Just deserts are bad things that happen to those who deserve punishment. Unjust deserts are good things that happen to those who don't deserve rewards. In their provocative book Unjust Deserts, authors Gar Alperovitz and Lew Daly suggest that those who achieve success and riches today have not done so by dint of their smarts and hard work, or even thanks to a fortuitous family inheritance. Instead, they have exploited the common inheritance of the accumulated contributions of society — technology, medicine, transportation, architecture, etc. Certainly, those who have earned their wealth through work have contributed an increment of accomplishment that is truly valuable, but not nearly as valuable as their huge salaries and income from stock holdings would suggest.
Gar Alperovitz, currently the Lionel R. Bauman Professor of Political Economy at the University of Maryland, has had a career as a historian, political economist, activist, writer, and government official; he is also the president of the National Center for Economic and Security Alternatives. Lew Daly is a senior fellow at New York City think tank Demos. I attended the book signing for this publication held at Demos' offices late in 2008, and the room was full of people in varying states of anxiety, protest, and agreement with the issues the authors discussed.
We can probably all agree, especially in these economic times when even our new president criticizes Wall Street banks for giving their employees fat bonuses, that the rich do not deserve all they have. It has long been so in America. Alexander Graham Bell's lawyer, for example, signed in at the U.S. Patent Office on Valentine's Day in 1876 as fifth on the appointment list, while Elisha Gray arrived later and got number 39. Bell got credit for inventing the telegraph; Gray, whose concept for the same invention actually worked, unlike Bell's, is forgotten. Neither man developed his ideas from scratch. They took one more step forward on a path well trodden by numerous predecessors who had been working to perfect the technology. Without those earlier efforts, neither Bell nor Gray could have succeeded.
If society provides the foundation for valuable economic and technological advances, what share of the rewards is owed to society, and what share to those who build on those advances? Would you agree to 90 percent, as the authors argue? (The book reminds us that John Locke thought that agricultural laborers should receive 99 percent of the value of their output, with landowners getting the rest.) And if you do agree, how would you suggest that society recover its collective investment? At this point the ideas become truly transformational — as evidenced by the buzz in the room that night as those present began to imagine the impact of a 90 percent tax rate.
For the sake of argument, write Alperovitz and Daly, let's consider such public policies as a more progressive income tax, higher inheritance taxes, and the diversion of profits to public education, libraries, and infrastructure. To support their arguments, the authors provide considerable references to an impressive body of social and economic research. Convincingly, they make the point that the unequal struggle of ethics against power has produced grossly unjustified inequities. Top management of U.S. corporations now receives 10 percent of profits, in contrast to only 4 percent a generation ago. Furthermore, these inequities not only offend our sense of social justice; they actually inhibit productivity. Even Warren Buffet has admitted that "society deserves credit for a significant percentage of what I earned." Rebutting the argument that high taxes inhibit risk taking and job creation, the authors point to the high marginal tax rates that prevailed during FDR's presidency (91 percent) and even as recently as Reagan's terms (70 percent). Productivity remained high in both eras. Studies of executive compensation show little relationship between performance and pay.
What is the role of philanthropy, as opposed to taxation, in all this? During a Q&A at the book signing, the authors offered their characterization of one of America's most prominent philanthropists, Andrew Carnegie, arguing that his generosity was atonement for his vicious exploitation of workers, and that it could be seen as self-taxation to support his pet project: public libraries. Some of Carnegie's contemporaries agreed with this characterization; several towns refused his gifts on principle and in protest against his power to decide who gets what and how. For their part, Alperovitz and Daly are reluctant to rely on philanthropy, instead of government, to address inequities in society. Instead, they see philanthropy as triage by noblesse oblige: If you happen to have a generous donor in your town, good for you — enjoy. If you don't, tough luck.
Their book makes reasonable arguments to support bold new ways to share the benefits of economic activity in the United States, with the goal of inspiring serious public debate. And whether you agree with them or not, they have provided a mind-opening starting point for that conversation.