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I've been watching in horror the story of Tom Perkins, wealthy co-founder of famous VC firm KPCB, who used a Hitler analogy to make a point about the demonization of the rich. I haven't yet seen a rational discussion of it in the media so I guess it's up to me.

For starters, using a Hitler analogy is almost always a self-refuting argument. And by that I mean that if you need to invoke a Hitler analogy, there's probably something deeply wrong with your point of view in the first place.

But I said "almost always." Interestingly, the Hitler analogy actually works in this particular case. My interpretation of Perkins' point is that the growing level of contempt for the rich is fueled by scapegoating. And if the economy falls into something like a depression, it is a legitimate concern that angry mobs might drag rich people out of their mansions and do harm under the theory that the rich are the problem.

What are the odds of that, you say? Low? Impossible?

I'd put the odds somewhere in the 5% range and growing. Remember, Perkins didn't say it will happen next Tuesday; he's simply identifying an emerging trend. Is it legitimate for Perkins to identify a potentially dangerous trend in its early stages with the hope of heading it off early? I'd say that's a legitimate position.

Keep in mind that Perkins got rich by identifying trends before others recognized them. His firm invested in AOL, Amazon.com, Citrix, Compaq, Electronic Arts, Genentech, Geron, Google, Intuit, Netscape, Sun, Symantic and more. So if you disagree with Perkins' assessment of the risk, please compare your success rate to his. And no fair saying VCs only get it right 10% of the time because in this case that would be often enough to totally justify raising the issue. And I don't believe anyone disagrees with Perkins' observation that the public's opinion of the top 1% is worsening.

Before delivering my verdict in this case, I'd like to state the facts as I see them.

1. I keep seeing comments and even headlines saying Perkins compared the suffering of the rich to the suffering of Jews during the Holocaust. As I have often written, all analogies invite wrong interpretations. I interpreted his analogy to mean that if the demonization of the rich continues there is a non-zero chance it could escalate into violence. That's far from saying rich people are exactly like Jews in concentration camps. The willful misinterpretation of his point (or perhaps confirmation bias) is strong evidence of his point. 

2. I often hear it said that the rich are torpedoing the U.S. economy by shipping jobs overseas or introducing robots. For starters, big corporations are owned by shareholders, most of whom are not rich. Second, the idea that the rich are, on average, subtracting jobs from the economy is economic illiteracy, not an opinion. That's the same sort of ignorance that drives most forms of discrimination and violence. 

3. If a pundit of modest means had raised a warning that worsening attitudes about the rich might someday escalate to violence no one would raise an eyebrow. The angry contempt shown to Perkins' opinion piece supports his opinion. Sure, the Nazi analogy was a bad choice, but does that make his point wrong? 

4. The fact that few citizens seem to care there is a chance that the rich might someday be dragged from their homes and killed is evidence of Perkins' point. The rich have already been dehumanized to the point where an offensive analogy seems the bigger crime against humanity than the possibility that the rich could someday be slaughtered by mobs. 

5. Much of the public believes the economy is a zero-sum game and therefore the rich are stealing their money from the poor. That is economic illiteracy, not opinion. It's the same sort of ignorance that made ordinary German citizens think the Holocaust might be a solution to their national problems. 

My verdict is that Perkins' point about escalating contempt for the rich potentially leading to violence is legitimate, in large part because the media contributes to economic illiteracy and highlights the bad apples in the top 1%.

The Nazi analogy wasn't politically correct. Nor was it a brilliant choice because all analogies cause fights, and when you throw in some Holocaust references you're just asking for trouble.

Is Perkins sort of a dick? Yes. But I have some respect for the fact that he's not trying to be a phony. And based on what I've read online, most of his critics are ignorant dicks. That seems one level worse than being a well-informed dick.

Yeah, I know, I'm a dick too. That goes without saying. Let's not get sidetracked.

 

 
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Feb 1, 2014


[The issue that people have with the current situation is that it seems that increasing amounts of capital are no longer used to move resources or produce goods, but rather to consolidate power, which is actually a negative sum game.]

Are we shifting the problem to "power" now? So it's not rich people, but because rich people have power, that we want to take money away from the rich?

What power does Bill Gates and Warren Buffet have over you, that isn't far outweighed by the choices you make yourself?

Do you think Bill and Buffet have not changed your life for the better, more than you have changed theirs?

Oh, and where do you think their money is kept, besides invested in companies that move resources or produce goods?

And don't think that if you use the excuse because they have more money than me, that I can't find someone with less money than you.

---------------

Wealthy are targeted now for kidnapping and extortion.

In the USA
Angry mobs drag black men from their homes and kill them.
Angry mobs drag gay men from their homes and kill them.


Is 1992 so long ago, we forget angry mobs can be lit with a spark?

Is there a chance the growing wealth envy will spread to violence? Yes.

 
 
Feb 1, 2014
@julesmartman

Many years ago I adopted the alias whtll on a website. whtll is based on my middle name. Then I decided to adopt another alias and labeled it 'whtllnew'. Over time whtllnew became my default online name and I stopped using whtll.
 
 
Feb 1, 2014
Most of us are not worried about the rich being dragged from their homes because we think there is zero chance of it happening. "Class warfare," is a Fox News exaggeration of proposed slight increases in the highest tax brackets. I believe Scott has written that he would be very little affected by such changes, and perhaps even that he wouldn't mind paying the extra. I wish this blog included a good search function, so I could check.

It's reasonable to talk about the effects of tax increases on different groups. It's dishonest to exaggerate the dangers of even discussing the topic. And it's disgusting to equate the other side with Nazis.
 
 
Feb 1, 2014
@whtllnew
Two things, Mind telling what the handle stands for? Sorry, but it's like the personalize license plates I can't decipher, Must figure out.

Second, whenever a discussion includes the Nazi party or Hitler you see a comment like MugaSofer made

[ No-one can seriously argue that the Nazis were right, and as long as you're factually correct, arguing that they didn't do it is doomed.]

I firmly believe that Hitler and the Nazi party were wrong. But, to say that no one can seriously argue they were right flies in the face of the reality we have seen throughout history and especially the last hundred years (Because of communication improvements, we have the ability to be aware of the activities around the world). People groups or political parties have and continue to suppress the rights of other groups for their gain. Some are more vile and despicable than others, but it exists and they are able to rationalize it for themselves. The point is that in order to make progress we must understand that there are those that think different and have different values.

If we don't recognize this we risk wasting a lot of time and energy on a path with no chance of success. (Strangely reminiscent of our political debates, Hmmm...)
 
 
Feb 1, 2014
I think you have made the best possible defense in Perkins' favor and yet I cannot bring myself to agree with it. Most of Perkins' critics are Occupy types and I am definitely not in that category. But the comparison with Nazism was incredibly stupid - and I can't forgive it even if Perkins has a point buried somewhere in the layers of stupid.
 
 
Jan 31, 2014
@Mugasofer

[The poor and middle-class rising up and dragging the wealthy and powerful from their homes to answer to sham "justice" - this is a legitimate concern (obviously). But if that was his point, he would have used the French Revolution, not Nazi Germany.

Instead, he tried to FORCE the point that demonizing a subsection of your population = BAD BAD BAD, using a cheap trick. No-one can seriously argue that the Nazis were right, and as long as you're factually correct, arguing that they didn't do it is doomed. An argument that can't be defended against no matter if the thing under discussion is actually bad or no - rendering what could be a valuable discussion utterly useless for determining something.]

Youre overanalyzing. Youre assuming Perkins put a great deal of thought into his statement. I dont think he put ANY thought into his statement. I do not mean that as an insult, only saying that it is too easy to say something you later regret as a result of folks expecting you to respond almost immediately to whatever they're saying.
 
 
Jan 31, 2014
"For starters, using a Hitler analogy is almost always a self-refuting argument. And by that I mean that if you need to invoke a Hitler analogy, there's probably something deeply wrong with your point of view in the first place.

"But I said "almost always." Interestingly, the Hitler analogy actually works in this particular case."

Scott, the problem with Hitler parallels isn't that they're factually incorrect - they're usually true - it's that the negative connotations are just noise, noise that drowns out any information that was present in the discussion. That's why they're the last refuge of the desperate.

The poor and middle-class rising up and dragging the wealthy and powerful from their homes to answer to sham "justice" - this is a legitimate concern (obviously). But if that was his point, he would have used the French Revolution, not Nazi Germany.

Instead, he tried to FORCE the point that demonizing a subsection of your population = BAD BAD BAD, using a cheap trick. No-one can seriously argue that the Nazis were right, and as long as you're factually correct, arguing that they didn't do it is doomed. An argument that can't be defended against no matter if the thing under discussion is actually bad or no - rendering what could be a valuable discussion utterly useless for determining something.

And everyone knows it, so it backfired immensely. Tricking people who know they're being tricked is hard, especially when you're too busy tricking them to notice how obvious you're being.

Now, in my fairly certain opinion, it IS bad bad bad BAD. And while I don't share your assessment of the odds, there are clearly serious points in favour that need to be discussed - maybe even enough to raise the probability to 5% from the prior.

But that's not what he tried, is it?

***

This simplecomment is already way too long, so I may as well put my money where my mouth is and actually discuss some of those points that need discussion. Obviously, the same disclaimer applies to my discussion of them as to the article itself, for those likely to start taking anything I say here the wrong way.

***

"I interpreted his analogy to mean that if the demonization of the rich continues there is a non-zero chance it could escalate into violence. That's far from saying rich people are exactly like Jews in concentration camps. The willful misinterpretation of his point (or perhaps confirmation bias) is strong evidence of his point."

Not really. Godwin's law leads to this result more or less inevitably - the opposing side can always point to it in the case of a Hitler analogy, unless the connection is already well-established (eugenics, fascism, swastikas, basically.)

***

"I often hear it said that the rich are torpedoing the U.S. economy by shipping jobs overseas or introducing robots [...] the idea that the rich are, on average, subtracting jobs from the economy is economic illiteracy, not an opinion."

Unless economists are economically illiterate, then I'm afraid yours is the illiterate opinion here (sorry, your term) - and if they are, well, considering your opinion originated with some economists ... perfect Ricardian reimployment and the notion of "the Luddite Fallacy" is losing support, and frankly the reason is probably that the effect used to be small, not nonexistent, and is now larger as we've gotten better at it.

***

"The angry contempt shown to Perkins' opinion piece supports his opinion."

Again, how? Moist robots, remember? Of course this is the response it would receive. No malice is necessary to explain people reacting according to their programming - and you know as well as I do what that programming entails when someone compares their group to the Jews in NAzi Germany.

***

"The rich have already been dehumanized to the point where an offensive analogy seems the bigger crime against humanity than the possibility that the rich could someday be slaughtered by mobs."

This was always the case. (OK, OK, I'm going to stop repeating this. Stupid article continuing as if it can't hear my objections.)

***

"Much of the public believes the economy is a zero-sum game and therefore the rich are stealing their money from the poor. That is economic illiteracy, not opinion."

Yup, it is. Got no counterargument here. Nothing to see, folks, Scott is right about his. (Figure I should at least acknowledge that instead of only voicing my disagreements.)

However, Scott - while you're right that this is a very common mistake and a dangerous one - you can still argue that wealth should be distributed differently without considering it fixed. So you may want to watch out for accidentally strawmanning people when you "recognize" their position as yet another fixed-pie idiot. Genuine rationality tip there, people - we all fall into this trap, so watch out!

***

In case I need to point this out, the conclusion depends on the stuff leading up to it. Just in case there's somebody reading this and saying "yes, the links in the chain are weak, but the chain as a WHOLE is strong/the conclusion is strong".
 
 
Jan 31, 2014
Tonyo123: [At the same time they provided jobs for people who would otherwise not have them and that otherwise would not have existed. That's what capitalism is all about, Charlie Brown.]

I'm not sure if you are being sarcastic or not.

Capitalism is not about providing jobs, although that is a side-benefit. Capitalism is about applying capital to move resources (including labour) to produce goods for the benefit of the owner (or borrower) of the capital. It's a wonderful system, and when markets are free, this self-interest moves an 'invisible hand' to benefit everyone involved in the process, from owners, to workers, to consumers, to nations.

The issue that people have with the current situation is that it seems that increasing amounts of capital are no longer used to move resources or produce goods, but rather to consolidate power, which is actually a negative sum game.
 
 
Jan 31, 2014
[Let's say we accept that the rich are not stealing our money, but agree that there is some vehicle by which a few people out there have an astonishingly large amount of money. How did this happen?

I am very curious to hear about that.]

This happened when they had a great idea for something they believed people would pay for, took a risk and used their savings or got a loan, put in a lot of sleepless nights and were successful at creating value (about 1% of the time -- 10% of the time they succeeded on a much more modest level, and about 90% of them failed and lost essentially everything.

At the same time they provided jobs for people who would otherwise not have them and that otherwise would not have existed. That's what capitalism is all about, Charlie Brown.
 
 
Jan 31, 2014
@Will Von Wizzlepig

I think the answer to your question is the nature of the recovery from the Great Recession. The rate of job loss due to technology has been higher than the rate of job creation due to technology for quite a while, and is accelerating. The recession exacerbated this by forcing business to re-evaluate labor needs and cut loose as many workers as feasible, to survive. Remember the pundits trying to convince us that the recession ended in 2009? Well, that wasn't just politics. Corporate profit turned around sharply and went through the roof. We didn't all go back to work when that happened, because very little labor was needed. The situation we are left with is that more and more of business income goes to profit, and less and less goes to labor. So, just like other times in history, most of the money funnels into a few hands on the capital side of things instead of labor. Coming attractions are the continuous erosion of consumer purchasing power, because the money is not returning to the consumers via wages. We have had large displacements before are eventually people retrained and job creation caught up. This time is different because the rate of job destruction is so high. Humans educate and retrain at about the same rate they always have, so they will never catch up. This will tend to keep the money in very few hands for a long time. If consumer purchasing power is allowed to collapse, people will once again be in the streets and the violence against the rich will happen. Look toward Europe for previews. I expect we will be in denial about the root cause as long as possible, so there will have to be a crash. Such a waste...

To look at the math of this and why this time is different, read: "Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy" by Erik Brynjolfsson and Andrew McAfee. I wish us all good luck.
 
 
Jan 31, 2014
Slam! Dunk! Well done, Scott.

I would like to investigate, though, the concept that the rich may be stealing our money.

Let's say we accept that the rich are not stealing our money, but agree that there is some vehicle by which a few people out there have an astonishingly large amount of money. How did this happen?

I am very curious to hear about that.
 
 
+14 Rank Up Rank Down
Jan 31, 2014
I'm going to throw in on the side that it was a valid analogy.

Also, note that Perkins compared violence perpetrated by the Occupy crowd to Kristallnacht, which was more or less the start of the holocaust against the Jews, not the end of it. Kristallnacht was a riot in Jewish populated areas, the concentration camps came after. The class envy types in the United States today, including the occupy movement, are just short of actually encouraging violence. Mostly they are asking for the IRS and other government bodies to put the hit on the rich instead, but the rhetoric and ginning of hate is exactly the type that might lead to violent uprisings.

Scott's points on scapegoating, economic illiteracy, and the fact that all of this has become acceptable in our country today is spot-on.

Godwin's Law aside, and all the war atrocities of Hitler aside, the main trait of pre-war Hitler was that people followed him almost entirely on the basis that he gave great speeches and wrote a nice book. That should be a lesson to us, because a lot of politicians give great speeches and have nice books, but their methods may or may not match up to their promises and the outcomes may or may not match up with their intentions.
 
 
+6 Rank Up Rank Down
Jan 31, 2014
You accuse people who criticise the rich of being illiterate about economics. The real fact is that capitalism is broken in this country. All the facts you assume to be true are only true when capitalism is working as intended. Today, employees have very little power over the price of their own labor, thanks to the destruction of unions, and rising productivity has been decoupled from wage increases since the late 1970's. Many industries that cannot compete on price or service have successfully used laws to entrench their dominance. But worst is what's happening in the worlds of defense, finance and healthcare, which together make up over half the economy. The principles of free market are nowhere to be found in those sectors - their only function now seems to be !$%*!$% the rest of us dry, and yet our government is totally incapable of reforming them in any way.

The majority of our country's economy has no resemblance to the free market anymore, and so it's time to stop assuming that those who recognize that fact are economic illiterates. The economy may not be a zero sum game, but when 100% of wealth increase over the last 5 years goes right to the 1%, it's certainly not a game that anyone else is going to win.
 
 
+3 Rank Up Rank Down
Jan 31, 2014
@CliffClaven

While this particular subject matter isn't exactly on my radar, those where some solid observations.

Scott just found his VP for the next election.

 
 
+3 Rank Up Rank Down
Jan 31, 2014
I generally don't believe in villains. With a few glaring exceptions, the rich are pursuing their self interest within the "rules" of our economic/political system. However, the system is under duress. The economy is not "zero sum" but due to automation (robots, software systems, etc), globalization, web-based commerce, etc; wealth creation is more and more dependent on capital and less on labor. This inevitably concentrates wealth in the investor class (aka the rich). I don't see this trend reversing or even decelerating in the foreseeable future. If our current system doesn't change in some pretty fundamental ways, I believe it will eventually be stressed to the breaking point and we could be faced with economic collapse and perhaps some form of class warfare. I think the major challenge facing us is to construct an economy which can thrive with permanent unemployment levels in the 40% range.
 
 
Jan 31, 2014
"The poor in American don't have it bad. The liberals just keep telling them they have it bad."

While it's true that most "poor" people aren't actually sleeping rough and rooting through garbage in an attempt to find food, a few are. We call them "the homeless" instead of "the poor."

Although there are an unfortunately large number of homeless people at any given time, most of them are young people who are homeless for only a few months and are never homeless again. That leaves a very small number of people who are chronically homeless. It's small, but not nonexistent.

Interestingly, they didn't make up the bulk of the Occupy movement. Almost all of the Occupy folks were weekenders. Apparently they had to go to work during the week.

What does this mean in terms of a possible violent rebellion? I don't know for sure . . . but I'm a little surprised that Occupy still exists. The honeymoon is over, but it's still chugging along, and I for one was expecting it to be gone by now.
 
 
+4 Rank Up Rank Down
Jan 31, 2014
When we talk about rich people, here, are we talking about the rich, or The Rich? I have little against rich or Rich or even Richie Rich. Which rich are presently resented? It used to be diamond-tie-pin Plutocracts such as the big industrialists. Do we now consider those with excess cash for big houses, cars, and vacations as rich? These people, educated to lucrative skills, could be those who live in the nicer parts of our suburbs.

I think those people are just well off due to foresight and luck, maybe a boost from multi-generational inheritances. These working rich are not going to be dragged from their homes. They will not lose their wealth except in a few percent extra taxes. This is obscuring the issue.

I myself do not anymore resent even the Entertainment Rich or the Sports Rich. Their skills are often without value to me, but their success is supported by many with different tastes, and this easy wealth is soon dissipated and recycled. A world with people all of my tastes would be a boring place. The perceived absurdity of others is entertainment to me.

The really Rich have Power. How many physical possessions can one have, after all, before one gets bored? But the desire for power goes on and on. This is what makes them stick out, especially when they abuse the power. People do not like to have others play Monopoly with their lives.

The Rich should not let things get beyond a certain point lest they badly lose control, however temporary. They should instead continually reveal their wealth in order to demystify it, convince others that its excesses smell good as the musk of success. Americans love success, and it used to be earned success. But now it involves a casino-lottery success and each of us hopes secretly one day to magically become rich, or get super powers. The bogus pot of gold will remain, the carrot ever closer in a Zeno paradoxical way. The Rich who live The Carrot should let us see it being eaten by others, if not tasted ourselves.

So it seems to me movies, television, and other media are working as hard as they can to portray the rich as an entitled indigenous class, as wicked but cool, ultimately under control by ordinary people. Americans especially believe this in our peculiar version of Democracy.

Europeans seem to portray the Rich as conflicted and evil but necessary to a core divine order. It is perhaps their remaining mental taint from centuries of Monarchy.

The rest of the world is so smothered by traditional religion and institutional poverty that consumer scraps such as televisions and cell phones, and sufficient food and not being physically beaten have satisfied them for now. Heaven help us if they ever feel the same degree of entitlement as Westerners.

In order for the Rich to continue subtle but firm control over the media and financial worlds and those of us with the possible power to harm them they must continue to lull us as with a psychological super-Wurlitzer heavy on Vox Humana. Using lesser classes of rich as human shields to protect themselves is a cool tactic in this present political era, I think.
 
 
-4 Rank Up Rank Down
Jan 31, 2014
So, it's ok to be a dick, as long as you really mean it?
 
 
Jan 31, 2014
Ugh, Sorry for the triple post. I also wanted to point out that if Perkins wanted to make an apt historical comparison for what he fears, he should have cited the Storming of the Bastille, which was the misguided actions of a revolutionary mob, whereas the Kristellnacht was a planned attack by government agents.

One was the act of revolution by a mob, the other was an act of suppression by a dictator. The present situation indicates a resemblance to one of these much more than the other.
 
 
Jan 31, 2014
And yes, I recognise the irony that a comparison with Josef Stalin (who was also a genocidal dictator) is more appropriate than a comparison with Hitler.
 
 
 
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