For those of you who missed our webinar, The Wealth Elite: what makes the super rich tick? featuring an interview between ASI President Madsen Pirie and author and historian Rainer Zitelmann, we have reproduced the interview for our blog.
Dr Rainer Zitelmann holds doctorates in history and sociology. In the late 1980s and early 1990s, he worked at the Central Institute for Social Science Research at the Free University of Berlin. He was then appointed section head at the major daily newspaper, Die Welt. His recent book, The Wealth Elite, delves into the subject of this webinar.
Dr Madsen Pirie is the co-founder and President of the Adam Smith Institute, a UK neoliberal think tank which has been in operation since 1977.
1. You’ve written several books about rich and successful people. What is it about them that interests you?
Zitelmann: Lots of people dream of being rich – just think of the millions who play the lottery week in, week out. Then there are all the books about getting rich – some are good, most are bad. But there are hardly and scientific studies about becoming wealthy. So that’s why I wrote my study, The Wealth Elite.
I followed that up with another study. Not about how to get rich, but about popular attitudes toward the rich. I was mainly interested in researching stereotypes of and prejudices against rich people. And there was no definitive scientific work on this subject either. There are thousands of books, articles and essays on prejudices about black people, women, homosexual people, etc. Researchers have also published countless studies on prejudices against the poor, the disabled and the overweight, but no major scientific study had ever investigated prejudices against the rich, which is what prompted me to write The Rich in Public Opinion.
2. Your new book, The Rich in Public Opinion, is about what people in different countries think about rich people. Without going into too much detail, how did you set about finding out the different attitudes people have about the rich?
Zitelmann: Well, we started by asking representative samples of people in the United States, Germany, Great Britain and France dozens of questions. Analysing their responses, three groups emerged: social enviers, non-enviers and ambivalents. The characteristic feature of the social enviers is that they do not primarily want to close the gap between themselves and the financially successful by improving their own situations, but by making life worse for the rich – by taking things off the rich.
3. Following on from that, does the attitude of the Anglo-American people differ much from that of people in Continental Europe?
Zitelmann: That is certainly the case. I just mentioned the enviers and non-enviers we identified. Well, for each country we calculated the relationship between the two groups. We called this the Social Envy Coefficient. The greater the number, the higher the levels of social envy in a society. France has the highest coefficient (1.21), followed by Germany (0.97). In the United States (0.42) and Great Britain (0.37), social envy was far less pronounced.
4. Do you think the media play a large role in determining what people think about very wealthy people?
Zitelmann: We also analysed media representations of the rich. For example, we analysed depictions of rich people in Hollywood movies. Rich characters in Hollywood movies are usually portrayed as immoral people who are willing to climb over dead bodies to make more money. But I think that the prejudices against rich people we identified would exist even without the media. A society that promises equality will only ever be able to deliver legal equality, not social equality. In the end, there will always be inequality because people have different abilities. But less successful people don’t all react the same: some see rich people as role models and strive to emulate them; others target the rich with envy. And envy is essentially an admission that someone else has something you would like to have yourself. This recognition leads to the question – and the potential damage to your self-esteem it may well provoke – of why you don’t have that thing. And this, in turn, explains why most people are unwilling to admit that they are envious.
5. It seems very much to be true in the UK, that people don’t mind footballers and pop stars being paid vast sums, but are less happy about the high salaries paid to business executives. Do you think this could be because everyone knows what footballers and popstars do, but there is no similar wide understanding of what goes on in business?
Zitelmann: Yes, there’s definitely some truth in that. Everyone can judge a footballer’s performance because they can watch them play the game. In contrast, people don’t see or understand what senior business executives do. Many people have what I call an “employee mindset”: They believe that salaries are (or should be) determined by the effort and time someone spends on a job. This matches the experience of workers and salaried employees. But the sums paid to the CEOs of large companies are based on supply and demand in a tight market for top talent. Unfortunately, many people simply don’t understand this.
As part of our study, we presented our respondents with a list of different groups of rich people (athletes, pop stars, lottery winners, bankers, etc.) and asked who they thought deserved to be rich. It was interesting to note that enviers had no objections to lottery winners being rich. To most people, this seems illogical, because all a lottery winner ever did was put six or seven crosses next to some random numbers. But the explanation is psychologically simple: Enviers find it easier to accept someone becoming rich on the basis of pure luck because this does not arouse feelings of inferiority. After all, a wife will not nag her husband for not having chosen the winning numbers on the lottery.
6. One of the most pervasive economic fallacies is that of the zero-sum game, in which people suppose that gains by some must mean losses by others. Do you think that people regard wealth like that, and assume it can only have been gained for some by having other people made poorer?
Zitelmann: Zero-sum beliefs are the basis of all socialist beliefs. Our study also revealed that enviers usually subscribe to zero-sum beliefs. They think the rich are only rich because they have taken wealth from the poor. This misconception is perfectly expressed in the poem by Bertolt Brecht:
“Said the poor man with a twitch:
Were I not poor, you wouldn’t be rich”.
Incidentally, I recently wrote an article for Forbes.com on this very subject and explained why zero-sum beliefs are so fundamentally wrong.
7. In your books, Dare to Be Different and Grow Rich and The Wealth Elite, you look at people who’ve made it against the odds. I spotted a personality pattern emerging. What did you determine were the character traits that made these people stand out?
Zitelmann: You’re absolutely right: Many rich people are nonconformists. In many cases, they even love swimming against the current of prevailing opinion. Or at least they don’t care a jot for what the majority thinks. And this is quite logical. After all, if you do what everyone else does, there’s no way you’ll get rich.
8. Do you think there are things we could do, either in the educational system or outside it, that might make it easier for people to develop these character traits?
Zitelmann: Teachers will never be able to teach students entrepreneurship. They are so far removed from entrepreneurship: they went to school, then studied and then went back to school. Business life is usually a very, very alien concept to them. I would suggest that every week an entrepreneur should go to school and tell the story of their company: How they started their own business, why they love being an entrepreneur and what challenges they face.
9. You point out in The Power of Capitalism that capitalism has done more than any other idea in history to lift people all over the world out of poverty and deprivation. Yet the fact is that too many people don’t understand that, and actually oppose capitalism. Was our message too weak? And if so, how might we improve it?
Zitelmann: In school and university today, students get to hear a lot about the supposedly negative sides of capitalism and almost nothing about the cruel sides of socialism. In the first chapter of The Power of Capitalism I write about the biggest socialist experiment in history, Mao’s Great Leap Forward. In the lectures I give all over the world, I ask young people if they have ever heard about what Mao did. The vast majority have never even heard of the Great Leap Forward, despite the fact that 45 million people died as a result! At the same time, I also think it is important for proponents of capitalism to be self-critical: Our messages are often too abstract, too theoretical. And strangely enough, most libertarians have little understanding of PR.
10. I rather like your suggestion that the intellectual class only values intelligence that can be communicated in books and lectures, but doesn’t spot the practical intelligence that successful business people have, one that is learned in the real world. Does this mean that academe must always be left-wing, and indoctrinate students with false ideas?
Zitelmann: Of course, that doesn’t necessarily have to be the case, there are also a number of pro-capitalist intellectuals, like myself, for example. But the majority of intellectuals will always reject capitalism. This is not only true for left-wing intellectuals, but also for many right-wing intellectuals. Anti-capitalism is the identity-giving religion of intellectuals. I reveal why this is so in the much-praised tenth chapter of my book The Power of Capitalism and in this article.
11. Why do you think so many young people find socialism appealing, even though it has led to poverty and repression whenever it has been tried?
Zitelmann: Young people don’t know enough about the failures of socialism. But how could they? They don’t learn about it at school. And socialists have developed a very effective trick. After every failed socialist experiment, they say: “Sorry, that wasn’t really socialism. Things will work out much better next time”. Kristian Niemietz describes this mechanism in his excellent book, Socialism: The Failed Idea that Never Dies.
12. Many left wingers claim that “pure socialism has never been tried”. Do you think pure capitalism has ever been tried?
Zitelmann: Pure socialism and pure capitalism do not exist and have never existed anywhere. Almost all systems are mixed systems. I compare this with a test tube to which the market and the state, capitalism and socialism are added. And then we look at what happens when you add more market (like in China over the last 40 years) or more state (like in Venezuela over the last 20 years). This is exactly what I do in The Power of Capitalism. Some libertarians dream of a “pure” capitalist system, perhaps even one without any form of centralized government whatsoever. I don’t believe in utopias of any kind. What I believe is that we have to dare much more capitalism – that the market has to play a far bigger role.
13. Some of the ideas that emerge from your book have echoes of Ayn Rand. Did her outlook have any influence on your own?
Zitelmann: I must admit that I haven’t read many of her books. But what I have read (especially her book about intellectuals) inspired me!
14. What would you say were the principal influences on your life and career, and on the development of your ideas?
Zitelmann: There aren’t really any specific books. The greatest influence on my life has always been my interest in history. For me, history is an incredible field of experimentation: you see what works and what doesn’t.
15. Did you always have a pro-capitalist, pro-business outlook, or was there a moment, an event, or maybe a book that led you down that path?
Zitelmann: No, no. I developed an interest in politics at a very early age. When I was eight years old I wrote a letter to the future Chancellor of Germany, Willy Brandt, and sent him political caricatures that I had drawn. At the age of 13, I was a Maoist, founded a Red Cell and published a newspaper (the Red Banner). Between the ages of 13 and 17, I read all the major works of Marx, Engels, Lenin, Stalin and Mao, including the three volumes of Das Kapital. I even gave courses on Marxist political economics to university-aged students who were members of the Red Cell. Later, as a university student myself, my opinions evolved. I wrote my first doctoral thesis on Hitler’s worldview, with a major focus on his social and economic policies. I proved that his ideas were far more anti-capitalist and pro-socialist than historians had previously assumed. My doctoral dissertation was awarded the highest possible grade, summa cum laude, and was also published in English, as Hitler: The Policies of Seduction.
Unfortunately, the book is no longer available in English and I am currently looking for a publisher to re-release it. I returned to the subject three years ago and wrote an entirely new, 50-page foreword on more recent developments in the field of research on National Socialism. It would be great if a publisher contacted me about publishing the book with a new foreword in English again.
16. I’ve noticed that much of your research involves personal interviews and surveys or polls. Why did you choose that method of collecting data to support your case?
Zitelmann: I don’t think all that much of theories, although I have also put forward some theories of my own. Generally, I have a higher opinion of facts. Theories must always be derived from facts.
17. As a German yourself, do you ever get the impression that you often stray into the empirical approach that characterizes thinking in the English tradition, rather than the system-building more common in Continental thought?
Zitelmann: I recently wrote an essay on the importance of implicit learning for entrepreneurs for a scientific volume. This type of essay is always evaluated by two reviewers. One reviewer wrote: “Zitelmann’s essay is very Anglo-Saxon”. He meant it as a point of criticism. I took it as a compliment.
18. Have you ever been publicly attacked for your views? I don’t mean physically, but by abuse in print or online?
Zitelmann: Yes, in the early 1990s, some left-wing extremists in Berlin set fire to my car. Back then, I was editor-in-chief of Germany’s third largest book publishing group, Ullstein-Propyläen. I published a large number of conservative and liberal authors and that was reason enough for left-wing extremists to send me a dead rat as a warning and torch my car. They also weren’t happy that I had stressed Hitler’s socialist ideas. They stupidly thought that by doing so I wanted to put Hitler in a more positive light.
19. Do you have any ambitions as yet unfulfilled?
Zitelmann, Yes, many. The new and extended edition of my autobiography has just been published in German. The new last chapter is called “Conquering the World”. That’s meant to be a little bit cheeky, of course. But I do want my books and ideas to attract attention all over the world. And that’s why I give lectures in so many different countries, including the United States, South Korea, China and the UK. I give video interviews almost every day, but unfortunately the questions are rarely as good as the ones in this interview. I also write columns every week for Forbes.com, the French newspaper Le Point and the Italian newspaper Linkiesta. And, of course, I write a lot for newspapers in Germany and Switzerland.
20. Is it your view that capitalism will adapt and survive, and will reinvent itself to overcome the criticisms that many people currently make?
Zitelmann: By nature, I am an optimist when it comes to my own life. But right now, there’s not much reason to be optimistic about capitalism. In the 1980s, the world had a number of politicians who trusted the market more than the state: Thatcher, Reagan and Deng Xiaoping, to name but three. Today, almost everywhere you look, anti-capitalists and statists are in the ascendancy. Whenever I start to get overly pessimistic, I frequently think back on what Madsen Pirie once told me: Even if a whole host of countries become socialist, somewhere, perhaps in one small country, capitalism will emerge again and people will see that capitalism is not the problem, it’s the solution.