Vinoth Ramachandra

Studying the Super-Rich

Posted on: May 25, 2014

The French economist Thomas Piketty’s monumental Capital in the Twenty-First Century is being widely acclaimed as a classic on par with Marx’s Capital and Keynes’ General Theory. Paul Krugman summarizes Piketty’s thesis thus: “The big idea of Capital in the Twenty-First Century is that we haven’t just gone back to nineteenth-century levels of income inequality [in the USA], we’re also on a path back to ‘patrimonial capitalism,’ in which the commanding heights of the economy are controlled not by talented individuals but by family dynasties.”

In a sense this is hardly new; indeed, it is what some of us lowly amateurs have been saying for years- that economic inequality is cumulative and “hereditary”, that the highest incomes are not earned but “fixed”, that democracy is being hijacked by the rich and super-rich (the famous “one per cent” highlighted by the Occupying movement in the USA), etc. What Piketty brings to the argument is the kind of sophisticated statistical analysis and detailed data-gathering (based largely on tax records) beloved of technical economists. Whether Piketty’s work will lead to any major shift in mainstream economists’ neglect of distribution in favour of “growth” remains to be seen.

Inequality kills. Adam Smith himself pointed out that the ability to appear in public without shame requires more in a wealthy society than an overall poor one: at a certain point, he suggested, a man needs a linen shirt to be respectably dressed. The whole idea of a standard of poverty unrelated to the incomes of others is false. Becoming relatively worse off can actually make a person absolutely worse off, in terms of opportunities and social standing.

Two of the most unequal societies in the world are Brazil and China. I had the privilege of spending almost three weeks in Brazil last month. Brazilians are a warm, hospitable and friendly people on the whole, but the contrasts in wealth can be quite overpowering. Much of this inequality goes back to the colonial annexation of vast areas of land and the steady influx of European settlers for most of the past four hundred years. But government policies have also contributed.

There is relatively little investment in primary and secondary education. Educated elites exert pressure to skew the educational budget in favour of universities. There are some excellent public universities where enrolment is free. But the exams are so competitive that only rich students from the best-equipped private schools and who have the advantage of the right social contacts are able to pass. This is what makes access to prestigious public universities difficult for Brazil’s poor and lower middle classes. The latter are the favourite clientele of private institutions of higher education. Instruction at these private institutions, to which the vast majority of university students now belong, is generally poor.

Brazil’s media is technically “free”, but in practice the major media companies are owned by well-heeled supporters of the establishment. So only one side of the news gets reported. It is left to the new social media to highlight discrepancies between the official version of events and the ground realities. In this soccer-crazy nation, there is widespread opposition to the hosting of the World Cup in Brazil next month. The government is spending over US $15 billion of public money in new soccer stadia and hotels for the World Cup, while public spending on education and healthcare withers. To forestall demonstrations on the streets, the government is considering bringing back anti-terrorist legislation from the days of military rule. If, however, these protests attract 5,000-10,000 people every time, then they will become too difficult to police.

I was told that while drinking alcohol is forbidden in Brazilian soccer stadiums, an exception will be made during the World Cup since Budweiser is one of the principal sponsors.

These major international sporting events are more about national propaganda and the corruption of corporate and political elites than it is about sport.

China’s 100 richest men are collectively worth over $300 billion, while an estimated 300m people in the country still live on less than $2 a day. In January 2014, Xu Zhiyong, a legal scholar and prominent human rights activist was jailed for four years by a Beijing court (in a closed-door trial) simply for calling on Chinese officials to declare their assets. This is the same Chinese government that is courted by Western multinationals and to which Britain’s David Cameron offered last November “a dialogue of respect” as well as long-term British visas to its business elites!

A two-year reporting effort led by the International Consortium of Investigative Journalists (ICIJ) has revealed that more than a dozen family members of China’s top political and military leaders are making use of offshore companies based in the British Virgin Islands. The documents also reveal the central role of major Western banks and accountancy firms, including PricewaterhouseCoopers, Credit Suisse and UBS in the offshore world, acting as middlemen in the establishing of such companies. Between $1 trillion and $4 trillion in untraced assets have left China since 2000, according to estimates.

The Chinese government has cracked down on citizens’ movements aimed at promoting transparency and accountability among the country’s elite. Foreign news sites that revealed details of offshore holdings by the relatives of China’s political leaders were blocked and internet service providers were ordered to target and report any users posting on the subject.

The connection between Picketty and Xu Zhiyong has not, to my knowledge, been drawn in the Western media. One is hailed as a rock-star economist, the other totally ignored.

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12 Responses to "Studying the Super-Rich"

Vinoth, thank you for your comments on this book. I find the income disparities in our country deeply disturbing. Earlier this week, I reviewed a book titled “Degrees of Inequality” that shows how income and funding disparities are once more creating sharp divide along class lines in who has access to higher education. In a post I wrote yesterday, I noted how in the top 100 companies in the US, CEO compensation averages nearly 500 times that of rank and file workers. What is more disturbing is to find many conservative Christians defending these disparities even when many are in fact suffering the effects of those disparities. It also seems that the more we are inured (stupefied?) to these disparities within our country, the more ignorant or even contemptuous we are of them globally.

Another book on this topic worth reading is The Divide: American Injustice in the Age of the Wealth Gap, by Matt Taibbi. The “divide” impacts not just income: Taibbi demonstrates the way white collar criminals in our global financial systems have stolen billions from average citizens with no real legal consequence, while the poor are incarcerated for small crimes that hurt no one (as in drug possession). Just as money has disappeared from China to the great harm of its citizens, it is disappearing from the US – and when banks are caught, the fines are negligible compared to the enormous profits.
I agree that many – most? – of the Christians I know here in the US defend the current economic regime and consider those who question it dangerously liberal. Somehow unfettered capitalism is considered an essential part of the Christian ethos. I too find this deeply troubling.

Bob and Carol, thanks for your comments.

Maybe we should explore this a little further. Is it simply ignorance of the Bible that makes these Christians think the way they do? Ignorance of American history? Some naive textbook definition of “capitalism”? Living all the time within a narrow religious subculture?

With the plethora of Christian colleges, theological seminaries and even Christian justice organizations in the US, I scratch my head and ask: how is it that the American church cannot produce a single person with the courage of a Xu Zhiyong- willing to go to prison rather than remain silent in the face of such horrific injustices (including as you point out, Carol, the blatant evils of the criminal justice system)?

Also, wouldn’t a 100 per cent tax on family inheritance be a very Republican idea? It will teach rich kids not to sponge off their parents, to work hard, be self-reliant and see for themselves if the “American dream” actually works.

Excellent post and excellent comments. I too scratch my head when I think about how U.S. Christians (conservative evangelical mainly) simply tolerate economic injustice and inequality. I mean it´s so ingrained in their subculture and theological paradigm. When I first became a Christian and was living in America I was part of this subculture. This may sound a bit simplistic, but what I have come to believe is that the “American Dream” has been woven ever so tightly into their theology that it is difficult for them to see such injustice staring them straight in the face. It also taints a proper biblical hermeneutic in this area. It is this “get Jesus, be blessed, get financially rich” mentality that is ever so strong (and dangerous). For many years I bought into it all thinking that inequality only existed because people on the lower end of the ladder were lazy. I have come to learn that´s not the case. The situation is much more complicated than that. Why can´t these circles produce a single person with the courage to stand up against such injustices? Good question. I´m inclined to think that because social justice issues are so often brushed aside in this subculture, strong leaders in this area are not being raised up. My personal experience is that it´s also a cultural issue. One dare not stand up and go against the prevailing mindset. If one does, they are basically marginalized and looked at as though they have six heads. The inability to get them to even consider a different way of thinking regarding financial inequality, capitalism, corruption, etc. becomes so frustrating that one gives up. You simply leave the subculture. I know … because it´s is my story. Maybe I should have been stronger and more determined to reform. It wasn´t until I left the conservative American church that I was able to see things in a new light as they pertain to the injustices Vinoth often writes about. It wasn´t until I left that I could, in my own small way, start to make a difference.

Of course America has produced people willing to stand up to injustice and equality! William stringfellow, dan berrigan, Thomas Merton, Dorothy day to scratch the tip of the iceberg.

Please do not slander the whole of the church in the us by assuming we are all conservative evangelical republicans. Such blanket stereotype and lazy caricature do not help anyone.

@Terry,
I also wanted to mention the names of the Americans you had listed as examples of resistance because their writings have had a great influence on my life but realized that Stringfellow and Day died in the 1980s, Merton in the 60s and Berrigan is 93 years old.
Where are the leaders in their 30s and 40s, post-9/11 resistors of empire? Shane Claiborne comes to mind but in my interaction with him, he seems to say all the right things but also wants his books to sell widely. I wonder if Shane has actually read Stringfellow? Of course there is Bill Wylie-Kellermann. So I am sure there are many Americas who have turned their backs on the American dream and are living their discipleship faithfully in the midst of empire.
If you have any other younger American Christian leaders of the Stringfellow and Day type you know of, and who have published books, please do mention their names.

Philip – I am distrustful of the cult of celebrity but I would mention William cavanaugh, ched Myers, Brian and Sylvia keesmat, christian peacemaker teams,not to mention jim wallis and tony campolo. I’m sure there are innumerable other examples on the ground…

Terry and Philip- all these guys are only “celebrities” in their Christian subcultures. Totally unknown and uninfluential in the wider society, including academia and politics. If there are “innumerable other examples” the point is that nobody knows of them.

Please let me know of any American Christian economists, legal scholars, sociologists and political philosophers who are saying and doing what Xu Zhiyong and others in China are saying and doing in the public sphere. (And risking their reputations, security and even lives by doing so).

Also note: I was responding to Bob and Carol’s comments which were referring to “conservative Christians” who, of course, make up the bulk of the American Church (whether RC or evangelical). I wasn’t thinking of people like Cornel West or Jeremy Waldron who would be dismissed as “liberal” by the former.

@Terry,

I do apologize that my post lead you to think I was lumping all American Christians together. That was not my intention. I was mainly talking about conservative evangelicals because they seem to have the most religious influence in American society and because of my own personal experience with them.

Dear Vinoth, I just finished viewing you on the Harvard Veritas Forum 2012. Your response about every faith group making exclusive claims and that such a stand should not be assigned to Christianity alone was very helpful. What struck me was your extending your response to the uniqueness of Jesus and the salvation he offers to all was received with a near dead silence – almost an awkward one from the moderator. Thank you for the stand you took. I had expected the moderator to allow you to respond following Diana to the fellow who read John 14:6. It was wise of you to come back to the topic later [than confronting Diana right after her somewhat confused answer].

Thank you Vinoth for writing on this issue. I think the problem of ‘patrimonial capitalism’ also evidently exists in Thailand. I am aware that some families don’t have enough resources for access a good quality of life, while some super-rich people spend their resources in order to increase be wealthier. There are those who are extremely rich and extremely poor live within the same city. And the gap is more and more wider. How should we react to this problem?

Apisorn, we need to be talking publicly about this (in newspapers, for example) as well as in the churches and universities. And teaching Christians before they take up jobs why God hates injustice and why these gross inequalities are a reflection of idolatry. Living sustainably and comparing our lifestyle with the poor (rather than our professional peers)should be central to our Christian discipleship- and taught as such.

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