Book: “Democracy at Risk: Rescuing Main Street From Wall Street”
Author: Jeff Gates
Publisher: Perseus Publishing
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.
So what is to be done about the unkept promises of the new economy? Gates, who has bipartisan disdain for “Republicrats” and “Demopubs,” doesn’t have much hope that the 2000 presidential campaign will become a national debate on alternative futures. He’s trying instead to inspire local innovations among people close to the problems. He wants “a broad array of action-based programs to convert today’s cynics into engaged citizens.”
Strangely, though, in his call for a new populism, Gates fails to tap the best populist tool ever created: the Internet. Check out the Web site of the Shared Capitalism Institute (www.sharedcapitalism.org); you’ll find a summary of his book and theories, but what you won’t find is a list of links to grassroots organizations where you can learn more about the issues. So here’s my contribution to addressing the challenges that Gates identifies: Visit my Web site (//www.fastcompany.com/team/dahle), where you’ll find the beginnings of such a list. What happens next is up to you.
Sidebar: FC Recommends
Big Idea: “Funky Business: Talent Makes Capital Dance,” by Jonas Ridderstråle and Kjell Nordström (Financial Times-Prentice Hall, $25). Two European professors with a flair for the dramatic offer a manifesto for the new economy. It’s been making waves on the Continent, but it will seem less radical to Americans.
Best Practice: “The Good News About Careers: How You’ll Be Working in the Next Decade,” by Barbara Moses (Jossey-Bass, $25). Good advice about the Brand Called You.
Sleeper: “The Fourth Great Awakening & the Future of Egalitarianism,” by Robert William Fogel (University of Chicago Press, $25). This controversial economic historian offers a thought-provoking look at the interaction between technological change and ethical norms.
Keeper: “The Monk and the Riddle: The Education of a Silicon Valley Entrepreneur,” by Randy Komisar (Harvard Business School Press, $22.50). Don’t let this book’s cryptic title turn you off to its value. A self-described “virtual CEO” offers a solid set of insights into leadership and growth.
Sidebar: Cheat Sheet
If you’re too busy creating wealth to read “Democracy at Risk,” then you might want to consider these offbeat “Populist visions” from its pages.
Shocking Factoid. For the entire world to enjoy the same standard of living as Americans and Canadians do, we’d need to create two more Earth’s to satisfy everyone and to generate all of the necessary material goods to support this lifestyle.
Why We Hate Mondays. More people in our culture die on one particular day, at one particular time: Monday at 9 AM. Thank God it’s Friday!
Conspicuous Consumption. Leslie Wexner, founder of the Limited Inc. (which owns or has spun off Abercrombie & Fitch, Express, and Victoria’s Secret), has built a house with a ballroom that operates as a mammoth dumbwaiter: The room’s entire floor can be lowered into the cellar so that servants can, say, set a banquet table and then raise it into place in time for a party.
Dumbest Idea. Do taxpayers really want to spend money so that U.S. spy satellites can beam pictures of children all over the world to enhance their shared sense of global citizenship? Smartest Idea Use debt forgiveness to fund development in Third World nations. One such plan would cancel outright 80% of the outstanding debt in those countries, and then require that debtor countries set aside the remaining amount due in local currency to finance long-term education initiatives for their citizens.