If I hear one more sanctimonious Republican talk about how we can’t tax the “Job Creators” any more or the economy will tank even worse, I’m going to vomit on his shoes.
Underlying this reverence for the rich is the myth – and it’s just that, a myth – that American success is all about the drive of hardworking individuals, succeeding on their merits while those who don’t try as hard don’t succeed as much. It’s the grasshopper and the ant, writ large: and it’s dangerously wrong.
One of the best books I’ve read this year is “Outliers: The Story of Success” by Malcolm Gladwell. In it, he documents that success isn’t always the result of what we think it is. Since for most the last decade or so, Bill Gates has ranked as the world’s richest man, let’s use him as our example.
Certainly, Gates worked hard. He began learning computer programming at a young age, at a time when most kids would rather have been playing sports or building model race cars. He dropped out of college to found a company that grew into the world’s largest software company. He made many tens of billions of dollars for himself and for several other co-founders and early employees. Hard work, unquestionably, was part of the bargain.
But not all. Gladwell recounts how, when Gates was in the eighth grade, in 1968, the parents at his private school started a computer club. This was pre-Apple II, pre-Coleco, pre-TI-99A – the idea of a “personal” computer didn’t exist yet. There were mainframes, and a newer thing called minicomputers (basically, a mainframe scaled down to support fewer users), and that was it. The Mother’s Club raised $3,000 – a sum of money that would have been out of reach for the parents of eighth graders at almost any public school in the country – and used part of it to buy a computer terminal. Moreover, the terminal was a teletype – it didn’t require the huge stacks of programming cards that still dominated mainframes a decade later, and it had a direct link to a mainframe in downtown Seattle. This was something unheard of even for college students – Bill Joy, the founder of Sun Microsystems and another early tech billionaire, considered himself amazingly lucky to have limited access to such a terminal in his freshman year in college, three years later. Yet here it was, in a middle school.
Back then, such terminals were “time sharing”; you could type at the terminal, submit a program to run at the mainframe, and the mainframe would track how many seconds of CPU time were consumed by the program. You paid by the second, which meant the Computer Club would have to pay for time on the mainframe. The $3,000 raised by the parents quickly ran out; they raised more, then the students found ways to trade other things (like running tests on programs for companies) in exchange for more mainframe time. Then the kids found out that the University of Washington (walking distance from Gates’ family’s house) never scheduled computer processes between 3 AM and 6 AM, so they took to using the computers all night, while their unknowing parents slept. And so on… until by the time he finally dropped out of college in his sophomore year, Gates had accumulated many thousands of hours of computer programming expertise.
Hard work? Of course, But it was work almost no other kids in America could have the opportunity to do, because virtually no other middle or high school had a computer, or access to the mainframe time needed for the kids to learn and become experts. The hundreds of hours of computer time that he frankly admits he stole from the University of Washington was computer time paid for with public dollars, so your tax money, and mine, made it possible for him to become the man he is.
Likewise, Gates was incredibly lucky. He happened to attend one of the only middle schools, of tens of thousands across the country, that happened to manage to get its hands on a computer terminal and the mainframe time on which to use it. He happened to live close enough to UW to sneak out after dark and walk to the computer lab and write and run programs all night – something very few high school students were in a position to do. And perhaps most importantly, he was born in late 1955, midway between 1952 and 1958.
Why are those dates important? Because the first personal computer, the Altair 8800, was released in early 1975. Computer programmer types born before 1952 would have been 24 or older in 1975, already settled in a career with the likes of IBM or Unisys. Back then, you’d probably already be married, likely have a kid on the way, and already have a house and a mortgage. The kind of person, in other words, least suited to take a chance and start up a new software company based on an entirely new and untested paradigm, personal computing.
And if you were born after 1958, you’d be too young, still in high school, and unlikely to have any experience at anything, much less starting a company from scratch. But those born in that narrow window – lucky enough, shall we say, to be born then – were the perfect age. Not yet corporate drones, yet still possibly well-trained and practiced in software to see the potentials and act on them. Virtually every major startup success of the PC era – Microsoft, Sun, Apple, Novell – was started by a computer guy born in that narrow window: Bill Joy, Bill Gates, Paul Allen, Steve Ballmer, Steve Jobs, Eric Schmidt, Scott McNealy, Vinod Khosla, Andy Bechtolsheim. (And note that they’re all men; not because men are more creative at starting companies, but because the avenues to learning the necessary computer skills weren’t as open to women in the late 1960′s.)
In other words, luck, as much as anything, is the reason Bill Gates is a billionaire and some equally talented and bright, but less lucky, programmer at Apple or Google or whatever is not. Right place, right time, to take advantage of events they had nothing to do with creating.
And the flip side of that “Job Creator” myth is that if we just cut them loose – lower those oppressive taxes that they have to pay – why, there’s no telling just how many more jobs they will create! Except that as we’ve seen the last several years, it’s just not true. Corporate profits are at record highs (and the stock market is flirting with record high territory again), and taxes on rich people are at historic lows. And yet jobs aren’t showing up – at least, not nearly enough. And it’s because letting rich people keep an ever-increasing share of their money (that is, by lowering and lowering their tax rates), we’re not “encouraging investment”; we’re just letting them keep more money. And an increasing number of them are simply shifting it offshore, or socking it away, instead of what we’ve always been told they’ll do, which is buy things that creates demand and employs workers to meet that demand.
And really – is anyone surprised? If you’ve made $20 million a year for the last ten years, are you really likely to buy a sixth or seventh house? Are you going to buy another Bentley or Maserati, or are you going to stick that money into some financial institution and live on the proceeds?
It might be reasonable to argue that rich people shouldn’t pay a higher tax rate than the rest of us – an argument I reject – but it’s categorically indefensible that mega-wealthy people should pay a LOWER tax rate than working people. A couple consisting of a police sergeant and a public school teacher, or a welder and a nurse, or a computer network manager and an architect, are likely to have a tax rate twice that of someone like Mitt Romney. That’s insanity. And at some point, a majority of the people in this country are going to realize how much they’re being shafted by the kleptocracy we have in Congress (and periodically have in the presidency) and revolt. It can’t come a day too soon.