What shall we do with all those billionaires? Do we have to exterminate them (financially) or can we use them in any way?
Those were the questions, which the student members of the Hart House Debate Club (University of Toronto) pondered during their session earlier this month. As a supreme arbiter they had invited Linda McQuaig, a (very) liberal columnist from Toronto Star.
The theme about whether billionaires are menace to society was discussed from two opposing points of view. The students were well prepared and had to speak extremely fast to fit into the short minutes allocated to each speech.
The first side stated that they are a menace. Their vast wealth buys politicians through campaign donations, because with the current practices in the election campaigns, you cannot be elected without money. Power corrupts – the politicians, who gained their positions through the rich, continue to serve them. Even the judges become corrupt as it was shown in the way Enron was treated in the courts.
Universities are also controlled through wealth. They should be subsidized by the government instead. Billionaires should not have the power they have now, because it is not deserved. For example, those who make billions trading currency should not be entitled to the power given by profits.
The other side defended the opinion that billionaires are important, because they donate money. Tax money is not enough for the different ventures and initiatives, so the gap is filled by billionaires. The money that Peter Munk donated to create the Munk School of Global Affairs is an example. Another one are the Warren Buffett contributions to the AIDS research. For the universities the money received from the government is not enough. It is also wrong to assume that the billionaires always win politically – example of that was Meg Whitman’s gubernatorial campaign in California, which she lost.
Then Linda McQuaig was called to resolve the conundrum.
In the promotional materials and at the debate it was quoted that the National Post called her “The Canadian Michael Moore”. Since this comparison came from the National Post, I am not sure it was meant as a compliment. But what I am sure of is that Linda lived up to that definition and showed in her presentation all the ugly Michael Moore-esque delusions.
Her not so hidden agenda was to promote her new book as well, titled The Trouble with Billionaires.
She went directly for a frontal attack stating that the idea of the debaters that the billionaires are needed, because the governments don’t have enough money, is wrong. Instead of expecting charity from the rich, there is another option – we can tax them.
Currently, the financial elite stops us from doing that, many taxes collected from the rich were abolished. This is the cause of most social problems, like housing, hospitals, and homelessness. The rich control too much money, more than ever before. The income of society increased, but almost all of it went to the top 1%.
That is not exactly true, the rich pay enormous amounts of taxes, which is supported by the statistics. Tax breaks are given in most cases for money invested. If the government takes away that money and gives it to the homeless, it would be gone forever. So what are they going after that when there will be nothing left to tax? The income of the society increased, but of course it will go those who save and invest. If you spend all your money, how are you going to accumulate any wealth?
Then she went into statistics – in the 1980’s a CEO was making 30 times the salary of a worker, now it’s 200 times more. Hedge fund managers (all in all 25 people) last year each made over $1 billion. The justification is that we need incentives to encourage those people. Another example is with baseball – the top payment went from $200,000 in the times of Babe Ruth to $28 million, at present time, although the skills remain the same. In the case of GM the CEO’s were paid less when the company was making money.
That was a cheap populist shot. First of all, CEO’s work for private companies and it’s up to the shareholders and directors to decide how much they should make. With an expansion of a company and increasing the complexity of its business, the obligations of a CEO increase as well. On the other hand, the value of the work of a worker who tightens a certain bolt at an assembly line in ten years will be exactly the same as it is todays (unless he is a union member and gets raises for no reason).
It is hard to believe that she couldn’t see why salaries increase in baseball. With the growing popularity of the game and the number of fans, the advertising revenue has increased substancially, so it is logical that the team owners will pay more and more to attract the best players. Should we put a cap on their salaries?
Before the 1980’s the taxes on the rich were much higher. Reagan started changing that, dramatically reducing the rates; now 1% of the rich control 24% of the wealth. We have the same situation, which was present in 1929 – that means that the crisis is imminent. So billionaires definitely are a menace to society.
If we get into crisis, it will be because of the reckless government spending over the last 20 years. Even if we confiscate all the wealth of the rich, that will cover only a fraction of the national debt and there will be nothing left to make the next payment.
Another important impact of the billionaire menace is the social one, which creates inequality. Bad things like teen pregnancy, crime, etc. are much worse in an unequal. To support her point Linda McQuaig gave an example with USA and Norway as respectively the most unequal and the most equal countries. Equal countries provide much more social mobility, where the incomes of different occupations are closer – if you want the American dream, you should move to Norway.
Here we go again. If we distribute the money equally everything will be fine and dandy. Giving money to people who produce nothing is the root of all the problems she mentioned. The welfare payments create a parasitic underclass in the urban areas and that’s where most of the crime is concentrated. If everybody was required to earn his or her living, there would have been much fewer problems.
The comparison with Norway was quite odd. Norway derives huge revenues from oil, which are distributed among a tiny population of under 5 million. The money is enough to conduct all kinds of social experiments, despite the growing number of Third World moochers and wanna-be terrorist in the country.
Another element of the menace is that the rich control not only the money, but also the influence – like think-tanks, etc. The issue with places like the University of Toronto is that universities are important in democracies, because they challenge the status quo. They affirm freedom of speech and discussion. You cannot have such an institution dependent on the rich, they will require preserving of the status quo.
The dilemma of money getting is what to choose – philanthropy of taxes. The first is bad, it creates dependency, the rich donate mostly to create publicity (there are no donations for the Jane/Finch area).
A clear example is Peter Munk’s donation, which helped establish the Munk School for Global Affairs. He donated $35 million, but for that he got tax break. In addition to that his donation is only part of all the expenses, yet he got his name on the school. The real problem is the influence he gets. For example, the director of that school will report to the Munk board of directors every year. That’s influence. $15 million of the donation is not paid yet, it will be paid if he is happy with the school’s work. So can we assume that there will be no dissent?
That school is probably not going to discuss the multinational corporations. It will also drag the school away from the UN.
The front door of the Centre is preserved for senior staff and dignitaries only. That’s just one small example of why the billionaires are a menace.
So that’s the issue: instead of the evil billionaire, the government must control that institution. If the government provides all the money, what is stopping them from exercising a total control according to the views of the political party in power at the time? That option was tried and failed in the “progressive” communist countries, which created the total equality.
If Munk didn’t donate that $35 million, we, the taxpayers had to put that much of our money there for a school that would probably be controlled by some super-duper-progressive-oriented-transgender-friendly board of directors totally out of touch with reality.
And if Linda McQuaig bothered to check, she would have noticed that many controversial topics are discussed at the Munk Centre. But of course, many of the topics are important to Canada and moving away from the corrupt United Nations, controlled by fanatics and small crooks is not such a bad idea.
This ended Linda’s presentation, but while answering the questions afterwards, she made an interesting remarked that further revealed her economic views. She said that if we tax the rich, we (the government) will invest the money; we will not throw it into a black hole. The billionaires’ money is just sitting, they don’t really use it. The “brilliant economist” Keynes emphasized that the capitalists don’t invest enough, so the government should do it. And the way it will do the investing is in education and other noble causes.
If it wasn’t that sad, her statement could have sounded like a joke. If you glance over the Forbes’s list of the wealthiest people, it’s easy to notice that the wealth of the most comes from some type of industry or investment in an industry. If their businesses don’t produce anything they will not have the money. It’s ridiculous to say that the money is just sitting there waiting for the wise government to find a better home for it.
Of course, few billionaires like George Soros don’t produce anything and get all his money through speculation. Ironically, he supports all kinds of extremist leftist organizations and they have never called for confiscation of his wealth.
The notion that the government is better in investing than individuals is laughable. The only “brilliant” thing about Lord Keynes was that he gave a brilliant excuse to the government to grab more money and run higher deficits. And the money was not invested, but squandered on strange projects, special interest groups and its own bloated bureaucracy.
But of course, the left will always support the government intervention, because that is the best way to get a piece of the unearned goodies the bureaucrats are giving away.
Yes, Linda McQuaig is a female Michael Moore.
And that’s not good at all.