bijlinda
11th February 2023, 03:43
Outrageously rich?
Is extreme wealth acceptable, or does it actually encourage inequality? Philosopher Antoon Vandevelde warns against a winner-takes-all society.
The champagne does not flow equally for everyone. In times of crisis, it may pain many people’s eyes and ears to hear the super-rich congratulate themselves at Davos, or see them cavorting in their yachts off the coast of Monaco. But is outrage appropriate here, and should we be hunting down those billionaires? Or is that just simple jealousy, and instead we should applaud those who amass a fortune through hard work? We went to economist and philosopher Antoon Vandevelde and came back with priceless advice.
Thesis #1 | There is nothing at all scandalous about acquiring a fortune through hard work
“If someone works hard, they should also be able to earn more than someone who cuts corners: completely agreed. But I don’t know if they exist, people who have really become rich entirely ‘by their own merit’. After all, extreme wealth is largely, in some societies even up to half, the result of inheritance. There is also the inequality of origins: some come into the world with better genes, in an environment with every opportunity, others grow up in a very difficult home situation. The most determining factor in inequality remains the country in which you were born. Whether you come into the world in a slum, in a failed state, or here in Flanders: of course, you yourself have no part in that.”
“Many people who climb high in our society tend to completely forget how much they were given in life, how lucky they were. They really believe they made it all themselves. Whilst you should actually turn that whole thought around: the higher you are on the social ladder, the more you have probably been given. Often, by the way, that success is the result of teamwork. Then modesty is appropriate. That’s where we should take an example from cyclists: the winner will never forget to thank their teammates.”
“Would it then also mean conversely that you are doing something wrong if you work very hard and do not get rich? All those nurses who work day and night, all those kindergarten teachers and educators on whom our society relies: they only earn a fraction of what a CEO gets. Are they doing something wrong?”
Thesis #2 | Wealth is fine, as long as it does not come at the expense of the poorest
“You could argue that: it doesn’t really matter how rich someone is; what really matters is how the weakest are doing. Fighting poverty is crucial, not inequality per se. That is also what philosopher John Rawls says: inequality is allowed, as long as it works to the maximum advantage of the weakest.”
“But extreme inequality does have very detrimental consequences for society, including the poorest. After all, rich people can use their money to weigh in on areas where it is not at all kosher. As a billionaire, you can bend the press to your will, you can influence politicians. Extreme wealth can endanger democracy. Look at the US, for example: today, you already have to have very deep pockets to run for public office − not only for the presidency, but equally for Congress, and so on.”
“As a millionaire, you can also ‘buy’ a degree for your children. Not literally, of course, but you have the money to send them to a private school in Brussels or an expensive foreign university, or pay for private tutoring for their admission tests. You also have access to better-than-average healthcare in most countries. Ethically, this is problematic: all people should be equal in matters of life and death. Someone should not be excluded on a financial basis from therapies when someone else just throws money at the issue.”
Thesis #3 | A unique talent deserves a unique salary. Sports stars are worth their money, as are CEOs who make decisions that affect thousands of jobs
“We are increasingly living in a winner-takes-all society: a society in which the one winner takes in a disproportionate amount, and the many who are a tad less well-off make do with much less.”
“In football, this is still understandable: it makes a big difference commercially, for a club’s revenue, if it can count Messi amongst its ranks. And if a television channel manages to snare that one star presenter it can make a huge impact on the ratings. And so you get the economic logic that that one topper, that person everyone wants, earns a multiple of the group just below them. In terms of merit on the pitch, however, the difference between Messi and ‘not-quite-Messi’ is small.”
“That’s all well and good in the entertainment sector or in the sports world. But that logic is gradually seeping into the mainstream economic world too, and that’s a problem. Then you get a climate in which CEOs really think: ‘I’m worth my bonus, because I am the only one who can do this job’. Or ‘star surgeons’ start wondering whether they shouldn’t earn much more than their colleagues.”
Thesis #4 | Million-dollar bonuses are perfectly fine if the money does not come from public funds
“If a top salary is paid from taxpayers’ money, as is the case with the public television broadcaster or other public companies, it is of course very delicate, and rightly so. But even when private money is involved, one can ethically question exuberant salaries. Are they justifiable in our society?”
“We have had about 1 per cent economic growth per year in Belgium for years, and that − especially now − is not going to increase any time soon. With that money, we have to face some enormous problems in the coming decades: climate change, the rising cost of healthcare, an ageing population, and so on. So there is no chance that the wages of ordinary working people will rise. And at the same time one category of people would get richer and richer? You’ll never be able to sell that.”
“That kind of inequality also challenges the capitalist system itself. French economist Thomas Piketty also says this: if we soon return to the extreme inequality of the nineteenth century, when the population is no longer as illiterate as it was then, capitalism will lose its legitimacy. A society in which people know how the world works will simply no longer accept that.”
Thesis #5 | There should be a maximum limit on what one can earn
“Some ethicists indeed think so: put a ceiling on what someone can earn. But I am not in favour of that. I have no big problem if one wants to give a footballer or a CEO untold sums of money − as long as one taxes them heavily. Until the late 1970s, early 1980s, the era of Margaret Thatcher and Ronald Reagan, marginal tax rates − what you pay on the portion in the highest income bracket − were enormously high in Britain and the United States. That could go up to eighty, even ninety per cent. Even then, the super-rich kept huge amounts.”
“For me, you can tax extreme incomes extremely. There is also a strong ethical argument for that: for that super-rich person, that last dollar they earn hardly makes a difference, especially compared to the utility of an extra dollar for someone who’s poor.”
“So I have no problem with Lukaku’s salary, as long as a good portion is skimmed by tax. I do have a big problem with sportsmen moving to Monaco to escape that. Such a footballer still gets tax breaks even in Belgium.”
Thesis #6 | The super-rich have a moral duty to give something back to society
“I certainly think so. If you want to make an ethical judgment about wealth, you have to look at two things. One: how did someone earn their fortune? By doing something useful for humanity, or by, say, real estate speculation? And two: what does that person then do with their pennies?”
“Let me just take the most favourable example: someone like Désiré Collen (the Leuven doctor and biotech entrepreneur, ed.). That man has a nose for patents that are tremendously useful for humanity, and has acquired a large income from them. Subsequently he says: ‘If they need me in the Faculty of Medicine, or if a start-up is looking for money, they can call me ... ‘ Unfortunately, a lot more people get rich through frivolous actions, through speculation, through things that have no social benefit at all. And then they spend their money on the most banal things.”
“For years, the World Economic Forum in Davos was a place where rich people came to show their good intentions. But last time a different sound was heard there: ‘Stop flogging us for our wealth.’ You also see this phenomenon in the US: ‘I’m rich, I’m unabashedly rich. So what?’ Fortunately, there are also rich people who realise: ‘I’ve been lucky, and now I want to do something useful for humanity.’ Who go out of their way to help eliminate that one element of misery from of the world: fighting malaria in Africa, or orphan diseases.”
“By the way, you don’t have to be a millionaire to do that. As an emeritus, I receive a nice pension, much higher than someone in the private sector. So I feel it’s my moral duty to give something back. And so now I do things that I am no longer paid for − correction: that are actually paid for by that nice pension.” ● (wv)
Blog KU Leuven, KULeuven Stories (21-12-2022): https://stories.kuleuven.be/en/stories/outrageously-rich
Is extreme wealth acceptable, or does it actually encourage inequality? Philosopher Antoon Vandevelde warns against a winner-takes-all society.
The champagne does not flow equally for everyone. In times of crisis, it may pain many people’s eyes and ears to hear the super-rich congratulate themselves at Davos, or see them cavorting in their yachts off the coast of Monaco. But is outrage appropriate here, and should we be hunting down those billionaires? Or is that just simple jealousy, and instead we should applaud those who amass a fortune through hard work? We went to economist and philosopher Antoon Vandevelde and came back with priceless advice.
Thesis #1 | There is nothing at all scandalous about acquiring a fortune through hard work
“If someone works hard, they should also be able to earn more than someone who cuts corners: completely agreed. But I don’t know if they exist, people who have really become rich entirely ‘by their own merit’. After all, extreme wealth is largely, in some societies even up to half, the result of inheritance. There is also the inequality of origins: some come into the world with better genes, in an environment with every opportunity, others grow up in a very difficult home situation. The most determining factor in inequality remains the country in which you were born. Whether you come into the world in a slum, in a failed state, or here in Flanders: of course, you yourself have no part in that.”
“Many people who climb high in our society tend to completely forget how much they were given in life, how lucky they were. They really believe they made it all themselves. Whilst you should actually turn that whole thought around: the higher you are on the social ladder, the more you have probably been given. Often, by the way, that success is the result of teamwork. Then modesty is appropriate. That’s where we should take an example from cyclists: the winner will never forget to thank their teammates.”
“Would it then also mean conversely that you are doing something wrong if you work very hard and do not get rich? All those nurses who work day and night, all those kindergarten teachers and educators on whom our society relies: they only earn a fraction of what a CEO gets. Are they doing something wrong?”
Thesis #2 | Wealth is fine, as long as it does not come at the expense of the poorest
“You could argue that: it doesn’t really matter how rich someone is; what really matters is how the weakest are doing. Fighting poverty is crucial, not inequality per se. That is also what philosopher John Rawls says: inequality is allowed, as long as it works to the maximum advantage of the weakest.”
“But extreme inequality does have very detrimental consequences for society, including the poorest. After all, rich people can use their money to weigh in on areas where it is not at all kosher. As a billionaire, you can bend the press to your will, you can influence politicians. Extreme wealth can endanger democracy. Look at the US, for example: today, you already have to have very deep pockets to run for public office − not only for the presidency, but equally for Congress, and so on.”
“As a millionaire, you can also ‘buy’ a degree for your children. Not literally, of course, but you have the money to send them to a private school in Brussels or an expensive foreign university, or pay for private tutoring for their admission tests. You also have access to better-than-average healthcare in most countries. Ethically, this is problematic: all people should be equal in matters of life and death. Someone should not be excluded on a financial basis from therapies when someone else just throws money at the issue.”
Thesis #3 | A unique talent deserves a unique salary. Sports stars are worth their money, as are CEOs who make decisions that affect thousands of jobs
“We are increasingly living in a winner-takes-all society: a society in which the one winner takes in a disproportionate amount, and the many who are a tad less well-off make do with much less.”
“In football, this is still understandable: it makes a big difference commercially, for a club’s revenue, if it can count Messi amongst its ranks. And if a television channel manages to snare that one star presenter it can make a huge impact on the ratings. And so you get the economic logic that that one topper, that person everyone wants, earns a multiple of the group just below them. In terms of merit on the pitch, however, the difference between Messi and ‘not-quite-Messi’ is small.”
“That’s all well and good in the entertainment sector or in the sports world. But that logic is gradually seeping into the mainstream economic world too, and that’s a problem. Then you get a climate in which CEOs really think: ‘I’m worth my bonus, because I am the only one who can do this job’. Or ‘star surgeons’ start wondering whether they shouldn’t earn much more than their colleagues.”
Thesis #4 | Million-dollar bonuses are perfectly fine if the money does not come from public funds
“If a top salary is paid from taxpayers’ money, as is the case with the public television broadcaster or other public companies, it is of course very delicate, and rightly so. But even when private money is involved, one can ethically question exuberant salaries. Are they justifiable in our society?”
“We have had about 1 per cent economic growth per year in Belgium for years, and that − especially now − is not going to increase any time soon. With that money, we have to face some enormous problems in the coming decades: climate change, the rising cost of healthcare, an ageing population, and so on. So there is no chance that the wages of ordinary working people will rise. And at the same time one category of people would get richer and richer? You’ll never be able to sell that.”
“That kind of inequality also challenges the capitalist system itself. French economist Thomas Piketty also says this: if we soon return to the extreme inequality of the nineteenth century, when the population is no longer as illiterate as it was then, capitalism will lose its legitimacy. A society in which people know how the world works will simply no longer accept that.”
Thesis #5 | There should be a maximum limit on what one can earn
“Some ethicists indeed think so: put a ceiling on what someone can earn. But I am not in favour of that. I have no big problem if one wants to give a footballer or a CEO untold sums of money − as long as one taxes them heavily. Until the late 1970s, early 1980s, the era of Margaret Thatcher and Ronald Reagan, marginal tax rates − what you pay on the portion in the highest income bracket − were enormously high in Britain and the United States. That could go up to eighty, even ninety per cent. Even then, the super-rich kept huge amounts.”
“For me, you can tax extreme incomes extremely. There is also a strong ethical argument for that: for that super-rich person, that last dollar they earn hardly makes a difference, especially compared to the utility of an extra dollar for someone who’s poor.”
“So I have no problem with Lukaku’s salary, as long as a good portion is skimmed by tax. I do have a big problem with sportsmen moving to Monaco to escape that. Such a footballer still gets tax breaks even in Belgium.”
Thesis #6 | The super-rich have a moral duty to give something back to society
“I certainly think so. If you want to make an ethical judgment about wealth, you have to look at two things. One: how did someone earn their fortune? By doing something useful for humanity, or by, say, real estate speculation? And two: what does that person then do with their pennies?”
“Let me just take the most favourable example: someone like Désiré Collen (the Leuven doctor and biotech entrepreneur, ed.). That man has a nose for patents that are tremendously useful for humanity, and has acquired a large income from them. Subsequently he says: ‘If they need me in the Faculty of Medicine, or if a start-up is looking for money, they can call me ... ‘ Unfortunately, a lot more people get rich through frivolous actions, through speculation, through things that have no social benefit at all. And then they spend their money on the most banal things.”
“For years, the World Economic Forum in Davos was a place where rich people came to show their good intentions. But last time a different sound was heard there: ‘Stop flogging us for our wealth.’ You also see this phenomenon in the US: ‘I’m rich, I’m unabashedly rich. So what?’ Fortunately, there are also rich people who realise: ‘I’ve been lucky, and now I want to do something useful for humanity.’ Who go out of their way to help eliminate that one element of misery from of the world: fighting malaria in Africa, or orphan diseases.”
“By the way, you don’t have to be a millionaire to do that. As an emeritus, I receive a nice pension, much higher than someone in the private sector. So I feel it’s my moral duty to give something back. And so now I do things that I am no longer paid for − correction: that are actually paid for by that nice pension.” ● (wv)
Blog KU Leuven, KULeuven Stories (21-12-2022): https://stories.kuleuven.be/en/stories/outrageously-rich