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The Ultimate Welfare Queens


Imagine people who have little reason to integrate themselves into their surrounding society. They live in isolated communities and either avoid or have little use for the public services everyone else takes for granted. If circumstances ever take a turn for the worse where they live, they can always move elsewhere. And when they really do feel like making a difference, they can choose a policy area and a geographic region and essentially set the agenda.

I’m talking about the super rich.

At times, it can be hard to fathom just how wealthy some people are. For instance, a mere 62 people hold as much wealth as half of the world’s entire population. It’s not a small amount of money, either: about $1.76 trillion. Expanding out to include all billionaires–of which there are 1426–their total wealth is $5.4 trillion. But without context, dollar amounts don’t mean much. What does it actually mean to be so wealthy?

According to the book Fortress America, some three million Americans live in gated communities. As the book describes:

Gated communities are residential areas with restricted access in which normally public spaces are privatized. They are security developments with designated perimeters, usually walls or fences, and controlled entrances that are intended to prevent penetration by nonresidents. They include new developments and older areas retrofitted with gates and fences, and they are found from the inner cities to the exurbs and from the richest neighborhoods to the poorest. Their gates range from elaborate two-story guardhouses staffed twenty-four hours a day to roll-back wrought-iron gates to simple electronic arms. Guardhouses are usually built with one lane for guests and visitors and a second lane for residents, who may open the gates with an electronic card, a code, or a remote control device. Some communities with round-the-clock security require all cars to pass the guard, issuing identification stickers for residents' cars. Others use video cameras to record the license plate numbers and sometimes the faces of all who pass through. Entrances without guards have intercom systems, some with video monitors, that residents may use to screen visitors. The residences we are discussing are not multi-unit, high-density apartment and condominium buildings with security systems or doormen in which gates or guards prevent public access to lobbies, hallways, and parking lots. Gated communities are different: their walls and fences preclude public access to streets, sidewalks, parks, beaches, rivers, trails, playgrounds--all resources that without gates or walls would be open and shared by all the citizens of a locality.

If these sound very much like small countries, it’s not your imagination. Consider the ways in which they resemble countries:

  * They have physically-defined boundaries to which access is controlled by authorities.
  * Common facilities are open only to residents within the boundaries of the community.
  * They have their own security staff with police-like powers (though they can't technically arrest or detain you).
  * The associations that run such communities collect dues and other fees which are akin to taxes, and similarly used to pay for administration, security, and common facilities.
  * The associations can also set arbitrary rules for residents, making them akin to governments with legislative power.

Of course, it’s possible to take the analogy too far. They don’t have militaries or military hardware, for instance. They don’t negotiate with other countries. For the most part, residents of such enclaves just want to be left alone, isolated from the outside world. This mentality, in itself, is dangerous.

The more the wealthy separate themselves from everyone else, the less invested they become in the ultimate fate of their surrounding society. If you live in a gated community that forbids outsiders, send your children to private school, and don’t make significant use of government-provided services, it’s easy to imagine you have no stake in the broader community or country where you live. It’s not a stretch, then, to see the money you pay in taxes as waste. Why pay for services you don’t need? Why pay to support communities you have no interest or involvement in? Why pay for a school system your children aren’t part of? Why fund a government that, as far as you can tell, you don’t need?

This is where tax avoidance and evasion come into the picture. Tens of billions of dollars in taxes are avoided every year in the US by individuals employing offshore tax havens. These mechanisms aren’t available to the vast majority of wage earners, who generally have to pay their taxes at the stated rates and don’t get to take advantage of various loopholes, deductions, credits, and other means of reducing their tax burdens. The very wealthy can dramatically reduce their tax liability by keeping income and assets overseas, which they have done to the tune of $21 trillion.

But when you’re very rich, there’s another reason to keep your money and assets far from home: in case things go sour and you need to split. Tax haven countries have traditionally competed with one another to make themselves the most attractive to individuals who might wish to store their assets securely. Should the infrastructure or government of the United States collapse into complete disarray, it’s no problem–there are plenty of other countries to escape to, and your assets are safely tucked away somewhere else already.

In order to hasten this collapse, albeit unintentionally, the wealthiest Americans use their vast fortunes to buy the policies they want. If it’s not setting up a special tax system that gives them one more avenue for tax avoidance, it’s creating think tanks, foundations, policy centers, and outright throwing money at politicians who will do your bidding. It’s much easier for one person to contribute millions of dollars to political campaigns than for millions of people to do the same individually–and the former makes the strings attached to that money much more visible. Policies are lobbied for which help make the rich richer, such as laws to curb environmental protection regulations that either reduce profits or cost money in fines and taxes. Efforts to both fund climate science denial and impede the government from advocating renewable energy sources serve the same end, as well: to enable vested interests to expand their fortunes with no regard for the ecological consequences. Whatever havoc climate change ultimately unleashes upon the Earth, one can rest assured that the wealthiest will land on their feet–they can take refuge anywhere, after all.

When the super rich do decide they want to make a positive difference in the world, it doesn’t necessarily come to pass, either. It’s a common mistake to believe that a billion dollars here and another billion dollars there, thrown at a particular problem, will make that problem go away quickly. Billionaire philanthropy, while typically seen as a good thing, in practice tends to have very mixed results. Issues like education may be presented as apolitical, but most issues have deep, complex politics and competing ideological factions. Should one faction be the beneficiary of a philanthropist’s largess, it can turn the tide of the debate in question–or drag it out much longer than it would’ve been otherwise. Mark Zuckerberg’s famous $100 million donation to Newark’s public school system, intended to revamp a district plagued by poor test scores and low graduation rates, instead produced not only significant waste but massive bureaucratic conflict. With an infusion of money that large, the fight is on to determine who gets it, why, and what purpose it should serve. Spend it on more teachers? Better technology? Newer buildings? Highly-paid educational consultants who can introduce new curricula, which themselves are subject to the political whims of their designers?

Attempting to solve significant sociopolitical problems with a massive, sudden influx of cash often produces major unintended consequences. The reality is that any big problem worth solving is likely to be path dependent, meaning the best way to achieve desirable results is through gradual, iterative changes, reassessments, and consensus-building. Shocks to the system breed chaos, and large sums attract special interests and schemers like blood in the water draws the sharks.

Something commonly derided as a failing of governments actually becomes beneficial in these situations. New policies, even ambitious ones, tend to be implemented in measured phases, and are adjusted based on feedback and other problems encountered. Democratic governments, at least, are nominally accountable to their citizens–a disastrous policy can be blamed on its architects and implementers, and its advocates called to account for the failure. When a philanthropic organization makes a bad situation worse, the best case is that they run out of money and can’t inflict any more harm. More likely, however, is for the billionaires to cut and run, and perhaps try the same policy or a slight variation on it elsewhere, until the desired results are achieved–if that ever happens. As an example, charter schools are immensely favored by billionaire donors who dabble in education reform, but their record is far from promising. Despite handfuls of success stories, as a general policy they’ve proven to be no better than traditional schools, and yet demands to expand them–driven by wealthy philanthropists who believe in a more technocratic approach to education policy–have only persisted. Governments can be pressured into abandoning bad policies. It’s much more difficult for the public to influence a private philanthropic organization, which may simply try the same experiment somewhere else.

The super rich hold a measure of influence well beyond what any individual in a free society should possess. Able to flee to greener pastures at the drop of a hat, hiding their assets to avoid paying into the public services that hold a functioning society together, and then wielding their immense influence to purchase policies to make themselves richer and push their pet ideologies, I’m inclined to say they’re easily the world’s worst free riders. All power, no responsibility, no accountability, no solidarity.