Are the Rich Necessary?: Great Economic Arguments and How They Reflect Our Personal Values

by Hunter Lewis

Are the rich compatible with democracy? Should we accept such a high degree of inequality in our society? Does the profit system glorify greed? In /Are the Rich Necessary?/ Hunter Lewis presents the most fundamental and provocative economic arguments that underlie society. Lewis connects economics directly with profound contemporary social issues. How are our personal values reflected in these issues and how do we choose between contending economic approaches? Most importantly, can philanthropy play a strategic role in helping people to lift themselves from poverty? Lewis offers a dramatic new proposal to significantly increase contributions to charitable organizations to help address key social issues. A challenging and sure to be influential book.

Genres: Economics

282 pages, Hardcover

First published August 1, 2007

About the author

Renowned investor and author Hunter Lewis has written eight books on the financial issues of America, providing real solutions to turn the economy around.
He is the former CEO of Cambridge Associates, a global investment firm he co-founded after graduating from Harvard University. The company’s clients represent three-quarters of higher education endowment assets in the United States as well as other nonprofit groups and high net worth individuals. Lewis has also served on boards and committees of 15 leading nonprofit organizations, including environmental, teaching, research and cultural groups, as well as the World Bank. Lewis runs the successful watchdog website AgainstCronyCapitalism.org with fellow writer and political consultant Nick Sorrentino.
Reviewers across the globe have noted Lewis’ unique economic insights, and he’s shared his expert opinion on national television programs including CBS’ Money Matters and NBC’s TODAY. His writings have appeared in the New York Times, The Times of London, Washington Post, The Atlantic, Forbes.com and other media. The Charlottesville, Va. author’s newest book releases, “Free Prices Now!: Fixing the Economy
by Abolishing the Fed” and “Crony Capitalism in America: 2008-2012,” hit bookshelves on
September 1, 2013.

Reviews

[Aaron Kleinheksel]

Warning: anyone who sees you reading this will almost invariably suspect you of being a "dirty commie," a "socialist," or a "comrade." If they are like the people I know, they will also not be shy about accusing or lauding you to your face as the case may be. The title can be blamed for this, but it does provide an opening for entertaining discussions. :D

I really enjoyed this. A terrific introductory text concerning exactly what the subtitle describes. I got this from the library and enjoyed it enough that I would consider purchasing a copy of my own. I really felt as though the author cared enough, and was knowledgable of the subject matter enough, to achieve his stated goal and be quite fair to both sides in his portrayal of the economic-political arguments concerned (equalitarianism vs. fraternalism vs. recipricolism vs. philanthropism).

My greatest complaint with this book would be the organization of it. It tries to be arranged in a point-counterpoint style, taking both sides of different arguments, but I often found this to be poorly done. I'm OCD enough that I was almost tempted to re-arrange and re-organize it myself! It annoyed me enough that I would probably deduct 1.5 stars for it, but since I enjoyed the actual subject matter enough and the arguments themselves, I am willing to round up. The citations, OTOH, were done in numerical order w/out regard for chapters, which I always appreciate for reference purposes.

I would direct anyone who may think they are interested in this short but delightful book to read chapter 3. From the text:
"So many of the choices that voters in a democracy face require at least some knowledge of economics, yet it is not easy to get the issues in clear focus. I hope that this book helps at least some voters to clarify their own thinking. Voters should also understand that the way the government, representing us, responds to these issues will directly affect their jobs, raises, promotions, and in general, all their economic opportunities."

[Ellen]

The author presents the major arguments for and against some of the biggest economic debates, like whether or not the rich are necessary. His writing is sharp and he makes himself clear to those with a cursory knowledge of economic principles. But, this is a difficult book to get into for that very reason. Just as I was beginning to understand an argument and develop my own ideas, we had moved on. You get lots of sauce but not much meat/tofu.

[Seth Wilpan]

I'm a third of the way through and most of the arguments made by the author are facile and full of holes. If it's meant to be a depiction of the shallowness of modern economic thinking, it may have some merit, but I think it more suffers from intellectual anemia. I have a feeling that Naomi Klein's "Shock Doctrine" will be more intellectually satisfying and useful.

[Desiree]

I'm almost done with this one. I am finding it VERY confusing! It is presenting different sides of arguments, which are seemingly contradictory. Not sure I can even get through the last few chapters....

I did manage to finish this one up! Still didn't glean a lot of info from it as they kept showing both sides, instead of really just answering the question!

[Dennis Littrell]

Provocative title; familiar text

The title is pretty funny and I think I would think so even if I were rich, which I’m not (but I’m doing okay, thanks). The title reminds me of the placard held by an Occupy Wall Street protester some months ago, “Eat the rich.”

Well, you know this sort of thing may not be all that funny to some people. The rich are still shaking in their polo boots about the communist threat even though it is as passé as mutton chop whiskers. However if the rich aren’t careful they may see a new threat arise in the next decade or two that will make the communist manifesto seem like an invitation to a tea party.

(Uh...never mind.)

The rich need to keep in mind that trickle down really means something has to trickle down. You can’t hire the Pinkerton Guards and hole up in your palatial estate and expect to feel cozy by the fire any more. You have to actually relinquish some of your ill-gotten gains just to keep the hoi polloi from the ramparts. In the US we used to do that with a progressive tax code. Since it is very, very difficult for anyone (except Warren Buffet) to vote themselves more taxes, we need to help the rich out.

As President Hoover famously observed, economists are in the very disconcerting habit of saying “on the one hand...” and then “on the other hand....” And so he longed for a one-handed economist. Here Lewis gives us both a “no” and a “yes” (and some “yes/no’s and no/yes’s) to nine economic questions beginning with the title question and covering such areas as globalism, government’s role in the economy, greed, the role of banks, etc. He quotes various economists on both sides of the issues. The effect is similar to taking a broad-based first course in economics at a college or university.

I think the book is okay as far as it goes and certainly I am not qualified to authoritatively debate the various issues; but I would like to point to what I think is a puzzling failure in the question in Part Three, “Are the Rich Compatible with Democracy?”

The way the arguments are presented it appears that what is at issue is who is boss, the producers (the rich) or the consumers who buy the products and services. Furthermore, the “democracy” that Lewis is referring to is not a political democracy but an economic one. Thus Lewis refers to “The free-market democratic system of one dollar, one vote.” Putting aside the non-reality of “one-dollar, one vote” politically speaking, the real question is the effect that wealth can have on the democratic process—on the very fact of our elections being democratic.

If this book had been written after the Supreme Court’s ruling on campaign financing in the “Citizen’s United” case instead of before, perhaps Lewis would have realized that what really needs to be addressed is whether money can so pervert the democratic process as to turn our democracy into an oligarchy.

With the enormous power of television and other advertising to sway uninformed voters my feeling is that it’s possible that we already have become a one-party nation (an oligarchy of the rich and influential) with two slightly differing branches, both seemingly long and loud on rhetoric but both very much the same in legislative and executive behavior. This has come about because no person seeking higher office has much of a chance of winning (or even getting the nomination of one of the two dominate parties) without considerable financial backing. You might gain a congressional seat for a term or two as a person of modest means without corporate backing, but you have no chance of winning a senate seat or the presidency.

The most obvious case in point are the positions taken by President Obama who talked of change but once in office continued most of the economic policies of his predecessors. He appointed Wall Street regulars to his team and continues to accept massive amounts of campaign funds from Wall Street firms. One can say that the differences between Obama and Romney are mostly superficial and that we can expect that whoever wins in November will continue in much the same way as before.

Anyway, this book is perhaps a less painful way of getting introduced to economic issues than having to read a textbook.

—Dennis Littrell, author of “The World Is Not as We Think It Is”

[Mark Dantonio]

Author – Lewis ISBN – 978 0 9753662 0 2

I think this book was a breeze to read. It was all about the role of the rich and the role of capital and wealth in the world. I think different people could read this book and come to different conclusions. I think the book was all about the world needing to cooperate and stop the class warfare. For me this was the secret to how to improve the economic situation of all.

Basically the book had it all in there. All of the big economic names were there, Adam Smith, David Riccardo, Keynes, Hayek, Friedman and many others. The book was well organized. It started with a question such as “Does global free trade destroy jobs?” Then it would answer yes and explain. The next chapter would ask the same question and answer no and explain. The great thing about this book is that it was short and to the point and did a great job of giving a pretty detailed explanation of both sides of a question or issue.

I was interested in every topic in the book. One of my favorites was the one about if the rich were necessary at all and if poverty could be eliminated. The book discussed the attitudes of socialists, communists and capitalists. They all had different viewpoints and wanted to accumulate or spread wealth around to the poor. Some viewed the rich as causing the situation for the poor. This seemed silly to me since, as the book says, well fed people in Boston do not cause poorly fed ones in India. But some of the counter points seemed intuitive.

The book does a good job of stating how wealth and the rich could or should cooperate with the not so rich. It further also goes into how human behavior has the effect of creating or destroying wealth. I liked the end of the book when it talked about the philosophies of fraternalism, reciprocalism and philanthropism. All of these seemed noble in their approach to everyone in the world getting what they needed. However, to me only one (reciprocalism) had any chance of being s success. Fraternalism proposed the safety net and was big on the government getting involved to the point that it controlled the final say with regard to how assets were distributed. Philanthropism has old world and Old Testament origins. It is all about charity. If you have something and someone else needs it, it should be given to them. This is definitely not what I think. I think that this would create a society of free-riders. My ideal of the three is reciprocalism. This is really taking responsibility for your own life and progress. It is very Adam Smith like and perhaps this is why I like it. The philosophy is explained in the book well. People should not be insulated from the consequences of their actions. When they are they pile up more bad behavior. Growth grinds to a halt. Charity can be a part but it is controlled by individuals not the government. The idea of people helping other people is still there, it is just not centralized. I really like the way that this was explained in the book.

Overall this was a great read for a business or economics major in school or someone just interested in general allocation of resources, government, politics etc. It is a great starter book for the understanding of the schools of thought think and how things got that way.

Mark D

[Meinna Gwet]

As a financial blogger (http://bobbyfinance.com) I like writing about economic issues, particularly those related to wealth disparity. So when I saw this book I was very excited because I thought I would get answers to why there are rich and poor people, and if ⁄ why this situation is necessary for a society to thrive.

The book is structured in 12 parts. The author tackles several issues surrounding the global economic system, by opposing arguments on:
• The necessity of having rich people in an economy;
• If the notions of wealth and private profit are compatible with democracy;
• Alternatives to the profit system;
• The role of government in reducing inequality and the excesses of the profit system;
• The role of central banks in controlling economic cycles;
• How global free trade affects local employment;
• The different economic systems that prevail;
• How the non-profit sector can be leveraged to improve the current system

Personally, I was a bit disappointed by the book, mainly because of the way it is written. Indeed, from beginning to end Hunter Lewis piles up YES ⁄ NO arguments on all the topics he tackles, which paradoxically makes it a bit difficult to follow. For example, the chapter “Are private profits necessary - YES ⁄ NO”, includes a list of arguments for and against the premise (Argument 1, Argument 2: Response, etc.). This approach, which seems fair and methodic, actually has two disadvantages. First, it makes the reading very cumbersome. The reader’s experience is really not good because you’re constantly bounced back and forth between arguments, some of which are not developed in depth. Second, while the author never really expresses his own opinion, one can see an imbalance in the way arguments are constructed, which suggests that the author is for capitalism, private profit, and the limitation of the role of governments and central banks in regulating the economy. So I would have preferred Lewis to just express his standpoint by constructing sound and deep arguments one chapter after the other. The last section, where he proposes improvements to the economic system by giving more control to charitable organizations, is interesting, but could have been developed much further. Lewis limits himself to suggestions on taxation and the quasi-privatization of some government’s mandates through NGOs, but he does not construct a whole new model as an alternative to capitalism or socialism.

However the best part of the book in my opinion was definitely the appendices (at the end). The appendices are much better written than the rest of the book, because the author takes the time to explain fundamental notions like the history of money, the banking system, fractional reserving, the different schools of thoughts that exist on what causes of economic cycles, the impact of governments and monetary policies in causing depression, how the Federal Reserve System and other central banks operate, the role of the World bank and the IMF, the notions of profit and interesting thoughts on price control. All of this is contextualized within historical facts and references, thus providing a better understanding of how the financial and monetary systems work today.

Overall, is was an Okay book! I gave it a 3 out of 5, because I learned a lot (mostly towards the end), and some people may actually like the writing style.

[Sam Frentzel-Beyme]

An interesting book that covers some basic arguments around the value of wealth accumulation. One new perspective that I hadn't really considered before revolved around looking at the rich as essentially public "trustees" that are de facto agents of society since dollars are really a form of voting. Lewis makes an argument that companies and the wealthy that run the most profitable of them are actually more democratically elected (via dollars) than our public officials. It's not hard to say that general advertising is basically a form of "campaigning."

I also found the book useful in helping to better understand terms like "rich" and "poor". For example, according to IRS records on wealth tracking the 400 richest Americans, Lewis finds that over 9 years only 1% of the names have been on the list every year. Similarly, Forbes shows that over a 22 year period only 50 individuals had stayed on the list. And in another study by Glenn Hubbard, a Treasury Department official and later President of the Council of Economic Advisers, Lewis shows that after tracking the top 1% of taxpayers over a ten-year period over a third fell out of the group and that over the same period the group's overall average dropped by 11%. So while most of us think that being wealthy is all "roses" the fact seems to be that having wealth and being able to keep that wealth are very different things.

On the poor side, it was interesting to see a Heritage Foundation study that shows that 41% of the official poor own their home with the majority owning cars, DVD players and air conditioning. While the source's conservative nature might be skewing the interpretation, the results certainly make me want to better understand what the poverty standards really are. Lewis includes a quote by Henry Hazlitt's that is worth thinking about:

"The overwhelming majority of Americans...now enjoy the advantages of running water, central heating, telephone, automobiles, refrigerators, washing machine, [music players], radios, television sets-amenities that millionaires and kings did not enjoy a few generations ago."

The last part of the book includes Lewis' idea of greater focus on private giving to non-profits, which at the time of writing in 2007 only made up 8% of the U.S. economy. With Gates, Buffet and a greater number of Silicon Valley entrepreneurs (Peter Thiel of PayPal fame comes to mind) funding more non-profit work, I wonder if more legislation is the answer.

Overall, the book's early sections are informative, but rather choppy with their "Argument" and "Response" format. Only in the last chapter does Lewis really get into a prose that can tug along under its own momentum. I would prefer he wrote the whole book this way.

[Ryan]

I was very disappointed in this book. The author claims that he will attempt to explain both sides to each topic. Well I guess he fulfills this promise if by explain, he means he will acknowledge and move on. The author tries to give himself an out on this by claiming that not all topics require much discussion to understand. This just illustrates the ignorance by the author on the opposing point of view to his own. Several times throughout the book the author simplifies an opposing viewpoint to his lengthy discussion of his obviously preferred point, many times these counterpoints have much more depth then what he leads on to.

By no means should this book be your sole source or even in your top 10 choices for good books on economics.

[Olivia Lewis]

An interesting, worth reading book. Don't fall for the title and assume that this book is from a socialist perspective, or that the author wants to abolish the rich. The author is unique in fairly providing both sides to every argument on the subject of whether society needs rich people.

Hunter Lewis, instead of simply discussing economics, actually tries to solve some of the problems we face, near the end of the book.

Parts of the book are devoted to complex but worth-knowing information on economics. Skip over this part if you don't want this primer on economics, finance, and investment.

[David Robins]

Good sets of arguments and counter-arguments, but a bit insipid, and his "solution" of more non-profits - and taking people's money to fund them - is at best a transition (let people redirect money taken as taxes to qualified non-profits rather than have government waste it) between today's theft and future stateless freedom.

[Ali]

A book with debating arguments and refutations about the importance and the consequences of having the rich and the poor in the economy. The book delivers a very rich context of details from different points of view. Certainly a beneficiary book, especially for economics and business majors looking for a wider scope of knowledge.

[Jeff]

Book about the function of the wealthy in society. had to read for class, but it was alright.

[Meghann]

Bit disappointed. Arguments were presented in most basic form possible. The appendices are longer than the content of the book itself. I wouldn't recommend it.

[Keith]

They are and they aren't. Writing is good and the topic and related ones are interesting.

[Bobby]

Raises some interesting questions, but ends up with trite conclusions.