What's Tony Thinking

The Broken Covenant


Here we are on the edge of another Thanksgiving. There will be essays on gratitude — who knows maybe one from me? But the reflection that struck home for me came from an Italian economic historian on the heedless super rich.

Under the impress of Christianity, there has long been a covenant between the wealthy and the societies in which they make their wealth. The idea was that the wealthy gave back to others, particularly in times of social crisis. This was only partly altruistic. It was also to keep revolution at bay. Here’s Guido Alfani writing on “What Happens When the Super Rich Are This Selfish?”

“Throughout much of the Western world’s history, the wealthiest have been viewed in their communities as a potentially unfavorable presence, and they have attempted to allay this sentiment by using their riches to support their societies in times of crises like plagues, famines or wars.

“This symbiotic relationship no longer exists. Today’s rich, their wealth largely preserved through the Great Recession and the Covid-19 pandemic, have opposed reforms aimed at tapping their resources to fund mitigation policies of all kinds. This is a historically exceptional development. Helping foot the bill of major crises has long been the main social function attributed to the rich by Western culture.”

What about the largesse directed by super rich toward their own charitable foundations, like the Seattle-based Gates Foundation. What it does on global health is impressive. And it has barely made a dent in the fortunes of Bill Gates. Moreover, we have moved into an era where the super-rich gain disproportionate influence because they are able, with low taxation, to direct their giving to foundations, usually named after them. At the same as they are reducing their own tax liabilities, they heighten their public recognition and status.

Or consider Jeff Bezos, who recently announced his move from Seattle to Florida. Is it only a coincidence that Bezos is moving out of Washington as the State implements a capital-gains tax targeting the super rich? Then there are the Elon Musk’s of the world whose wealth grants them huge influence on global political matters. Musk froze Ukrainian access to satellites needed for reconnaissance. And X (Twitter) has been a ready source for disinformation and anti-semitic tropes since the Israel-Hamas began.

A lot of the focus of the left has moved to race and gender, while matters of class and income disparity go unattended. True there is, as for example the ways that black home ownership has been crippled, often an intersection between race and class. But if Alfani is correct, the rich have largely been untouched by the recent social crises of the Great Recession and the global pandemic. Alfani asks the pertinent question:

” . . . [W]e should also consider whether the exceptional resilience of the rich to recent crises has been obtained in such a way as to make society as a whole less resilient — for the rich, protecting their fortunes from crises also involves protecting them from extra taxation, thus stripping public institutions of resources that could have been used for stronger mitigation policies, including those aimed at abating the sufferings (economic or otherwise) of the poorer strata. To some degree, governments compensated for this by expanding the public debt, which raises the question of who will repay it. Given the fact that many Western fiscal systems do not burden their wealthy to the same degree they once did, it seems probable that the bill for the Covid-19 crisis will weigh on the shoulders of the rich to an extremely low degree relative to the burden during past crises.” (emphasis added)

The signs of a less resilient society are everywhere. Public universities in the U.S. have been steadily defunded, the cost being shifted to students and their families, who already support them with their taxes. Imagine the public schools charging tuition fees! The pandemic showed how woefully inadequate the public health system is in the U.S., while health care premiums eat ever larger shares of middle-class incomes. Those who serve our cities in public roles — teachers, police, emergency workers — cannot afford to live in those same cities. Housing for the wealthy continues to be built apace, while homelessness only grows and no one any longer speaks of “starter homes.”

Of late, many commentators have remarked on the disconnect between the healthy state of the American economy and the sour state of the American voter. Could it be, as Alfani suggests, that as the bill(s) have come due for Covid-19 crisis the bills aren’t being shared through equitable taxation or by those who can afford it, but billed those who cannot afford it?


Categories: Uncategorized