| NEW YORK, Sept 13
NEW YORK, Sept 13 At a time when a CEO of a large
U.S. company is likely to earn in one day what the average worker
does in a year, an investment adviser takes the income-disparity
controversy a few steps further in "Are the Rich Necessary?"
That question, almost unthinkable in a capitalist society,
is one of many that Cambridge Associates LLC co-founder Hunter
Lewis poses in his latest book (Axios Press, $20).
Lewis, the author of "A Question of Values" and "The
Beguiling Serpent," also looks at the profit motive, its effect
on democracy and society, and the roles government and central
banks should play in wealth distribution.
"Are the Rich Necessary?" offers no simple or even
definitive statements on these complex issues. Instead, Lewis
presents a cross-section of often divergent viewpoints, in
keeping with the book's subtitle: "Great Economic Arguments and
How They Reflect Our Personal Values."
These are generally arguments with no clear winner.
On the question of whether the rich are necessary, for
example, one school of thought considers them decadent
parasites who reap the harvest sown by those less fortunate
But another theory contends that any government seizure and
redistribution of the fruits of that harvest would cause buyers
to disappear and prices to plummet.
There's also the concept that the wealthy are both
outnumbered and outgunned financially by the rest of society.
As a result, the average consumer rules, and millionaires and
billionaires are mere public servants, trustees or social
agents, although Lewis acknowledges that such a view might
surprise even the deep-pocketed.
In terms of the profit system, some consider it unfair and
inefficient, pitting employers against workers. Others say the
quest for earnings leads to increased supply and lower prices,
benefiting people who have to watch what they spend.
THE PHILANTHROPIC APPROACH
Many theorists advocate progressive taxation -- in which
the rich pay more -- as a way to ease the effects of income
inequality, but Lewis sees great promise in expanding the
nonprofit sector, an area in which he has decades of
He helped start Cambridge Associates in 1973 after working
on a review of Harvard University's investment approach, and
nonprofit organizations are still the firm's main client base.
He has also sat on board and committees of 15 not-for-profit
Philanthropic associations could take over many government
functions, such as social services, health, housing and
education, Lewis writes. The government could either fund these
groups directly or encourage the wealthy to do so with tax
One scenario, he said, would be a simple income tax with
only a few allowed deductions. The poor would be fully exempt,
and the initial tax bracket would fund the government.
There would also be one or two higher brackets for the
rich, who could either pay these additional taxes directly to
the government or receive a full tax credit by donating the
same amount to registered charities.
An estate tax whose revenues would go to nonprofit
organizations is another possibility.
Enlarging this sector, which now accounts for only about 8
percent of the U.S. economy, would mean more money would flow
directly to the needy, Lewis said. He also sees philanthropic
organizations as more creative and responsive to the people
they are trying to help.
But even here, he is careful to list possible objections,
such as an aversion to donations as government policy and
concerns that charities could become bloated and inefficient.
Still, he sees the nonprofit approach as one way to bring
the various economic factions together.
"An expansion of philanthropic values," he writes, " ...
could offer a way forward out of the old, bitter, and often
sterile economic quarrels of the past."