The Rich Shouldn't Be Trusted To Make Decisions

Photo by Clay Banks on Unsplash

As a society, we are constantly pushing many politicians to treat the government as a business. "The government should be run like a great American company," politician Fiorello La Guardia remarked as mayor in 1938. This trend has continued to the present day, with survey after survey indicating that Americans have more trust in businesses than the government or the media.

For some, this perception has been shattered by the election of Donald Trump, a wealthy businessperson of unscrupulous disposition who has since been indicted. Our first CEO president didn't lead us to a Golden Age but a recession. As Sean Illing writes in Vox of Trump’s first term: "Trump's background in business could not have prepared him less for the job he has now….Even when he built casinos, the only person he was ever able to serve was himself. He made a profit, he paid himself enormous consulting fees, even as his shareholders were taken to the cleaners. It's not hard to see how this approach would be a disaster when applied to the presidency."

More and more people are coming around to the idea that a good businessman does not necessarily make a good leader. Yet, for those still clinging to the notion that the wealthy make better decisions, I want to make the case for why this couldn't be farther from the truth. When it comes down to it, the rich are terrible at making decisions and should be placed as far away from positions of power as possible.

The rich cannot be trusted

There has been much research about how rich people act more selfishly. A famous example brought up whenever people discuss this topic is the more than decade-old monopoly study conducted by Paul Piff, where monopoly games were rigged to give certain players advantages to access the impact on their behavior (e.g., more money at the start, more money when passing GO, etc.). Players with these advantages became more confident and were more likely to attribute their success to effort. The initial findings were not published but have since been replicated with similar results.

Another example published by Paul Piff and researcher Dacher Keltner is the famous car study, where they noted that people with more expensive cars were more likely to ignore the rules of the road. The replication of this study has been mixed, with some indicating that luxury cars are not a good indicator for the wealthy and others unable to replicate the results at all. However, as recently as 2020, a similar study noted that the cost of a car was a significant predictor of a driver yielding, with odds of yielding decreasing 3% per $1000 increase in the worth of the vehicle.

The truth is that even on a basic level, the rich lack the ability to assess their decisions. The fact that they have power gives many wealthy people an over-inflated perspective that impairs even the most inconsequential of decisions. In the 2009 paper Power And The Illusion Of Control, researchers ran a series of experiments where they concluded that “…power led to perceived control over outcomes that were uncontrollable or unrelated to the power." One of the outcomes was that those who held a power position were less likely to let others roll dice for them — a truly random action where the holder did not make a difference in the outcome. Rich people feeling a greater sense of control has been routinely noted in the literature for over a decade.

And worryingly, it is not just the rich making individual decisions that overvalue their interests that we should be concerned about, but how they relate to their fellow man. There is a lack of compassion among the wealthy, which is worrying. One study by Stellar, J. E., Manzo, V. M., Kraus, M. W., & Keltner, D. notes a compassion gap between the poor and the wealthy. In one test, participants were asked to fill out self-reported data on compassion. In another, participants were shown videos meant to induce distress. In both examples, those with worse material conditions reported higher levels of compassion.

Inversely, individuals in another study who were classified as "high-ranking" were shown a picture of "rising economic inequality between the wealthiest Americans and the rest of society." These individuals, according to researcher Michael Kraus, ended up blaming this trend on things such as "hard work," "talent," and "skill differences."

Of course, this has more significant, real-world implications than just how people conduct themselves during games of Monopoly or traffic. According to ProPublica, the ultra-wealthy pay fewer taxes using legal and illegal means, having a true tax rate of around 3.4%, which is far less than what your average American pays proportionally. This avoidance leads to a situation where the wealthiest 5% of Americans choose not to pay hundreds of billions of dollars in taxes yearly.

The rich also don't make up for that gap in charitable giving. The Chronicle of Philanthropy noted in 2014 that: "The wealthiest Americans are giving a smaller share of their income to charity, while poor and middle-income people are digging deeper into their wallets." As written in the Philanthropy Roundtable: “If instead of the average percentage of income given away by wealthy households, we look at the median percentage (meaning that half gave more than this amount, and half gave less), the wealthy appear less magnanimous. From 2007–2011, the median wealthy household (having annual income of $200,000+ or assets of $1 million+) gave away 3.4 percent of its income.”

This lack of proportional giving gets even more depressing once one realizes that many modern-day philanthropic endeavors are a combination of tax-avoidant and reputation-laundering schemes. These people, who manipulate their books to avoid paying taxes, then set up massive charities and foundations so that they can spend billions of tax-exempt dollars on efforts that will further lower their tax bills.

Once one peers past the facade, the harm caused by the rich is obvious. For example, the rich are more likely to steal from their employees. Wage theft is the largest type of theft in the US. The FBI reports over $10 billion in property theft every year. Compare that to the $50 billion the Economic Policy Institute estimates are being stolen from workers every year. The wealthy's decision to place their needs and preferences above everyone else's negatively impacts workers nationwide.

We also need to recognize that the rich often make their wealth through the harm they cause to our society. Most businesses are built on some combination of pollution, slavery, labor exploitation, wage theft, regulatory arbitrage, and more. These harms are then massaged away either by setting up denialist think tanks and propaganda, creating massive foundations and other philanthropic endeavors, or both.

Intuitively, you probably know this distorted sense of self from the rich to be true. From Elon Musk botching the takeover of Twitter (or now X) to Donald Trump failing to run America like a business, our recent history is filled with rich people making the most foolish decisions possible. A billionaire died recently inside a deep sea submarine that experts decried as unsafe. Should we be surprised that the rich, so insulated from the effects of their actions, make terrible decisions?

And why would one want such people anywhere near a position of authority?

A rich conclusion

We are a country that often glorifies the decision-making of the rich. We hold them to this almost mythical standard where their opinions and beliefs are seen as "better" than everyone else's merely because they happen to have more subsistence tokens in their bank account.

Some will argue that it isn't the rich’s fault that they are more selfish and cruel but that they are responding to incentives. As scholars argue in the Observer: "Our conclusion is that incentives are the biggest determinants of pro-social behavior and that neither the rich nor the poor are inherently kinder or more selfish — in the end, all of us are susceptible to behaving this way."

However, this counter ignores the point. Regardless of the individual morality of the person being criticized, if such wealth corrodes your decision-making, it calls into question not only that class of people being trusted to make decisions but also having such a class at all. It seems dangerous to tolerate the existence of an economic class of people guaranteed to misbehave and have impaired judgment, regardless of their starting ethics, especially when all you have to do to avoid such a hazard is to take away their money through vehicles like higher taxation and property redistribution.

Maybe the best answer to the sociopathy of the rich is not to have any rich people whatsoever.