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Saturday, September 24, 2011

Book Review: The Trouble with Billionaires by Linda McQuaig and Neil Brooks « Earnest and Jest

Book Review: The Trouble with Billionaires by Linda McQuaig and Neil Brooks « Earnest and Jest

Book Review:

Posted on March 2, 2011 by 

Have you ever been in an argument with an economic libertarian? One of the most predictable things is that sooner or later they will paraphrase Margaret Thatcher:
“Socialist governments traditionally do make a financial mess. They [socialists] always run out of other people’s money. It’s quite a characteristic of them.”
I think that economic libertarians see this quote as a kind of anti-socialist trump card. Never mind that the woman who said it used that logic to crush labour unions and usher in an era of privatization that is only now starting to be opposed; modern-day Thatcherites see any appropriation of “other people’s money” to be not just bad fiscal policy but ethically wrong, regardless of the potential good of the public services that said money could potentially buy.
The real strength of The Trouble with Billionaires is that it effectively shreds this claim on every level. McQuaig and Brooks bring the best in hard statistics together with convincing ethical analysis to show not only that countries which place greater financial constraints on their upper class tend to have generally better quality of life, but also that the upper class really has no good ethical reason to demand that they be able to hang onto their wealth at the expense of society at large.
I picked up this book at a book tour event in Halifax last fall, and so I had the benefit of Neil Brooks’ speech to further illuminate the issues as I read it. He said that his co-author had absolutely ruled out the inclusion of any lists or graphs in the book. I found this unfortunate, because his seven premises, which he presented at the book tour event but was unable to explicitly include in the book itself, are quite compelling:
  1. Economic equality matters. Brooks and McQuaig bring up a whole series of compelling statistics to demonstrate that life in nations with a lower index of inequality is better in nearly every way. Most amazingly: There is an extremely well-established correlation between index of inequality and average height. There is a reason that Swedes, Danes and Norwegians have a reputation for height and it has more to do with their economic policies than with their viking heritage. If you live in a country with a lot of billionaires, you’re more likely to be a little guy like me.
  2. Inequality has increased dramatically. The statistics here are absolutely terrifying, but I’ll leave you to look them up yourself (or read the book!)
  3. This increase is the result of political decisions. Specifically, political decisions made during the academic reign of Milton Friedman and the political reigns of Ronald Reagan and the aforementioned Margaret Thatcher.
  4. The rich do not deserve their income or wealth. This is, in my opinion, the most important and effective premise of the book.
  5. Inequality has huge social and economic costs. This is similar to the first point. To be honest, I’m not entirely sure why it is made distinct in this list. Maybe because it bears repeating. From a quality of life perspective, economic inequality is a really really bad thing.
  6. The pursuit of social justice is consistent with high levels of material well-being. Material well-being is actually more strongly correlated with equality than it is with more traditional economic measures like growth or Gross Domestic Product. Social justice policies, despite their supposedly detrimental economic effects, are still conducive of general well-being.
  7. The Tax system is an appropriate and necessary policy instrument for reducing the economic dominance of the rich. Aside from a few practical concerns (more on those later), this follows pretty logically from the preceding premises.
I think that point number three is the one that is most effectively argued in this book. McQuaig and Brooks go over each of the ethical arguments used to defend our present state of economic inequality, and tear each one to shreds in turn. The first one they consider is the contention that billionaires repay society through innovation and initiative which benefits us all, and for which there must be a large financial incentive. This is destroyed when the case of Bill Gates, who profited most handsomely off the computer revolution without actually contributing to it in any meaningful way, is recounted. Once this is done, the rest of their work is fairly easy. Brooks and McQuaig go through a series of ethical arguments, most of which are variations on the somewhat whiny theme of “But I earned it fair and square!”. Even if the system were fair and square, they argue, there is no ethical reason why those who have the skills or, more importantly, luck, to amass huge fortunes should be allowed to do it at the expense of those who are not so blessed.
These arguments are especially potent when applied to the ubiquitously cited case of the Wall Street sub prime mortgage peddlers whose specter seems to haunt every nonfiction book about economics from the past few years. I was admittedly on their side from the beginning, but I can attest that by this point in the book I was fully on board their argument. They run into a little bit of a roadblock on one practical point, however when they discuss the inevitable counter that if we overtax the rich, they will simply flee the country and take all their money with them. Brooks and McQuaig argue that we should let them do no such thing, but the mechanism proposed is a bit unclear. They suggest a kind of international system, modeled after passports, for the tracking of currency. I failed to see how this would stop the Cayman Islands from opting out and continuing to undercut all the other countries that need the taxes of the Cayman Islands’ current inhabitants. Maybe I’m just not well-versed enough in the relevant tax law to understand their proposal, but this is a popular book. They could have made it more clear.
The second half of the book is mainly a catalog of the various kinds of harm that large inequality inflicts on society. They bring up a lot of compelling evidence about how billionaires are bad for both your health and democracy, but these are all less dramatic and somewhat disorganized points. Despite the valid arguments presented in its second half, the book peaks early with its devastating critique of Thatcher’s claim.
I have reviewed one other book on this blog: Economyths by David Orrell. Any liberal who wants to arm themselves against the patronizing popular economics of libertarians should read both. Any libertarian who earnestly wants to understand their opposition should read both. While Orrell takes apart the supposed objectively scientific grounding of neoliberal policy, Brooks and McQuaig demolish its ethical foundations. Taken together, the books make an extremely compelling case that socialists are not actually using other peoples’ money, they are in fact using money that rightfully belongs to us all. Read this book.

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