could call it Romnesia: the ability of the very rich to forget the
context in which they made their money. To forget their education,
inheritance, family networks, contacts and introductions. To forget the
workers whose labour enriched them. To forget the infrastructure and
security, the educated workforce, the contracts, subsidies and bail-outs
the government provided.
Every political system requires a
justifying myth. The Soviet Union had Alexey Stakhanov, the miner
reputed to have extracted 100 tonnes of coal in six hours. The United
States had Richard Hunter, the hero of Horatio Alger’s rags-to-riches
Both stories contained a germ of truth. Stakhanov worked
hard for a cause in which he believed, but his remarkable output was
When Alger wrote his novels, some poor people had become very rich in
the United States. But the further from its ideals (productivity in the
Soviet Union’s case, opportunity in the US) a system strays, the more
fervently its justifying myths are propounded.
As the developed
nations succumb to extreme inequality and social immobility, the myth of
the self-made man becomes ever more potent. It is used to justify its
polar opposite: an unassailable rent-seeking class, deploying its
inherited money to finance the seizure of other people’s wealth.
crudest exponent of Romnesia is the Australian mining magnate Gina
Rinehart. “There is no monopoly on becoming a millionaire,” she insists.
“If you’re jealous of those with more money, don’t just sit there and
complain; do something to make more money yourselves – spend less time
drinking, or smoking and socialising and more time working … Remember
our roots, and create your own success.”(3
her roots is what Rinehart fails to do. She forgot to add that if you
want to become a millionaire – in her case a billionaire – it helps to
inherit an iron ore mine and a fortune from your father, and to ride a
spectacular commodities boom. Had she spent her life lying in bed and
throwing darts at the wall, she would still be stupendously rich.
rich lists are stuffed with people who either inherited their money or
who made it through rent-seeking activities: by means other than
innovation and productive effort. They’re a catalogue of speculators,
property barons, dukes, IT monopolists, loansharks, bank chiefs, oil
sheikhs, mining magnates, oligarchs and chief executives paid out of all
proportion to any value they generate.
Looters, in short. The
richest mining barons are those to whom governments sold natural
resources for a song. Russian, Mexican and British oligarchs acquired
underpriced public assets through privatisation, and now run a
Bankers use incomprehensible instruments to fleece their clients and
the taxpayer. But as rentiers capture the economy, the opposite story
must be told.
Scarcely a Republican speech fails to reprise the
Richard Hunter narrative, and almost all these rags-to-riches tales turn
out to be bunkum. “Everything that Ann and I have,” Mitt Romney claims,
“we earned the old-fashioned way”(5
Old-fashioned like Blackbeard perhaps. Two searing exposures in Rolling
Stone magazine document the leveraged buyouts which destroyed viable
companies, value and jobs(6
), and the costly federal bail-out which saved Romney’s political skin(7
personifies economic parasitism. The financial sector has become a
job-destroying, home-breaking, life-crushing machine, which impoverishes
other people to enrich itself. The tighter its grip on politics, the
more its representatives must tell the opposite story: of life-affirming
enterprise, innovation and investment, of brave entrepreneurs making
their fortunes out of nothing but grit and wit.
There is an
obvious flip-side to this story. “Anyone can make it – I did without
help” translates as “I refuse to pay taxes to help other people, as they
can help themselves”. Whether or not they inherited an iron ore mine
In the article in which she urged the poor to emulate
her, Gina Rinehart also proposed that the minimum wage should be
reduced. Who needs fair pay if anyone can become a millionaire?
In 2010, the richest 1% in the United States captured an astonishing 93% of that year’s gain in incomes(8
In the same year, corporate chief executives made, on average, 243
times as much as the median worker (in 1965 the ratio was ten times
lower, namely 24:1)(9,10). Between 1970 and 2010 the Gini coefficient,
which measures inequality, rose in the United States from 0.35 to 0.44:
an astonishing leap(11
for social mobility, of the rich countries listed by the OECD, the
three in which men’s earnings are most likely to resemble their father’s
are, in this order, the UK, Italy and the US(12
If you are born poor or born rich in these nations, you are likely to
stay that way. It is no coincidence that these three countries all
promote themselves as lands of unparalleled opportunity.
opportunity, self-creation, heroic individualism: these are the myths
that predatory capitalism requires for its political survival. Romnesia
permits the ultra-rich both to deny the role of other people in the
creation of their own wealth and to deny help to those less fortunate
than themselves. A century ago, entrepreneurs sought to pass themselves
off as parasites: they adopted the style and manner of the titled,
rentier class. Today the parasites claim to be entrepreneurs.
1. The Ragged Dick series.
4. Mike Lofgren uses this term in this fascinating article:http://www.theamericanconservative.com/articles/revolt-of-the-rich/
Emmanuel Saez, 2nd March 2012. Striking it Richer: the Evolution of Top
Incomes in the United States (Updated with 2009 and 2010 estimates).http://elsa.berkeley.edu/~saez/saez-UStopincomes-2010.pdf
9. Joseph Stiglitz, 2012. The Price of Inequality. Allen Lane, London.
Lawrence Mishel, Jared Bernstein and Heidi Shierholz. The State of
Working America 2008/2009. Economic Policy Institute, cited by Joseph
Stiglitz, as above.
12. OECD, 2010. Economic Policy Reforms: Going for Growth. Chapter 5, Figure 5.1.http://www.oecd.org/tax/publicfinanceandfiscalpolicy/45002641.pdf
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