Share the Wealth

Book: "Democracy at Risk: Rescuing Main Street From Wall Street"
Author: Jeff Gates
Publisher: Perseus Publishing
Price: $25

Early on in his energetic, engaging, but often shrill and infuriating book, Jeff Gates, president of the Shared Capitalism Institute, asks a simple question that deserves serious consideration: "If you could step twenty years into the future and look back, what would you want to see?"

The knee-jerk response: We'd want to see more of the same. Wall Street has boomed (notwithstanding a few nerve-racking dips), jobs are plentiful, and technology is inspiring great new products. Three cheers for the digital status quo!

Think harder, though, and it's not as easy to be so exuberant. The economy has created unprecedented wealth. But it is distributing that wealth in obscenely unfair ways. In 1998, the top-earning 1% of Americans had as much income as the lowest-earning 100 million Americans. In that same year, Microsoft cofounder Bill Gates (no relation to the author) amassed more wealth than the poorest 43% of Americans combined.

Meanwhile, day-to-day life is not that much better for the vast majority of people. "There has been almost no trickle-down of economic growth to the average family," argues a leading economist, whose work is cited by Gates. "Almost all the growth in household income and wealth has accrued to the richest 20 percent. The finances of the average American family [were] more fragile in the late 1990s than in the early 1980s."

Gates's conclusion: "We've created a mean economy -- a sumptuous heaven for some, an ungodly struggle for most, and a living hell for many. The new economy is an economic marvel but a social vacuum."

"For every cyber-millionaire," Gates continues, "there are hundreds of cyber-peons. We've always had lots of immigrants, but never so much economic disparity."

"Democracy at Risk" is not the first work of social criticism to make these points, although Gates marshals his evidence with an unusually keen eye and a very sure hand. But there's a difference between serving up an indictment, which Gates does with real power, and fashioning a program for change that's even remotely plausible. Gates offers a slew of models for redistributing wealth and reclaiming natural resources. A few of his ideas are innovative, but too many of them are either unrealistic or anachronistic. The Gates program is long on unnerving facts but short on workable solutions that people can embrace and champion.

For example, he wants more people to become owners of the assets that drive the economy -- a laudable goal that's in keeping with the share-the-wealth philosophy at so many Internet companies. To advance this agenda, Gates wants consumers to be able to buy shares in their gas and electric companies with a portion of their monthly utility bills. He also supports models that go beyond the deal that the state of Alaska fashioned in the 1970s, which entitled residents to a share of the profits earned by oil companies. Pushing this brand of public ownership is at once radical and out of step: How does owning a few shares in a gas company or a few barrels of oil in Wyoming -- the ultimate old-economy resources -- address the challenges of the new economy?

Some of his other ideas are tiresome, or else the rhetoric he uses is just plain tiring. Gates hammers on the issue of CEO pay. He wants pension-fund investments to be withdrawn from companies that line the pockets of their CEOs and redirected to companies with more equitable policies. "There's a huge public investment in these funds -- an investment in a sound future," Gates writes. "It boggles the mind that fiduciaries would allow those funds to be invested to create multibillionaires."

What's troubling, however, is Gates's failure to distinguish between entrepreneurs -- people with last names like Case and Dell -- who start companies, succeed beyond their wildest dreams, and amass great fortunes by virtue of their equity holdings, and the big-company bureaucrats who make bad decisions, destroy jobs, and still get paid big bucks. Not to mention big-company change agents -- people with last names like Welch -- who earn big salaries and have amassed tremendous personal wealth, but who have also created even greater public wealth (much of it stashed in the pension funds that Gates cherishes) by virtue of their savvy leadership. I'm not about to defend the idea that any CEO (Bill Gates, Larry Ellison, or anyone else) deserves to be worth $50 billion. Still, Gates's kind words for a "maximum wage" make for fiery speechifying but not much more.