Must-Read: Frank Pasquale (2011): Economic Policy for the Worried Wealthy

Must-Read: Frank Pasquale (2011): Economic Policy for the Worried Wealthy: “Why is the austerity movement so powerful in the US?…

…Why not expect a little more from the wealthy? Why are states from Arizona to New York going after poor Medicaid patients and schools instead? We know the economic case for austerity in a deep recession is bunk. Why its enduring appeal?… The wealthy in the US may have extraordinary influence over the political process, but they could use it in many different ways. Warren Buffett complained about being taxed less than his secretary, and Bill Gates’s father has fought for the estate tax…. At some point the marginal value of money diminishes; why not spread it around a bit?…

Consider the research of BU sociologists on the lives of “people with fortunes in excess of $25 million.” It is featured at The Atlantic, which, in between ads for Goldman Sachs and planning for its Aspen Ideas festival, earlier this year informed us that “we need a creative, dynamic super-elite more than ever.” But that super-elite is worried:

They are frequently dissatisfied even with their sizable fortunes. Most of them still do not consider themselves financially secure; for that, they say, they would require on average one-quarter more wealth than they currently possess. (Remember: this is a population with assets in the tens of millions of dollars and above.) One respondent, the heir to an enormous fortune, says that what matters most to him is his Christianity, and that his greatest aspiration is “to love the Lord, my family, and my friends.” He also reports that he wouldn’t feel financially secure until he had $1 billion in the bank….

The mental agony of being so close to the billionaire’s circle, but just not quite there, must be enormous. Those in the upper echelons of industry may well be looking at the 400 persons who own more wealth than half the country, and say, “why not me?”… The “fear of falling” Barbara Ehrenreich diagnosed among middle class households in the 1990s has infected the very wealthy today…. Many millionaires will need to pay a lot less taxes to join the ultra-high-net worth crowd, which in turn envies a finance elite. And why not—given the extremely low tax rates on “carried interest,” hedge funders are getting quite a deal…. The “worried wealthy” can choose to create a more equal society, where no one could fall too far, or to build a fortress of personal wealth designed to keep generations secure from the vicissitudes of market driven “creative destruction”…


Brad DeLong
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