Wal-Mart, Wall Street, Welfare, and the Senseless Entitlements of Wealth

The common wisdom, probably due to comments Ronald Reagan made in the 1980s about “welfare queens” (and incessantly repeated by Rush Limbaugh), is that the poor have a “sense of entitlement” to their welfare benefits and that the public dole has become a “lifestyle” for the poor. The theory goes further, stating that this results in a large number of people who have no incentive to work and have become lazy and complacent.

There may be an element of truth to this, but with 45 million Americans now qualifying for food assistance, it can’t be all true. This statistic is shored up by the fact that the fastest growing segment of the homeless and of food bank users is comprised of families in which at least one adult works—so clearly the problem isn’t that people receiving assistance don’t want to work.

Receiving welfare is still a matter of deep shame in America, and its rolls are swelled by the economic downturn and the shrinking American wage, not by laziness or a sense among those getting it that welfare is anything other than a last resort that they would gladly give up if given a chance to earn a decent living.

The “sense of entitlement” language is, if anything, a classic case of Freudian projection by the rich onto the poor. For recent evidence of this look no further than Wall Street shaking down Uncle Sam for $700 billion simply because the big Wall Street banks gambled away all their money on risky financial instruments. This sense of entitlement that involves private jets and Fifth Avenue apartments, not a sackful of groceries for this kids and a housing voucher for a run-down Section 8 apartment.

More subtle examples can be drawn from the common practice of major corporations demanding tax breaks for locating in a particular area. In economic development terms this is known as being competitive on a global scale. In mafia terms, this is known as a protection racket. But it derives from a sense by the corporations and the rich people who run them of pure entitlement; they demand special treatment that other, smaller businesses can’t get, and they demand a special status that actual people—versus the corporate “people” a recent Supreme Court decision assured us exist—can never achieve. The promise, of course, is that by locating in a given area, the company will “create jobs” which will then lead to eons of wealth and contentment in that locale. Until, of course, the company finds a better deal elsewhere.

Wal-Mart is well known for these tactics, but its behavior is even worse. Once the titanic retailer does locate in an area, tax incentives assured, it proceeds to undercut local retailers and drive them out of business, monopolizing local retail. It also pays its employees so little that they qualify for government subsidized food and health care benefits. Thus it “double dips” once at the front end, with tax incentives, and once at the back end by sucking on the public teat to keep its employees healthy and alive. Clearly, it feels entitled to this treatment and to these benefits, as it actually coaches its employees about how to get public assistance.

All that is well known. But then there’s this item from the July 9, 2010 edition of Public Radio International’s Marketplace Morning Report. The piece, titled “Rich More Likely to Walk Away from Homes,” has Nancy Marshall Genzer summarizing a New York Times article that shows about one in seven mortgages worth more than a million dollars is in default, as opposed to one in 12 for those worth less than a million. And apparently it isn’t because the rich can no longer afford these homes. Here are Marshall Genzer’s words: “Well, the Times reports that these homeowners just say, look, their houses are not a good investment, and they decided to walk away.” In other words, they’re screwing the banks, and by default the rest of us who use those banks, by going delinquent on mortgages that they don’t like because they aren’t returning the kind of value they want, not because the mortgage holders are out of work or seriously financially strained. Marshall Genzer goes on to explain how they can get away with this: “[T]he Times also says that the wealthy are less susceptible to tactics used by the government and banks to shame them into paying their mortgage.” What she isn’t saying here, possibly in order not to upset the show’s corporate underwriters, is the next obvious thing: that the wealthy have no shame.

Obviously, that isn’t true of all rich people, just as certainly some poor people abuse their welfare benefits. But the actions of the rich here don’t pass ethical muster. If we apply a little Kant, we can see that if what Wall Street, Wal-Mart, and these rich homeowners do were to become universal law, the economy would not merely be damaged as it has been but utterly destroyed. The ever-weakening responsible middle is keeping the boat afloat by working hard amidships with a bucket. Meanwhile the water flows in from our captains continually running aground.

But these examples above require some type of deeper explanation. Why do those at the very top feel like they can bash the hull in and then retire to their deck chairs? We might be able to move in the direction of understanding this if we look again at Stanley Milgram’s famous experiment from the 1960s. In it, he got a majority of subjects to shock another person to the brink of death. He did this simply through the power of the authority of a man in a lab coat standing next to the subjects and giving them orders. No one really got shocked, of course—all but those giving the faux shocks were actors—but the experiment revealed how people can act in unethical and immoral ways if they feel confident in the authority that assures the course of action. The poor and middle class are less likely to walk away from our debts because we view banks and government agencies as authority figures. But also, perhaps, because we view these entities as somehow infused with the power of the public good. Even the much-despised banks, after all, keep money building interest for regular users and loans flowing to locals building homes and small businesses. Or at least they did before the financial meltdown, which was led by the rich and the Wall Street investment firms.

The rich find their authority figures in other rich people and the corporations they run, not in the public, the government, or some penny-ante bank. Evidence supports their view in a sort of feedback loop: they get the entitlements they want from the government; the government is therefore a sucker; the government therefore deserves no respect. This is reinforced by free-market dogma which shores up the authority effect through think-tanks, Ayn Rand novels, and the business departments of colleges and universities. A Marxist would recognize this as reification, but it happens not as a top-down form of control, but peer-to-peer, excusing bad behavior that keeps the rich rich despite the economic damage they create.

An anthropologist would recognize this as a form of intensification, which is necessary for any culture (or in this case sub-culture) to maintain group cohesion. It is clear the rich are doing this better than the rest of us, and it is to the detriment of both the common culture and the common good.

–EW Wilder

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