The Populist Surge of Presidential Season Has Everything to Do With the Super Rich Fleecing the Rest of Us
The author F. Scott Fitzgerald once wrote that the “rich are different than you and me.”
Fitzgerald’s observation rings especially true today. The growing divide between the wealthy and everyone else is one of the preeminent issues of the 2016 presidential election. A tidal wave of public anger over income inequality and the decline of the middle class has made the rich a popular target on the campaign trail. The best example is the remarkable success of Bernie Sanders, who has tapped into the populist spirit of the electorate by calling for a “political revolution” against the “billionaire class.”
Sanders and other populists did not create the class tensions in American society. Instead, wealthy Americans themselves played a central role in creating the conditions that gave rise to the angry and populist mood of the 2016 election.
A nation of inequality
The economic data make clear why populism is the dominant theme of the 2016 campaign.
Although America has the largest economy in the world, real wages have not gone up since 1972 because most workers have experienced stagnating incomes for decades. Across the country middle-income Americans face a precarious economic future. Median income has fallen in over 80 percent of America’s counties since 2000, a trend that is accelerating. Even mortality rates reflect growing income inequality. Poor and rural Americans now die at rates well above that of wealthy and urban Americans.
Meanwhile the rich just keep getting richer. A study by the Pew Research Center found that the median net worth of upper-income families is now 70 times greater than that of lower-income families. As of 2015, the 400 richest Americans had a combined wealth of US$2.3 trillion. Over 75 percent of the nation’s wealth is held by 10 percent of the population, and the gap between the rich and the middle class in the U.S. is the highest ever measured.
America has become a nation of pervasive economic inequality. It’s no wonder, then, that the 2016 election has witnessed a populist uprising.
But class conflict does not flow only from the bottom up. It’s also a top-down phenomenon. Since the 1980s, rich Americans have maximized their share of the nation’s prosperity at the expense of the rest of the country. Adding insult to injury, a growing body of evidence suggests that many rich people today simply do not care about their fellow Americans. The old concept of noblesse oblige has declined among the wealthy to a disturbing degree.
New money is not like old money
To understand how the rich have changed, one needs to understand how the upper classes used to behave.
No single location encapsulates the worldview of “old money” families better than Harvard’s Memorial Church, which stands in the center of Harvard Yard. The church’s walls list the Harvard students, alumni and faculty members who have perished in America’s wars since 1917.
The numbers are breathtaking. During the world wars, thousands of Harvard students and alumni served in the U.S. military. In all, about 400 died in World War I and nearly 700 in World War II. The ranks of Harvard fatalities included Quentin Roosevelt, the youngest son of Theodore Roosevelt, and Joseph Kennedy Jr., the older brother of John F. Kennedy.
Harvard’s military death toll is particularly staggering when one considers that in the early 20th century, Harvard’s student body was drawn primarily from America’s richest and most well-connected families. Those families could have pulled strings to ensure their sons stayed out of combat. But they did not, as powerfully demonstrated by the list of names at Memorial Church and similar memorials across the Ivy League. During the world wars, the upper classes did their part to defend the nation.
Harvard is not unique. Military experience is rare among America’s political and economic elite. None of the current presidential candidates has served in the military, and only 18 percent of members of Congress are veterans, the lowest percentage in generations.
Mitt Romney, an immensely wealthy Harvard graduate, revealed the cavalier attitude of the rich toward military service during the 2008 presidential campaign. As the Iraq and Afghanistan wars raged, critics pointed out that none of Romney’s five sons had served in the military. In response, Romney defended his sons by declaring that they served their country by “helping me get elected.”
The fact that Romney viewed working on a relative’s political campaign as the patriotic equivalent of battlefield service revealed just how tone-deaf many in America’s upper classes have become.
Greed is good
The military is only one example of how disconnected wealthy Americans are from their country. The extraordinarily low rate of charitable giving among the rich offers more evidence. Even though we live in a time of entrenched income inequality, poor Americans actually give a higher percentage of their income to charity than the rich do. The lack of generosity among America’s upper classes shows no signs of abating. Although the overall wealth of the upper classes is growing, levels of charitable giving continue to fall among the rich.
The selfish worldview of America’s upper classes is underscored by their demand for ever greater financial rewards. In the last 50 years, CEO compensation rates have skyrocketed. For example, in 1965 the typical CEO made about 20 times as much as average workers. By 2013, the CEO-to-worker pay ratio grew to nearly 300 to 1.
The turning point came in the Reagan era of the 1980s, when executive compensation began to soar. The Gordon Gekko character in the 1987 movie “Wall Street” perfectly captured the spirit of the decade with his notorious declaration that “greed is good.”
Gekko’s worship of wealth continues to reflect the attitude of America’s upper classes. Wealthy interest groups have hired armies of lobbyists to prevent tax increases in Congress and to block government investigationsinto alleged corporate wrongdoing. Despite their soaring share of the nation’s wealth, the rich go to enormous lengths to avoid paying taxes. A recent study found that wealthy Americans have moved $36 billion into offshore tax havens.
The rich have also poured money into the campaigns of candidates who cut the government programs that most benefit middle-class and working-class Americans, such as public schools and healthcare. And the wealthy increasingly cluster in neighborhoods that isolate them from other social classes.
The Buffet and Gates exception to the rule
History shows it does not have to be this way.
As Harvard’s Memorial Church demonstrates, the upper classes once felt a strong sense of obligation to their fellow Americans. Indeed, for much of the 20th century, wealthy families like the Rockefellers and the Carnegies established charitable institutions across the country to promote social mobility.
A few prominent billionaires, such as Warren Buffett and Bill Gates, have continued that noble tradition of socially minded philanthropy. Buffett and Gates serve as inspiring examples of how some people still use great wealth for the benefit of society at large.
But the sad reality is Buffett and Gates do not reflect the general attitude of wealthy Americans. Gordon Gekko does.
It should not come as a surprise, therefore, that middle-class and working-class Americans are so angry at political and economic elites. Until the Buffett and Gates families become the rule and not the exception, it seems likely that populist fury and class conflict will remain the dominant theme of American politics for years to come. The 2016 election is just the tip of the iceberg.