WWVS (What Would Veblen Say?)
Daniel Gross had the smart idea of turning to the writings of Thorsten Veblen, one of America's greatest, and first, political economists, for some insight on the current meltdown. Veblen, he decides, is still right about the eccentricities of the wealthy. But his "Theory of the Leisure Class" has been shot through with holes by an upper crust that can't stop checking its e-mail:
In the contemporary money culture, to be at leisure, to be idle, is to be irrelevant. After Bank of America acquired Merrill Lynch, John Thain, the former chief executive of Merrill, was pushed out, in part because he insisted on going skiing at Vail over Christmas and wanted to attend the World Economic Forum in Davos amid the company’s continuing crisis. A great many people can afford not to work and could spend their time shuttling between multiple homes, eating fabulous meals and playing golf. Yet they continue to work around the clock. Of course, the private jet, the BlackBerry and the Internet allow people to do all of the above. But among Type-A, self-made members of the leisure class, there’s a sort of reverse prestige associated with leisure. At Davos, which is filled with conspicuous consumers, the only people who ski are the journalists.
Veblen, in other words, was right about the culture of conspicuous consumption, where acquiring ever more impressive material goods served "as a means of reputability to the gentleman of leisure.” But he was less attuned to the rise of conspicuous achievement, where the hours worked and the awards accrued served as a means of triumph. In part, though, that's because the rich in Veblen's day looked rather different from the rich in ours. They were, for lack of a better term, the lazy rich. This graph from Emmanuel Saez's "Income and Wealth Concentration in a Historical and International Perspective" tells the tale well:
Veblen, who died in 1929, saw a large overclass that earned most of its wealth through returns on capital. Essentially, their money made money for them. Which gave them time to hang about and conspicuously consume. In the period after his death, that overclass shrank substantially, first because the Great Depression battered them and then because the New Deal disadvantaged them. But by the start of the 21st century, they were back. At least in terms of wealth concentration. Their money, however, wasn't coming from capital returns. It was coming from wages and salaries. They were -- gasp! -- working.
July 8, 2009; 10:07 AM ET
Categories: Charts and Graphs , Economy , History
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