How do you place wealth and equality next to
one another and say, "These are the good things about American life and
The presidential election and last month's debate over raising taxes on the rich exposed a deep ambivalence in the U.S. over wealth and equality. How do we balance the American dream's offer of equality with its offer of financial success? And in a country with a tradition of larger-than-life philanthropists, recently re-highlighted by Bill Gates's and Warren Buffett's Giving Pledge campaign, but where social mobility is weak, how should we feel about the super-rich?
Robert Dalzell, American historian and professor emeritus at Williams College, explores some of these themes in a new book called The Good Rich and What They Cost Us, published January 8. Dalzell looks at figures like George Washington, John D. Rockefeller, and Bill Gates, all of whom eventually became known for giving their wealth away, and several of whom were criticized early on for their ruthless approach to building their fortunes. What themes and lessons can we draw from examining America's favorite philanthropists? After reading the work over the holidays, I called Dalzell up to talk to him about his conclusions.
I was interested and startled to read that George Washington was in fact the richest man ever to serve as president of the United States.
Absolutely, though it looked like Mitt Romney might give him a run for his money for a while.
But why is that not a very well-known fact, given how many other aspects of George Washington's personality and life are played up in schools and elsewhere?
Well, because I think there are actually more important facts about him that many of us were once taught in school. It is true, however, that even though we aren't conscious of his wealth, his career without his wife's money would have been unimaginable in Virginia at that time making his way up through the ranks and beyond. That money was very important. It was a society that paid attention to money and paid a lot of attention to people who had it--and he did have it, but it was by virtue of marriage.
He was a young man on the make, clawing his way up. He was born into the Virginia elite but at a low level of it. He wanted to do better in life. His forbears had, too, though unfortunately most of them died too young. And it mattered to him. Money mattered to him, possessions mattered to him, far more than we think they did, but that was at the beginning of his life. I think later in his life he came to think less of those things.
And you think it was a genuine revolution in his thinking--rather than concern for his image, which was a concern for some of the other individuals you discuss? George Washington actually changed his mind about his wealth?
I think so. I think the Revolution was key. It was a fascinating process because you see the beginning during the Revolution and it's focused even then on the issue of slavery. But it's also a function of the fact that he looked at the people who were fighting the Revolution with him--the officers and the troops--and if you were trying to generalize about them you would have said that very few of them came from established positions in life, that they were in effect using the war as a way of bettering themselves. They saw it as an opportunity. They were also people on the make. And I think that the war worked for many of them in this way. And I think George Washington was impressed with the notion of American society as a place where that kind of thing could happen, and as a result of that he began to change his mind about a good many things.
This books starts with people who have turned to philanthropy to prove they're favored by God. But then there are those who do it for image rehabilitation, and, even today, as a strategy against taxation. Why does that change?
Well, the society changes. What constitutes wealth changes. People's attitudes towards it change. But there is this fundamental paradox which is present in all these cases, and that is that great wealth--the fact of great wealth--sits oddly with a democratic faith that celebrates the notion that people are essentially equal in American society. So there's this conflict, and it expresses itself in different periods in different ways, and it expresses itself in the lives of these individuals in different ways. But I think they're all similar at least to the extent that they are worried about this contradiction, and try to work it out. The way they try to work it out in the end is in giving away a lot of money, as a result of which we think of them as "the good rich."
Why do we think of them as "the good rich"? Why is there this constant theme in American culture where we believe in democracy but we also believe in wealth in a way that you don't see in other countries?
That is a paradox. How do you place those two things, great wealth and equality, next to one another, and say "these are the good things about American life and society"? The way "the good rich" handled it was to decide to be very generous with their wealth. And we as a society have, in effect, said: it doesn't matter so much how you make your money. What matters is what you do with it. And if you're generous with it we will say that you were a good person and it was a good thing that you made all that money.
How does this play into the oft-remarked fact that you don't really see a vibrant socialist movement in America?
I think it has a lot to do with it. For many people, the generosity of these individuals who made so much money eliminates the problem that wealth poses, inequality poses, in the society. Now, the point I make at the end of the book, and briefly at the beginning, is that we tend to conclude that such behavior is typical of the wealthy, and in fact it's not. The proportion of the very wealthy who are very generous is not large, but we tend to assume that there's a kind of universality to what happens here--there isn't. That's a cost we pay, because this whole notion of "the good rich" I think reconciles us to levels of inequality in the society that in terms of our democratic ideology would otherwise be unacceptable.
That brings us to the Giving Pledge created by Bill Gates and Warren Buffett. This is one of the more provocative sections of this book. You talk about the different ways the very wealthy on the Forbes 400 list have explained their decision to join in and pledge to give away half of their fortunes or not. And one thing that you pointed out that seems very interesting, is that Steve Jobs, unlike Bill Gates, is not really known for his philanthropy. You suggest that that might be because he didn't need philanthropy.
I think that's true. I think he was so good at what he did, he had such appeal, that even though he made a lot of money, and even though if you knew anything about his business career you knew he could be thoroughly ruthless, the results as they were observable in the lives of people were such that he got off the hook. It's intriguing, because he does not fit the paradigm. Oprah Winfrey doesn't quite either, and she didn't sign the Giving Pledge. I think the purpose of the Pledge as it was conceived by Bill Gates and Buffett was in effect to underline that traditional paradigm which has the rich being generous in giving their money away. But there are rich people who manage to be loved and admired by their countrymen who don't necessarily give a lot of money away. The other reality is that statistically the rich who give away a lot of money are a minority.
You point out that the rich who give aren't just a minority--they're actually different from the majority. They are more prominent figures, perhaps, with more of an image to look after, for example...
Well, more of an image issue or more of a spiritual issue. It varies from individual from individual. It's hard to generalize about what's going on here, because the rich who are generous are generous in different ways in different times for different reasons.
But you don't think that the fact that the Giving Pledge came up when it did was an accident.
I don't think it was an accident at all. I think it was defensively conceived. It was a time when because of the economic downturn, the economic crash, '08, '09, there were certain people who were quite concerned about what this was going to mean to the rich who could be blamed in significant measure for what had happened. I think that Gates and Buffett, who conceived the idea of the Giving Pledge, did it as a strategy for pulling some of the claws of the rising discontent and dislike of the rich, among Americans. It's interesting, because it hasn't really worked all that well. I mean, if you look at the number of the Forbes 400 who have signed on to the giving pledge (and they're the group that Gates and Buffett were targeting) it isn't all that many of them.
You also point out that this has happened before--that there was not necessarily an upsurge in giving but an upsurge in public giving, both in the Gilded Age and then again in the Great Depression. So this is something of a pattern?
I think there is a pattern there. When things get palpably unequal enough, there is a response in society, which is uncharacteristic, and we do begin to look harshly at the rich and even look at their generosity as something which is in many ways essentially defensive. That has happened before twice in recent history--in the 1890s and in the 1920s. The great question is whether it's happening now, and how far it will go now. I think it's fascinating--it means every day's news is intriguing to me, because it bears so directly on this issue.
That brings us to the fiscal cliff negotiations, which came up in my mind while reading what you wrote about tax breaks for philanthropy.
It's an interesting topic, because it is certainly a way of avoiding paying taxes that some of the rich--those rich who are generous--have had the benefit of. And if you look at what they give to, not only does a lot of their giving seem to be defensive, but they give to things that the public at large does not give to. The public at large when it gives away money tends to give it to relieve immediate problems--cases of want. They give to religious causes, too. The very rich give to elegant academic institutions and museums, symphony orchestras...things that it's nice to have but not things that the population at large cares enough about to give much money to them. So there's a question, I think, as to whether or not the tax deductions that they earn have much to do--again--with, in this case, political democracy. There's a lot of money involved here. As an alternative to this system you could tax those fortunes and the public could decide for itself what it wanted to do with the money. That would be a very different model, but it's not the one we've adopted so far.
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