Elon Musk’s Controversial Politics: Beyond the Financials

As U.S. President Trump signed his “Big Beautiful Bill” into law on July 4, 2025, Elon Musk, shareholder and CEO of Tesla, announced that he would create a new political party (or “group” in European-speak). Musk opposed the projected trillions of dollars that the bill would add to the debt held by the U.S. federal government, though, as CEO of SpaceX, he was fine with cutting a trillion dollars from Medicaid, which provides health coverage to the poorest of the poor, and from food assistance while the defense budget was augmented. Musk’s proposed “America” group would likely draw support from Trump’s “MAGA” base, rather than from moderate Republicans and any Democrats. Whether Musk was more motivated by breaking up the political duopoly of the two major parties, or groups, to increase the practical options for voters or to split Trump’s support and punish the Republican party, such controversial political involvement by a major shareholder CEO is without doubt risky business. This is not to say that CEO’s should not be active politically apart from business strategy, for even business managers are citizens and thus may feel compelled to become active politically. This is to be lauded especially if the motive is out of duty to repair or otherwise improve a political system.

On the next working day after Musk’s announcement that he would be forming a new political party, “Tesla shares plunged nearly 7 percent . . . as investors registered dismay” at Musk’s “plans to form a third party and his intensifying feud with President Trump.”[1] Even though 7% is not exacting “plunging” or “crushing” Testa shares, beyond the hyperbole of journalists is the point that not avoiding controversy politically has costed Tesla and Musk himself financially. To be sure, billionaires can afford to lose significant wealth and still be left standing comfortably, and even in the case of business practitioners, economic reductionism doesn’t always hold. Also, political involvement can raise stock prices, as, for example, “Musk’s involvement in politics and his financial support for the president’s campaign were once seen by investors as a benefit to Tesla, fueling a steep rise in company shares after the election” in November, 2024.[2] No one but the most cynical would deny, however, that Musk’s chief motivation that led to his involvement in “DOGE” in the White House was for his businesses to benefit even though they did, initially. So that they took a hit when Musk broke from President Trump and then formed the America Party cannot be assessed only as concerns the financial impact on Tesla or SpaceX.

In American history, the notion that wealthy people should devote some time to public service for the benefit of the Union or their respective member-states was once well-known. Both because such people could afford financially to take time off from business and because their experience could be useful in governing, the notion of public duty was beneficial to the public good. Men like Thomas Jefferson and George Washington did not make public service into a career and did not go into politics primarily for its positive financial benefit. As a frustrated General dependent on the sovereign states whose delegates met in the Second Continental Congress, Washington would not have endured such hardships as he did were his motivation simply to benefit himself and his landholdings in Virginia financially. Even though Musk is by no stretch another Washington, more has been involved in Musk’s political motivation than maximizing Tesla’s stock price or gaining government contracts for SpaceX, and even getting back at Donald Trump. Government, moreover, is not just the aggregate of business interests without remainder.

Other billionaires might look to Musk’s example not in terms of his political ideology necessarily, but in terms of having enough financial cushion to weather political-turned-financial pushback from going beyond business to engage in public service—to give back, as it were, so to improve the system of government and add to the public good. It is admittedly very easy to be guided by personal and business financial considerations in delving into politics, whereas being willing to hold those at bay out of a sense of public duty is more difficult, and, frankly, increasing rare as American history has proceeded but not necessarily evolved politically. The notion that duty pertains to citizenship has become increasingly recessive in public discourse and consciousness. This is to say that duty-bound CEO’s are saints; rather, it is to say that we shouldn’t be so surprised when a billionaire businessman jumps into politics not merely for financial reasons, and thus not turn back to shore after a financial hit. Even if motivated by political ideology rather than in saving the union from itself (e.g., public debt), personal and business financial benefit is not the whole story, and the public good can still be a beneficiary. 

Mozi says, "'worthy people [are] those who are well versed in virtuous conduct, discriminating in discussion, and broadly knowledgeable!’ . . . . When the wealthy and eminent in the state heard this they retired and thought to themselves, ‘At first, we could rely on our wealth and eminence, but now the king promotes the righteous and does not turn away the poor and the humble. This being the case, we too must be righteous.'"[3]

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1. Jack Ewing, “Musk’s Idea of 3^rd Party Is Crushing Testla Shares,” The New York Times, July 8, 2025.

2. Ibid.

3. Philip J. Ivanhoe and Bryan W. Van Norden, ed.s, Readings in Classical Chinese Philosophy (New York: Seen Bridges Press, 2001), 58.

The Hebrew Bible on Business Ethics

The early Hebrews considered wealth to be an integral part of human perfection and, moreover, what ought to be.[1] The ideal man was wealthy and leisured, and yet occupied with honorable work.[2] In the Torah, as long as the Hebrews as a people obey God, including dutifully acting as stewards rather than as selfish exploiters of the land that God has provided, poverty should be nonexistent in Israel. “There need be no poor people among you, for in the land the Lord your God is giving you to possess as your inheritance, he will richly bless you, if only you fully obey the Lord your God.”[3] Blessed wealth is a reward for fidelity to Yahweh, whereas poverty here is indicative of, or even punishment for, disobedience, which will evidently always be the case in Israel, for, “There will always be poor people in the land.”[4] The conditionality leaps off the page, as does the notion of collective justice, and yet wealthy individuals, including business practitioners, are held to account. The ethic of work is upheld even though labor in Genesis is due to original sin. 

The full essay is at "Ancient Judaism on Wealth."

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[1]. Charles R. Smith, The Bible Doctrine of Wealth and Work (London: Epworth Press, 1924), 21.

[2]. Smith, The Bible Doctrine, 22, 33-34.

[3]. Deut. 15:4-5.

[4]. Deut. 15:11.

Behind Corporate Loopholes: Wealth and Power

A company in the U.S. wants a tax loophole to apply. Starbucks, for example, wanted to be able to use the manufacturing deduction by stretching manufacturing to include the roasting of coffee beans. So in 2004 the company hired Michael Evans, a lobbyist at K&L Gates who had just a year before worked as a top lawyer on the U.S. Senate Finance Committee, which writes tax law. Evans was able to urge his former colleagues in the Senate to expand the definition of manufacturing to include roasting in a clause added to a 243-page tax bill called the American Jobs Creation Act.  As you might imagine, Starbucks was not the only company to get a tax break written into that law. By 2013, the manufacturing deduction had saved Starbucks $88 million that the company would otherwise have had to pay in corporate income tax. In 2012, corporate tax breaks and loopholes added $150 billion in lost revenue for the federal government, increasing the budget deficit by that amount.[1] Three lessons can be gleamed from the hidden corporate loopholes. 

First, the damage done to the U.S. debt by corporate loopholes has been significant. While dwarfed by the debt incurred to finance the Iraq and Afghanistan wars ($2.4 trillion added to the debt by 2013), $150 billion of lost revenue from corporate tax benefits for that period alone is nonetheless significant. 

Second, the “insider influence” itself violates the principles of openness and fairness, which are so esteemed in a democracy. The many points of access to influence legislation can be abused by legislators and lobbyists alike by their stealth dealings, sometimes literally in the middle of the night as a bill is about to be voted on. Ideally, the many points of access refers to the fact that various groups (and citizens) can reach legislators, not that the most powerful interests can abuse their ability to contact lawmakers for private gain (both to the interests and the lawmakers, thanks to political campaign contributions). In fact, for a lobbyist, including a corporate lobbyist, to have disproportionate influence on a bill to make it financially beneficial to the lobbyist's clients can be reckoned as a conflict of interest because even the information supplied is apt to be biased. The many points of access is meant to dilute the influence of the private interests that stand to benefit most from loopholes. 

Third, the contacts that lobbyists have in government from having worked there themselves can play a major role in the loopholes being granted and even in secret. Other self-interested interests cannot check the self-interested influence of the companies or industries that would gain most, so the private benefit gets away with eclipsing the public good. A law prohibiting former legislators and Congressional staffers from lobbying for at least ten years might make a dent in the inordinate insider influence of corporations in Congress. However, the influence of a Speaker of the House such as John Boehner, who became a corporate lobbyist after resigning from Congress, would hardly be diminished in his private influence, and thus earnings. Information that only insiders have sells. 

Like water, pent-up power naturally seeks its way around an obstruction with the objective of reaching an objective. The influence of wealth inexorably finds its way into the halls of power, especially in democracies as they have many points of access. This vulnerability is particularly great in cases in which candidates for public office must raise large sums of money to get elected. Asking the candidates to look the other way when a big donor is knocking at the door runs against human nature; even if laws prevent large donations, power finds its own way in the dark. The power both of candidates/lawmakers and corporations can be so massive that space itself bends toward mutual objectives. Perhaps the question is whether trying to bend space back only slightly is worth the time and energy of passing a law. Although removing the financial need of candidates for campaign funds (e.g., by public funding of advertising) could in theory take out part of the incentives on one side of the equation, corporations could tempt the incentive for private gain in other ways, such as with the promise of a lucrative job afterwards. 

In the end, the threat to the democracy is the inordinate power from the concentration of private wealth as in large corporations. The citizens are hardly focused in their collective use of their power, so the insiders in government tend to be influenced inordinately by the moneyed interest at the expense of the public good, the good of the whole.  

1 Ben Hallman and Chris Kirkham, “As Obama Confronts Corporate Tax Reform, Past Lessons Suggest Lobbyists Will Fight For Loopholes,” The Huffington Post, February 15, 2013.

See Institutional Conflicts of Interest, available at Amazon. Conflicts within the U.S. Government, in business, and between business and government are explored, as well as the very nature of an institutional conflict of interest. 

Should Health Care Be a Right?

In the Spring of 2019, President Trump promised that a Republican alternative to "Obamacare" would soon be unveiled; the majority leader of the U.S. Senate, Mitch McConnell, quickly informed the president that the prospects of such legislation passing the Democratic-controlled U.S. House were zilch. This virtually guaranteed that health care would be play a salient role in the upcoming 2020 presidential race. The underlying question, I submit, has been whether health care ought to be a right, which the government would be obligated to ensure. Such a right would obviously not be one of those that hold government back (e.g., the right to liberty). Whether a right ensured by government or holding government back, the nature of a right is such that it is to be respected by others, whether individuals, organizations, or the state. Such respect, being an obligation, constrains those others. Hence, health care as a right has been controversial in the U.S. 
The Senior US Senator from Illinois, Dick Durbin, said the following just before one of the votes in December, 2009 on the Affordable Care Act, the health-care insurance reform legislation initiated by President Obama: “Thirty million Americans who currently don’t have health insurance  have the peace of mind of knowing that they have health insurance,” Mr. Durbin said. He added, “This is a real debate over whether or not health care is going to be a right or a privilege in America.”[1] By using the word, privilege, Sen. Durbin was implying that having access to health care on the sole basis of whether a person has money is unfair. 
If being wealthy is a good indication of being worthy of survival, then it may be assumed that health care for all, whether through private, non-profit, or government insurance, would undermine survival of the fittest. This in turn takes fit to mean strong or good. Were the humans in the financial sector before the financial crisis of 2008 strong or good? Does not fraud point to an underlying weakness? When Dick Fuld was CEO of Lehman Brothers before it collapsed, was he a strong leader or a pitiful man whose ambition got the best of him? 
In "survival of the fittest," fit has to do with fitting in with a changed environment. Such fitness, or fit, is on nature's terms rather than necessarily according to our notions of strong and good. For instance, a young drug dealer in a large city may have twelve "baby mamas." This means that the man had impregnated twelve women, who had been attracted to him on some basis that they valued. The sheer number of offspring suggests that the man was successful in reproducing himself; he thus fit well in his environment on this nauralistic basis. If survival of the fittest lies the availability of health care, should that man be covered while a poor religious man who has contributed to society without earning much money or having children should not? 

See also "Congressional Cuts to Foodstamps: Violating a Human Right?"

1. David Herszenhorn and Robert Pear, "Parties Stay United as Health Bill Clears Steps in Senate," The New York Times, December 22, 2009.

Income Inequality: Natural or Artificial?

In the United States, the disposable income of families in the middle of the income distribution shrank by 4 percent between 2000 and 2010, according to the OECD.[1] Over roughly the same period, the income of the top 1 percent increased by 11 percent. In 2012, the average CEO of one of the 350 largest U.S. companies made about $14.07 million, while the average pay for a non-supervisory worker was $51,200.[2] In other words, the average CEO made 273 times more than the average worker. In 1965, CEOs were paid just 20 times more; by 2000, the figure peaked at 383 times. The ratio fell in the wake of the dot-com bubble and then in the financial crisis and its recession, but in 2010 the ratio began to rebound. According to an OECD report, rising incomes of the top 1 percent in the E.U. accounted for the rising income inequality in Europe in 2012, though that level of inequality was “notably less” than the one in the U.S.”[3]  Nevertheless, in both cases the increasing economic gap between the very rich and everyone else was not limited to the E.U. and U.S.; a rather pronounced global phenomenon of increasing economic inequality was clearly in the works by 2013.

Accordingly, much study has gone into discovering the causes and making prognoses both for capitalism and democracy, for extreme economic inequality puts “one person, one vote” at risk of becoming irrelevant at best. One question is particularly enticing—namely, can we distinguish the artificial, or “manmade,” sources of economic inequality from those innate in human nature? Natural differences include those from genetics, such as body type, beauty, and intelligence. Although unfair because no one deserves to be naturally prone to weight-gain, blindness, or a learning disability, no one is culpable in nature’s lot. No one is to be congratulated either, for a person is not born naturally beautiful or intelligent because someone else made it so. This is not to say that artifacts of society, as well as their designers and protectors, cannot or should not be praised or found blameworthy in how they positively or negatively impact whatever nature has deigned to give or withhold. It is the artificial type of inequalities, which exist only once a society has been formed, that can be subject to dispute, both morally and in terms of public policy.
A society's macro economic and political systems, as well as the society itself, can be designed to extenuate or diminish the level of inequalities artificially; it is also true that a design can be neutral, having no impact one way or the other on natural inequalities. How institutions, such as corporations, schools, and hospitals, are designed and run can also give rise to artificial inequalities. In his Theory of Justice, John Rawls argues that to be fair, the design of a macro system or even an institution should benefit the least well off most. Under this rubric, artificial inequalities would tend to diminish existing inequalities. Unfortunately, a society’s existing power dynamics may work against such a trajectory, preferring ever increasing inequality because it is in the financial interests of the most powerful. Is it inevitable, one might ask, that as the human race continues to live in societies the very rich will get richer and richer while “those below” stagnate or get poorer? Jean-Jacques Rousseau (1712-1778) distinguishes natural and artificial (or what he calls “moral”) inequalities with particular acuity and insight. He answers yes, but only until the moral inequalities reach a certain point. Even if his “state of nature” is impractical, we can make more sense of the growing economic inequalities globally but particularly in the U.S. by applying his theory.

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1.Eduardo Porter, “Inequality in America: The Data is Sobering,” The New York Times, July 30, 2013.

2. Mark Gongloff, “CEOs Paid 273 Times More Than Workers in 2012: Study,” The Huffington Post, June 26, 2013.

3. Kaja B. Fredricksen, “Income Inequality in the European Union,” OECD, Economics Department Working Paper No. 952, 2012.

Royalty: Natural or Exaggerated?

On April 29, 2011, the world watched in utter fascination as a crown prince in one of the E.U. states married a wealthy commoner in London's Westminster Church--the same edifice in which Queen Elizabeth had married in 1947.  The prince is of course William, and his bride is Kate (or Catherine to the purists), who in one hour's time went from being the daughter of two wealthy commoners to royalty.  It is as though she leap-frogged from “the many” past “the few” to join “the one”--the firm. My question is whether these distinctions, involving birth as well as wealth, are natural in terms of human nature or exaggeraged artifices borne of excessive privilege and power.

The seemingly-eternal tripartite division was on display during the wedding, as throngs watched large screens in large parks and crowded pubs while a relative few, which had been invited to attend the ceremony in person, took their seats inside the church after which the royal family arrived with great attention to each individual member. Of course, “the one” literally refers to the person of the monarch, Queen Elizabeth II, who uniquely stood deliberately silent as the congregation sang “God Save the Queen.” One might ask whether having a living human be the subject of a national anthem evinces a category mistake wherein a person is taken for the nation as a whole (i.e., an abstraction). Does aristocracy go so far as to end up as standing for a nation itself?

Thomas Jefferson and John Adams both referred to a natural aristocracy of virtue and talent. Such differences do indeed exist between people, and thus are generally agreed to be quite natural. Indeed, most people view it fitting that distinguishing people by their character or effort is a perfectly valid basis for rewards. The two American founders also wrote of an artificial aristocracy based on birth and wealth. While nobility and royalty are typically associated with the latter, a monarch may also serve as a check on the sort of artificial wealth that grabs more than it is entitled to on the basis of character and effort. In other words, a king or queen, being in the job for life, can in theory protect titles from simply being bought. This potential benefit of royalty implies a downside to the aristocracy in the American republics wherein what counts is the size of one’s bank account rather than whether one has been raised well and is talented.

In virtually any of the American states, for example, a boorish used-car businessman or subprime mortgage salesman who has become newly rich by providing lemons could join a country club and thus be reckoned as part of his city’s aristocracy. Similarly, wealthy CEOs like Lew Glucksman and Dick Fuld of Lehman Brothers could be members of the most exclusive country club in New York and yet lack “gentlemanly traits.” Such qualities cannot be purchased like some commodity traded by investment banks; instead, a gentleman is fashioned from birth. Such natural aristocracy is beyond the reach of the vast wealth of the sort like the envious Glucksman and the childish Fuld even if they could buy themselves into exclusive country clubs. In a European state such as Britain, however, the monarch could theoretically forestall a grasping capitalist from buying a title. Hence, even a rich CEO in Europe can remain a commoner regardless of his or her wealth, which in an American state would clearly differentiate him or her from the masses in terms of exclusivity and privilege.  This is not to say, however, that European aristocracy and royalty are without their downsides.

That Kate Middleton, a millionaire’s daughter, would be lumped together with the other “commoners” only to become royal in marriage ignores the rather obvious economic distinction between rich and poor. That is to say, because of Kate's parents’ wealth, there was something artificial in Kate being referred to as a commoner before her wedding. Moreover, royalty itself might be a highly artificial construct in so far as royals come to believe they do not share humanness with other people.

The director Ken Loach points to the irrationality in the behavior of “commoners” when they ignore the artificiality that is in the expectations of royals. Good people “have knelt before the Queen at some point in their lives. . . . the woman you’re kneeling before represents all that is wrong with this country—inherited wealth, inherited privilege, the apex of the class system. Let’s have a bit more dignity than to crawl before that woman, please.” In other words, subjects as well as monarchs are adults and they should all act the part. There is something undignified for people such as the Middletons who created a business from scratch regressing to childlike behavior in front of a person simply because that person is regarded as the symbol of the state. Furthermore, there is something insulting in the royals referring to the Middletons as commoners because the appelation does not recognize the family's achievement in business.

Perhaps Europeans have the potential benefit in royals acting as a check on ugly usurpers grabbing off too much societally, yet at the cost of artificiality in the royal-aristocrat-commoner distinction wherein the common human denominator in all three is ignored or relegated. Ironically, I suspect that the royals themselves may be among the casualties in the severing of a recognition that we are all human beings. In addition to holding themselves to standards of behavior that may be at odds with human nature itself, royals may tend to forget that commoners are just as human as are nobles and royals. For example, we all die, and none of us knows what, if anything, is in store for us after death. So while there are real and artificial distinctions, there is also the shared basis in all of us being human. Accordingly, my instinct should I come in contact with a royal would be to relate to him or her simply as another person, whose need for genuine human contact is just as real as mine.

Source on Ken Loach: “Between Commodity and Communication: Has Film Fulfilled Its Potential?” International Socialist Review, 76 (March-April 2011), 28-44, p. 44.

See my related essay, "On the "Wedding of the Century': History Made or Manufactured?"

A U.S. Visa Fast-Track For Rich Investors

The New York Times reported in December 2011 that affluent foreigners had been rushing to take advantage of a U.S. immigration program. The foreign applicants must invest at least $500,000 in construction projects within the United States. The number of applicants had nearly doubled since the end of 2008 to more than 3,800 in the 2011 fiscal year. The intent of the program is to spur economic development at a time of high unemployment. Yet the program has also been characterized as a cash-for-visas scheme. Besides the question of whether the program’s rules have been stretched in New York City to qualify projects in prosperous areas for special concessions, an ethical question can be raised concerning who should get a visa.
Obviously, the program’s designers must have known that only wealthy people could qualify. A public-interest ethical argument could be made that they deserve a green card because they contribute to economic development out of which jobs for Americans can ensue. Indeed, to the extent that the additional investment results in more economic activity, the visitors making the investment in 2011 could have been helping to forestall a double-dip recession. This was a distinct possibility at the time, given the E.U. debt crisis.
The ethical issue is in the exclusion of people who are not wealthy. The principle of fairness would seem to mandate that just as many non-rich foreigners be granted green cards above the ordinary limit. However, this would seem to be rather artificial—a sort of tit for tat—as in “we’ll accept your tax cut if you accept ours.” Moreover, in the context of high unemployment, any such increase in visas should not add to the supply of labor.
John Rawls suggested that in designing such a system as applying for a green card, a veil of ignorance as to whether one will be rich or poor should be utilized. Rawls’ thinking was that if the designers cannot know whether they or their friends will be rich or poor, then the proposed system design will be fair (i.e., there would be the chance that one’s friends are poor foreigners unable to get a green card). While fair in itself, this ethical device may not adequately take into account the public interest that could be satisfied by only one segment (e.g., the rich). Should the U.S. renounce the possibility of more economic development, particularly at a time of high unemployment, just because poor and middle-class foreigners cannot participate?
Related to the matter of income and wealth, it can be asked from both the public interest and ethical standpoints whether capital investment is more valuable economically than highly skilled and educated foreigners. To be sure, the latter ought not crowd out citizens and existing residents who have comparable skills and knowledge, and it is presumably possible to further train and educate existing citizens and residents.
For example, the very same issue of the New York Times containing the story of the green cards for foreign investors reported that M.I.T. was announcing an expanded program that would still allow anyone anywhere to take M.I.T. courses online free of charge, but would add online labs, self-assessments and student-to-student discussion. Also, for a small charge, a certificate can be obtained. At the time, the university’s free OpenCourseWare included nearly 2,100 courses and had been used by more than 100 million people. Rafael Reif, the provost, gave the following as the operating assumption: “There are many people who would love to augment their education by having access to M.I.T. content, people who are very capable to earn a certificate from M.I.T.” To be sure, a certificate would not be a degree, but in terms of non-professional jobs the former may be sufficient. “The most important thing is that it’ll be a certificate that will clearly state that a body sanctioned by M.I.T. says you have gained mastery,” Reif added. The notion that cost (and debt) ought not be an obstacle to a natural drive to learn more, whether in terms of skills or knowledge, is foreign in the United States (and increasingly in Europe as well).
Yet from the standpoint of economic development as well as jobs, viewing education as an investment rather than as a purchased product would likely pay substantial dividends. Where such an approach to vocational training and higher education falls short for citizens and residents, welcoming the best and the brightest from abroad—even training and educating them at online programs such as M.I.T’s—may be an investment policy even more beneficial than that of attracting additional capital investment in construction projects.

Sources:

Tamar Lewin, “M.I.T. Plans to Expand Its Free Online Courses,” The New York Times, December 19, 2011.

Patrick McGeehan and Kirk Semple, “Rules Stretched as Green Cards Go to Investors,” The New York Times, December 19, 2011. 

The U.S. Senate as Protector of the Interests of the Rich

In the U.S. Constitutional Convention, Governeur Morris said on July 2, 1787, that the “Rich will strive to establish their dominion & enslave the rest. They always did. They always will. The proper security [against] them is to form them into a separate interest.” (Madison, p. 233) By this he meant the U.S. Senate. The democratic principle in the U.S. House and the aristocratic spirit in the U.S. Senate “will then controul each other.” (Madison, p. 233) Having the State Legislatures appoint their U.S. Senators—as was the case until 1913—would defeat the independence of the Senate, and hence its function as a check on the excesses of democracy in the U.S. House.  Such excesses had just been evinced in Shays’ Rebellion in Massachusetts, wherein the legislature there had sided with the former soldiers who had not been paid for their service but were still to make payments on their debts.

In other words, one of the purposes of the U.S. Senate as originally envisioned was to protect property (including creditor interests). The assumption was that the representative democracy of the U.S. House would favor the lower classes.  Although the amounts spent on Senatorial campaigns in after the turn of the twenty-first century practically guarantee that the seats would defend the interests of the rich, that the Senators are elected by citizens rather than appointed by State governments must compromise the U.S. Senate as a check on the democratic excesses in the U.S. House. Even as this check has been enervated, the protection of wealth function endures. 

Indeed, given Shaws’ Rebellion the check on excess democracy is really just the protection of property, which is practially guaranteed anyway by the amounts needed to run for the U.S. Senate.  Not surprisingly, in 2010 the medium wealth of a U.S. Senator was roughly $2.8 million. It is worth quoting from Governeur Morris again—this time from July 19 in Convention. “Wealth tends to corrupt the mind & to nourish its lvoe of power, and to stimulate it to oppression.” (Madison, p. 323)  As the number of electors per member of the U.S. House has increased, even that body could be said to evince a moneyed aristocracy.  The question may thus be raised: Is there a sufficient check against the rich in the national legislature?

Governeur Morris claimed in convention that the U.S. President “should be the guardian of the people, even of the lower classes” on account of the wealth-interest in the U.S. Senate. (Madison, p. 322). However, if the wealth interest has gained a foothold in the U.S. House and even in the presidency itself, that check may well be insufficient and nugatory. A return of domestic functions of government to those of the respective States could perhaps evince a greater weight for what Morris calls “the Mass of the people.” (Madison, p. 323)  At the very least, the lower houses of the State governments are not dominated by the rich. This was precisely what the delegates of the convention wanted to check, and the creation of a general government was their solution. It is no wonder that it has become top-heavy both at the expense of federalism and the poor.

Source:

James Madison, Notes in the Federal Convention of 1787 (New York: Norton, 1987).

Happiness: A Matter of Prosperity or Economic Security?

A macro-economist would probably assume that the percentage of people rating their lives positively enough to be considered thriving is positively correlated with real GDP per capita. Yet evidence suggests that this is not the case. The key to happiness, I submit, is having the sense of foundational economic security—that come what may, even in the case of rich people, you won’t fall through the cracks. It is difficult to thrive over a continuous, subterranean (i.e., subtle) anxiety, whereas a sense of security, such as most children feel while still living in their childhood homes, is a sturdy foundation on which a sense of thriving can grow and survive. I think most people, particularly Americans, take this point for granted, and thus are all too willing to make staples like housing, food, and health care conditional on having money.

In Britain during the two years leading up to the referendum to secede from the E.U., Gallup found that the percentage of people who were happy in the sense of having the sense of thriving fell 15 percent.[1] Meanwhile, GDP per capita (PPP) in current international dollars increased from $38,873 to $41,499.[2] Egypt, likewise, went from 29 percent “happiness” in 2005 to 8 percent in 2012, while GDP per capita increased from $8,123 to $11,210. Clearly, something other than the level of prosperity is behind changes in happiness as a sense of thriving.

That Norway (7.537), Denmark (7.522) and Iceland (7.504) led the pack among countries in terms of happiness as thriving in 2017, with the Netherlands coming in sixth and Sweden tenth may suggest that having an economic safety-net may be important. The United States stood at only 6.993, and the safety nets in those states are partial. To be sure, the state of France in the E.U. came in even lower, at 6.442, and Italy at 5.964, so we cannot conclude that the stronger safety nets in the E.U. necessarily translate into more happiness. However, even within the E.U. Denmark and the Netherlands were known for their well-fortified socio-economic infrastructures, whereas in the U.S. only Massachusetts and California were known to have relatively encompassing social policies in comparison with the other American states. Unfortunately, Gallup lumped all of the American states together while distinguishing the European states, so we cannot tease out differences within the U.S. 

Even so, the high marks of Denmark, Norway, and the Netherlands suggest that having a solid social-welfare safety net for the most vulnerable in matters of food, housing, and medical care is at the very least consistent with a broad sense of happiness in the sense of not merely surviving, but thriving in life. With less of the existential, conditional angst, people rich or poor can feel more stability upon which they can step out onto striving, venturing, into the unknown, with paradoxically a higher chance of sustainable self-sufficiency.

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1. Jon Clifton, “The Happiest and Unhappiest Countries in the World,” The World Post, March 20, 2017.

2. Source: The IMF

The Wealth of 8 People and 3.6 Billion People: Utilitarianism Applied

As of the end of 2016, eight people held as much wealth as the 3.6 billion people who make up the world’s poorest half. Just a year earlier, a similar study had “found that the world’s richest 62 people had as much wealth as the bottom half of the population.”[1] Part of the difference in these findings is due to new data gathered by Credit Suisse. Put another way, the richest of the rich were richer than had been thought. In this essay, I want to call attention to the sheer magnitude of the wealth involved, as it pertains to the richest.
Forbes’ 2016 list of billionaires has Bill Gates, the founder of Microsoft, with a net worth of $75 billion, followed by Amancio Gaona, the founder of Inditex, at $67 billion. Warren Buffett came in third with $60.8 billion.[2] I could go on, but these three figures are sufficient to raise the question of how much is enough. By the calculus of greed, which is the love of gain itself—as in more and more ad infinitum—this question can only be extrinsic. In terms of use, however, the question is ripe, for there is indeed a limit to how much a person can realistically consume.
In terms of declining marginal utility, wherein a person does not get as much pleasure out of the fourth or fifth ice-cream cone in a row as from the first, it takes a lot more money added to $67 billion to trigger pleasure than to $100. Add $1,000 to $100 and you have made the guy’s day, but add $1,000 to $67 billion and you might get a yawn. Pareto claimed that no such interpersonal comparisons of pleasure can be made, but I think Bentham was correct in making this point. Whereas Pareto relies on the valid point that pleasure itself is not quantifiable, Jeremy Bentham (whose 18^th century mummified body absent his head sits in an open closet in a university-building’s hallway in London) stressed the declining marginal utility as it pertains to very different quantities of wealth.
Bentham, whose utilitarian ethics gives primacy to the greatest good (i.e., pleasure, which he viewed as happiness) for the greatest number of people. Distribution from the rich to the poor is in line with this ethic, given the fact that a poor person would get more pleasure, or utility, from $1000 than the pain of the rich man who is now without the $1000.

Even just the gigantic sums of accumulated wealth themselves, such as Warren Buffett’s $60.8 billion—holding aside the question of added utility/pleasure from adding more wealth to the base—are not efficient, so to speak, in terms of utility/pleasure. “In my entire lifetime,” Warren Buffett said, “everything that I’ve spent will be quite a bit less than 1 percent of everything I make. The other 99 percent plus will go to others because it has no utility to me. So it’s silly for me to not transfer that utility to people who can use it.”[3] Because other people could use the money to derive more pleasure/utility, there is indeed an opportunity cost in the rich holding such vast sums. In other words, the retention of billions of dollars does represent a harm in that people who could really use it are deprived of it.
Admittedly, Buffett’s invested funds have led to pleasure from added productive enterprise and even innovation. The assumption of added productive uses can be questioned, however, as presumably alternative means of raising capital exist. An enterprise strategically oriented to expanding could go to a bank, for example, were Buffett’s invested funds depleted by voluntary or involuntary redistribution. In fact, banks would presumably have more money to lend to the extent that people receiving the redistributed funds deposit some portion (even the added consumption would go to existing businesses, thus giving them more retained earnings to invest in expansion and innovation). Furthermore, Buffett could have redistributed some wealth to the poor in the form of stocks and bonds, which would give the poor more economic security given the dividends and bond payments are on a base of wealth. In general, such means of increasing productive enterprise and innovation would be more in line with the greatest good for the greatest number of people, given declining marginal utility.
To be sure, Bentham warns that if redistribution crosses a threshold, the rich will not be motivated to create more wealth by work or investing more funds. The total “pie” would thus decrease; other things equal, there would be less pleasure/utility all around. We humans react more to losing $1,000 than to gaining $1,000, Bentham points out. Additionally, a rich person may be emotionally agitated if he or she feels that the redistribution is unfair—even stealing. This is in spite of Buffett’s point that very little utility relative to billions of dollars accrues to a rich person. However, Buffett’s statement suggests that losing a lot of money to redistribution—admittedly voluntary in his case—need not trigger the pain of loss. Even considering such pain to exist and be material, it must surely be less than the pleasure on the other side of the redistribution, given declining marginal utility. In Buffett’s words, other people can get more use out of the funds, and this added pleasure (which was not in Buffett’s holding of the wealth) is more than any pain in losing the wealth (given the pleasure that Buffett would still have from even just 1 percent of his wealth!).
From another perspective, owning tens of billions of dollars can be deemed to be excessive in not being justified in terms of property-rights theory. I have in mind John Locke’s labor theory of wealth. A person gains a natural right of ownership by “mixing” his or her labor with the asset, such as land. If you till the ground and plant the corn, you have earned a property right, or exclusive claim, on that land and its corn. It would be unethical for other people to trespass and consume from the corn.
Applied to founders such as Gates, Gaona, and Buffett, the question is whether having wealth of tens of billions of dollars is proportioned to the labor (and even risk of loss) put into the respective foundings. This question pertains to executive compensation—are CEOs who are also founders paid inordinately because of their power and status in their respective organizations?—and to stock ownership—is there a public interest in limiting the amount of stock-value one person holds in a company?  The public interest, if one exists, would presumably borrow from the Bentham’s point that billions of poor people would get more pleasure, or utility, from the redistributed surpluses than all the pain (if any) inflicted on the richest of the rich from the loss of some of their stock-wealth. Given that only so much wealth can be consumed by any single person, there would presumably be more than enough wealth remaining such that the richest would not suffer.
In conclusion, sound theoretical reasons support the claim that the eight richest people in the world should not have as much wealth as 3.6 billion of the poorest. Just as it is difficult for the human mind to conceive of billions of people, the same applies to billions of monetary units. Accordingly, it is difficult to grasp the sheer vastness of the imbalance. From this basis alone, the inequality can be deemed problematic. As this point is itself in dispute—perhaps in part because some people simply hate government—I have not gone on to prescriptions on how the problem can or should be solved. In other words, just establishing that there is a problem is a task in need of theoretical justification and argumentation. My essay here is a flawed (e.g., too limited) attempt to fortify the position that the massive inequality of wealth is indeed a serious problem, ethically speaking. That is to say, the holding of such huge sums as I’ve cited above is not justified by the efforts expended to “get the ball rolling.”

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[1] Gerry Mullany, “World’s 8 Richest Have as Much Wealth as Bottom Half of Global Population,” The New York Times, January 16, 2017.

[2] Ibid.

[3] Jonathan Stempel, “Gates Charity to Sell 60 Million Berkshire Shares, as Buffett Urged,” Reuters, January 18, 2017.

Analysis of Italy’s 2016 Referendum: Beyond the Euro and the E.U.

The predominate axis of analysis in the wake of the Italian referendum in early December, 2016 centered on the euro, the federal currency of the European Union. 

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

SEC Investigating a Hedge-Fund Priest: Christianity’s Pro-Wealth Paradigm Lapsing into Greed?

It is against U.S. securities law to knowingly make false statements or publish false information about a company you are shorting (selling stock now and buying the shares later, hence betting the stock price will go down). In other words, you can’t try to drive the company’s stock price down you are shorting so you can profit from the trade. Besides being illegal, the practice is unethical. Just go to Kant for that! The guy was fanatical against lying.

You wouldn’t expect to read, therefore, that the SEC is investigating a Greek Orthodox priest who sidelines as a hedge-fund manager for trashing commercial reputations in order to make money off shorting stock.  BloombergBusiness reported on March 18, 2016 that the SEC was “examining whether the Reverend Emmanuel Lemelson of Massachusetts made false statements about companies he was shorting.”.”[1] He reportedly referred to his trading skills as a “gift from God.”[2] Such a claim is on a slippery slope, theologically speaking.

The priest who may have lapsed off the plank of Christianity's pro-wealth paradigm onto outright greed hidden under rationalizations as to means and ends. Is Christianity itself at risk for having gone so far into this worldly realm? The again, the Medieval Roman Church was very worldly as a political power.

When the story broke, I had just days earlier finished revising my second book on Christian attitudes toward profit-seeking and wealth in relation to greed. Lemelson’s “gift from God” language reminds me of the pro-wealth writings during the Italian Renaissance two centuries before the Calvinist work-ethic of industriousness. The Italian theologians of the fifteenth century tended to lighten up on profit-seeking and wealth. Cosimo de Medici got a pass from Pope Eugene IV in spite of a fortune based on usury (lending at interest). One priest, Fancini, went so far as to claim that humans are gods on Earth, given the dominion we have over its resources. Far from the camel who could not get through the eye of the proverbial needle, a Christian during the Renaissance (and after) knew he had to be rich in order to exercise the Christian virtue of munificence. Whereas liberality pertains to typical gifts, munificence involves donating money to build a cathedral, for instance. Being able to make a lot of money was a “gift of God” that would enable the successful Christian to give philanthropically on a scale worthy of God’s majesty.

Of course, the pro-wealth paradigm in Christianity is vulnerable to lapsing into love of gain (i.e., greed). Luther’s extremely anti-wealth stance can be interpreted as an effort to put on the brakes before the by-then dominant pro-wealth attitude in Christianity hit the skids and flipped over into greed. Luther did not succeed. Nor did Calvin or the Puritans, though they were more accommodating to the dominant perspective. The result was a clear line to the Prosperity Gospel—the notion that God rewards true believers with not just salvation, but material wealth as well. This idea came from the Old Testament, wherein God promises Israel that material wealth would come if His People hold to the covenant.

In my book, God’s Gold, I search for a theological undercurrent below the graduate shift from anti-wealth to pro-wealth dominance. I discount the impact of the commercializing context. With regard to the hedge-fund priest, I would be hesitant simply to say he was a manifestation of a pro-business American culture. This may be so, more significant, I submit, are the rationalizations presumably going on in the guy’s head. Bearing false-witness (i.e., lying) to harm others is difficult to view as a gift from God. Even as a means to a salubrious end, the juxtaposition of a gift from God and lying without concern for others’ welfare is odd at best.

In the book, I come to a discussion of how the human brain functions in the domain of religion. If we are vulnerable to certain “short-circuiting” cognitively and yet we have a religious instinct, are we not as a species in a double-bind? Put another way, if Lemelson can neither cognitively nor perceptually recognize his own rationalization, is his urge to be religious compromised? I don’t think so; rather, other aspects of the brain, or mind, may obstruct or circumvent it as it manifests itself. I do think these short-comings can be made transparent, and thereby reduced at least somewhat in severity, or swollenness, but denial is indeed a formidable and intractable obstacle. I suppose the dominance in Christianity since the Renaissance of the pro-wealth paradigm (i.e., profit-seeking and wealth decoupled from the stain of greed) renders the “mind-games” that much more harmful in terms of rationalizing some rather un-Christian behavior toward others. For one thing, in order to make money in order to serve God better can enable some pretty nasty means-ends justifications.  In this way, Christianity itself is now more vulnerable than the religion was when being wealthy and Christian were presumed to be mutually exclusive (i.e., greed was assumed to be tightly stapled to virtually any wealth). Ironically, the theology may be partially to blame, in so far as anthropomorphism unwittingly lifts the religious status of money and property.[3]

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1. Matt Robinson, “Hedge Fund Priest’s Trades Probed by Wall Street Cop,” BloombergBusiness, March 18, 2016.

2. Ibid.

3. The secret to that sauce is in chapter 12 of the book, God’s Gold. I got so into the writing of that chapter in revising it that in retrospect the chapters on the historical shift seemed a bit like a very long preface.

Wealth and Happiness American-Style

The Organization for Economic Cooperation and Development released an up-dated version of its Better Life Index in May 2012. The U.S. ranked first in income, with average household wealth at $102,000, as well as in housing (Americans spending about 20% of their disposable income on it—the OECD average being 22%).[1] These figures for the U.S. could have been pushed upward by the fact that at the time, the very rich were richer than their counterparts in other countries, for the gap between rich and poor was relatively high in the U.S. For example, 30 million Americans were without health insurance and a record number of Americans were receiving a governmental subsidy for food. Rather than assume that the middle and lower economic segments in the U.S. were better off than their counterparts in other regions of the world, I suspect that the statistics reflect the higher relative pay of American executives and professionals (lawyers, physicians and CPAs). The typical CEO in the E.U., for example, made less than his or her counterpart in the U.S.  This caused trouble in the Chrysler-Daimler merger because the Chrysler executives enjoyed higher compensation even though Daimler was in charge.

Interestingly, the rank of the U.S. in life satisfaction was above average, with 76 percent of people reporting having more positive than negative experiences in an average day (the average in the OECD index being 72%). In other words, the gap between the rich and poor does not appear to have gotten in the way of life-satisfaction. Although economic reductionism is particularly salient in the U.S., such satisfaction does not reduce to dollars and cents. Even in economic terms, the large gap between the rich and poor includes geographic distance. For example, court-orders have had to be used to force some cities and towns to allow subsidized (low-income) housing. Meanwhile, it is not uncommon, particularly in Florida, for people with money to live in gated communities. With the rich out of sight, the poor are less likely to be aware of the economic inequality, which could otherwise put a damper on their life-satisfaction.

As a final observation, my reference to Florida suggests that the OECD should not generalize all of the American states into one figure. For example, life-satisfaction is likely to be higher in Hawaii than in Alabama or Michigan for climatic or economic reasons (or in North Dakota during the winter even considering the economic boom). Housing in New Hampshire is, in general, better than in Mississippi. Income in Connecticut is higher on average than in Arkansas. For states, whether in the U.S. or E.U., to be in a union is not to say that they are identical and thus readily grouped together. In other words, a general statistic in housing or income has less real meaning when applied over such a large area. It is like saying that the average temperature in the U.S. in 2011 was 56 degrees (I don’t know the real figure). It is unlikely that figure applies in any state—certainly not in Florida, Hawaii, Alaska, or Maine. The figure has no real meaning, other than relative to other such figures over time (e.g., to assess global warming). For the OECD to compare the U.S. as a whole to E.U. states such as Denmark, Belgium and Spain suggests that the organization is content to engage in category mistakes. If the figures are relevant on the state level, the OECD should be consistent rather than selectively over-generalize.

1. “OECD LaunchesUpdated Version of Your Better Life Index,” OECD. 

See also MSNBC, “US Ranks No. 1 in Wealth, Not in Happiness.” 

Risking Default of the U.S. Government: Other Priorities

In mid July 2011, as several of the American states were in the midst of a heat-wave, the showdown on the debt-ceiling was becoming hot in Washington, D.C. The “heat index” on default was steadily rising with no end in sight. The refusal of republican representatives in the U.S. House to automatically increase the debt-ceiling had prompted unprecedented attention on what had been treated hitherto as a “housekeeping matter” of the U.S. Government. The attention can be referred to as a “fiscal moment.” Whereas a “constitutional moment” is one in which a citizenry’s attention is momentarily galvanized on a particular constitutional question, a “fiscal moment” is a window wherein heightened popular attention of the citizenry enables a societal recognition of what had been vaguely understood and recognized as a long-standing fiscal tendency or pattern.

The prospect of default by the U.S. Government was dire indeed. Talking to U.S. Senate leaders, Secretary of the Treasury Geithner said, as later recounted by Sen. Reid, “default would result in a complete ‘loss of capacity to function as a government.’ If this country defaults on its obligations, it will be ‘much worse than the Great Depression, and it would make the massive financial crisis of 2008 look mild. It will make what we just went through look like a quaint little crisis.’”[1] Sen. Reid concluded from the Secretary’s remarks, "Those who say this crisis would be a blip on the radar are wrong. Default would be a plague that would haunt our nation for years to come. Our credit rating would take years to rebuild. The country would never be the same."[2] In the context of this awareness of an impending yet self-inflicted catastrophe, the failure of the “players” in the Congress and Obama administration to mitigate rather than exacerbate real differences of opinion within the citizenry was apparent.

Perhaps not coincidentally, the attention of a crisis announced and solved at the last minute would serve the interests of, and be practically irresistible to a politician. Add to the mix a perplexing tendency to acknowledge what the catastrophe would bring and yet assert other priorities—of value to be sure—over that of extending the debt ceiling. Allowing other priorities to get in the way of an agreement oriented principally to obviating default is so perplexing that it raises the question of societal dysfunction and compromised representative democracy. That is to say, are We the People mature enough to self-govern when so much is at stake?

An accumulated public debt of over $14 trillion (plus $68 billion among the states) points to a basic imbalance, ultimately of values and rooted in psychology and its related culture. External discipline, while a tacit admission of self-government, is necessary where such an imbalance is countenanced, and perhaps not even recognized at large until a jolting fiscal moment of self-serving attention. One means of external discipline is a balanced budget amendment. To better understand, the rationale for this crutch, I discuss the ailment that is compromising our self-governance. The sickness is most apparent where incredulous claims are represented as taken-for-granted facts of reason.

Even in the context of a U.S. debt of over $14 trillion, and especially when an upcoming solvency deadline was looming, the question of whether the rich should contribute more in taxes was being allowed—incredibly—to prevent an agreement that would obviate default. Rationally speaking, it does not make sense to believe that default would be catastrophic while objecting to a solution because those who can pay more would face higher taxes. If something is crucial, it does not make sense to hold up because someone who can do something refuses because it is not convenient. At the very least, this evinces a problem of priorities, if not garden-variety selfishness at the expense of the public weal.

Put differently, if averting catastrophe is not enough of an incentive for people who can afford higher taxes to let an agreement go through with revenue increases as well as spending cuts, then closing the budget gap can be expected to be nearly impossible politically. “We have a terrible track record, Republicans and Democrats alike, of promising to get our spending under control and never doing it,” Senator Coburn (R-Okla) said on July 17, 2011.[3]  He could have added that the politicians do no better at getting their revenue in line with what they have decided to spend.

During the Bush administration (2001-2009), for example, the federal debt went from $5 trillion to $10.5 trillion because neither the Iraq and Afghanistan wars nor the prescription-drug benefit program were “paid for,” while tax cuts reduced federal tax revenue. This disconnect between spending and revenue, as well as the convenient decisions to spend borrowed funds, suggests that some form of external fiscal discipline. President Obama’s disclaimer that no such discipline, such as in the form of a balanced budget amendment to the U.S. constitution, is needed rings hollow. Even beyond the fiscal policies of the Bush administration, the pattern of debt-ceiling increases belies Obama’s claim.

We as a people, and our elected representatives, do not have sufficient discipline (and priorities) on our own. A balanced budget amendment, with a two-thirds majority in both bodies of Congress and a presidential signature necessary to go into debt (e.g. for an emergency such as to fight an invasion), ought not be so dismissed out of hand by such a people just because it would require us to confront our long-standing habit of living beyond our means governmentally.

The denial concerning the need for imposed or external fiscal discipline is itself indicative of the psychology sustaining the budgetary problem. It is to be expected that those used to spending beyond revenue levels would object to external discipline, but for officials to claim that such discipline is not necessary borders on recklessness. To be sure, a few years of preparation and adjustment would be needed for the Congress and president to get the U.S. Government’s spending and tax levels closer into line, and it is unlikely that such a task would be accomplished. The likely refusal to close the gap even to forestall a jarring adjustment is itself a testament to the need for the amendment. Even then, I predict that we would allow other priorities, such as the interests of the wealthy as well as debates on the size of government, to get in the way.

In other words, we, the American people, are not even close to a mentality capable of suitably managing our Union’s fiscal matters. We are like a bike tire out of balance and yet we seem to refuse even to recognize it. If there is to be recovery from our comfortable brain-sickness, a jolt, such as that which a balanced budget amendment could proffer, may be necessary.

Barak Obama’s claim that external fiscal discipline is not necessary and the republican decision to put the Bush tax cuts for the rich, a desire for a smaller government, and the (putatively tax-cut-related) priority on economic growth above an August 2, 2011 deadline on the debt-ceiling BOTH point to a serious underlying psychological (or, at the very least, political) problem inhibiting our collective ability to get the fiscal house of our Union in order. Given the magnitude of the problem, our distractedness and denial says a lot finally about us as a people and whether we are adequate to self-governing. If our representatives were inventing a crisis in order to be viewed in the end as the saviors after having stirred up attention on themselves, We the People could perhaps do much better; we might reconsider how we approach our exercise of popular sovereignty on election day. We blame one party or the other at our own peril, as we are the sovereign and are ultimately responsible as one people. Are we something more than distracted, blaming, angry, and selfish? 

1. Michael McAuliff, “Tim Geithner: U.S. Debt Default Means ‘Lights Out’ and a New Depression, Treasury Secretary Warns,” [sic] The Huffington Post, July 18, 2011.
2. Ibid.
3. Eric Lipton, “Both Sides Confident on Deficit Talks Despite Impasse,” New York Times (July 17, 2011).