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We Can't Afford the Rich by Andrew SayerLUMPENPROLETARIAT—In an encore broadcast, author and professor, Andrew Sayer [1] has joined free speech radio’s Against the Grain to discuss his 2014 book, Why We Can’t Afford the Rich.  Host Sasha Lilley guides Professor Sayer through a thoughtful discussion including the accumulation of wealth “without contributing to the production of goods and services”, or “unearned income”.  “You can get money simply by virtue of power stemming from control of assets,” emphasised Dr. Sayer, responding to questions about the dreaded rentier class.  Listen (or download) here.



AGAINST THE GRAIN—[22 DEC 2015]  “Today on Against the Grain:  Are the rich wealth creators, as we commonly hear?  Should we be grateful to investors and entrepreneurs, as they like to be called, for generating jobs and greasing the wheels of the economy?  Or is the source of their massive wealth the rest of us?  I’m Sasha Lilley.  In this encore broadcast, I’ll speak with scholar Andrew Sayer about rentiers, capitalists, and why we can no longer afford the rich.  That’s following these news headlines.”

[News Headlines omitted by stenographer]  (c. 6:28)

“From the studios of KPFA in Berkeley, California, this is Against the Grain on Pacifica Radio.  I’m Sasha Lilley.

“The world’s richest 85 people own as much as the poorest half of the world’s population.  That is as much as 3.5 billion people.  46% of the world’s wealth is owned by just one percent of the world’s population.  In the United States, the top 1% owns 35% of the nation’s wealth, while the bottom 40% owns just 0.2%.

“Yet, as Andrew Sayer asserts, it’s not a mystery how the rich have become so rich.  My guest, today, argues that, despite their self-description as wealth creators, the rich are, in fact, wealth extractors.  In his book called Why We Can’t Afford the Rich (published by the University of Chicago Press), Sayer argues that the richer people are, the more their wealth comes from purely unearned sources, from property and finance, not to mention production.  His other books include The Moral Significance of Class.  And he teaches social theory and political economy at the University of Lancaster.  And he joins me now from the UK.

“Andrew Sayer, let me start by asking you, if you will, to describe the degree of inequality in our respective countries.  That is, in the US and UK.”

DR. ANDREW SAYER:  “Actually, the US and the UK have some similarities here.  And, as Thomas Piketty and Emmanuel Saez and people like that have shown over the last century, there’s been a dramatic series of changes in the degree of inequality, especially as regards the rich and super-rich.

“And one century ago, just after the First World War, the top 1% received about 20%, or nearly 20%, of total income.  That fell in the Inter-War Period.  And in the UK fell down to about 6% of total income.  But since then—and, again, the US is the same—the rich have bounded back with the top 1% taking about 12%, now, of total income.  And more in the US.  So, the rich have made a huge come back.  And it’s, largely, at the expense of the bottom 99%, but, particularly, the bottom 90%.”  (c. 8:58)

SASHA LILLEY:  “So, how do you define the rich?  Now, you just used the term 1%, something, that came out of the Occupy Movement.  But the top 10%?  Would we consider them rich as well?  How do you define the rich?”

DR. ANDREW SAYER:  “Well, as regards the UK, looking at the last hundred years, actually, the top 1% versus the 99% has been a key dividing line because whenever the top 1% have enlarged their share of total income the 99% have lost out.  And it could have been different.  It could have been the top 5% gaining at the expense of the bottom 95% or something much more complicated.  But throughout the last hundred years, at least in the UK, there’s been a kind of hinge point around 99%.

“So, I would say the 99%, definitely, are the rich.  But the amount of variation within the top 1% is, of course, far greater than anywhere else.  They can be people with multi-billions, like Bill Gates, or people who are just getting in to the top 1% with incomes—well, in the US, just trying, roughly, to convert from pounds to dollars—they’d be getting a household income of about $250,000 to $300,000 dollars a year.

“There’s a matter of degree in it.  The richer you are, the more of the problem it is for various reasons, which we can, no doubt, talk about.”

SASHA LILLEY:  “So, you’ve been giving us a rough sense of how we should think about the rich:  Who are they?  Whether it’s as a percentage of the population  Whether it is by income or wealth.  But I wonder if you could describe for us—who are the rich?—because, of course, the image we tend to get in the mainstream media is of celebrities, high-flying movie stars, and so on.  Are they the rich?  Or is the rich a broader group than that?”  (c. 11:02)

DR. ANDREW SAYER: “It’s not celebrities in the media, like sports stars and television and film stars.  Even someone like Steven Spielberg or Oprah Winfrey, they don’t get anywhere near the top.  They’re certainly super-rich.  But most of the super-rich we, ordinary people, haven’t even heard of.

“Okay, there are a few exceptions like Bill Gates and Donald Trump and so on, and Warren Buffett.  But most of them are known only to a few business insiders.  So, in Britain, most people haven’t heard of the top 10.  And most of them are foreign, Russian, and so on, super-rich people who  control businesses we haven’t heard of in many cases.

The richer they are, the more their income tends to be associated with finance and real estate and the more of it is what I would call unearned income.  But, no doubt, we can talk about what that is later.”  (c. 12:03)

SASHA LILLEY:  “Sure.  One of the things, that we’ve heard about in this country is very high salaries going to, say, people in the medical profession.  And that is one group of people who are making a substantial amount.  But it sounds like what you’re saying is that, within the spectrum of the rich, those people, people, say, making $400-, $500,000 dollars a year—obviously, a lot of money—would be dwarfed by people who are on the top echelons of the 1%, so to speak, whose income or, more significantly, wealth would be substantially more.”

DR. ANDREW SAYER: “Absolutely.  Certainly, key medical consultants and other people who have very specialist skills, but also power that goes with that, can leverage themselves very high salaries.  There’s no doubt about that.  But they tend to be in the bottom half of the top 1%, if you see what I mean.  But, to get into the top half, you really need other sources of income, like financial securities and the income, which they give you, bonds and shares, derivatives, and so on, and also property, capital gains, and such.

“Any get-rich book will tell you that the best way to get rich is not simply by working hard.  And, in fact, maybe you don’t need to work hard.  It’s by getting access to financial assets, which will yield you lots of unearned income.”

SASHA LILLEY:  “Right.  And we will be talking a lot more about that.  In fact, that’s sort of the centerpiece of your book:  How are the rich rich?  But before we get to that, let me ask you:  How do the rich spend their money?  Because that has a significant role, not just simply as an individual question—how a certain person may spend the money, that they have—but it actually has a societal impact.”

DR. ANDREW SAYER: “Yeah.  Well, if you’re a billionaire, then it’s very difficult to spend all your income.  At least, it is hard to spend it on things you’ll actually get to use in a typical year.  For example, you may have four of five houses in different parts of the world.  And you’re unlikely to be able to stay in any of them for more than a short period.  But the more you get, the less you can use them, the less point in having them.  And maybe a couple of private jets would be useful.  But any more than that is a complete waste.  And, likewise, trying to get a bigger yacht than the next billionaire will take several hundred million, perhaps.  But, if you’re a billionaire, that’s not making much impression on your wealth.  So, what they do with most of their wealth is just reinvest it and seeking further sources of capital gains.  The might invest in property, not in order to live, but just to take advantage of the inflation of its value.

“So, once you get into the multi-millions, it becomes harder and harder to spend on things, which you’ll actually use.  In other words, it’s money beyond purpose, in a way.”

SASHA LILLEY:  “Andrew Sayer is my guest.  He’s the author of Why We Can’t Afford the Rich.  You’re listening to Against the Grain on Pacifica Radio.  And I’m Sasha Lilley.

“So, then the question, which you touched—you mentioned the rich have not always been as rich, as they are now; and if you look at the early part of the 20th century, the rich were quite rich.  That, then, changed in mid-century and, then, has become concentrated again at the end of the 20th century and into the 21st century.  So, can you tell us, then, why the rich are as rich as they are now?  What has happened?”  (c. 15:54)

DR. ANDREW SAYER: “In the 1920s, the Interwar Period, labour grew in strength.  And the political franchisement of labour meant that it had more influence.  It was more possible to tax the rich and to reduce their share, their huge share, of the national income and, also, to reduce their wealth.  Particularly with the New Deal and the Second World War, that changed economies and changed attitudes as well.

“So, for people to sacrifice themselves for the country and the war, they expected a better life when they returned from the war.  And the shift in power towards labour, particularly with the reconstruction after the war made a huge difference as well.  And we experienced in the UK, and in the US, in the late 1940s through the 1960s very high rates of marginal taxation, which young people today would scarcely believe—over 80% and over 90%, even in the US.  So, very high earners were very highly taxed.  And, yet, capitalism was very successful in that period from the late ’40s to about the very early 1970s.  That was the most successful period of capitalism, in fact.

“But capitalism also got into trouble in the sense that globalisation meant that industry could run away from well-paid labour in countries like ours to East Asia and so on.  That weakened trade unions and labour organisations.  And, also, rates of profit in rich countries were also falling in productive industries.  And, as David Harvey has argued, capital started looking for other outlets, particularly in property and in financial assets.

“And, with the liberalisation of finance in the 1970s, that gave them free rein to do so.  And, so, you had a shift away from productive capitalism, after the Second World War, and, starting in the 1970s, late 1970s, towards what I would call a rentier capitalism, in which simply controlling assets is the key way to get income, rather than investing considerably in productive investments.”  (c. 18:30)

[transcript pending]”  (c.52:47)

SASHA LILLEY:  “Well, let’s talk about—since you’re saying these things are all tied together—the political implications of thinking about how to reduce the power of the rich.  You write that certain concrete steps a ways toward reining that power in.  What would those steps look like?”

DR. ANDREW SAYER: “Well, with rent, I would have kind of land value taxes, which have been advocated, not only by the Left, but actually by some figures on the right, like Henry George, of course.  And even Milton Friedman said a land value tax is the least bad tax.

“So, you tax away those free lunches, if you like, and return them to the public, who, effectively, paid for them.  And, where interest is concerned, that’s tied to credit, I think credit needs to be brought under democratic control, not totally, but to a significant extent, so that it is used for funding necessary productive investment, particularly in the foreseeable future with a huge emphasis upon sustainable energy—sustainable ways of living.

“As regards other forms of unearned income, I think ensuring that employees and users of products and services should be the key stakeholders, not absentee shareholders.  I mean it’s absurd that shareholders are almost the only stakeholders.  I can buy some shares in Monsanto or whatever; and the money that I pay doesn’t go to Monsanto.  It goes to the previous owner of those shares.  I’m not invested in the company at all.  But I, then, get a bit of power over what happens to Monsanto if I buy a lot.  And I get this unearned income in the form of capital gains and trading shares and dividends and so on.

“I should not be a stakeholder.  It should the employees and key users or representatives of users, as a question of justice.  But it’s also functional for the economy.  That way you’re more likely to get an economy, that’s serving the public, rather than providing a kind of disservice.”  (c. 55:13)

“And I think it’s very important that, with that, people like Gar Alperovitz have argued we need much more cooperatively organised economic organisations.  So, there, the workers really are the primary stakeholders.  And one of the attractive things about them, in a no-growth future, is that they can survive without  constantly expanding.  And they can stay at one level.

“And that will, actually, probably, mean that there’d be less competition.  And I think we need less mobility of capital.  Competition can be a good thing.  It can raise standards.  And, then, should be retained in many sectors.  But there can be competition between competing cooperatives. And, internationally, competition is a very mixed bag, in terms of its benefits.

“So, we don’t really need to re-think economies, rather than just assuming that business as usual is the only possibility.”

SASHA LILLEY:  “Well, I’m afraid we’re entirely out of time.  Andrew Sayer, thank you so much for your time.”

DR. ANDREW SAYER: “Thank you.  I’ve enjoyed it.”

SASHA LILLEY:  “I’ve been speaking with Andrew Sayer.  He’s the author of Why We Can’t Afford the Rich, published by the University of Chicago Press.  You can find a link to that book on our website, AgainstTheGrain.org.  He teaches social theory and political economy at Lancaster University in the UK.  I’m Sasha Lilley.  You’ve been listening to Against the Grain.  Thanks for listening.  And, please, tune in again next time.”

Learn more at AGAINST THE GRAIN.

[Transcript by Messina]


Also see AgainstTheGrain.org.


[1]  Andrew Sayer is professor of social theory and political economy at Lancaster University, UK.  His books include Radical Political Economy: A Critique, The Moral Significance of Class, and Why Things Matter to People: Social Science, Values and Ethical Life.


[Last modified  10:50 PDT  25 DEC 2015]