Fox News on Friday

1 Apr 2018

I was on the Claire Fox show last Friday (30 March) discussing the economics of Brexit. My item is about two hours in.

On 26 March the Academy of Ideas (formerly the Institute of Ideas) distributed a podcast version of last year’s Battle of Ideas debate on “Silicon Valley from Heroes to Zeroes” in which I was panellist. The session explored the backlash against Silicon Valley in the policy and public debates. A lot has happened in this discussion since last autumn but clearly the debate about Facebook and Cambridge Analytica has once again brought it to the public’s attention.

Yesterday the Financial Times published my latest book review.

There is one battle that even the wealthiest person is bound to lose. Even the most advanced medical technology can only postpone, rather than overcome, the inevitability of death. Some argue that, before long, regenerative medicine will transcend this reality but, for the time being at least, death will remain an essential part of human existence.

That leaves open the question of what should happen to the assets of rich individuals once they have died. Some affluent people will not care — their wealth will be of no use to them under such circumstances — while others will take a pragmatic attitude without thinking about the broader significance.

Many others, however, will ponder at least some of the difficult questions raised by death and inheritance. For example, what is the nature of property rights? Is an inheritance tax just? If so, what form should it take? What difficulties does inheritance raise in relation to the persistence of social inequality?

Judging by the keen interest in philanthropy, there are plenty of prosperous individuals pondering these questions. They are keen to do good, not just in their lifetime but afterwards too. Leaving a positive legacy is a central preoccupation for many.

Daniel Halliday, a political philosopher at the University of Melbourne, has written a practical philosophical guide to some of these questions. The Inheritance of Wealth marries a discussion of the principles involved with a sketch of what he sees as some of the key empirical features of contemporary inequality.

Halliday’s perspective is essentially that of a moderate egalitarian. He sees what he describes as “economic segregation” as unjust. In his view, those in the wealthier layers of society have better life chances than others, even though it may not be fair. Often the rich achieve their advantages entirely or largely through accident of birth.

Halliday’s critique is, however, a measured one. He concedes that some people do achieve their wealth through merit and he is certainly not in the camp of those who argue that all bequests should be abolished. His goal is not to destroy capitalism but to work out how, in his view at least, it can operate more fairly.

The scene is set with an examination of early liberal writings on inheritance from the likes of John Locke, Adam Smith and John Stuart Mill. None of these economists — from the 17th, 18th and 19th centuries, respectively — wrote much about inheritance specifically, but there are scattered mentions as part of broader discussions of such topics as property rights and social class. Although these thinkers differ among themselves, there are certain common elements. In particular, their view of inheritance can be seen partly as a reaction against the preceding feudal experience.

Pre-capitalist societies tended to be highly stratified. Social mobility and equal opportunities were not recognised at times when people’s position was determined by birth. Therefore, those writing in the early days of capitalism tended to be concerned with the risks of inherited wealth promoting idleness and maintaining a rigid social order. Halliday shares these worries in relation to the present, rather looking back to the feudal past.

Nor were early liberal thinkers alone in being sometimes scathing in relation to inheritance. Andrew Carnegie, the Scottish-American industrialist and philanthropist, reflected a common view in late 19th-century America in describing the bequesting of wealth to family members as “most injudicious”. Halliday quotes him as saying “the man who dies rich dies disgraced”.

In practical terms, Halliday’s favoured form of taxation for inheritance is what he calls a Rignano scheme. This follows an early 20th-century Italian thinker, Eugenio Rignano, who proposed that second-generation wealth should be subject to a higher tax rate than first-generation wealth. The idea is that entrepreneurs would still have an incentive to work hard to benefit their children but later descendants should not live idly off the wealth created by earlier generations. It would also help create a society where opportunities are more widely shared.

Halliday is open to discussion about the precise form such a scheme would take. For instance, it might make more sense to tax the recipients of wealth rather than the estate of the deceased.

Those who share Halliday’s premises are likely to find many of his arguments persuasive. On the other hand, those who are either unconvinced that economic segregation is a serious problem or are unconcerned by it will not. The Inheritance of Wealth at least has the merit of making readers ponder a difficult subject.

On 2 February my latest review was published on the Spiked Review of Books.

Debating individuals who have a completely different mental picture of the world presents a fundamental challenge. That is, they differ not just in their political convictions or values, but even in terms of how they describe reality. There seems to be insufficient common ground even to start a discussion.

That is certainly the case in relation to the critics of the wealthy, or ‘the 1%’, as they are known nowadays. The rich are routinely portrayed as greedy, ostentatious and obsessed with status. Yet such caricatures, despite being so prevalent, are rarely grounded in actual observations, let alone systematic research.

Just to emphasise: the point here is not to take a political stand for or against the rich. It is deliberately more fundamental than that. The question is whether perceptions of the wealthy even serve as an accurate description of the reality of the wealthy.

Certainly my impression of wealthy people from my job as a journalist writing about economics and finance is that they are not the aggressive materialists so commonly portrayed. On the contrary, they generally seem at pains to come across not only as normal, but as morally worthy. They are a world away from the caricatured neoliberal plutocrats that so many of their critics seem to assume.

Of course, they may be on their best behaviour when meeting journalists. I have no way of knowing what they are like in private. But even the existence of such a yawning gap between their public persona and their real selves should be worth investigating.

From this persepective Uneasy Street is an important book. It is an all too rare empirical study of how the rich see themselves. Rachel Sherman, an associate professor of sociology at the New School for Social Research in New York, did in-depth interviews with 50 parents in 42 households in the New York area. Their annual household incomes ranged from $250,000 (£190,000) to over $10million, while their assets ranged from $80,000 to over $50million.

Overall, Sherman’s sample size is relatively small, and confined to New York, but it is nevertheless valuable given the dearth of research in this field. She also supplemented her research by conducting 30 interviews with those who work with the wealthy, such as architects, art advisers, estate agents, interior designers and personal chefs.

Getting the rich to talk about their own wealth is notoriously difficult. They are extremely unwilling to be open on such matters. Sherman, by her own admission, benefited from having a similar social background to her interviewees. She has also gone to considerable lengths to disguise the identity of her subjects.

Sherman’s project is to discover how the wealthy see themselves rather than accepting the caricatures. She correctly observes that ‘the wealthy are often represented not only as status-seeking and lazy, but also as morally deficient in terms of personality and behaviour. Even relatively serous non-fiction books such as Richistan and Plutocrats reinforce this idea, even in their titles.’

Instead, Sherman found that her subjects felt highly conflicted in relation to their own wealth. They certainly had no intention of giving it up, but they struggled with the question of how to be worthy of their material privilege. They were desperate to see themselves as Good People, or ‘moral actors’, as Sherman calls them. Typically, they advocated diversity, openness and meritocracy rather than pursuing status based on material possessions.

Indeed, they tend not to see themselves as wealthy at all, but as middle class. That is not to say they failed to realise they had a lot of money relative to others, but that they nevertheless identified with what they saw as mainstream, respectable values.

A perhaps extreme exponent of this approach is Hillary Clinton, who in 2014 infamously said that she and her husband had been ‘dead broke’ when they left the White House. Yet whatever assets and debts they may have had in 2001 – and there is some dispute about this – the former president and first lady clearly had huge earnings potential. Apart from a generous presidential pension package for Bill, there were five-figure speaking fees, lucrative book deals, and consulting work for both of them. By 2016, it was widely estimated that they were worth over $200million. Yet, despite their great wealth, Hillary was still keen to identify with the middle class and speak out against the excesses of the rich.

Sherman identifies three ways in which the rich managed to square this circle and so manage to perceive their own wealth as legitimate. First, they were keen to emphasise that they worked hard, even if they often acknowledge there is an element of luck in their material advantage. They seize on whatever kind of work they did – paid, voluntary or domestic – to justify their wealth as deserving.

Secondly, the rich emphasised that their consumption is prudent. They were not against spending money in principle, but they are keen to view it as being spent in a sensible and frugal way – for example, on their children or on things that demonstrated high cultural capital. They viewed luxury items as exceptional and eschewed ostentation.

Finally, ‘giving back’ in some way was seen as important. This included both traditional philanthropy and volunteering, as well as an awareness of privilege.

Paradoxically, such awareness meant acting as if class differences did not exist. It involved observing a norm of silence in relation to material advantage. It also included – at least in the minds of the wealthy – treating others with kindness, respect and gratitude.

The flipside of this awareness of wealth was a tendency to criticise other rich people who were seen as not living up to these norms. For example, one of Sherman’s wealthy subjects describes the behaviour of other rich individuals in an exclusive seaside resort in New York:

‘Well, once summer hits [in the Hamptons], I can’t stand [it] – like, we don’t go out to dinner. We don’t really leave the house, other than going to the beach. Because the people are just awful, you know – too much money, spoiled. They hate locals. They’re rude to people that work in restaurants and everything, because they’re locals.’

Sherman’s carefully crafted observations of how the rich view themselves raise a difficult question. How can the caricature of the avaricious wealthy survive when it is so at odds with the reality of a highly conflicted group of individuals?

An important factor is no doubt the lack of class conflict in contemporary society. There are no existential challenges facing those with material privilege. Gone are the days, at least for the time being, when they are faced with the threat of political revolution or expropriation.

The climate of economic atrophy in the Western economies also plays a part. A dearth of growth in the developed world means there is an intense focus on how to distribute seemingly scarce resources rather than how to create more. This strengthens the idea that consumption has to be ‘responsible’. In practice, it means others in particular, rather than the wealthy themselves, are expected to constrain their consumption.

Under such circumstances, the divisions within the elite take on an outsized importance. The lack of a popular threat deprives them of a sense of purpose and encourages them to turn in on themselves. It is a classic case of what Sigmund Freud called ‘the narcissism of small differences’. There is a heightened sense of ‘us and them’ among the affluent rather than between them and the rest of society.

Creating and attacking caricatures of the errant rich has the added advantage of giving the wealthy a sense of mission. It allows affluent individuals to define themselves as progressive in contrast to those other, supposedly backward members of the rich.

In other words, there is a strange symmetry between the views of the wealthy themselves and those of their green-tinged critics. The sense of responsible consumption favoured by the rich is hard to distinguish from middle-class preoccupations more generally. Both sides are keen to attack the greedy rich as a kind of pantomime villain, presenting themselves as on the side of Good against Evil. Indeed, many of Sherman’s wealthy interviewees expressed affinity with Occupy Wall Street, which was in the news at the time she was doing her research.

Supposedly radical criticisms of the rich strangely reflect the inner turmoil of the rich themselves. Any meaningful discussion about the true significance of material inequality in contemporary society needs to start by thinking afresh.

 

 

I will be introducing a discussion on the backlash against Silicon Valley at the Academy of Ideas Economy Forum in London on the evening of Tuesday 13 February. More details can be found here.

NOTE: THIS EVENT HAS BEEN POSTPONED TO A LATER DATE.

My latest spiked article, published on 14 December, argues that it is not only Donald Trump who is grandstanding about Jerusalem.

It was guaranteed to send self-righteous politicos into an uncontrollable rage. The man they hate above all others, Donald Trump, recognising Jerusalem as the capital of the country they loathe most of all: Israel. All their prejudices about the president’s stupidity, orange skin and bad hair were recycled in response to his seemingly avid support for the Jewish state.

Of course, only a small minority took to the streets to protest. This included a ritual demonstration outside the American embassy in London’s Grosvenor Square (reportedly including anti-Semitic jihadist chants). Meanwhile, several prominent artists performed their now traditional role of condemning Israel as a racist state rife with ethnic cleansing. Similar sentiments were expressed in numerous tweets and Facebook posts, as well as no doubt being echoed in countless party conversations.

In some parts of Europe it got even uglier. In the Swedish town of Malmo, a crowd of demonstrators waving Palestinian flags reportedly said in Arabic: ‘We’re going to shoot the Jews.’ Further north in Gothenberg, a synagogue was firebombed. In Amsterdam a man was arrested for smashing the windows of a kosher restaurantwhile shouting about Allah and Palestine. In Berlin there were demonstrations which included the burning of an Israeli flag and chants of ‘death to the Jews’. Naturally, there were also protests in the Middle East and beyond, but that is a story for another day.

Mainstream politicians thankfully condemned acts of violence and rejected overt anti-Semitism, but they were also anxious to distance themselves from Trump’s decision. Theresa May described it as ‘unhelpful’. Jeremy Corbyn, UK Labour leader, said Trump’s announcement was a ‘reckless act’. President Emmanuel Macron said it was a ‘threat to peace’, while the official spokesman for Angela Merkel keenly distanced the German government from Trump’s move.

Those tempted to go along with this criticism of Trump for taking reckless unilateral action would do well to look more closely at his official statement. Trump is more than capable of saying foolish things, but in this case he included an accurate observation that is worth pondering. If its implications are considered carefully, it could throw an entirely different light on Trump’s initiative:

‘In 1995, [US] Congress adopted the Jerusalem Embassy Act, urging the federal government to relocate the American embassy to Jerusalem and to recognise that that city – and so importantly – is Israel’s capital. This act passed Congress by an overwhelming bipartisan majority and was reaffirmed by a unanimous vote of the Senate only six months ago.’

In other words, Trump’s announcement was not a new policy but one that was officially adopted 22 years ago but never enacted. US presidents, including Bill Clinton and Barack Obama, supported the embassy move in principle, even though every six months they signed a waiver to stop it from happening.

Even more remarkable is that after Trump made his statement, he sat down and signed another presidential waiver stopping the transfer of the embassy from Tel Aviv to Jerusalem. In other words, despite all the hype, the move will not happen this year and may well be postponed again in the future. Trump seems to have been lured by the publicity associated with making a high-profile announcement without any particular desire to follow it through.

There should be no doubt that the key questions here are symbolic rather than practical. Trump’s claim that the US needs ‘architects, engineers and planners’ to complete a new embassy is nonsense. The US already has a substantial consulate on Jerusalem’s Agron Street that it could easily rename as the embassy.

Several points can be gleaned from this bizarre tale. It is certainly not evidence of unwavering US support for Israel or reckless unilateral action by Trump, as many claim. On the contrary, the US president is indulging in his own form of posturing, which in some ways mirrors that of his critics.

Firstly, the days of solid US bipartisan support for Israel are long gone. Obama’s notorious loathing for Benjamin Netanyahu, the Israeli prime minister, reflected abroader shift away from Israel by many in the American political establishment. Trump seems to be taking a more pro-Israeli position than his predecessor did, but his stance is far more tentative than is widely understood.

Secondly, anti-Israel posturing has become central to radical political identity in the West. There are many big questions on which they can refrain from taking a position, but Israel is not one of them. Any mention of the Jewish state will elicit knowing comments about ‘ethnic cleansing’ and the occupation.

To be sure, Israel has many faults – but the scale of its critics’ double standards is breathtaking. There are numerous grave problems in the Middle East and beyond, but these are either not mentioned at all or, if they are, they have not become central to defining radical identity. Consider, for example, the war in Yemen. Saudi Arabia, with backing from the US and Britain, is complicit in a war that has killed many thousands of people and caused a humanitarian crisis. Or consider the Syrian Civil War, in which the West has also played a central role, where hundreds of thousands have been killed and many millions more have been made homeless. The list could go on, but the central point is this: none of these conflicts has come to play a role in the Western left’s virtue-signalling, while Israel has.

As I have argued previously on spiked, the views of Western radicals on Israel strangely parallel the grandstanding of Arab and Islamic regimes. They are also keen to focus on the failings of Israel as it provides a welcome distraction from their severe domestic problems.

Finally, European leaders are more than willing to go along with this masquerade. They hide behind platitudes about the ‘peace process’ and international law in relation to the Middle East and elsewhere, but they are unwilling or unable to challenge the alarming double standards on Israel.

It is a tragedy for both Israelis and Palestinians that they have become the playthings of Western egos.

The Know It Alls

5 Dec 2017

On Friday 1 December the Financial Times published my review of Noam Cohen’s The Know It Alls. I have pasted it below including some sentences that were cut (in bold).

The Know-It-Alls does not quite accuse the most famous entrepreneurs in Silicon Valley of devouring human flesh but its claims are not that far off.

Noam Cohen, a former New York Times journalist, starts his book with an account of an episode of The Twilight Zone television series entitled “To Serve Man”. The programme features apparently benign aliens, the Kanamits, who claim to have come in peace and to share their superior technology with humanity. After satisfying the world of their good intent they manage to persuade earthlings to board a spaceship for their home planet. Only then does it become apparent that their mission “to serve man” refers to the aliens’ desire to put humans on their dinner plates.

This analogy sets the tone for Cohen’s study of the “powerful, uber-confident men” who helped shape the world-wide web in the 1990s and became fabulously wealthy as a result. They include Jeff Bezos of Amazon, Sergey Brin and Larry Page of Google, Reid Hoffman of LinkedIn and Mark Zuckerberg of Facebook.

The author makes several sweeping attacks on these and other tech billionaires. “These Silicon Valley leaders propose a society in which personal freedoms are near absolute and government regulations wither away, where bold entrepreneurs amass billions of dollars from their innovations and the rest of us struggle in a hypercompetitive market without unions, government regulations, or social welfare programs to protect us.”

He is particularly hostile to those with a strong attachment to free expression. “Freedom of speech apparently trumped all other values as Google, Facebook and Twitter encouraged the public to stew in their own hateful juices and profited handsomely in the process.”

But let us leave aside, for now, the debate about the desirability of a political outlook that places liberty as its key value. There are certainly important debates to be had about where lines should be drawn in relation to freedom but they are too big to resolve here.

The fundamental problem with The Know-It-Alls is that it does not even work as a description of its subject matter. It comes nowhere close to substantiating the overstated charges that it makes. For every accusation it makes it would be possible to add qualifications or several counterexamples.

For instance, Cohen claims that “Silicon Valley values” were responsible for Donald Trump’s success in the 2016 US presidential election. Yet, by Cohen’s own account, Silicon Valley generally supported Hillary Clinton’s candidacy for president.

Moreover, Trump can be accused of many things but it stretches credulity to portray him as a libertarian.The president is so sensitive to criticism that he notoriously tweeted furiously in response to an unflattering Saturday Night Live sketch. That is hardly the behaviour of a staunch free speech advocate.

Cohen’s claim seems to be that Trump’s victory was the unintended consequence of the victory of Silicon Valley’s individualist values. But if that is his case he needs to work a lot harder to substantiate it.

Peter Thiel is perhaps the closest to Cohen’s portrayal of a Silicon Valley libertarian. The co-founder of PayPal is the only figure portrayed by Cohen who publicly endorsed Trump’s election campaign, but even that was with reservations. He has also supported and funded libertarian campaigns.

Yet even Thiel’s support for freedom has been qualified. The tech billionaire gave financial backing to a campaign that in 2016 bankrupted the online publication Gawker after it published a sex tape involving Hulk Hogan, a wrestler, without the subject’s consent. Back in 2007, the publication had outed Thiel as a gay man.

In addition, most Silicon Valley billionaires are a long way from Thiel’s record of backing libertarian courses if they have done so at all. For instance, Cohen describes how Sergey Brin and Larry Page have shifted their stance from the early days of Google. At first, they emphasised it should be a non-commercial enterprise but today the search engine earns huge amounts of adverting revenue. It could be argued plausibly that the Google duo’s more mature selves betrayed their youthful idealism but that hardly makes them ardent libertarians. In fact the firing of James Damore, a Google employee who wrote a 10-page anti-diversify manifesto, suggests the firm’s spirit is a long way from free speech fundamentalism.

If anything, the Silicon Valley’s ethos is better described as technocratic. That is, it is supportive of a privileged role for an elite technical class in running society. It is guided by a pragmatic belief in efficiency and expertise rather than a principled support for freedom.

Indeed, Cohen refers to this technocratic outlook in passing but in his visceral hostility to libertarianism he fails to grasp its importance.

Quoted in Moneyweek

19 Nov 2017

Moneyweek has quoted my Financial Times book review published in March.

I was recently on Newshour Extra on the BBC World Service discussing ‘Do we need economic growth?

A reminder that I will be debating “Silicon Valley: from heroes to zeroes” at the Battle of Ideas in London next weekend. Do come along to the whole event.