Sunday, November 27, 2011

Vance Packard and the Ultra Rich

Presently I'm reading Vance Packard's The Status Seekers, which published in 1959 as a follow-up to his 1957 book The Hidden Persuaders. Status Seekers is out of print and I gather it had less impact than Persuaders(which was reissued recently), or at least is not remembered as having had as much impact. There's no question Seekers is dated in some respects, such as his numerous references to the prices of things circa 1959, and to a "diploma elite" who were seemingly guaranteed better outcomes in their lives by virtue of having attended college.

If anything, its datedness is instructive as to how much the underpinnings of the US economy and the zeitgeist are so different today. At any rate, datedness in some trivial particulars doesn't disqualify a text as therefore having little or no value. It's a little like objecting to a film from years ago because you don't like the hairstyle of the protagonist.

This is from Chapter 2, "An Upsetting Era:"

This brings us to the second big economic change affecting class: the graduated federal income tax. Some have described it as the great leveler. The federal-government income taxes began rising in the thirties to fight the Depression, and soared even more steeply in the forties to finance World War II. They still remain near wartime levels. As a result, it has become virtually impossible for a man to become a multi-millionaire by salary alone. He needs to have capital gains, only one quarter of which he loses in taxes, or to be an oilman and get a "depreciation allowance." Still, in 1958, I was able to find, without too much difficulty, several dozen Americans who have established fortunes of at least $10,000,000 in the twenty years since income taxes have become so high.[4]

Despite the laments about high taxes, the number of American families with a net worth of a half-million dollars has doubled since 1945. Most of the very rich manage, one way or another, to hold onto the bulk of their new incomes each year. Meanwhile, corporate lawyers have applied their ingenuity to find non-taxable benefits for key executives. These range from deferred payments in the form of high incomes for declining years and free medical checkups at mountain spas, to hidden hunting lodges, corporate yachts, payment of country-club dues (according to the survey, three quarters of all companies sampled did this), and lush expense accounts. One sales manager declined a $10,000 raise and took instead a $10,000 expense account which, it was specified, he didn't have to account for.

(Packard's footnote refers to "How to Make a Fortune-- New Style" from Ladies' Home Journal, January 1959. No author is cited. He also cites a lot of academic sociologists throughout the book, so he wasn't just citing popular articles, although the citations are a bit sparse for my taste.)

In the 1989 interview above with Harold Channer, Packard talks about Ultra-Rich: How Much is Too Much? which had just been published a couple of months earlier, and which turned out to be his last book. In Ultra Rich he suggests an absolute limit of 25 million dollars on inheritable fortunes, which he argues would motivate the wealthy to be more mindful of creating civic legacies and take an interest in making plans to disperse their fortunes down to that limit before they died.

For my part I think an absolute limit like that is unrealistic and promotes corruption, much as Prohibition promoted an underground alcohol economy in the 1920s. I think Huey Long also argued for an absolute limit on wealth back in the 1930s.

But I appreciate Packard's intent as well as his noting that Reagan's tax policies were promoting inequality, which, if memory serves, not so many people fretted about in 1989. To put it in perspective, remember that Bush Senior had been inaugurated president that January, the same month that Ultra-Rich was published. My impression at the time was that many people regarded the Reagan era as being an aberration, and felt we were likely to go back to the New Deal Lite policies of Nixon, Ford and Carter, especially after George Bush Sr. had memorably described Reagan's ideas as "voodoo economics" in 1980. And of course most of us didn't know to call him Senior then.

Labels: , , , ,


Post a Comment

<< Home