The right eloquence needs no bell to call the people together and no constable to keep them. ~ Emerson

Thursday, December 4, 2008

The Luxury of Giving

“Greed is good,” as Michael Douglas’s character reassures a room of sycophantic followers in the film Wall Street. And he is correct in his pronouncement. In our capitalist society, enlightened self-interest is the catalyst for everything, including “the upward surge of mankind.” Yet the positive qualities imbued in the noun form of this particular word fail to carry to the adjective form. While many may perceive “greed” as good, nobody finds anything honorable about “greedy.”

The current issue of Newsweek reports on yet another troubled American industry – the luxury industry. Have the affluent been hit as hard as the rest of us by the financial crisis? The short answer is “no.” We are talking about individuals whose personal wealth is so great they can afford to lose millions – sometimes even hundreds of millions or billions – in the market on a given day without requiring the slightest adjustment to their lifestyles.

There is a relationship between the sudden downturn in luxury purchases and the bad economy but the spending cutoff is voluntary. The wealthy are suffering from the phenomenon of “luxury shame.”

“I could walk downstairs now and buy a Ferrari,” says multimillionaire Michael Hirtenstein. “But all of my friends are hurting. I don't feel like buying random toys.”

“Would I go out and buy something showy? Not at a time like this,” agrees one of Hollywood's richest moguls. “It would be like bragging.”

In the current recession, it strikes the rich as vulgar to flaunt their personal capacity for luxury. Yet as G.K. Chesterton once wryly observed, “The vulgar man is always the most distinguished, for the very desire to be distinguished is vulgar.” We are all the products of a society that worships material possessions and in which everyone struggles for their fifteen minutes of fame.

The Newsweek article quotes Coco Chanel, yesteryear’s leading light of fashion, who once told Life magazine in 1957, “Luxury lies not in richness and ornateness but in the absence of vulgarity.”

Chanel draws an interesting comparison. The English words “vulgar” and “luxury” both originated in the Fourteenth Century. However, while the former started with a neutral connotation and shifted to a negative one, the latter began as a negative and slowly morphed to a neutral, even positive, meaning.

“Vulgar” comes from the Latin vulgāris, meaning “from the common people or ordinary classes.” It kept this simple meaning for several centuries, only taking on the negative associations of rudeness and boorishness in the Seventeenth Century.

“Luxury” comes from the Latin luxuria, meaning “excess.” Its original use was to suggest lasciviousness or sinful self-indulgence. It lost this denotation in the Seventeenth Century and instead began describing something costly. By the Eighteenth Century, it settled on its current common form, meaning a pleasure beyond life’s necessities.

Americans have long viewed achieving excess wealth enabling one to live a luxurious lifestyle as a virtue. In Europe, poorer classes historically saw resources and opportunities as limited and thus viewed the wealthy has having acquired their disproportionate shares of both by iniquitous means. The United States, with seemingly limitless resources and opportunities, not to mention cutting-edge technologies, bred a completely new mindset, in which growth improved the fortunes of all.

The wealthy generally win admiration in the U.S. for their diligence, productivity, and financial prudence precisely because poorer classes see themselves as capable of aspiring to the same. This attitude has begun shifting in recent decades, due to the concentration of wealth.

Since the 1980s, most of our economy’s net financial gains have flowed to the richest five percent of Americans. Even the majority of this goes to the richest one percent and more than half goes to the richest one-tenth of one percent. According to the Census Bureau, the top tenth of U.S. households now earn an average of 11.2 times what those in the bottom tenth make, up from a ratio of 8.7 thirty years ago. The wealthiest fifth of U.S. households now take in fifty percent of all income, up from forty-four percent.

“The income gap between the rich and the rest of the U.S. population has become so wide and is growing so fast that it might eventually threaten the stability of democratic capitalism itself,” warned former Federal Reserve Chairman Alan Greenspan in 2005.

As a result, arguments that taxation stifles creativity and growth as well as limiting opportunities, now has less impact on middle and working-class Americans. An April Gallup poll found sixty-eight percent believe in a more fair distribution of money and wealth. What is more, fifty-one percent support heavy taxes on the rich to redistribute wealth. A 2003 survey of U.S. economists found most endorse policies resulting in redistribution of wealth.

In trying to resolve the seemingly conflicting observations of Chanel and Chesterton, it becomes apparent that less important than how much wealth a person has is how they choose to use their wealth. After all, only a finite amount is required to satisfy one’s basic physiological needs. People also have socialization and self-actualization needs and luxury purchases create an aura of distinction that fills them.

People also spend wealth to the benefit of the greater good. Most people do not object to a national defense budget, although they often quibble over exact amounts, because this satisfies our common need for safety. Likewise, spending and investment by the wealthy can help provide opportunities for others.

Nonetheless, something else has changed over the past thirty years as well. If pursuing opportunities and wealth through one’s own initiative and efforts has always earned admiration, it has lately become disreputable to the point of taboo providing opportunity for others, save through the auspices of the market. Turning Barack Obama’s remark to Joe the Plumber about “sharing the wealth” into accusations of socialism by his political opponents is the most recent high-profile example.

It was not always so. When oil tycoon John D. Rockefeller decided to put his vast fortune to public use, he created the Rockefeller Foundation in 1913 with two gifts totaling $100 million. That organization led the way in the eradication of hookworm in the South, helping pave the way for the region's economic development. It supported scientific research that led to a yellow-fever vaccine. It helped Brazil eliminate a malaria-transmitting strain of mosquito. It funded the Asian Green Revolution, which enabled India and other countries to escape endless cycles of famine and poverty.

Nor are all such efforts gone today. Bill and Melinda Gates, backed by more than $30 billion of their own funds and an additional $31 billion of Warren Buffett's, seek to exploit technological breakthroughs to end extreme poverty on a global basis in such areas as healthcare, agriculture, and water. George Soros funded efforts in Central Europe and the former Soviet Union that helped bring about the end of communism. Google founders Larry Page and Sergey Brin want to employ information technologies to benefit society.

This is not merely charity but also transformative change. Unfortunately, conservatives are as likely to meet contemporary billionaire altruism with jeers as with cheers. When the aim is feeding and nursing impoverished children, all is well. When the focus turns to ensuring the parents of those children have jobs with good wages and benefits, support turns to skepticism. Change the funding method from charity to taxation and outright hostility ensues.

Many Baby Boomers aspire to the moral fiber of their “Greatest Generation” parents. That generation forged its character through the shared sacrifices of the Great Depression and World War II.

Boomers have largely thrown away the opportunity for such sacrifice in our most recent wars. The economic downturn presents another opportunity and we need better advice from our leaders than the Bush Administration’s pathetic admonitions to display our patriotism through conspicuous consumption.

President-elect Obama has proposed a far-reaching set of programs to repair and expand inadequate infrastructure and convert the U.S. to a green energy economy. The expense is great, estimated to cost from $200 to $500 billion.

Under a traditional, jingoist mindset, this will be catalyzed by struggling but brilliant and diligent individuals, working in garages, basements, ill-equipped laboratories, and obsolete factories. Imagine how much more could be done and how much more quickly, if this creativity and can-do spirit received funding from the wealthy, vigilantly collected and funneled to the right places by the federal government. According to Forbes magazine, there are nearly a thousand billionaires in the world, with an estimated combined wealth of $3.5 trillion.

Granted, it is a long evolution from “luxury shame” – a temporary condition that has occurred previously, only to see Americans return to their profligate ways – to a transformative social change that re-embraces the lost virtue of shared sacrifice. Still, it is a start and it draws upon a deeper wisdom in the American consciousness.

It is the wisdom embodied by John Crisp of Del Mar College in Corpus Christi Texas. He holds societies to be more than collections of individuals, each competing for the greatest wealth. “A society can also be rich or poor as a whole, and its economic health depends on its attitude toward the wealth that it holds in common; that is, its natural resources and the labor and ingenuity of ordinary people. Without these . . . no one in our culture could be rich.”

It is the wisdom that allowed Andrew Carnegie to write presciently in 1889 that “the day is not far distant when the man who dies leaving behind him millions of available wealth, which was free for him to administer during life, will pass away unwept, unhonored, and unsung.”

It is the wisdom that caused FDR to observe in the 1930s, “We have always known that heedless self-interest was bad morals; we know now that it is bad economics.”

But perhaps the best wisdom that brings home Chanel’s distinction of luxury as the opposite of poverty comes from a fellow woman, Mary Ann Evans (a.k.a. George Eliot), who exclaimed in her epic 1872 novel Middlemarch, “One must be poor to truly appreciate the luxury of giving!”

Let this nation use the luxuries given us for the betterment of the world as our chosen mark of distinction upon history.

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