In the course of browsing the interwebs, I’ve again found an
article that I think is worth responding to, though this one is a great deal
more thought provoking and better written than my previous target. It’s a sort
of open memo from Nick Hanauer, an ultra-rich investor/businessman, directed to
his fellow multimillionaires and billionaires. If you haven’t yet read it,
I recommend it—it’s certainly interesting enough. Hanauer’s thesis is basically
that for the rich to continue to enjoy their prosperity, a strong middle class
must exist. Fair enough.
Unfortunately, though, we end up being reminded that the
mythical super-rich guy looking out for the less fortunate is a pretty rare
species, and Hanauer is not really a member of it. He might think he is, but
that image doesn’t hold up after a close reading of his article. He admits
early on,
“I’m not the smartest
guy you’ve ever met, or the hardest-working. I was a mediocre student. I’m not
technical at all—I can’t write a word of code.” Yet he’s not trying to overhaul
the economic system that allows people like him to get obscenely rich because
bets they make on companies pay off—quite the contrary; he’s trying to preserve
the wealth and power of those like him. I suppose that’s understandable—who
would really surrender that sort of advantage willingly? But it’s not exactly
doing much good for the rest of us.
Hanauer’s support for
reforming the current capitalist system is based on fear of rebellion and/or
revolution (not an unfounded one, at that). But that his fear is ultimately
self-interested is a fact he’d like to gloss over, as he talks about how the
rich can “help the 99 percent and preempt the revolutionaries and crazies”—the
“crazies” being, presumably, anyone who calls for some fundamental challenge to
the system of corporate capitalism we’ve all come to know and Nick Hanauer and
his friends have come to love. Interesting that helping the 99 percent involves
preempting the people who most fervently champion their cause. Of course, in
Hanauer’s view abandoning corporate capitalism would probably mean the downfall
of the United States or something like that, because clearly allowing immense
concentration of power and wealth in the hands of a few is best for everyone
(as long as workers are paid enough to keep them from revolting, of course).
Hanauer then goes on
to praise Henry Ford, observing correctly that his high wage policy allowed his
workers to buy the cars they made, fueling his business (no pun intended). Left
unsaid, unsurprisingly, is how Ford had hired goons use violence against labor
activists, and considered unionization the “greatest disappointment” of his
business. Naturally, these facts would make Hanauer’s talk of how trickle-down
economics has “so screwed the American middle class” seem slightly less than
sincere.
Hanauer goes out of
his way to make the fifteen-dollar-an-hour minimum wage he proposed in an older
article seem like some radical new idea, despite the fact that fifteen dollars
is actually about two-thirds of what the minimum wage would be if it had kept
up with productivity over the years. His case for raising the minimum is
convincing enough, but it’s laced with a pretty substantial amount of
intellectual dishonesty, as Hanauer talks about how “the capitalists” have always
been opposed to higher wages—unlike Henry Ford and Nick Hanauer, who are
clearly not part of that class at all, since they’re on your side and want higher wages. They’re practically socialists,
even (but of course they’re not socialists because capitalism is the only
economic system that works, obviously). In talking about companies that set a
“bad example” by paying their employees low wages, Hanauer undermines his point
even further when he notes that two offenders, Wal-Mart and McDonald’s,
“thankfully” have said they wouldn’t oppose a minimum wage hike. So where are
“the capitalists” that Nick Hanauer is talking about? It’s almost like he made
them up so he could look pro-worker in comparison—but that’s crazy.
After talking about
how many Wal-Mart employees are so poor that they have to depend on government
programs, Hanauer comments that “Wal-Mart won’t (and shouldn’t) volunteer to
pay its workers more than their competitors.” Why they “shouldn’t” isn’t
explained, and that idea is particularly baffling when one considers how shrewd
Henry Ford was to pay his workers higher, by Hanauer’s own account (among
others). In fact, the sentence I quoted comes immediately after he makes the
same point, essentially. Hanauer goes from being a champion of “middle-out
economics” to an apologist for underpaying workers and then back again, all
within a paragraph. Apparently even the façade of being pro-worker is too hard
to maintain.
Still harping on his
fifteen dollar minimum wage proposal as if it’s some magic cure for every ill
of modern capitalism, Hanauer talks about how many government programs would be
unnecessary with it: “If people are getting $15 an hour or more, they don’t
need food stamps…rent assistance. They don’t need you and me to pay for their
medical care.” A person working a forty-hour week at a fifteen-dollar wage
would make around 31k a year (not taking taxes into account). Based on the
Economic Policy Institute’s Family Budget Calculator, a family of four in a major city would quite possibly barely be kept out of poverty, assuming both parents made this amount. Single
parents wouldn’t be so lucky. But these facts—which take a few minutes of
research to ascertain—don’t stop Hanauer from talking as if his minimum wage
proposal would virtually eliminate the need for welfare programs, as he
cheerfully adds that the higher wages would also help reduce the deficit
through payroll and sales taxes (two taxes that overwhelmingly hit the poor).
Hanauer faults the
Democrats for failing to emphasize the economic growth policies like his would
create, claiming that they’ve used social justice as their talking point,
allowing the Republicans to promise growth and win. This claim, like his
minimum wage claims, is pretty out of touch with reality. In 2012, Barack Obama
won reelection over Mitt Romney—who promised better economic growth than had
been seen under Obama—by appealing to the desire for a more fair economy. In
the nineties, Bill Clinton had similar success in talking about how he felt the
pain of those struggling to pay their bills. In contrast, George W. Bush won
reelection after a campaign mostly focusing on foreign policy. Perhaps
Hanauer’s understanding is approximately what happened in the Reagan years, but
the American people have long ago begun to recognize the economy isn’t serving
them. Trying to shift the debate to economic growth is doing them a disservice
at this point.
In wrapping up his
argument, Hanauer asserts that capitalism is not the problem, but actually “the
greatest social technology ever invented to create prosperity in human
societies.” But why shouldn’t we blame capitalism—using that term to refer to
the state-corporate capitalism we’ve had for many decades—for the problems we
see? Do we really have to settle for a system that lets people get filthy rich
off of successful investments, while we have inner cities rank with poverty and
violence? “Capitalism,” as Hanauer is using the term, refers to a system that
concentrates control of the economy in the hands of a small elite—people like
himself, not coincidentally. This system allows the few to live off of the work
of the many; their fortunes have to come from somewhere, after all. Why not aim
for a system that actually lets the workers keep the fruits of their labor, and
manage their businesses cooperatively?
Hanauer’s article is
a very interesting one, and it’s all very shrewd advice if one takes it to be
only what it explicitly claims to be—a memo to his fellow super-capitalists.
But if you read between the lines, it becomes pretty clear that isn’t all it’s
intended to be. Hanauer talks about a “New Deal” and appeals to the memory of
FDR—not exactly great ways to win over CEOs and investors, but a great way to
convince liberals he’s on their side—and not surprisingly, they’ve already fallen for it. Perhaps Nick Hanauer and the liberals happily agreeing with him
think that higher wages really are a solution to the problems we face, but the
logic is ultimately not convincing. Until they are given real control, the
workers of America remain, essentially, slaves. Hanauer’s solution is not to
abolish slavery, but rather for plantation-owners to treat their slaves a
little more nicely—after all, we don’t want any of the “crazies” convincing the
slaves they could be better off free.
It’s time for those who really are devoted to the cause of
the middle class and the workers to wake up to a simple fact: their interests
are not in alignment with people like Nick Hanauer’s. As long as investors and
businessman like Hanauer remain extremely rich, the rest of us have to settle
for less. Only when we wake up to the fact that we don’t need billionaires and
multi-millionaires can we really address the problems of capitalism. Some may
call that class warfare, but I call it simple economics.