Oligarchy in the 21st Century

By Matthew Continetti

Saturday, April 26, 2014

‘To see what is in front of one’s nose,” George Orwell famously wrote, “needs a constant struggle.” In front of my nose as I write this is a copy of last Sunday’s New York Times. I have opened it to the business section. Below the fold is one of many Times articles on Thomas Piketty, the French economist and author of Capital in the Twenty-First Century, which argues that America has entered a second Gilded Age of vast inequality, inherited fortunes, and oligarchic politics, where the shape of public discourse and public policy is determined by a wealthy few. Capital in the Twenty-First Century, the Times says, “follows in a tradition of works on political economy” that includes The Wealth of Nations, An Essay on the Principle of Population, Principles of Political Economy, Das Kapital, and The General Theory of Employment, Interest, and Money. They’re not kidding.

Above the article on Piketty is another profile, headlined “Comcast’s Real Repairman.” Its subject is David Cohen, the executive vice president of the communications giant Comcast, who wants the government to approve the proposed merger between his company and Time Warner Cable. The deal would make Comcast the largest cable provider in America, with some 30 million customers.

Last year Cohen made about $14 million. He began his career as chief of staff to Ed Rendell, the former Democratic governor of Pennsylvania. And while he backs some Republicans, mainly Pennsylvania politicians who stand to make life easier for his Philly-based conglomerate, Cohen leans left. His political giving favors Democrats, as does the overall giving of his company. President Obama, who appears frequently on Comcast-owned networks, has golfed with Cohen’s boss. Obama has been to Cohen’s house. “I have been here so much,” he said during a 2013 visit, “the only thing I haven’t done in this house is have Seder dinner.” There is always next year.

If the business editors of the Times were aware of the irony of lamenting the political influence of great wealth on one half of their page while handling it with kid gloves on the other, they gave no sign. “Mr. Cohen says he understands the criticism that he has access most citizens do not,” says the article, before handing Cohen the microphone. “But I also don’t believe in unilateral disarmament,” he said. Two paragraphs earlier, he had said, “My priorities in political giving are Comcast priorities. I don’t kid myself. My goals are to support the interests of the company.”

There you have it: A wealthy Democratic donor admits he funds candidates to improve his bottom line. And yet I hear from the Senate floor no denunciations of his attempts to buy American democracy, no labeling of him as un-American. I have not received a piece of direct mail soliciting donations to fight David L. Cohen’s hijacking of the political process, nor do I wake up every day to investigations of the Cohen political and charitable network. Why?

My confusion only grows as I turn the pages of the paper and come to an article in the Sunday Styles section headlined “Including the Young and the Rich.” Here I learn that last month the White House held a secret meeting with “an elite group of 100 young philanthropists and heirs to billionaire family fortunes.” This “discreet, invitation-only summit” was intended, the author says, “to find common ground between the public sector and the so-called next generation philanthropists, many of whom stand to inherit billions in private wealth.” Media were not allowed, the author says in a parenthetical, but he was “invited to report on the conference as a member of the family that started the Johnson & Johnson pharmaceutical company.” The author’s name is Jamie Johnson, he is worth around $610 million, and as of 2011 he was, I see, one of the world’s most eligible bachelors.

“I was a little worried they were going to get a bunch of rich kids in the room and fundraise for the Democratic Party,” said one of the participants. “But they didn’t.” The quote comes from 30-year-old Liesel Pritzker Simmons, whose billionaire cousin is the secretary of Commerce, and who along with her brother earned a $560 million inheritance by suing her dad. The Obama team did not have to hit up Pritzker Simmons for cash. She and her husband, an heir to the Montgomery Ward fortune, have contributed hundreds of thousands of dollars to Democrats and liberal groups in recent years, including to ActBlue, the DSCC, Harry Reid’s Majority PAC, Priorities USA, Elizabeth Warren, and congressional candidate Sean Eldridge. Like Eldridge needs the money. He is married to Chris Hughes, who lucked into rooming with Mark Zuckerberg at Harvard and now is worth around $400 million.

Not every attendee at the trust-fund summit was an Obama donor. Zac Russell, “an eloquent 26-year-old” who recently joined his Russell Family Foundation, is “not an ardent supporter of the Obama administration.” Indeed, not even 30 years old, he speaks “with an air of cynicism” befitting his “scraggy Brooklyn-style facial hair” and “loosely fitting suit without a necktie.” He told Jamie Johnson, “Their head of public affairs contacted me and said, ‘Let’s talk,’ and so we’ll talk.” What they talked about was climate change and “grass-roots efforts to improve water quality in Puget Sound.” You know: real Tea Party stuff.

The world of unequal incomes that liberals self-righteously lament, the world of concentrated, inherited wealth, of politics dominated by the concerns of a few, is a world constructed by liberal methods according to liberal ideals. “The ruling ideas of each age have ever been the ideas of its ruling class,” Marx and Engels wrote in 1848. And there can be no denying that the ruling ideas of our age — diversity, multiculturalism, cosmopolitanism, gun control, free trade, unrestricted migration, sexual autonomy, feminism, environmentalism — are liberal ones.

The popular rhetoric of income inequality, the attacks on Charles and David Koch, the assertion that the system is rigged against the common man, the accusations that a vast right-wing conspiracy has despoiled the American landscape and society and polity — these are the means by which the ruling class masks its true position and justifies its continued agglomeration of power and of wealth.

The campaign against inequality and the call for higher taxes and the regulatory burdens placed on extractive industries further the self-interest of the liberals who rule our world partly because those liberals are already established in society and have already made their money, partly because like David Cohen or Tom Steyer or George Soros or Elon Musk or Warren Buffett they stand to benefit financially from their preferred outcomes, but also because there are fortunes to be made, there is status to be gained, in justifying the continued expansion of the welfare state, in designing plans for the redistribution of tax dollars, in demonizing those sections of the elite, and that minority of Americans, which dissent from the ruling ideas.

Seven of the ten richest counties in the country voted for Barack Obama in 2012, many of them by huge margins. Six of the ten are in the Washington, D.C., metro area, which has benefited from government employment and payment regulations, from government contracting, and from consulting, lobbying, and lawyering for clients petitioning the government. The median income of Falls Church City, Va., is $121,250 dollars. In 2012, Falls Church City voted for Obama 70 percent to 30 percent.

Democrats represent eight of the ten richest congressional districts in the country. Democrat Carolyn Maloney represents the district with the highest per capita income of $75,479. Outgoing congressman Henry Waxman represents the district with the second-highest per capita income of $61,273. The only two Republicans on the list are Representative Leonard Lance, whose New Jersey district ranks seventh, and outgoing Representative Frank Wolf, whose Virginia district ranks tenth. The average per capita income of Democratic House districts is $1,000 more than Republican ones.

Congressional Democrats have a higher median net worth than congressional Republicans. House Democrats have a higher median net worth ($929,000) than House Republicans ($884,000), while the median net worth of Senate Republicans ($2.9 million) is higher than that of Senate Democrats ($1.7 million). But it is not like the Senate Democrats are hurting financially. They have lost some wealthy members in recent years (Herbert Kohl, John Kerry, Frank Lautenberg). Of the ten richest members of Congress, only three are Republicans.

The top 20 entries in the Forbes list of the 400 wealthiest Americans include conservative bogeymen such as Charles and David Koch (tied at number 4) and Sheldon Adelson (number 11). But these men are overwhelmed by Democratic fundraisers such as Warren Buffett (number 2), Michael Bloomberg (number 10), Jeff Bezos (number 12), Larry Page (number 13), Sergey Brin (number 14), and George Soros (number 19), as well as by billionaires who have donated more evenly between parties, such as Bill Gates (number 1) and Larry Ellison (number 3). Members of the Walton family, who fill four of the top ten spots, have also donated to both parties, but in recent years have leaned Republican.

That does not include the Waltons’ charitable giving, however, which includes sizable donations to the left-wing Tides Foundation and Obama aide John Podesta’s Center for American Progress. Indeed, the partisan makeup of the super-rich is less interesting, and less important, than their ideological unity. The issues that the richest Americans care most passionately about, from gay marriage to comprehensive immigration reform to gun control to drug legalization to foreign aid, are liberal issues. Only the Kochs and Adelson are famous for making defiant and public stands against the spirit of the age.

The list of the 20 most highly compensated CEOs contains many Republicans, and some conservative ones. But it also contains plenty of Democrats and liberals. Ticket-splitter Ellison, who was paid $78.4 million in 2013, tops the list. Next is Disney CEO Bob Iger, who received $34.3 million in compensation in 2013, and is a generous Democrat. Other highly paid CEOs whose giving since 2009 has favored Democrats include outgoing Ford chief Alan Mulally, Larry Merlo of CVS, Kenneth Chennault of American Express, and Paul Jacobs of Qualcomm. When you make more than $19 million a year, the line separating Democrats from Republicans becomes hazy. Is Lloyd Blankfein of Goldman Sachs a movement conservative? Is GE’s Jeffrey Immelt?

Eight of the ten largest private foundations are liberal. The Bill and Melinda Gates Foundation, the largest foundation with $37 billion in assets, to which Warren Buffett has pledged his trust, has delivered grants to the Tides Center and the Center for American Progress. So have the Ford Foundation ($11 billion in assets), the Robert Wood Johnson Foundation ($10 billion), the Hewlett Foundation ($8 billion), the MacArthur Foundation ($6 billion), and the Gordon and Betty Moore Foundation ($6 billion). The Kellogg Foundation ($8 billion) has donated close to $30 million to the Tides Foundation and to the Tides Center, and the Packard Foundation ($6 billion) has chipped in another $30 million to Tides affiliates, as well as founding, at a cost of $71 million, the environmentalist Energy Foundation.

Of the top ten foundations, only number 7, the Lilly Endowment (with $7 billion in assets) leans conservative. Other notably liberal foundations in the top 100 include Bloomberg Philanthropies, the Kresge Foundation, George Soros’s Open Society Foundation, the Walton Family Foundation, the Heinz Endowments, and Soros’s Open Society Institute. The notorious conservative foundations that constitute the “counter-establishment” do not even crack the top 100. The Lynne and Harry Bradley Foundation, the largest conservative foundation, has assets of $640 million. The Charles G. Koch Foundation in 2012 had assets of $277 million. Conservative foundations are out-gunned.

So, too, are conservative media. The right has talk radio, Fox News Channel, the New York Post, the Wall Street Journal editorial pages, the Washington Times, the Weekly Standard, National Review, and a bunch of plucky websites. Liberals have the New York Times, the Washington Post, the Los Angeles Times, the Financial Times, NBC, ABC, CBS, CNN, PBS, NPR, MSNBC, BBC, the Huffington Post, Slate, the Atlantic Monthly, the New Republic, the Daily Beast, GQ, Esquire, Time, Vogue, and many, many others. Not a single prominent institution of higher education, not a single prominent institution of high culture, can be described in any way as conservative. New York magazine admits that the “vast left-wing conspiracy is on your screen.”

The campaign of Barack Obama outraised the campaign of Mitt Romney. Overall, in 2012, the “red team” slightly outspent the “blue team” by a little more than $100 million. It made no difference. Not a single one of the top “all-time” institutional donors between 1989 and 2014 tilted Republican, according to a list compiled by the Center for Responsive Politics. Senate Democrats are winning the 2014 money race. Even as they denounce Supreme Court rulings that loosen restrictions on political speech, liberal billionaires pledge gifts of $100 million and $50 million to Democrats in the 2014 election, and meet anonymously and in secret to coordinate giving to the multitude of organizations that make up the professional left. So effective has been the fundraising of hedge-fund billionaire Tom Steyer that President Obama, having delayed the Keystone pipeline yet again, is likely to kill it.

“It’s very difficult to make a democratic system work when you have such extreme inequality,” Piketty told the Times last Sunday, “and such extreme inequality in terms of political influence and the production of knowledge and information.” In fact the mechanisms of democracy seem to be working precisely as the capitalist and petty-bourgeois liberals would like them to work: the question among Democrats these days is just how permanent their majority is likely to be.

What we are in danger of losing because of the “extreme inequality in terms of political influence and the production of knowledge and information” are the classical liberal values of negative freedom, of religious liberty, of equality before the law, of free markets. The inequality of income our bipartisan ruling class sanctimoniously condemns is the very tool it uses to shore up the inequalities of power and communication from which it benefits. Affluent, self-righteous, self-seeking, self-possessed, triumphalist, out of touch, hostile to dissent — this is what oligarchy looks like in the 21st century. And it is all in front of one’s nose.