A demagogue in economists’ clothing

Patrick Chisholm | Writer/Editor, PolicyDynamics.Org

The single most prominent leitmotiv among demagogues the world over is demonization of the rich. Whether it’s railing against fat-cat bankers or bemoaning the uneven distribution of wealth, demagogues whip up hatred and passions by zeroing in on one of the most powerful and destructive of human emotions: envy.

You’d be hard pressed to come up with an article — or an article title — that’s more demagogic than a recent one in Vanity Fair magazine by ostensible economist Joseph Stiglitz: “Of the 1%, by the 1%, for the 1%.”

I say ostensible because, at least with this article, any semblance of scholarly rigor is absent. The article is written in stream-of-consciousness style. It is assertion after assertion — essentially one bumper sticker after another — with no references whatsoever to any sources or any supporting evidence to back up his many incendiary claims. Each claim would need multiple paragraphs of explanation, but Stiglitz makes multiple disparate claims in single paragraphs — quite contrary to the rule that a paragraph is supposed to stick to a single subject.

In appealing to mass, crass envy, the article fails to disappoint. It was #1 among Vanity Fair’s “most viewed” and “most e-mailed” articles, and at last count, clocked in at 146,802 “likes.” So at least 146,802 envy-prone minds, yearning to get their hands on anything to add fuel to their worldview that the rich are the focus of evil in the modern world, lapped up his every word.

It’s hard to pinpoint a thesis in such a messy and poorly organized article, but it seems to be that the rich are intentionally causing rising income inequality in America. He writes “the top 1 percent want it that way,” referring to inequality. But he produces no evidence that the rich want the poor and middle class to get poorer while the rich get richer. He merely indicates the rich don’t like their taxes raised. But wanting to keep more of what you earn is absolutely not the same as wanting other people to become poorer. To imply that it is, is insulting and slanderous.

Stiglitz also points to “manipulation of the financial system,” such as the government keeping interest rates at near zero and its bailouts of big banks. Not only do such policies get more support from his brethren on the left than from those on the right, but it’s absurd to use this as evidence that the rich want more inequality. Even if one manipulates something in order to boost one’s income, it merely means that person is desirous of a higher income for one’s self, not a lower income for others.

If you don’t ascribe nefarious motives to the top 1 percent — accusing them as Stiglitz does of wishing lower incomes on others — and instead claim that getting richer results in someone else getting poorer, albeit unintentionally, you’d also be wrong. Ours is not a zero-sum economy where there are a fixed number of goods and services. There are an ever-growing number of goods and services, thanks to ingenuity and hard work. Sure, Windows made Bill Gates rich, but it made PC users much better off too. And yes, Warren Buffett got rich by savvy investing, but he benefitted the rich, poor, and middle class alike by allocating resources to the most efficient and job-creating companies.

Stiglitz incredibly blames the top 1 percent for government underinvestment in infrastructure such as roads and bridges, airports, and education. He alleges the rich can buy everything for themselves rather than rely on the government to do so (buy their own roads and bridges?), and at the same time “lose empathy” for us common folks. Of course, he gives not an iota of evidence of any rich person “losing empathy.” But the damage is done. Stiglitz reinforces the slander among his hard-left sheep that rich people are selfish and uncompassionate.

The irony, moreover, is that the main culprits for underinvestment in infrastructure are not the top 1 percent, but Stiglitz and the redistributionist left themselves. Fully two-thirds of the federal government’s budget is allocated to entitlement programs and other modes of wealth redistribution. This crowds out spending on essential government services such as transportation infrastructure, national parks, and environmental protection.

So if you’re in the top 1 percent and you see that most of the wealth that the government takes from you isn’t being spent on traditional government services, and instead is being transferred to other people, most of whom are middle class or rich (the left almost always resists means-testing), then you’d have good reason to watch your wallet.

Another Stiglitz slander: “The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine.” Stiglitz not only subscribes to the ultra-leftist view that the government stacks the deck in favor of the rich and against the middle class and poor, he also accuses the rich of wanting it that way. Of course, he produces no evidence of even a single rich person taking this reprehensible position.

Setting the record straight on Stiglitz’s numerous dubious assertions would need a lot more space than is here. Suffice to say that his many smears aimed at the rich, such as “the wealthiest often stand actively in the way of policies that would improve life for people in general,” is classic demagoguery. The practice of scapegoating the rich is an age-old institution.

“Class war is more appealing than class harmony,” writes noted psychiatrist Aaron Beck in his book Prisoners of Hate. “It is easier for the populace to blame and attack an alien group than to understand the intricacies of economic and political problems.” The groups that Beck refers to are often rich minorities, but the rich in general make tempting targets, too.

Beck explains, “Members of a subgroup who become conspicuous because of their economic or political success are suspected of conspiring with their brethren to advance their own interests at the expense of the unsuspecting majority.” People conclude that the subgroup “resorted to shady tactics and schemes to gain an unfair advantage.”

Stiglitz’s article, of course, pushes all of these buttons. It no doubt pushed bigbadduke’s buttons. In an online discussion prompted by the article, someone with the username bigbadduke writes, “The rich OWN our politicians and court systems. Free market my ass. The sooner you Faux news republitards die the quicker w can get back to sannity (sic).”

I’m sure Stiglitz does not approve of such sentiment among his readers. But demonization of the rich inevitably whips up profound hatreds that at worst lead to violence or the desire thereof, and that at best lead to popular support for unwise economic policies.

A further irony: Stiglitz won a Nobel Prize in economics. That says more about the Nobel committee than it does about Stiglitz.

Patrick D. Chisholm, a former Christian Science Monitor columnist, is founder and creative director of Accentance.

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