October 22, 2010


I read in the news that a billionaire in India has built himself a seven story building which he plans to use as his private residence. My first reaction was, “Wait a minute, isn’t this the same India where “Slum Dog Millionaire” exposed the extreme poverty of many of its people?

What I asked was a rhetorical question; but I was so stunned, I asked it anyway. Of course, one needn’t travel to India for examples of profligate spending.  Recently an American billionaire built a yacht so luxurious it takes over 3 million dollars a year to maintain it. 

A recent report from by Emily Kaiser from the Reuters news service (10/22/2010.) states that economists are studying the growing gap between the “haves” and “have nots” in our country and explains the complacency of our shrinking middle class in this way:

                “Americans are generally not bothered by inequality because they believe with hard work, they, too, can strike it rich.”

Of course, to believe that myth is to believe one can discover a vein of gold if one works hard and digs enough holes. The math isn’t there.

Thorstein Veblen wrote “The Theory of the Leisure Class in 1899. In it, he discussed what he called “conspicuous consumption” or the tendency of those with money to make purchases not for their intrinsic value but to create envy.  Certainly the Indian with his seven story home and the American billionaire with his yacht are good examples. But Veblen poses a timelier question which is yet to be answered: to what degree should a person be granted unfettered freedom to squander a finite resource, money?  Should there be no limits? Some limits?  Stringent limits? American needs to have this debate. Thinking that reigning in government spending is the sole solution to the growing gap between rich and poor isn’t the full picture.

Recently I read one solution that might lead to a better distribution of wealth in the country. The economist Herbert Frank proposed we do away with the income tax and shift to a progressive tax levied on the amount spent each year. It struck me as an interesting idea with lots of ramifications. But I saw no exemption for charitable giving. Such a provision should be added. If the American billionaire with the expensive yacht used his money to build shelters for homeless veterans, I wouldn’t want to tax him. I‘d want to thank him.