8 Nov 2016

Can the 1 percent solve inequality?

From Nine To Noon, 10:08 am on 8 November 2016

Can the one percent be part of the solution to wealth inequality instead of the problem?

US activist Chuck Collins, who gave up his own inherited wealth, says 'yes' is answer to both questions.

Bill Gates

Bill Gates Photo: AFP / FILE

Three decades ago, when he was in his mid-twenties, he gave up an inheritance worth $US500,000 even then, and which, invested would have been worth close to $US10 million now.

He spent the next three decades working, writing and networking to try to create a fairer economy.

Part of his argument is that it is in the interests of the world's most wealthy and privileged citizens - the one to five percent - to contribute to a fairer economy for all.

Collins has been speaking and writing on these matters before the GFC, the Occupy movement, or the year of discontent that has yielded Brexit and Donald Trump's lightning raid on the Republican Party. 

His latest book on this subject is called Born on Third Base.

He said the pattern of wealth concentration towards the rich and away from the middle and working classes was becoming clear 15 years ago.

“Wages were flat for most people, but I had a front row seat for how the concentrations of wealth were growing at the time.”

The common assets that had been built up in the post war period had enabled a great expansion of the middle class, but with the advent of Reaganomics that was being dismantled, Collins says.     

“Individuals matter and individual efforts matter, but very little wealth would be created if it were not for the commonwealth of inputs: public investments and various forms of subsidies and help and help of various kinds.”

Some of the wealthiest in the US understand this, he says.

“People see the web of commonwealth around them which makes their wealth possible, but other people are very focussed on the individual merit part of that story.”

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Photo: supplied

He said a tendency to “hyper-individualism” in the US masks the fact that redistributive policies and massive investment in the 30 years post WWII built a huge, primarily white, middle class.   

“First home buyer programmes, 1 percent 40 year loans, debt-free college education - a third of the US population was launched onto the middle class and onto the wealth-building train thanks to these public investments.

“We invested in building a white prosperous class but we left others behind.”

He says at the outset there was discrimination in mortgage lending and mortgage insurance against African Americans and Latinos, who if they did get a loan, were steered to certain areas where home values did not rise in the same way.

At the same time, billions of dollars were poured into scientific investment, education and infrastructure.

“We really provided a generation of subsidies to researchers.

“Uncle Sam was the biggest venture capitalist in building the foundations of the modern internet.”

Great individual tech fortunes have been built on that foundation, as most American’s have stood still or gone backwards.

“There’s been a steady erosion in middle class security - declining assets - the whole [home] ownership rate rose steadily until 2007 and then it’s been steadily going down. People have less assets, less savings.

“All those things contribute to the political environment that we’re in - the polarised politics is a reflection of this polarised economy and particularly that experience of the collapsing middle class,” Collins says.

That has manifested itself in the “progressive populism” of Bernie Sanders and the “regressive xenophobic populism” of Donald Trump.

Collins is agitating for the wealthiest to go to Washington and lobby for measures that will make them poorer – to lobby against their narrow class interests.

“My invitation to the 1 percent is to come home. Take your wealth out of the global financial casino, and the offshore tax havens and put it to work in our local and real economy - the one a lot of young millennials are building.

“For the climate crisis and the inequality crisis are going to undermine the quality of life for everybody.”     

He says the US is moving towards an economic and racial apartheid that is bad for all.

“Wealth disconnects people from each other, and there is no wealth on a degraded planet.”