The Morality of Wealth

Almost nothing divides the political Left from the Right more than their mutually exclusive views of wealth. Listen to President Obama, Senator Elizabeth Warren, Hillary Clinton, or Senator Bernie Sanders for long and you get an impression of the rich as social parasites. Obama is constantly excoriating the rich for “not paying their fair share” and for having the gall to think they built their own businesses. Elizabeth Warren repeated this canard and added in another speech that Citigroup should be broken into pieces. Hillary Clinton meanwhile has declared that corporations and businesses do not create jobs. Bernie Sanders is so far left, he has said that a 90% tax rate on the rich is not too high.  

In answer to President Obama on his remark about taxes, a right-winger might well note that the top one-percent in income pay more in taxes than the bottom 90%. Is this not already their fair-share?

Also, although granting that the rich who create a business need the social environment that creates infrastructure and provides educated workers, conservatives would maintain that the creator of a business also provides capital and skills to organize everything to make the business work. In these days it is no mean feat to navigate the minefields of government regulation! I suspect the heads of many small businesses work much longer hours than most politicians and government bureaucrats. A conservative might also note that local governments often do such a bad job educating young people that businesses must sometimes provide remedial training. The New York Times reports that according to the National Commission on Writing, corporations are estimated to spend between $2.9 billion and $3.1 billion on remedial training in writing every year. If the heads of new small businesses have not created their own business, they have certainly provided outsized contributions to their creation.

Why should the rich be so detested and loathed as a group? Is the possession of wealth intrinsically immoral? Perhaps the loathing is partly due to envy and partly due to a cultural bias against wealth inculcated by religion in previous centuries. A more probable explanation comes from a historical remembrance of the rigors of the industrial revolution and of the privileged status of the capitalists. That was certainly a motivation for the Luddites and the first European socialists and communists. Some of the early goals of the American Progressive movement were to remove the undue influence and corruption of the political bosses and captains of industry, against whom the ordinary man had scant power.

But is this bad reputation deserved, particularly in the present day? In the modern corporation, it is not just the CEO who gets rich. Usually the major corporate officers and many of the most talented managers, engineers, scientists, and other employees with talent also share in the wealth. How much does a manager contribute to the corporate revenues by combining all of the factors needed to produce his part of corporate output, and to resolve legal, labor, technical and logistical problems; and how much does a janitor contribute by cleaning the offices? An excellent ethical argument can be made that it is moral to give the manager a much larger salary than the janitor for two reasons: first, the manager has contributed to corporate revenues far more, and second, to give incentives to others in the company to produce more. The more a company produces and sells, the more wealth can be shared by the employees and the stock holders of the company. How much salary or wage should any particular employee, including the CEO, receive? A salary or wage is a price for a person’s labor, and like any price it should be set by the marketplace through the interactions of the law of supply and demand with the law of marginal utility. It certainly should not be set by any government.

How about the richest of the rich, the fabled one-per-centers? Do they need all their wealth? Of course not! Those who have incomes in the tens of millions of dollars or higher probably personally consume a very small fraction of that income. It might well be that it is physically impossible to consume more than a small fraction due to constraints on available time. So what do the one-per-centers do with the rest of their wealth? Some contribute to charities and charitable foundations. Some contribute to private family foundations, sometimes for purely charitable reasons and sometimes partially for the support of their progeny. Many take their excess assets and invest them in the economy. If they are wise investors and make profits, then they have contributed to a, at least for some time, self-sustaining increase in the country’s GDP. If they are not wise investors and lose money, the money they lose is redistributed to others who have done better in their use of society’s precious and scarce economic assets. The Christian parable of the faithful steward seems particularly apt here. All of these activities from the charitable contributions to the investments in the economy are for the benefit and well-being of society.

So why should anyone consider the possession of wealth to be intrinsically immoral?

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