The Poverty of Affluence. Paul Wachtel

income tax credits, and the provision of public goods that are available to all regardless of income. Public schools, highways, parks and playgrounds, and police and fire protection are among the most familiar and least controversial of these public goods—services and amenities available to all regardless of income, and thus seamlessly enabling those with lower incomes from their jobs to share in the quality of life that derives from a successful economy. But these examples do not exhaust the ways that public goods can enhance people’s lives without the stigma of special programs targeted only to the poor or disadvantaged. Free public universities (not so radical an idea; the university at which I teach was for more than 130 years free for all New York City residents) or free mass transit or bike sharing programs are additional examples of how public goods can complement income in providing access to the opportunities that the society offers. Other kinds of public goods that would further extend opportunities for enjoyment and advancement are not hard to imagine.

      Such programs and policies would rely on still another venerable and long-standing feature of our society, the progressive income tax.^* Taxes have probably been viewed negatively since the very first tax was levied at the dawn of history, but they also are the foundation for a panoply of services, programs, and amenities that we take for granted but would hate to be without. Anti-tax attitudes have been amplified in our current era by the unfortunate and misleading depiction of many civilizing features of our body politic as “entitlements,” a term that—because of the way that our brains work—almost inevitably evokes associations to people who feel “entitled” in the negative sense of that term. Shifting our emphasis from so-called entitlements to public goods can help generate an understanding that the spending enabled by taxes is not necessarily taking from some to give to others but rather a matter of contributions from all that are available to all. Basing those contributions on the ability to pay has been a longstanding principle of our system, and there is little indication that it has the impeding effect on the economy that some have claimed. We have prospered as a society when progressive tax rates were considerably higher than they are now.

      One particular form of public good needs to be mentioned separately in the context of a proposal to encourage greater access to jobs via reduced working hours rather than maintaining an urgent necessity to grow at any cost. Health care systems in which coverage is strongly dependent on funding from employers are a significant obstacle to enabling more people to be employed through reducing the workweek. Even now, the added cost of employer-funded medical coverage is an obstacle to hiring by employers—as well as a detriment to the competitiveness of American companies compared to companies in countries where the cost of medical care is not a direct expense of the employer. If we were to approach the challenge of employing more people via the route of each person’s working fewer hours, the costs of funding health care through employer payments would become even more of an obstacle. People working twenty hours a week would obviously not get sick only half as much as people working forty, so hiring twice as many people for half as many hours would double the employer’s healthcare costs, creating a chilling effect on hiring. Thus in order to ease the path for shorter workweeks it will be important to uncouple healthcare coverage from employment and to treat medical care as a public good, a right of citizenship available to all in the same way that schools, parks, or police protection are available.

      Other proposals to address the increasing disconnect between companies’ earnings and the incomes of its employees point to measures that would permit workers gradually to accumulate shares in the companies in which they work and thereby to share in the profits their work generates.¹⁸ A related but different approach would focus not on shares in the particular company in which one worked but in the overall economy. Here, the income from one’s work would be supplemented by the issuance of shares to every citizen in some broad-based investment vehicle such as an S&P 500 index fund. These shares, financed through some form of taxes, could be issued to everyone at birth and be held in escrow to increase in value until the person was of age to take possession or, in other versions, would be issued in some amount to all citizens annually. In this way, each person would both benefit from and have a stake in the overall performance of the economy.

      Particularly intriguing to explore as a means of enabling more people to benefit from the success of the companies they work for is the idea of requiring the total compensation of the CEO and other top executives of publicly traded companies to be limited to some multiple of the total compensation of either the median or lowest paid employee of the company. The ratio of CEO pay to that of the average worker has increased 1,000 percent since 1950.¹⁹ Yet back then, when the ratio was only about twenty to one, the economy seemed to run just fine. Indeed, it was just a few short years before we were described as The Affluent Society.²⁰ If we were to legislate some limit to the ratio today, it could have a number of important and beneficial consequences. Particularly important to understand is that the essential impact of such a policy would not be a “leveling down” caused by placing a ceiling on the top earner’s income, but a ratcheting up of the incomes of everyone else working in the firm. There would be strong incentive for the CEO and other top executives to reverse the recent trend for wages and salaries to reflect a smaller share of the company’s sales and profits. In order for the CEO’s income to go up, the incomes of the people working in the firm would need to also go up. Consequently, everyone working in the firm, from top to bottom, would have a stake in the success of the company, because that success would be the foundation of their gains.

      We presently operate on a rather perverse incentive system, because, although in one sense there is enormous incentive for CEOs to strive for success in their work—the rewards are in the multimillions—in another sense, we essentially evaporate any real economic incentive. By paying CEOs and other top executives so much, we create an income structure in which they essentially have no economic need. Their only incentive is pure ego. Placing serious limits on the possibility of the CEO’s income to grow unless the income of the people who work in the firm also grows would create powerful incentive for him (and it is still preponderantly men who occupy that role) to lead the company in a direction in which it thrived. He would actually feel some need for the stock options that could boost his overall earnings (though it is important to note, that, consistent with this proposed arrangement, those options could only be available to the CEO if they were available to all the employees in the firm, and the amount of the options available to the CEO would be a fixed ratio of the amount issued to the median employee). This would still be capitalism and private enterprise. But it would be capitalism in which the incentive structure made it in the interest of the CEO for everyone else who works in the firm to do well.

      Conclusion: The Poverty of Affluence in 2016

      In this book I raise serious questions about a way of life so thoroughly organized around the intertwined ideas of growth, accelerating material consumption, and “creating” jobs. I began with concerns about the ecological consequences of this way of life, but as a psychologist, whose daily work offers me a kind of access to people’s intimate subjective experience that is not available to economists, sociologists, climate scientists, or others who have focused on similar concerns, I gradually became aware of what could be seen as still a further cost of this way of life—but a cost that could also offer a crucial handle on how we could extricate ourselves from the trap in which we are caught: The growth-oriented consumer society doesn’t really bring us the satisfactions or contentment we are led to think it does. Thus, we do not really need to give up the good life to protect the earth; indeed, we need to find it.

      This does not mean that growth bears no relation to our deepest psychological needs or to the way our brains are wired. We would not have developed a growth oriented society if it did not. But the very ways in which growth seems wired into us are also the foundations of why growth doesn’t work to bring us the better life we turn to it for. I take up some of these issues in my discussion of adaptation level in Chapter Two and in various discussions in Chapters Six, Nine, and Ten. Throughout the book I highlight the irony that the very ways of thinking that enabled us to generate prodigious