Romnesia: The Ability of the Very Rich to Forget the Context in Which They Made Their Money
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We could call it Romnesia: the ability of the very rich to forget the context in which they made their money. To forget their education, inheritance, family networks, contacts and introductions. To forget the workers whose labour enriched them. To forget the infrastructure and security, the educated workforce, the contracts, subsidies and bail-outs the government provided.
Every political system requires a justifying myth. The Soviet Union had Alexey Stakhanov, the miner reputed to have extracted 100 tonnes of coal in six hours. The United States had Richard Hunter, the hero of Horatio Alger’s rags-to-riches tales(1).
Both stories contained a germ of truth. Stakhanov worked hard for a cause in which he believed, but his remarkable output was probably faked( 2). When Alger wrote his novels, some poor people had become very rich in the United States. But the further from its ideals (productivity in the Soviet Union’s case, opportunity in the US) a system strays, the more fervently its justifying myths are propounded.
As the developed nations succumb to extreme inequality and social immobility, the myth of the self-made man becomes ever more potent. It is used to justify its polar opposite: an unassailable rent-seeking class, deploying its inherited money to finance the seizure of other people’s wealth.
The crudest exponent of Romnesia is the Australian mining magnate Gina Rinehart. “There is no monopoly on becoming a millionaire,” she insists. “If you’re jealous of those with more money, don’t just sit there and complain; do something to make more money yourselves – spend less time drinking, or smoking and socialising and more time working … Remember our roots, and create your own success.”( 3)
Remembering her roots is what Rinehart fails to do. She forgot to add that if you want to become a millionaire – in her case a billionaire – it helps to inherit an iron ore mine and a fortune from your father, and to ride a spectacular commodities boom. Had she spent her life lying in bed and throwing darts at the wall, she would still be stupendously rich.
The rich lists are stuffed with people who either inherited their money or who made it through rent-seeking activities: by means other than innovation and productive effort. They’re a catalogue of speculators, property barons, dukes, IT monopolists, loansharks, bank chiefs, oil sheikhs, mining magnates, oligarchs and chief executives paid out of all proportion to any value they generate.
Looters, in short. The richest mining barons are those to whom governments sold natural resources for a song. Russian, Mexican and British oligarchs acquired underpriced public assets through privatisation, and now run a toll-booth economy( 4). Bankers use incomprehensible instruments to fleece their clients and the taxpayer. But as rentiers capture the economy, the opposite story must be told.
Scarcely a Republican speech fails to reprise the Richard Hunter narrative, and almost all these rags-to-riches tales turn out to be bunkum. “Everything that Ann and I have,” Mitt Romney claims, “we earned the old-fashioned way”( 5). Old-fashioned like Blackbeard perhaps. Two searing exposures in Rolling Stone magazine document the leveraged buyouts which destroyed viable companies, value and jobs( 6), and the costly federal bail-out which saved Romney’s political skin( 7).
Romney personifies economic parasitism. The financial sector has become a job-destroying, home-breaking, life-crushing machine, which impoverishes other people to enrich itself. The tighter its grip on politics, the more its representatives must tell the opposite story: of life-affirming enterprise, innovation and investment, of brave entrepreneurs making their fortunes out of nothing but grit and wit.