put people who want
• 6:32
  Speaker 2: to influence the world as their profession largely on the left.
• 6:38
  Speaker 1: And journalists asiemst those people will have an income that is,
• 6:41
  Speaker 1: one way or another state sponsored.
• 6:44
  Speaker 2: Yes, I think that's true. Of course, entertainers don't, but
• 6:47
  Speaker 2: it's absolutely true if bureaucrats do. And in the United States,
• 6:51
  Speaker 2: most of our academics, most of our important universities, like
• 6:54
  Speaker 2: my own, are private, but still they're become more dependent
• 6:58
  Speaker 2: on the state.
• 6:59
  Speaker 1: So I think there's some to that, and I suppose
• 7:01
  Speaker 1: the other part is the charitable sector. Oh, the third
• 7:04
  Speaker 1: sector is might call it, which again is very heavily
• 7:07
  Speaker 1: stay sponsored both here and in the US, and obviously
• 7:10
  Speaker 1: leans to the left.
• 7:12
  Speaker 2: Yes, that's true, although in the United States things are
• 7:14
  Speaker 2: a little mixed, and I don't know whether it becomes
• 7:17
  Speaker 2: our differences in law. One of the actual advantages of
• 7:21
  Speaker 2: the rich is that they'd send up actually some charities
• 7:24
  Speaker 2: that push against the left liberalism. For instance, our university
• 7:28
  Speaker 2: system and you quite correctly point out how left leaning
• 7:31
  Speaker 2: professors are. Conservative billionaires have actually set up centers that
• 7:36
  Speaker 2: are somewhat counterpoints, and that's been very important. And I
• 7:39
  Speaker 2: myself am on the board of something called the Federalist
• 7:42
  Speaker 2: Society here, which is a conservative group of law students
• 7:46
  Speaker 2: and practitioners, and they've had enormous influence on our legal
• 7:51
  Speaker 2: education system, which before the rise of the Federalist Society
• 7:54
  Speaker 2: was almost totally left wing. It's obviously the professors still
• 7:58
  Speaker 2: a very left wing, but they give a voice, and
• 8:00
  Speaker 2: they may are presents on campus that really wouldn't be
• 8:03
  Speaker 2: there but for the wealthy. So one important point about
• 8:07
  Speaker 2: this book is that a lot of billionaires are left
• 8:11
  Speaker 2: wing and they give to charities. The money on the
• 8:14
  Speaker 2: right makes more of a difference at the margin, because
• 8:17
  Speaker 2: already the professional influencers are on the left. So each
• 8:21
  Speaker 2: marginal dollar spent by the right wing billionaire, either on
• 8:25
  Speaker 2: politics or on culture, makes more of a difference.
• 8:30
  Speaker 1: Yeah, okay, So one of the key ideas in the
• 8:33
  Speaker 1: book is that the left leaning influencers on that side
• 8:38
  Speaker 1: of the equation, there is this homogeneity of opinion that
• 8:41
  Speaker 1: is really full on. But yet when you move across
• 8:44
  Speaker 1: to the Talking about the rich, you can't talk about
• 8:48
  Speaker 1: them in terms of having a homogeneity of opinion because
• 8:51
  Speaker 1: they don't. They're very, very different. So when you look at,
• 8:54
  Speaker 1: for example, the political donations of the left, you will
• 8:57
  Speaker 1: see in the US lots of billionaires contribute to the
• 9:00
  Speaker 1: Democrats in the same way that as they do to
• 9:02
  Speaker 1: the Republicans. You're not see any hobgenaty. And you see
• 9:05
  Speaker 1: that in the UK as well. You see some of
• 9:06
  Speaker 1: the very rich supporting labor and lots of the very rich,
• 9:09
  Speaker 1: of course, supporting the right. So there's a divergence of
• 9:12
  Speaker 1: opinion among the rich in a way that I suspect
• 9:15
  Speaker 1: most people don't really think about.
• 9:17
  Speaker 2: Yes, that's right. And one of the reasons for that
• 9:20
  Speaker 2: is they have a kind of independence. I think that
• 9:22
  Speaker 2: most professional influencers don't because one other important difference between
• 9:27
  Speaker 2: the rich and professional influencers is the rich are not
• 9:31
  Speaker 2: gatekeepers of the other rich. How do people become rich, Well,
• 9:35
  Speaker 2: it's someone likes their product, or someone likes the way
• 9:37
  Speaker 2: they put together companies. It's a market test, and people
• 9:41
  Speaker 2: aren't thinking ideologically in that spectrum. But let me tell you,
• 9:44
  Speaker 2: I've been in academics a long time, appointments here are
• 9:48
  Speaker 2: controlled by other academics, and people's political views make a
• 9:52
  Speaker 2: difference in those appointments, and that's so I think true
• 9:56
  Speaker 2: at journalism as well. And so one aspect of the
• 10:00
  Speaker 2: diversity of the rich is that there's no gatekeeping function
• 10:04
  Speaker 2: that they play. And another is that the rich make
• 10:07
  Speaker 2: their money in all sorts of different way. Some are entrepreneurs,
• 10:12
  Speaker 2: some are financial people, others are inventors. And that's another
• 10:17
  Speaker 2: advantage of theirs, even beyond ideology. They have a different
• 10:20
  Speaker 2: way of thinking about the world. And in a commercial democracy,
• 10:23
  Speaker 2: like really all modern democracies, that's important. They know something
• 10:28
  Speaker 2: about the economy. So it's not only they bring a
• 10:31
  Speaker 2: variety of views, they bring a variety of perspectives about
• 10:34
  Speaker 2: the market that are extremely helpful. And so that goes
• 10:38
  Speaker 2: a bit back to the point you began with. It's
• 10:42
  Speaker 2: different version of that point is democracies do need to
• 10:46
  Speaker 2: be economically successful. They have an increasing pie is extremely
• 10:50
  Speaker 2: important for their health, and how that happens depends on policies,
• 10:55
  Speaker 2: and then rich bring a useful perspective to those as well.
• 11:00
  Speaker 1: So to become rich, you have you're automatically nonconformist, don't you.
• 11:04
  Speaker 2: Absolutely you see some niche that other people have not
• 11:08
  Speaker 2: yet exploited it.
• 11:10
  Speaker 1: And so it's more you could say that, you know,
• 11:13
  Speaker 1: they're more rationalist than romantic, more pragmatic. To become rich,
• 11:17
  Speaker 1: to build a company, to turn yourself into a billionaire,
• 11:20
  Speaker 1: show you might have a dream or a little romance
• 11:22
  Speaker 1: on the side, but the path is one that is
• 11:24
  Speaker 1: very pragmatic.
• 11:25
  Speaker 2: Schumpeter, a famous economist. To be rich, you just can't
• 11:29
  Speaker 2: talk your way to success. But in a lot of
• 11:32
  Speaker 2: the professional influencers, being a great talker is a way.
• 11:37
  Speaker 2: And of course, as you suggest, that doesn't actually mean
• 11:40
  Speaker 2: you're going to have good results. There's not a connection
• 11:43
  Speaker 2: necessarily between eloquence and consequence.
• 11:47
  Speaker 1: Yeah, I mean I would divide that up into maybe
• 11:51
  Speaker 1: one group continually talking about the world as they would
• 11:56
  Speaker 1: like it to be and people behaving as they would
• 11:58
  Speaker 1: like them to, and the other group working with the
• 12:02
  Speaker 1: world as it is, and the way that people genuinely
• 12:05
  Speaker 1: respond to incentives.
• 12:06
  Speaker 2: Every day, someone running a company is faced with a
• 12:09
  Speaker 2: market test of his actions. And let me tell you,
• 12:13
  Speaker 2: in academics at least, which I know best, people are
• 12:17
  Speaker 2: faced with any kind of market tests, or at least
• 12:20
  Speaker 2: not yet. Who knows, AI may start changing that. But
• 12:23
  Speaker 2: actually an important university, there's no sense that one's in competition,
• 12:28
  Speaker 2: there's no sense that anything is at risk.
• 12:52
  Speaker 1: So in that sense, one of the things that you
• 12:53
  Speaker 1: talk about in the book is this idea that democracy
• 12:57
  Speaker 1: tends to mediocrisy if you don't keep a close eye
• 13:00
  Speaker 1: on it, or soft deputism, etc. And so the rich
• 13:02
  Speaker 1: to then a constraint on the natural excesses of majority
• 13:06
  Speaker 1: rule exactly because they do introduce these ideas, practice them,
• 13:11
  Speaker 1: evaluate them, so they are available for public use.
• 13:14
  Speaker 2: And they also the independence to stand up against the
• 13:16
  Speaker 2: majority I talk at least, and it's true, there's some
• 13:19
  Speaker 2: analogs in British history are how crucial the rich were
• 13:23
  Speaker 2: as catalysts for abolishing slavery. I mean it's not well
• 13:26
  Speaker 2: known in the United States at least, but abolition of
• 13:30
  Speaker 2: slavery was an extremely unpopular view, not only in the
• 13:34
  Speaker 2: South but in the North. And so who was able
• 13:36
  Speaker 2: to stand up for that, Well, wealthy people, and they
• 13:40
  Speaker 2: paid for that. People burned down their houses. But note
• 13:43
  Speaker 2: that if you're wealthy and your house is burned down,
• 13:46
  Speaker 2: well you can build another house. But if you're not wealthy, well,
• 13:49
  Speaker 2: you'd not likely to speak up against something that the
• 13:52
  Speaker 2: majority wants. And it turns out, of course, the majority
• 13:55
  Speaker 2: is not always right, and so that's one problem of democracy.
• 13:58
  Speaker 2: And they also sometimes, as Tokville says, worship themselves the
• 14:03
  Speaker 2: majority of their mediocrity. That's a problem of mediocrity. And
• 14:06
  Speaker 2: the rich have therefore been very important in funding what
• 14:10
  Speaker 2: we now regard as the great arts, the great buildings
• 14:13
  Speaker 2: that are lasting monuments to our democracy. And I think
• 14:17
  Speaker 2: democracy is some kind of national greatness is important in
• 14:21
  Speaker 2: supporting a national democracy, and the rich play a very
• 14:24
  Speaker 2: important role in that. And finally, the soft decimotism point
• 14:28
  Speaker 2: that you raise, which goes back cut the worry to
• 14:32
  Speaker 2: ari style that the democracy the people are just going
• 14:35
  Speaker 2: to vote themselves, benefits at the expense of everyone else,
• 14:39
  Speaker 2: points you made at the beginning of this broadcast. The
• 14:42
  Speaker 2: rich are very aware of that, and again they, at
• 14:44
  Speaker 2: least in the United States, fund a lot of think
• 14:47
  Speaker 2: tanks that worry about that essential fiscal problem which never
• 14:51
  Speaker 2: goes away in democracy. And there of course the people
• 14:54
  Speaker 2: with the incentives to do that, and the money too,
• 14:57
  Speaker 2: that we be much worse off. We're not, as you
• 15:00
  Speaker 2: point out, wonderfully off without that constant pressure of people
• 15:04
  Speaker 2: who want to worry about the fiscal long term and do.
• 15:08
  Speaker 1: Worry about excellence. One of the things that the book
• 15:11
  Speaker 1: really brings out is this idea that there is there
• 15:15
  Speaker 1: really isn't any thing as a pure democracy. Is the
• 15:18
  Speaker 1: whole idea of everyone having a vote and everyone having
• 15:20
  Speaker 1: a similar level of influence is of course always nonsense
• 15:23
  Speaker 1: because there's always really strong pressure groups across the board.
• 15:27
  Speaker 1: There's the end of special interest groups. If we've discussed,
• 15:30
  Speaker 1: there's the charities, there's the academics, etc. So it doesn't
• 15:34
  Speaker 1: really exist, this idea of a genuine democracy because of
• 15:38
  Speaker 1: the way public opinion is so heavily influenced by different groups.
• 15:42
  Speaker 2: In a representative democracy, it doesn't because we made the
• 15:45
  Speaker 2: decision not to have the kind of really impossible the
• 15:48
  Speaker 2: democracy that was imagined in ancient Greece, where ever we
• 15:51
  Speaker 2: would vote on everything, where in some sense people would
• 15:54
  Speaker 2: have greater influence. Was representatives are going to be influenced
• 15:58
  Speaker 2: by a variety of things and what works, because they're
• 16:01
  Speaker 2: going to be worried about what's going to happen to
• 16:02
  Speaker 2: the next election some sense, one idea about democracy is
• 16:06
  Speaker 2: we give a kind of prize to people who in
• 16:08
  Speaker 2: public office which they'd like to keep, and that tends
• 16:11
  Speaker 2: to make them focus a bit on consequences. But that
• 16:14
  Speaker 2: also means they're going to look at a variety of
• 16:17
  Speaker 2: views and they're not going to simply look at the
• 16:20
  Speaker 2: everyone individually, because they're concerned about what's going to happen
• 16:23
  Speaker 2: next time, not just what people have voted for last time.
• 16:26
  Speaker 2: And that's just inevitable. And people are very different. They
• 16:30
  Speaker 2: have different money, they have different amounts of interest in politics,
• 16:34
  Speaker 2: they have different eloquence. So once you have that kind
• 16:36
  Speaker 2: of representative democracy, it really is a fantasy to think
• 16:40
  Speaker 2: that people are going to have equal influence. And that
• 16:42
  Speaker 2: is that I do think is an underlying fantasy against
• 16:46
  Speaker 2: which people worry about the wealthy have more influence than average.
• 16:50
  Speaker 2: And my book begins with the idea, well, that's true,
• 16:54
  Speaker 2: but it doesn't follow that they have too much influence,
• 16:58
  Speaker 2: because there are so many groups that have more influence
• 17:00
  Speaker 2: than the average citizens.
• 17:02
  Speaker 1: Yeah, and of course I suppose we should as obvious
• 17:05
  Speaker 1: but true that you can only tolerate the rich offering
• 17:08
  Speaker 1: this balance of opinion as long as you have clear
• 17:11
  Speaker 1: institutions and trusted legal systems that control the excesses of
• 17:15
  Speaker 1: the rich as well.
• 17:16
  Speaker 2: Right only in a market democracy. I do argue that
• 17:20
  Speaker 2: in some sense the rich are better than ever because
• 17:24
  Speaker 2: we move more quickly through different rich people than ever
• 17:28
  Speaker 2: before with our technocracy, because that's always creating a new
• 17:32
  Speaker 2: group of rich people. So you might worry, and Aristotle
• 17:35
  Speaker 2: didn't worry, I think correctly, the rich could be a
• 17:38
  Speaker 2: kind of permanent, encrusted oligarchy, and that was a real
• 17:41
  Speaker 2: worry in a world where we had a static society
• 17:45
  Speaker 2: where the rich were largely tied to land. And in
• 17:48
  Speaker 2: that world we have people with unchanging views. We're just
• 17:52
  Speaker 2: really important, we're very concerned and able to keep a
• 17:56
  Speaker 2: lid on new ideas. But that's not our world. Our
• 17:59
  Speaker 2: world is one of churn of the next new technological thing,
• 18:04
  Speaker 2: and that's shown in our richest people. At the beginning
• 18:08
  Speaker 2: of the Forbes four hundred, which goes back now over
• 18:11
  Speaker 2: forty I think maybe forty fifty years, most people have
• 18:15
  Speaker 2: inherited their wealth. Now very small, much smaller percentage of
• 18:19
  Speaker 2: people inherit their wealth, and that's because we have a
• 18:22
  Speaker 2: much more dynamic, changing society and that's great because these
• 18:26
  Speaker 2: the rich people who come up have different ideas from
• 18:29
  Speaker 2: the old money, and that's a good thing as well.
• 18:33
  Speaker 1: So your theory, your ideas, wouldn't really support those who
• 18:38
  Speaker 1: have inherited their wealth in the same way as those
• 18:41
  Speaker 1: who have made their wealth. What we're talking about here
• 18:44
  Speaker 1: is people who have created wealth and therefore have these
• 18:48
  Speaker 1: interesting thought patterns, eccentric thought patterns even that allow them
• 18:52
  Speaker 1: to give value. So if we're thinking about how to
• 18:56
  Speaker 1: tax the rich, as it appears everyone pretty much always does,
• 18:59
  Speaker 1: should we then focus more on inheritance tax than on
• 19:02
  Speaker 1: any other kind of tax because the second and third
• 19:05
  Speaker 1: generation rich are of significantly less value to us as
• 19:08
  Speaker 1: opinion balances than the first generation.
• 19:11
  Speaker 2: I think there's a grain of truth in that, But
• 19:12
  Speaker 2: I want to push back slightly against that idea because
• 19:16
  Speaker 2: I certainly agree with you that if most people inherit
• 19:19
  Speaker 2: their money, that goes back to the kind of Aristotelian concern.
• 19:23
  Speaker 2: The people who inherit their money do often have a function,
• 19:27
  Speaker 2: particularly in national greatness and the arts, So you might
• 19:30
  Speaker 2: think there's a kind of interesting alchemy that takes place
• 19:34
  Speaker 2: in the rich. So you begin with someone who's made
• 19:36
  Speaker 2: their money and therefore done a lot for consumers. He
• 19:40
  Speaker 2: hands on money after he dies, and then his children
• 19:44
  Speaker 2: they're in a different position. They collect art, they do
• 19:47
  Speaker 2: other things that are important, And so I don't want
• 19:50
  Speaker 2: to say the inherited wealth has no function. I do
• 19:55
  Speaker 2: agree that if you're looking to tax things, it's better
• 20:00
  Speaker 2: to tax at the inherited stage than some other stages.
• 20:04
  Speaker 2: For instance, at least in the United States, we have
• 20:06
  Speaker 2: something called a step up in basis, which means that
• 20:10
  Speaker 2: all capital gains disappear on people's death. That strikes me
• 20:14
  Speaker 2: as a mistake, at least for large fortunes, and so
• 20:18
  Speaker 2: I'm not always in favor of any tax break for
• 20:21
  Speaker 2: the wealthy, and that would be one I would certainly
• 20:25
  Speaker 2: want to take a look at as opposed to taxing
• 20:28
  Speaker 2: their wealth. Now. Wealth taxes now I think would be
• 20:31
  Speaker 2: a terrible mistake. It would, essentially and that's one of
• 20:34
  Speaker 2: my concerns in writing this book is try to take
• 20:38
  Speaker 2: away the power of the rich. But that doesn't mean
• 20:40
  Speaker 2: it would go to ordinary people. It mean that the influencers,
• 20:43
  Speaker 2: the claresy, would just become more powerful. And so it's
• 20:46
  Speaker 2: not only an economic matter. The wealth taxes would have
• 20:49
  Speaker 2: bad economic effects. I think they would have bad democratic
• 20:52
  Speaker 2: effects and actually entrenching the professional influencers as more powerful.
• 20:58
  Speaker 1: Okay, so then I know that I know the next
• 21:00
  Speaker 1: question everyone listening is asking in their heads, which is
• 21:04
  Speaker 1: how rich is too rich? So when does inequality get
• 21:07
  Speaker 1: out of control? So all the things that we are
• 21:10
  Speaker 1: talking about, You can be rich enough for that, to
• 21:13
  Speaker 1: be rich enough to not be beholden to the bureaucracy
• 21:16
  Speaker 1: in any way, to be rich enough to hold whatever
• 21:18
  Speaker 1: opinions you like without having any interest in anyone's opinion
• 21:21
  Speaker 1: on your opinions. You can be rich enough for that
• 21:24
  Speaker 1: when you're into the tens of millions or the maybe
• 21:26
  Speaker 1: even the hundreds of millions, I don't know, but you
• 21:28
  Speaker 1: don't need much more than that to be able to
• 21:30
  Speaker 1: fulfill that role.
• 21:31
  Speaker 2: I don't entirely agree with that. We'd certainly you need
• 21:34
  Speaker 2: more than tens of millions to actually fund some great enterprise. Charitably,
• 21:40
  Speaker 2: you may need billions of dollars. In our world. Certainly,
• 21:43
  Speaker 2: global public goods working on health are extremely important. No,
• 21:48
  Speaker 2: not also that there's a problem often with charities that
• 21:53
  Speaker 2: people aren't willing to give unless the charity is up
• 21:56
  Speaker 2: and running and effective, and what the wealthy can do
• 22:00
  Speaker 2: really wealthy, is they can just give an enormous amount
• 22:03
  Speaker 2: of money and bring to light a new charity that
• 22:07
  Speaker 2: focuses on some need that people haven't thought of before.
• 22:11
  Speaker 2: So I'm cautious about saying in our world that there's
• 22:15
  Speaker 2: a limit about it. I think the greater concern is
• 22:18
  Speaker 2: not how much any individual has. At some point you
• 22:22
  Speaker 2: do worry that the inequality might become just too much.
• 22:26
  Speaker 2: There's a debate about that. Of course, people like Pikaity
• 22:30
  Speaker 2: in France have raised it. I look at that in
• 22:33
  Speaker 2: the book and I just don't think his arguments are
• 22:35
  Speaker 2: really proven, even on his own terms, and people have
• 22:39
  Speaker 2: pointed out these missed some technical matters about income. But
• 22:44
  Speaker 2: I also point out in the book that I think
• 22:46
  Speaker 2: people miss out on something really important about the modern world,
• 22:50
  Speaker 2: which is how technology really makes people's living standards similar
• 22:55
  Speaker 2: in a way they never have been before. And one
• 22:57
  Speaker 2: way I try to explain this with a thought experiment
• 23:01
  Speaker 2: with some Oxford don and a duke. Though one hundred
• 23:05
  Speaker 2: years ago, two hundred years ago, they lived completely different
• 23:08
  Speaker 2: lives compared to when I you compare me to Peter Teale,
• 23:12
  Speaker 2: whom I've met Peter Teal is a lot richer than
• 23:15
  Speaker 2: I am. Our lives just different and completely well, not really,
• 23:19
  Speaker 2: because in some sense we all spend our time on
• 23:22
  Speaker 2: the internet. Information is free. Even I can summon up
• 23:25
  Speaker 2: as chauffeur with Uber when I need to, and that's
• 23:29
  Speaker 2: because the technology is dematerializing our world and so making
• 23:34
  Speaker 2: some things just less scarce and so people to be
• 23:37
  Speaker 2: able to enjoy them in common. So I think it
• 23:40
  Speaker 2: may be a mistake, particularly when we don't understand how
• 23:45
  Speaker 2: technology is really changing these it won't be clear that's
• 23:48
  Speaker 2: about middle class people. There still is a problem of
• 23:50
  Speaker 2: poverty and people who don't have enough. I consider that's
• 23:53
  Speaker 2: not a problem of inequality, and people often confused confuse
• 23:57
  Speaker 2: those problems. I'd see that poverty of the lowest ten
• 24:00
  Speaker 2: percent and income is still a huge issue. I just
• 24:02
  Speaker 2: don't think it's a probab inequality.
• 24:05
  Speaker 1: Okay, So putting that to one side, the key point
• 24:07
  Speaker 1: here is that as our lifestyles begin to equalize thanks
• 24:10
  Speaker 1: the technological change around us, the actual difference in absolute
• 24:13
  Speaker 1: wealth becomes less relevant.
• 24:15
  Speaker 2: Correct.
• 24:16
  Speaker 1: Okay, Now do you think that you are getting cut through?
• 24:19
  Speaker 1: Because if you look at the political round across Europe
• 24:22
  Speaker 1: in particular, and certainly across much of the US. You
• 24:25
  Speaker 1: do still have this idea that you know, we can
• 24:27
  Speaker 1: ditch the rich, we can live without the rich, which
• 24:29
  Speaker 1: atacks the richinal tags them into oblivion, et cetera. There's
• 24:33
  Speaker 1: very little understanding or acceptance of what you're saying.
• 24:36
  Speaker 2: Oh, quite confident that my academic colleagues are not going
• 24:39
  Speaker 2: to be listening to me. One thing that gives me
• 24:42
  Speaker 2: hope is that it is democracy. So I do think
• 24:46
  Speaker 2: democracy and even the great mass of people giving a
• 24:50
  Speaker 2: vote is useful in this respect that when people tax
• 24:53
  Speaker 2: the rich into oblivion and the economic consequences are really bad,
• 24:58
  Speaker 2: there are revolts of people. It's been pointing out, for instance,
• 25:02
  Speaker 2: that in a real democracy, when people just have the vote,
• 25:04
  Speaker 2: there almost never is a famine. A march Sen pointed
• 25:08
  Speaker 2: that out, And so I think that eventually people do
• 25:12
  Speaker 2: wake up to the bad consequences. But alas democracy sometimes
• 25:17
  Speaker 2: works slowly, I'm just trying to speed it up a little,
• 25:21
  Speaker 2: maybe a few days. The one other thing I think
• 25:24
  Speaker 2: would be hopeful too, is that our world I think
• 25:27
  Speaker 2: is going to be changed by the rise of AI
• 25:31
  Speaker 2: that I think it will scramble some long time political allegiances,
• 25:36
  Speaker 2: and I think that may give more of an opportunity
• 25:39
  Speaker 2: to think through some things again, so I'm cautious about that.
• 25:44
  Speaker 2: Was of course, the social changes brought on by AI
• 25:48
  Speaker 2: could lead people astray as well, but I'm not that
• 25:52
  Speaker 2: pessimistic because I do think so long as we keep
• 25:56
  Speaker 2: the basic idea of democracy is that the trial and
• 25:59
  Speaker 2: experim some of them are bad experiments of actingly rich
• 26:03
  Speaker 2: successively are likely to be thrown out at least after
• 26:07
  Speaker 2: a time.
• 26:08
  Speaker 1: Okay, John, you may be a billionaire. I don't know.
• 26:14
  Speaker 1: We're only looking to other across the screen. How do
• 26:17
  Speaker 1: you manage to be such an obviously contrarian thinker?
• 26:22
  Speaker 2: So while I'm not a billionaire, I grew up among
• 26:26
  Speaker 2: the children of billionaires, so that might be one aspected
• 26:31
  Speaker 2: rubbed off on me. So maybe that's one of the reasons.
• 26:35
  Speaker 2: Of course, there aren't going to be contrarian thinkers in
• 26:38
  Speaker 2: any profession. The question is they're a critical mass of them.
• 26:41
  Speaker 2: I think another reason is that my father pointed out
• 26:44
  Speaker 2: that my family has had a long tradition of difficulty
• 26:48
  Speaker 2: with authority, and so the authority that is represented by
• 26:52
  Speaker 2: the clarity in my profession has rubbed me the wrong
• 26:55
  Speaker 2: way and has actually moved me to be more contrarian
• 26:58
  Speaker 2: over time.
• 27:00
  Speaker 1: Talk about this outside influence of the rich on opinion
• 27:04
  Speaker 1: and operating as a sort of a healthy tension, as
• 27:07
  Speaker 1: one of the phrases you is creating this healthy tension
• 27:10
  Speaker 1: that amongstey requires should governments be thinking more carefully about
• 27:14
  Speaker 1: the way that they finance the organizations around them, but
• 27:19
  Speaker 1: the way they finance academia, about the way they finance
• 27:22
  Speaker 1: the charitable sector. And it feels that there's a responsibility
• 27:25
  Speaker 1: on the state using taxpayers money to finance organizations that
• 27:30
  Speaker 1: should be encouraging diversity of thought, and maybe isn't so.
• 27:35
  Speaker 2: I have two thoughts about that. One is that's absolutely true,
• 27:38
  Speaker 2: and we actually see movements in the United States to
• 27:42
  Speaker 2: create for our state legislators to create some centers within
• 27:45
  Speaker 2: universities that might be more heterodox, so that's an advantage.
• 27:49
  Speaker 2: On the other end, one asked me very careful, I
• 27:52
  Speaker 2: think for the state to get too involved in choosing
• 27:57
  Speaker 2: who's going to be an academic, because that backfire in
• 28:01
  Speaker 2: a big way and lead, of course, depending on who's
• 28:04
  Speaker 2: in control of the state, to actually a hyper orthodoxy.
• 28:07
  Speaker 2: So one thing we've had actually in the United States
• 28:10
  Speaker 2: is THEI diversity, equity, and inclusion, which has been all
• 28:14
  Speaker 2: the rage and affirmative action, which are state policies. They
• 28:18
  Speaker 2: worse state at least encouraged policies in many respects, they
• 28:22
  Speaker 2: actually led to greater a homogeneity of thought. So I'm
• 28:27
  Speaker 2: a classical liberal in the sense that I'm worried about
• 28:31
  Speaker 2: the state always and if the state wants to add
• 28:35
  Speaker 2: some particular center that will do something or other that's
• 28:38
  Speaker 2: apart from the rest of the university. There's something to
• 28:41
  Speaker 2: be said for that. But actually running the university and
• 28:45
  Speaker 2: making really tamping down on its decision making, I think
• 28:49
  Speaker 2: can have some law, even as some short term gains
• 28:52
  Speaker 2: can have a variety of long term costs.
• 28:55
  Speaker 1: Okay, we've talked about all the positives of the rich,
• 28:59
  Speaker 1: the positive externalities they create, and I suppose there is
• 29:02
  Speaker 1: a sort of very long list of books of the
• 29:05
  Speaker 1: negative externalities of the rich, So they come with negatives
• 29:09
  Speaker 1: as well.
• 29:10
  Speaker 2: So I think the biggest negatives and the negatives and
• 29:12
  Speaker 2: pointed out as you say, for centuries is some of
• 29:15
  Speaker 2: the concerns about the rich have been that they because
• 29:19
  Speaker 2: of their independence, they lead lifestyles that are really not
• 29:23
  Speaker 2: moral and encourage that in other people. Right, And they're
• 29:28
  Speaker 2: also there's a view that there's some and this goes
• 29:30
  Speaker 2: back to the nobility, they're not really that connected to
• 29:33
  Speaker 2: their nation. They're just unconcerned about their particular place of birth.
• 29:40
  Speaker 2: And then finally, I think a concern is that they
• 29:43
  Speaker 2: themselves are a kind of interests, that they know how
• 29:45
  Speaker 2: to maneuver the levers of power in their own interest.
• 29:49
  Speaker 2: And there's something I think to be said for all
• 29:52
  Speaker 2: of those problems.
• 29:54
  Speaker 1: It's a very compelling, very compelling story, and one that
• 29:58
  Speaker 1: it would be interesting to see politicians really react with
• 30:02
  Speaker 1: at all. I mean, we're still hear here. As you know,
• 30:04
  Speaker 1: there's endless anti the rich, anti wealth diatribes constantly, and
• 30:08
  Speaker 1: there's constant conversations about new taxes and new wealth taxes,
• 30:12
  Speaker 1: and we have mansion taxes, straight out wealth taxes. Bitch
• 30:15
  Speaker 1: of course never work, because of course, taxing the rich
• 30:18
  Speaker 1: is very difficult, taxing them beyond a certain level, beyond
• 30:21
  Speaker 1: straightforward capital gains and straightforward income. These wealth taxes are
• 30:25
  Speaker 1: very complicated and very difficult to manage and very rarely
• 30:29
  Speaker 1: raise much money. But nonetheless, the conversation is constantly about them, the.
• 30:34
  Speaker 2: Books that actually have shown that the only way really
• 30:37
  Speaker 2: to get rid of the riches to have a war
• 30:40
  Speaker 2: or a vast depressions, and where I think the antidote,
• 30:44
  Speaker 2: whatever you think of the riches, worse than the disease.
• 30:48
  Speaker 1: Listen, before we end, can I just ask you what
• 30:50
  Speaker 1: you are reading?
• 30:51
  Speaker 2: So I'm reading two things at the moment. One is
• 30:55
  Speaker 2: Charles Dickens Bleak House, which is about lawyers, most book
• 31:00
  Speaker 2: about lawyers, and I recommend it. It's really a I
• 31:03
  Speaker 2: think as great as and of course it's it's lawyers
• 31:07
  Speaker 2: who are another group of a last professional influencers. And
• 31:10
  Speaker 2: the other is a book which I think is very
• 31:13
  Speaker 2: interesting by I think Sebastian Malaby called The Infinite Machine,
• 31:18
  Speaker 2: which is about the race for AI and I think
• 31:21
  Speaker 2: he does a very good job in showing not only
• 31:24
  Speaker 2: the players in that race, but what's going on and
• 31:28
  Speaker 2: confirms my view that the world, even within five years,
• 31:34
  Speaker 2: is going to look astonishingly different from what it is today.
• 31:38
  Speaker 2: And in ten years, I'm not sure if we came
• 31:42
  Speaker 2: back we would exactly recognize I'm sure we would be
• 31:45
  Speaker 2: not in the same kind of podcast. I think we'd
• 31:47
  Speaker 2: be much more like we'd be. We could really tell
• 31:51
  Speaker 2: that much different that we would be talking to one
• 31:53
  Speaker 2: another's if we were sitting on a couch.
• 31:56
  Speaker 1: Thank you. Thanks for listening to this week's Maren Talks Money.
• 32:02
  Speaker 1: If you like us, share, rate, review, and subscribe wherever
• 32:04
  Speaker 1: you listen to podcasts, and keep sending your questions in
• 32:06
  Speaker 1: your comments to Merrin Money at Bloomberg dot net. You
• 32:09
  Speaker 1: can also follow me in John on Twitter or x.
• 32:11
  Speaker 1: I'm at marins w and John is John out of
• 32:13
  Speaker 1: score steppeg. This episode was housted by me Maren's unsep
• 32:16
  Speaker 1: Web was produced by Samasadi and Moses and Em and
• 32:19
  Speaker 1: Jennifer Seely. Sound designed by Blake Maples and special thanks
• 32:22
  Speaker 1: of course to John mc ginnis