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Winners take all

An elite charade

Anand Giridharadas, '03

Anand Giridharadas, ’03 (Wikipedia)

While tweeting about the 2019 World Economic Forum last month, former New York Times columnist Anand Giridharadas, BA  ’03, seems to have coined a novel term in the global economic lexicon: Davosplaining.

The New York University visiting scholar and NBC political analyst recently released Winners Take All: The Elite Charade of Changing the World (Knopf Doubleday Publishing Group, 2018), a book that calls into question “an idea that has become part of the air we breathe,” according to The Washington Post.

Giridharadas takes on the world’s monied “philanthro-capitalists” in the book and contends altruistic elites often do harm even when they appear to be doing good.

“They’re causing by operational daylight the problems they seek to solve by philanthropic moonlight,” he says.

Giridharadas’ thesis likely made for spirited debate among any of the 3,000 economists, world leaders, policymakers, and CEOs who picked up his book en route to the economic confab in Switzerland. In Davos, Giridharadas says, the elite titans “fight on both sides of a war” as they discuss  Africa-saving, charity, and inequality. On Jan. 23 he tweeted that the nature of the economic forum “elevates them from mere businesspeople to sages. Then they use that loftier platform to stealth-lobby against policies that help others, but hurt them.”

Read: Davosplaining.

In the following Q&A, Michigan Today contributor Tom Kertscher invites Giridharadas to elaborate on five excerpts from Winners Take All: The Elite Charade of Changing the World. 

Excerpt: “The winners of our age must be challenged to do more good. But never, ever tell them to do less harm.’”

Michigan Today: You seem to believe that leaders/the wealthy may be doing more harm than good with their philanthropy, to the point of being predatory at times. What are some ways they are doing harm?

Giridharadas: The winners of our age, in many cases, make their money from business models that are inherently harm-doing. The Sackler family made a huge fortune selling opioids, which becomes the seed of the opioid crisis, the metastasizing phenomenon that, I think, has claimed some 200,000 lives. Then you have the banks that caused the financial crisis in 2008. And then at the subtlest level, but I think very importantly, many of the winners of our age are beneficiaries of, and complicit in, an economic order, a set of social arrangements, that is guaranteed to shut most Americans out of the so-called American dream.

Excerpt: “For when elites assume leadership of social change, they are able to reshape what social change is — above all, to present it as something that should never threaten winners.”

MT: What are some examples of elites appearing to move to make social change, only for things to remain as they are and for winners not to be threatened?

Winners take all book cover

(Knopf Doubleday Publishing Group, 2018.)

AG: David Rubenstein is one of the founders of the Carlyle Group, a private equity shop in Washington, D.C. He often buys historic documents and then (loans) them to the U.S. government — the 13th Amendment, the Magna Carta, those kind of things. And he says the government just doesn’t have the money it used to have, so people like him have to step up.

One of the things that Rubenstein doesn’t talk about is the fact that he is one of the reasons the government doesn’t have the money it used to have. He and his firm and the industry have lobbied for something called the carried-interest loophole, which is a tax benefit and a sweet deal for hedge-fund guys and private-equity people and those who make their money from investment income. And that loophole, by one estimate in The New York Times, costs the government $18 billion a year.

A lot of rich folks in our age are fighting on both sides of a war. They’re causing by operational daylight the problems they seek to solve by philanthropic moonlight. And they are building, maintaining, and clinging to a set of social arrangements that will predictably, reliably, and foreseeably cause massive exclusion.

Excerpt: “When the fruits of change have fallen on the United States in recent decades, the very fortunate have basketed almost all of them.”

MT: Is this a reference to inequality in wealth and income in America, or are the very fortunate getting a disproportionate share of other fruits of change?

AG: The rain of progress, of the future, falls on every society. And I want to raise the question of reframing inequality as the question of who harvests the rainwater. And so, if you look at society that way, you start to see that inequality is not just about a gap of some having more than others. Inequality is about the theft of progress, the theft of the future.

Amazing things have happened in the ability to teach students, but our kids are no better educated. Amazing things have happened in biomedical research, but our lifespan is down. The first set of things is innovation. The second set of things is progress, if progress is defined as most people’s lives getting better. And what I want to suggest is one of the consequences of inequality — but in some ways the meaning of inequality — is that you start to have a breakdown between the innovation and the progress. In a society that is so unequal as ours, innovation has stopped translating into progress.

Excerpt: “The top 10 percent of humanity has come to hold 90 percent of the planet’s wealth. It is no wonder that the American voting public — like other publics around the world — has turned more resentful and suspicious in recent years.”

MT: Are you arguing for a redistribution of wealth — and if so, how would you do it — or are you seeking some other type of change?

AG: I think broadly, we need a redistribution of resources. We also need more fundamentally a redistribution of power. There is capital supremacy, which is that those who make money from money, and hold great resources, and are born of great resources, essentially have come to monopolize America and make America work for them.

Dismantling capital supremacy is going to be complicated; there’s not an easy solution that’s immediate. I think it will involve the kinds of things like higher taxes on wealthy people, more regulation on a lot of businesses that essentially dump harm into our laps, whether that be Facebook or chemical companies or Exxon Mobil. I think it’s going to require ending the manifest cruelty of a public education system where public schools are funded according to the value of mommy or daddy’s home.

Excerpt: “Are we ready to call participatory democracy a failure, and to declare these other, private forms of change-making the new way forward?”

MT: Are you saying that “ordinary” people, rather than just the elite, should be more involved in making change — and, if so, what should ordinary people be doing?

AG: There is a long history of making extraordinary change in this country, real change, and that history is a history of movement from below demanding power. There’s that old (Frederick Douglass) quote about power concedes nothing. You have to take power; you have to demand power. If you think about how women got to vote, or how we ended slavery in this country; if you think about how we got children out of factories and how we had a New Deal and all of these things, they were the mobilization of citizens. It’s such a crucial part of making change happen because it is only through that kind of mobilization that you muster the power to counteract entrenched power.

That heritage has been lost in what I can call “the Age of Markets,” because the Age of Markets basically told young people that if you want to change the world, you should start a cupcake company that gives back, or join an impact investment fund, or go into consulting at McKinsey or investment banking at Goldman Sachs. In other words, change the world by getting smart about business. That rhetoric and that story has distracted young people from the real work of real change.

Comments

  1. Georgia Hale - 1987

    Thank you for writing what has been on my heart for quite some time.

    Reply

  2. Brock Nigg - 1989 bse-ME

    Power is manifest in an adherence to responsible thinking and actions. Work is done first in oneself and then collectively. Not collectively and then re-distributed to individuals.
    Compassion is powerful. Grit and persevere CRE are powerful. Mindfulness is powerful.
    Pity and guilt are the polar opposite of these ideas. Redistribution is a short circuited way of thinking.
    Do the work. Persist and live a more satisfying, meaningful life. This article is not useful other than to hopefully expose the sophomoric understanding these kind of ideas encourage.

    Reply

    • Ruth (Schols) Harper - 1964 AB, Teacher certification

      I am in basic agreement with what I believe you are saying: Do right and live well! Grit, I get. But “persevere CRE”? The acronym is unfamiliar to me. I might have said “grit and perseverance,” as attributes for getting ahead. Undoubtedly some people are gaming the current system, but that system is the problem: The “Federal Reserve,” effective 1915, unconstitutionally allows the Fed to print instead of coining (and not from base metals except as a means to small change) commodity money. Gold coins were forbidden for use by ordinary Americans in 1933 by FDR, while foreign debtors could still draw gold from our treasury until Nixon in August 1971 stopped that practice. Johnson (1965) stopped coinage of silver, thus eliminating the dollar (1798 US Code definition of 371.25 grains of silver, 90 fine or 90% pure), so now people habitually borrow [no real value] at APRs of 3-6%, or up to about 29% if ever late with one credit-card payment! As there is no “lawful money of account” in circulation, we are effectively a bankrupt people living on hope and accepting persistent theft of our assets through inflation and taxation!

      Reply

  3. Barbara Nagler - 1977

    Excellent article/interview!

    Something very fundamental will have to change: the skeleton of all this is what used to be called usury, but which became the very definition of banking about 800 years ago in a corner of Europe, then spread by degrees throughout that continent and the rest of the world.

    Compound interest is out of touch with reality (physical, environmental, and service-oriented reality). It cannot be otherwise. It demands endless growth, and periodically crashes. No one is secure at any level. It needs to be faced directly. It’s like a vehicle that has only been created to go forward and crash. Maybe some of the students who have to deal with the loan crisis will be motivated to work toward a different basis for exchange; they’re getting first-hand experience of the results.

    It’s been the basis of economics so long that it’s hard to see just how simple the problem is.
    Under that “base” is another one: dominator culture. The fear that generates the need for a small group to maintain precarious control. It’s what created the system in the first place.

    We need to understand that everyone is afraid, and work toward alleviating that and creating trust- and hand in hand with that, come up with a system that is aligned with the realities of what people do for each other and what it is wise to extract from other animals/minerals/vegetables for the vitality and
    benefit of the whole.

    Reply

  4. Jim Mott - 1985 MFA

    RE comment #2 here: This is not about pity, it’s about conscience. And guilt is a useful emotion for the guilty. I was bought up with the understanding that increased privilege brings increased responsibility to see that others are treated fairly, have dignity and a real chance to share equally in society’s benefits. The current dominant ethos is that privilege brings more privilege and the right to secure control over the system in ways that promote the continued concentration of wealth, power and advantage. The greedy rise to the top and manipulate the system to increasingly benefit themselves, or turn a blind eye to the way the status quo reinforces structural disadvantages for the less privileged. I agree about grit and compassion. But compassion is nothing if it doesn’t translate to soul searching and work for justice, i.e., fairer underlying conditions, rules for the game where everyone is truly valued and actually has a chance. Mindfulness is great, but not if it’s just a hobby for feeling good about the present moment while perpetuating a bad system. Just, for example, look at the history of the Koch brothers if you doubt the system is highly and aggressively rigged.

    Reply

  5. Brian Morr - 1979

    “The Arms of Krupp” comes to mind. The super wealthy have always made money off of funding both side of an issue. Hedge funds are no different. Selling of carbon credits is another. Just some random thoughts. Go Blue 🏀

    Reply

  6. Chris Campbell - Rackham '72; Law '75

    When I was a senior in high school, the ratio of CEO pay to average worker pay in the U.S. was about 30:1. Now it’s about 350:1. In the 1960s, George Romney was earning $225,000 and turned down an annual bonus because he felt it was not appropriate for an executive to earn that much. (The NYT also noted that the marginal tax rate of 91% then meant he would have received little of it anyway). Now, in my lifetime, the distributions of both income and wealth have skewed badly, and the inclinations of the wealthy toward accumulation have changed.

    Private philanthropy can produce some wonders. I used to sit in the U-M Law Library reading room and marvel at the magnificence of it, something that would not have been likely at a public university had it not been a gift. But it’s clear that we have come to over-rely on benevolent impulses of very rich people and to discount the value of public decision-making about how our national wealth is distributed and used.

    I’ll need to get Mr. Giridharadas’s book and consider solutions for out neo-Gilded Age economy.

    Chris Campbell, MA ’72, JD ’75

    Reply

  7. John Lehman - 1976

    Very good thoughts. There are three issues of federal taxation that help to create the economic inequality described. One is the carried-interest provision that Mr. Giridharadas notes. The second is the reduced tax rate on capital gains that applies on investments held for only 12 months, which supports speculation not true investment.

    The third is the death tax give-away: At death, the first $5.5 million of an estate is estate-tax free , per individual, to one’s heirs ($11 million for a couple). In addition to that, all of the capital gain in the estate is completely untaxed, if the total estate is smaller than these threshholds. The effect is that large holdings pass between generations income tax free.
    John Lehman BSE ’76

    Reply

  8. Madhu Gupta - 1968, 1972

    Over generalized assertions based on a few cited examples which are selectively picked and interpreted with a socialist perspective. There are many more counterexamples to his claims, for example, that philanthropy is being used to protect and perpetuate the power and financial standing of the philanthropists. I do not see Howard Hughes Foundation promoting machine tools, oil drilling, and warfare technology (the source of its money), or Bill Gates Foundation seeking to block the broader adoption of open-source software (because its money was made from proprietary software), and hundreds of other such examples of philanthropy. If Giridharadas had attended U.M. thirty years earlier (during the late 1960s — the years of Vietnam war protests, Timothy Leary, and SDS) he would have had the company of a lot of like-minded flower children, who saw sinister motives lurking behind the established institutions, and their overthrow as the only way forward for change-making.

    Reply

  9. Ruth (Schols) Harper - 1964 AB, Teacher certification

    Education has been systematically and visibly “dumbed down” since at least the 1940s with the widespread introduction of “look, say” and basal readers (limited vocabulary defining grade levels) replacing the logic of learning phonics along with syllables, diacritical marks, Greek and Latin roots, prefixes, suffixes, and all the rest.
    Many of us still thrived because we learned a great deal at home, often from older siblings and texts that they or even our parents had used, the Elson-Gray Readers, McGuffey’s Eclectic Readers, et cetera. We were taught not only to use dictionaries, but to love them! I recall heading into school with great anticipation only to be crushed with the utterly boring Dick and Jane books “See Dick run. Run, Dick, run. Run, run, run.” Bad enough! But then followed with “See Jane…,” and, “See Sally …”! Poor Mrs. Feenstra had no clue! Unimaginative, she inflicted us with school-provided books.
    Fortunately for me, and 46 others “in my room,” our elderly 2nd grade teacher, Mrs, Knowlton, had saved sets of older readers with interesting titles like “Down by the River Road” and characters such as “Patches,” books we could read when we’d finished our “Think and Do” or Penmanship pages. When I requested Tom Sawyer from the library to read at home, it wasn’t in, so she brought Huck Finn instead. She taught us the meaning of “monotheism” before introducing ancient mythology.
    She had creative ways with arithmetic, too, so we competed to finish and report to her desk where, if we had all correct solutions, we could proceed to the art cupboard, take a sheet of Manilla paper, return to our desks, and draw whatever we wished! Eventually, she allowed four of us, generally the first finished, to have the cork board strip above the blackboard in the rear of the classroom to make a panoramic mural! We coordinated our lake and landcapes by marking heights of hills or water levels at contiguous edges, before drawing and we took turns using the step-stool to hang our creations. So she didn’t have difficulties that duller teachers would have had with bright youngsters who cause trouble from sheer boredom! She offered wings, so we learned to fly!
    She also gave dictated speed tests as we became more proficient. Such early incentives and practice, combined with later work from other great teachers at Grand Rapids (Walker, District No. 4) Oakleigh School led to my getting a perfect score on the math section of the PSAT and attendant scholarship opportunities. In the years since, I’ve really learned to appreciate the Oakleigh difference: Oakleigh was a true North West Ordinance of 1787 school: “Religion, morality, and knowledge being necessary to good government and the happiness of mankind, schools and the means of education shall forever be encouraged.”
    Education was encouraged, not micro-managed, and when we did — on rare occasions — take standardized tests, the high scores came in from the Oakleigh kids! But the real advantages we had were a country that ran on commodity-backed money, Judeo-Christian ethics, intact families, including stay-at-home mothers who civilized us, made real food for us, and taught us personal responsibility!

    Reply

  10. Laura Mueller - 1987 LS&A Economics

    The author of “Winners Take All” and all those interested in their philanthropic efforts leading to true progress and positive impacts, would be well served to read Dambisa Moyo’s “ Dead Aid” about “Why aid is not working and how there is a better way for Africa”. Published in 2009, Ms Moyo makes a compelling argument for how it can done for more positive outcomes. Turns out governments have similar short comings to individual elites.
    Growing up in Michigan in the 70s and 80s I never realized how important the presence of middle class was until I lived in other states with much smaller middle classes or historically much smaller middle classes. However, massive income redistribution never works out so well for a society. If I as a teacher take the highest grade earners’ test scores and give them to the lowest grade earners in my class, the net result over time is no one is incentivized to do much work and scores overall will drop in my class.
    I totally concur with the author’s sentiments about the environment at U of M…Go Blue!

    Reply

  11. Catherine Badgley - current faculty

    Thank you for showing that the emperor (elites) has no clothes (only self interest at heart). Great interview and I have read some of your op-eds in The Guardian. Bravo for your insights and your articulate way of expressing them.

    Reply

  12. Marc Schiller - 1974

    An interesting set of conclusions, with some merit. But it seems Mr. Giridharadas left out some very important players — government elites. They are equally, if not more, culpable than the business elites. Indeed, where I depart from the author is on this key point — the failure is not from “the Age of Markets”, but the perversion of free markets by crony capitalists, who have been enabled, encouraged and driven by social-engineering government elites.

    Reply

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