Wealth redistribution?

During a walk in the forest, I listened to a recent episode of the Oxford-style debate series of Intelligence². Oxford-style means that the position of the audience is registered before and after the debate, and the side that has gained the most percentage points, wins the debate.)

The proposition was simple: Is it time for wealth redistribution? Unfortunately, and typically in debates like this, the debaters interpreted this differently. Over the last decade, the question has been asked more urgently every year, and with every increase of Bezos’ billions. Most people agreed on Piketty’s structural analysis of “Capital in the 20th century”, and redistribution seemed to be a red scare only in the eyes of heavily ideological anti-socialists.

The debaters were familiar to me, and I liked ‘my’ team on the left: Yannis Varoufakis and Robert Reich, both of whom are, I think, keen intellectuals with no lack of self-deprecating humor. They argued in favor of the motion. Reich and Varoufakis made it clear that merit ought to be rewarded, even excessively so. They don’t have an issue with that (that was the strawperson the other side of the debate repeatedly knocked down).

But money begets money. Wealth breeds – rendered in Varoufakis’ austere voice, that stuck with me. We are not taking down the successful people, as Larry Summers argued, when we redistribute ‘their’ accumulated wealth.

The most important argument in favor of wealth redistribution was the damage extreme inequality does to democracy. This was also the point where the debate lacked intellectual rigor and ideological courage on the part of the libertarians. The middle class is beholden to populists, Reich aptly remarked, that make them blame the lower class. Of course, these populists enjoy strong support of the wealthy elite. Their money should be removed from politics, and it would be naive to think that can be done without actually taking it away from them and investing it in the public space.

The debate merits a second round about the value of democracy itself. Simply put: Do we need to democratically legitimize the disowning of wealth, in order to heal the democratic process? Can we trust a democracy that has already been ‘infested’ with big money interests, or should be temporarily suspend it in order to rebuild a functioning rule by and for the people later on?

These are simplistic questions of political science 101, but we need to address them – because the populists will. In Hungary and Brazil we already saw something like the formal suspension of democracy. In Trump’s USA it seems like it’s about to happen.

Both sides agreed that democracy is unquestionable both as a value and a political practice. Yet the answer to the proposition was not “let the people decide”. Should it be?

The ideology that makes the people believe that Bezos’ wealth is Bezos’ business, and none of ours, can be compared to a casino. One player is excessively successful. Intuitively, we support him: we are animals with a rich imagination and we depict ourselves in that player’s chair. When we find out that he is good friends with the casino owner, we shrug. We would be too, if we were sitting in that chair. If we would learn about a scam, we would give the player the benefit of the doubt – up to a certain point. Our abhorrence of free-riders appears to be hard-coded too, so once the player falls, he falls hard (Epstein hard). We inflate their personal worth because we are them, vicariously, in our upward-facing middle class existence.

That is the emotion Larry Summers knew to evoke very well – and that is why his side won the debate by a large margin. Outrage against the super rich only comes when people are fully convinced (persuaded!) that they play foul, which is increasingly hard to do as they own the media and dictate the very definition of foul play. The structural decoupling of merit and wealth requires a rethinking of the American, and indeed the Western mind.