Kinsley on Billionaires

Michael Kinsley can make sense at times, but more often he's merely infuriating. Last Thursday's op-ed in the Washington Post is an example, and it appears to have cheesed me off more than usual.

According to Forbes magazine, the world is enjoying a boom in billionaires. Twenty years ago there were 140 billionaires. Three years ago there were 476. This year there are 793.
You can check out the stuff Forbes has made available online here. Kinsley appears to have read at least first few sentences of this article (and has summarized them in a non-plagiaristic manner). Did he read anything else? Let's see.
Some people automatically associate great wealth with evil, and they deserve the ridicule they get. But the automatic association of great wealth with virtue is equally fatuous.
Kinsley implies a tired and fallacious argument:
  1. Let's imagine two diametrically opposed, absurd positions that some (unnamed) people might hold;
  2. I hold neither of these positions;
  3. hence I am reasonable and correct.

Anyone convinced? Me neither. Let's move on:
It's probably true that most billionaires have acquired their wealth in ways that make life better for the rest of us.
Hedging and vagueness with "probably" and "most", but it's good that Kinsley acknowledges this up front.

I bet you can tell me, without peeking, what the first word of his next sentence is, however.

But the Forbes list includes plenty who merely chose rich parents.
Still vague ("plenty"), and getting way too cute with the tired "chose rich parents" cliché.
There are many whose accumulation of vast wealth, however gumptious, does not fit the Adam Smith model of individual drive and greed being channeled into activities that benefit all.
Still vague ("many"), but undoubtedly true.
The rising value of exclusive franchises given away by the government, such as cable TV and cellphone licenses, creates billionaires without generating any general social payoff.
This is probably the best sentence in the article. Yes, many governments (not just "the" government) shower economic favors on groups and individuals. It's an interesting and important topic. But Kinsley is on the moral indignation road, so this is a mere aside. We go immediately from a valid insight to sheer fatuity:
Real estate investors do not create a square inch of land.
Free advice to op-ed columnists: when you find yourself writing a trivial and obvious truth as if it contained some precious insight, maybe you should examine your assumptions. OK, real estate investors don't create land. Duh. What do they do? Never mind, because Kinsley just barrels along:
Meanwhile, science undermines the notion that people deserve moral credit for their smarts, daring, vision, dedication and similar virtues, even when these are applied in socially beneficial ways. Intelligence was the first to go. Why should you get the credit if your brains make you a billionaire? Increasingly, neuroscience and evolutionary psychology are showing that the same logic applies to other admirable qualities.
Kinsley's invocation of "science" is tendentious bullshit. If people deserve "moral credit" (or, for that matter, moral blame) for anything at all, they deserve it for what they do: the uncoerced choices they make. "Smarts" (etc.) are involved only indirectly, in the sense that they may make it more likely that people will make good choices, and (hence) deserve moral credit.

If you can imagine (say) people of equal "smarts" (etc.) making different uncoerced choices, doesn't it necessarily mean they deserve whatever moral credit (or blame) as a result? Sure. Kinsley's just wrong.

(Of course, if "science" has made you a thoroughgoing determinist, then people don't "really" make choices at all, and "moral credit" and "moral blame" are simply illusions. But Kinsley isn't saying that, is he? I don't think so; it's hard to care.)

Adam Smith explained how our individual efforts serve the common good. We work to produce things that can be traded for things we want. That's an improvement on making everything that we consume ourselves. The first exchange of one caveman's dinosaur meat for another's rather attractive decorative rock started a process that, after millions of years, leads to DVD players at Wal-Mart that cost less than DVDs. Or something like that.
A breezy trivializing of the process by which great masses of people have escaped subsistence and privation, don't you think? Again, there's a good story there, but Kinsley's only interested in being superficial here. He's eager to go back to sneering at rich people:
But billionaires are beyond the desire for more money to buy more stuff. Just look at Forbes's breathy descriptions of the billionaire lifestyle. Add it up. Yachts can cost up to $300 million to buy plus 10 percent annually to run, and a Russian on the list has three. So you need three, all bigger than anyone else's. Assuming that each one sinks after five years, this will cost you $270 million a year. The most expensive car Forbes could find was something called a Bugatti Veyron, costing $1 million. Get a new one every year -- heck, get three -- throw in a full-time driver, and luxuriate in a visit to Jiffy Lube whenever you feel like it, and you're still talking barely $4 million a year. Forbes reports that actually the top 10 billionaires drive cars much cheaper than this.
OK, so Kinsley did read beyond the first paragraph of the main article; good for him. But, despite his proclaimed interest in the moral worthiness of how these 793 acquired their wealth, he's really more interested in sneering at their alleged need to acquire conspicuous amounts of stuff. But note the tailing admission about the cars; doesn't it cast some disconfirming cold water on Kinsley's point? Let's look at what Forbes actually says:
The cars and trucks driven by those in the Top 10 of the 2005 Forbes list was, in short, shocking. You won't find a Bugatti, Ferrari or BMW driven by these billionaires. But you will find a Lincoln, a Mazda, even a Dodge and Ford. It seems that for the super-rich, a vehicle is seen not as a status symbol, but as a means to an end in which to get from point A to point B. Status is something that these billionaires need not prove to others. In many cases, the people on our list prefer to live inconspicuously, avoiding the limelight at all costs. This might explain why many of their vehicles cost less than your own daily driver.
Emphasis added. But never mind, Kinsley rolls on:
House? Prince Ahlwaleed bin Talal Alsaud has a palace that cost $130 million. Suppose you own five of these, and every 10 years you start again. Even including maintenance, air conditioning and condo fees, you have to struggle to hit $100 million a year. Put one of your houses on your own private island. The most expensive island Forbes could find for sale was listed at $39.7 million. Buy a new one every year, but don't go see it. Fly a private jet to the Bahamas instead. Forbes says you can charter a plane to the Bahamas for $40,000. So do that every weekend. It adds up to $2 million. Check into a nice hotel. Add another million and use the mini-bar.
More of the same. Is there a point to be made in largely imagining how a billionaire might spend money? I suppose that, if you're writing op-eds, you have to come up with a word count, and this is how Kinsley does it. (For someone who felt it necessary to point out "Forbes's breathy descriptions of the billionaire lifestyle", Kinsley is pretty breathy himself.)
Staff yourself silly with personal assistants and special British-trained security agents. Have a Starbucks latte every single day. Total? Uh-oh, you're spending over $400 million a year. At that rate, the average billionaire's $3.3 billion stash could be gone in less than a decade. But about 90 percent of that is the boats and the houses. Settle for one maximum-size yacht, two enormous houses (plus a Las Vegas time share) and only one private island. Congratulations, you're down to barely $100 million a year. At that rate, you can live like a Saudi prince, and $3.3 billion will last you and your children forever. (Depending, of course, on how many children you have. This guarantee does not apply to actual Saudi princes.)
Three paragraphs of nearly fact-free snarking at how someone might spend their wealth. Anyone see a point? If you do, Kinsley's about to pull out the rug:
Surely billionaires are not inspired to accumulate more billions by the prospect of a third gigantic yacht. Most billionaires spend far less than these amounts.
"So never mind that stuff I've been writing about."
Many of them give huge amounts to charity. But it's also hard to believe that the chance to give it away is a major motive for earning it in the first place. And if billionaires do earn it primarily to give it away, that itself would require a special economic theory just for them, different from the one that explains the rest of us.
Um, fine. So is Kinsley about to apply the same "economic theory" to billionaires as he would to the rest of us?

Dream on.

The prevalent theory of billionaire behavior is that it's a matter of keeping score. Billionaire investor Carl Icahn recently told Ken Auletta of the New Yorker, "I enjoy winning and making money." Keynes meant something similar when he used the term "animal spirits."
Yes. Immediately after denying that there should be a "special economic theory" for billionaires, Kinsley is now explicating a "theory of billionaire behavior."

Never mind because we're about to come to the real point:

Okay, fine. But if it's all about winning, wouldn't (say) half as much money be just as much winning -- as long as everybody else in the game had half as much money as well? If Icahn is right, a stiff tax on billionaires ought to have no effect on the fragile incentive structures of billionaires, as long as it is applied to all billionaires equally. I'm not advocating such a tax. I am, though, suggesting that the exquisite sensitivity to the incentives of rich people that dominates our tax policy may be overwrought.
After 900-some words, it's all about taking their money away. Kinsley, based on an offhand comment from one gigabuccaneer, is ready to decree that a 50% wealth tax on billionaires wouldn't alter their incentives much. Maybe. Although he's not advocating that.

Feh.

Everything You Know Is Wrong, Part CXVII

Good news: they're making piggies with high levels of Omega 3 fatty acids. I'm thinking: Mrs. Salad will someday be able to replace those salmon filets with pork chops. A couple strips of bacon every day to replace the fish oil capsules. Not bad!

But now it appears that all that Omega 3 hype may be on the way out.

The finding, if confirmed, will place fish oils at the top of the list of medical shibboleths that turned out to be myths. Among them are claims that fibre can prevent bowel cancer, vitamin C can halt colds, spinal manipulation can cure back pain, tranquillisers can cure anxiety and removing tonsils can prevent throat infections.

Maybe Woody Allen will turn out to have been uncannily right after all:

Dr. Melik: [puzzling over list of items sold at Miles' old health-food store] ... wheat germ, organic honey and... tiger's milk.
Dr. Aragon: Oh, yes. Those are the charmed substances that some years ago were thought to contain life-preserving properties.
Dr. Melik: You mean there was no deep fat? No steak or cream pies or... hot fudge?
Dr. Aragon: [chuckling] Those were thought to be unhealthy... precisely the opposite of what we now know to be true.
Dr. Melik: Incredible!

(Pig link via Carl Schaad.)


Last Modified 2012-10-25 8:29 AM EST