Robert Reich And Stanley Chang Want To Solve One Of The Big Problems Endemic To Growing Inequality

The debate above on the topic: The Rich Are Taxed Enough-- Robert Reich and Mark Zandi vs Glenn Hubbard and Arthur Laffer-- took place in 2012. At its core, the question came down to whether or not the richest are paying their fair share in taxes. (Spoiler: the audience vote showed a gargantuan win for Reich and Zandi over the two clueless corporate stooges Hubbard and Laffer.)

Over the weekend, Reich did an interesting post, Work and Worth that almost anyone who finds himself in a high-paid job contemplates at one time or another. His assertion-- that "what someone is paid has little or no relationship to what their work is worth to society"-- doesn't delve into an even more basic question: is what gigantically rewarded executives are paid relationed to what their work is worth to the company paying them? Yesterday we looked at billionaire sociopath Bruce Rauner, a sleazy conservative crook running for governor of Illinois. Rauner and his wife pull in slightly over $50 million a year and-- using various loopholes and schemes-- pay virtually no taxes. Reich, though focuses on another financial manipulator to kick off his piece, crooked hedge-fund operator Steven Cohen, who made $2.3 Billion last year alone, "despite," Reich reminds us, "being slapped with a $1.8 billion fine after his firm pleaded guilty to insider trading?"

Reich compares a money-grubbing sociopath like Cohen to "social workers who put in long and difficult hours dealing with patients suffering from mental illness or substance abuse" who make around $38,000 a year, to "personal-care aides who assist the elderly, convalescents, and persons with disabilities" who make around half what the social workers make, to "hospital orderlies who feed, bathe, dress, and move patients, and empty their ben pans" ($24, 190/year), to kindergarten teachers, who make an average of $53,590 a year, rather than $2.3 billion.

Yet what would the rest of us do without these dedicated people?

…One study found that children with outstanding kindergarten teachers are more likely to go to college and less likely to become single parents than a random set of children similar to them in every way other than being assigned a superb teacher.

And what of writers, actors, painters, and poets? Only a tiny fraction ever become rich and famous. Most barely make enough to live on (many don’t, and are forced to take paying jobs to pursue their art). But society is surely all the richer for their efforts.

At the other extreme are hedge-fund and private-equity managers, investment bankers, corporate lawyers, management consultants, high-frequency traders, and top Washington lobbyists.

They’re getting paid vast sums for their labors. Yet it seems doubtful that society is really that much better off because of what they do.

I don’t mean to sound unduly harsh, but I’ve never heard of a hedge-fund manager whose jobs entails attending to basic human needs (unless you consider having more money as basic human need) or enriching our culture (except through the myriad novels, exposes, and movies made about greedy hedge-fund managers and investment bankers).

They don’t even build the economy.

Most financiers, corporate lawyers, lobbyists, and management consultants are competing with other financiers, lawyers, lobbyists, and management consultants in zero-sum games that take money out of one set of pockets and put it into another.

They’re paid gigantic amounts because winning these games can generate far bigger sums, while losing them can be extremely costly.

It’s said that by moving money to where it can make more money, these games make the economy more efficient.

In fact, the games amount to a mammoth waste of societal resources.

They demand ever more cunning innovations but they create no social value. High-frequency traders who win by a thousandth of a second can reap a fortune, but society as a whole is no better off.

Meanwhile, the games consume the energies of loads of talented people who might otherwise be making real contributions to society-- if not by tending to human needs or enriching our culture then by curing diseases or devising new technological breakthroughs, or helping solve some of our most intractable social problems.

In 2010 (the most recent date for which we have data) close to 36 percent of Princeton graduates went into finance (down from the pre-financial crisis high of 46 percent in 2006). Add in management consulting, and it was close to 60 percent.

Graduates of Harvard and other Ivy League universities are also more likely to enter finance and consulting than any other career.

The hefty endowments of such elite institutions are swollen with tax-subsidized donations from wealthy alumni, many of whom are seeking to guarantee their own kids’ admissions so they too can become enormously rich financiers and management consultants.

But I can think of a better way for taxpayers to subsidize occupations with more social merit: Forgive the student debts of graduates who choose social work, child care, elder care, nursing, and teaching.

Next Saturday, August 9, Honolulu voters will pick between a gaggle of Democrats running to replace Colleen Hanabusa. There is only one progressive in contention, City Councilman Stanley Chang. Like Reich, he is very focused on the societal value of education. In his Agenda For Change he calls for "a year of college tuition for every year of public service a young person invests in military service, the Peace Corps, VISTA, Teach For America, or other qualified programs. The years following World War II showed how robust investment in public universities along with support from programs such as the GI Bill combined to create an educated and productive workforce. Education represents a fantastic return on investment. Educated workers create wealth for themselves, their families, their communities, and the companies that employ them. A program to guarantee free college tuition for students who devote themselves to service would both produce a workforce for the 21st century and instill a spirit of giving back to the community in the next generation."

And like Reich, Chang recognizes that "debt is crushing our young generation before they even start their careers." He would like to go to Washington to work on a solution. "Profiteering in student loan programs needs to be stopped. Our parents may have been able to work their way through college, but with high tuition and our rising cost of living, this is increasingly out of reach for today’s students. Today, too many college students are forced to take out expensive loans in order to finance their education, and can’t get off on the right foot once they graduate and start working. If subject to predatory interest rates, the paychecks for their first few years on the job will be siphoned away. They will not be able to save to buy a home and support a family. If the prospect of paying for college is too daunting for today’s working families, our economy and productivity will suffer in the long run. Let’s make sure that the student loan industry is appropriately regulated so that funding is made available to our young people at reasonable rates."

This map showing the richest person in each state circulated widely online over the weekend. The only states blessed enough to not have any blood-sucking billionaires are Delaware, Alaska (the socialist states that gives everyone in the state a share of their oil), North Dakota and Maine. Just for the heck of it, I decided to see if there was any pattern of political giving among the fifty richest people of each state.

• WA- Bill Gates ($80B)- huge donor to both parties
• NE- Warren Buffett ($63.1B)- huge donor to both parties
• CA- Larry Ellison ($49.4B)- moderate donor to both parties
• NY- David Koch ($41.4B)- huge donor to Republicans
• KS- Charles Koch ($41.4B)- huge donor to Republicans
• WY- Christy Walton ($37.9B)- huge donor to Republicans
• NV- Sheldon Adelson ($35.7B)- huge donor to Republicans
• AR- Jim Walton ($35.7B)- huge donor to Republicans
• TX- Alice Walton ($35.3B)- huge donor to Republicans
• VA- Jacqueline Mars ($20B)- modest donor to Republicans
• OK- Harold Hamm ($19.7B)- huge donor to Republicans
• OR- Phil Knight ($19B)- big donor, mostly to Republicans
• MA- Abigail Johnson ($18.2B)- moderate donor, mostly to Republicans
• CO- Charles Ergen ($16.6B)- big donor to Democrats
• GA- Ann Cox Chambers ($16.1B)- huge donor, both parties
• CT- Ray Dalio ($14.4B)- big donor to Republicans
• MO- Jack Taylor ($13.5B)- big donor, mostly for Republicans
• NH- Rick Cohen ($11.2B)- modest donor to Republicans
• NJ- David Tepper ($10B)-big donor to Republicans
• FL- Charles Johnson ($8.1B)- big donor for Republicans
• NC- James Goodnight ($8.1B)- big donor, both parties
• HI- Pierre Omidyar ($7.9B)- big donor for Democrats
• MI- Hank & Doug Mijer ($7.9B)- big donors to Republicans
• WI- John Menard ($7.7B)- big donor to Republicans
• TN- Tom Frist ($6.9B)- modest donor for Republicans
• MT- Dennis Washington ($6.1N)- big donor for both parties
• IN- Gayle Cook ($6B)- small donor for Republicans
• OH- Leslie Wexner ($5.7B)- big donor for Republicans
• IL- Ken Griffin ($5.5B)- huge donor to Republicans
• MN- Whitney MacMillan ($5.3B)- big donor for Republicans
• AZ- Bruce Halle ($4.8B)- big donor for Republicans
• MD- Ted Lerner ($4.6)- small donor, both parties
• VT- John Abele ($3.3B)- small donor, both parties
• IA- Harry Stine ($3.1B)- modest donor to Republicans
• PA- Mary Alice Dorrance Malone ($3B)- small donor to Republicans
• SC- Anita Zucker ($2.7B)- modest donor to both parties
• MS- Leslie Lampton ($2.4B)- modest donor to Republicans
• KY- Bradley Hughes ($2.3B)- huge donor to Republicans
• RI- Jonathan Nelson ($1.8B)- modest donor, both parties
• WV- Jim Justice ($1.6B)- modest donor to both parties
• LA- Tom Benson ($1.5B)- big donor to Republicans
• SD- T. Denny Sanford ($1.3B)- modest donor to Republicans
• UT- Jon Huntsman, Sr ($1.2B)- huge donor to Republicans
• ID- Frank Vandersloot ($1.2B)- huge donor to Republicans
• AL- Margerite Harbert ($1B)- small donor to Republicans
• NM- Maloof Bros ($1B)- modest donor mostly to Democrats
• ND- Gary Tharaldson ($900M)- modest donor to both parties
• ME- Leon Gorman ($860M)- modest donor mostly to Democrats
• DE- Robert Gore ($830M)- modest donor to both parties
• AK- Robert Gillam ($700M)- modest donor to both parties