The American public is catching on that almost all the benefits from the still-fragile U.S. recovery have gone to the top 1 percent of earners. One sign is that “inequality” has suddenly become a fighting word. Legendary venture capitalist Tom Perkins recently denounced the “demonization” of the rich — and was quickly forced to apologize for comparing it to Kristallnacht.
Perkins is too sensitive. He is one of the creators of the U.S. venture capital industry, and played a big role in nurturing the hardware and software revolutions that made the United States so dominant in high technology. Americans admire people like Perkins, who earned their wealth — whether they are financiers like Warren Buffett or George Soros, entrepreneurs like Bill Gates and Steve Jobs, or superstars like Michael Jordan.
But Americans abhor “rentiers” — unproductive citizens who make good incomes by collecting tolls on other people’s production. In the early days of economics, rentiers were the owners of stagnating estates who partied in London on the earnings of their peasants and tenant farmers.
More recently, they are the beneficiaries of special privileges, like the web of congressional protections that protect sugar farmers from international competition. Or they have effective monopolies. Can anyone imagine that the Internet would have grown so explosively if AT&T still ruled American telecommunications?
Rentiers profit from falling productivity, preserving their privileges on the backs of the rest of us. John Maynard Keynes once mused that economic progress would require the “euthanasia of the rentiers.”