Billionaires, Obama, and Redistributive/Reciprocal/Market Exchange

In the Great Transformation and Trade and Market in the Early Empires, Karl Polanyi proposed a typology of exchange: reciprocal, redistributive, and market (as a clear summary among other things, you should read Barber’s “Absolutization of the Market.” It’s quite useful). Reciprocal exchange is gift exchange, and the act of exchange itself brings people into continued social interaction. Redistributive exchange is exchange between a person and a centralized authority, such that you give resources to the authority, and back comes some sort of collective good. This type of exchange (like tithes, and taxes) draws people into a collective. It is also necessary for the creation of some kinds of public goods. Market exchange is the kind of exchange where resources flow one direction, and goods/services/equivalent resources flow in the other direction. In market transactions, the exchange completes the social obligation. You don’t have to wear the sweater you bought when you go back to the store, to demonstrate that you love it; you do have to wear that sweater when your Aunt Judy gives it to you for your birthday and comes to visit.

I bring this sociological point up in order to talk about some of the resentment we’ve seen from billionaires – actually not just billionaires, but really the thin sliver of American society currently touted as ‘producers’, or ‘job creators’ – towards Obama. Despite the empirical evidence that the wealthiest Americans are doing ever increasingly well compared to the rest of the country, the hyperbole from some of the wealthiest Americans is surprising.

Freeland thinks this is about tone and deference. Felix Salmon thinks it is “one part narcissism, one part greed, and one part tactical,” and he makes some great points, especially about the world-views represented by Obama and Romney.

I think, instead, this resentment could be explained in terms of reciprocal, redistributive, and market exchange. In short, when people who are used to market exchange (where the norms of self-interest apply most strongly) are required to engage in redistributive exchange (where the norms of collective good apply most strongly), they believe they are engaging in reciprocal exchange (where the norms of gratitude and deference apply most strongly).

Market exchange is what we commonly think about when we talk about how people make money. We can talk about the morality of profits, the relationship between capital risk and reaping those benefits, the power and politics involved with extracting the legally lowest cost labor available. Some of the resentment from rich folks is likely that they could be making ever more money with more favorable regulation, etc. (not less, as you often hear. That’s a bit of BS – it is more favorable regulation that people want).

But when it comes to government, there is a confusion of redistributive and reciprocal exchange that is going on. If you see taxes as a social responsibility, then it is not a problem. In fact, it is in your own (broadly construed) self-interest! This is the heart of Elizabeth Warren’s discussion about fair taxation. People instead see ‘benefits’ going to lazy, undeserving people. The redistribution is wrong! It should be going to the places I want it to go!

And so, instead, it feels like a gift. And a gift that is not being treated correctly! If you give a gift, what should flow back is gratitude, and social deference – gift givers have a higher status than gift receivers.

About two-thirds down, Chrystia Freeland relates the ‘tone’ billionaire Leon Cooperman objects to, the sense of entitlement felt:

Last July, before he had written the letter, Cooperman was invited to the White House for a reception to honor wealthy philanthropists who had signed Bill and Melinda Gates and Warren Buffett’s Giving Pledge, promising to donate at least fifty per cent of their net worth to charity. At the event, Cooperman handed the President two copies of “Inspired: My Life (So Far) in Poems,” a self-published book written by Courtney Cooperman, his fourteen-year-old granddaughter. Cooperman was surprised that the President didn’t send him a thank-you note or that Malia and Sasha Obama, for whom the books were intended as a gift and to whom Courtney wrote a separate letter, didn’t write to Courtney. (After Cooperman grumbled to a few friends, including Cory Booker, the mayor of Newark, Michelle Obama did write. Booker, who was also a recipient of Courtney’s book, promptly wrote her “a very nice note,” Cooperman said.)

Kids getting school lunches are not sufficiently appreciative of the hard work the ‘creators’ have done in order to provide them. Workers are not sufficiently appreciative of the opportunities their employers provide. And people at the top are used to getting deference. Lots of it. Exclusive deference. So if one candidate is doing everything possible to signal he is one of you, and the other won’t have his daughters read the vanity-published poetry of your 14-year-old granddaughter, well, then you feel indignant about it. It becomes just like not wearing Aunt Judy’s sweater when she comes to visit.

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