Opinions, Context & Ideas from the TPM Editors TPM Editor's Blog

The Brittle Grip, Part 2


Let me state the phenomenon as clearly as possible: The extremely wealthy are objectively far wealthier, far more politically powerful and find a far more indulgent political class than at any time in almost a century - at least. And yet at the same time they palpably feel more isolated, abused and powerless than at any time over the same period and sense some genuine peril to the whole mix of privileges, power and wealth they hold.

There is a disconnect there that is so massive and glaring that it demands some sociocultural explanation. I've written about this before. But I confess not terribly well because I've found it a difficult issue to get my arms fully around and to reorient my focus on day to day events to the longer horizon. But I do think it's one of the core political and economic issues of our time and deserves real explanation.

I first started noticing this when I saw several years ago that many of the wealthiest people in the country, especially people in financial services, not only didn't support Obama (not terribly surprising) but had a real and palpable sense that he was out to get them. This was hard to reconcile with the fact that Obama, along with President Bush, had pushed through a series of very unpopular laws and programs and fixes that had not only stabilized global capitalism, saved Wall Street but saved the personal fortunes (and perhaps even the personal liberty) of the people who were turning so acidly against him. Indeed, through the critical years of 2009, 10 and 11 he was serving as what amounted to Wall Street's personal heat shield, absorbing as political damage the public revulsion at the bailout policies that had kept Wall Street whole.

Let's start by stipulating that no one expects the extremely wealthy to react happily to mounting discussion of wealth and income inequality or left-wing diatribes about "the 1%." But again, the reaction is extreme and excessive and frequently runs into less comical versions of Perkins' screed, with weird fears of persecution and threat from the folks who quite truly rule the roost.

Here's an exchange I had more recently with one of the wealthiest persons in the United States on the issue of perceptions of Obama among the very wealthiest Americans.

Let me start by saying that I am not a fan of rich people complaining they're being mistreated... That said, all the rich people I know think that Obama is trying to whip up anti-1% sentiment. The irony is that Obama's policies have been fine for rich people -- taxes have stayed low, almost nobody got prosecuted coming out of the financial meltdown, etc. But the feeling is real.

So what is it about?

I see three basic roots, though I don't think my list is exhaustive.

One is the simple but massive run up in the concentration of wealth itself over the past two generations. There's a slice of the population, whether it's the top 1% or .01% or whatever, that doesn't just have more stuff and money. The sheer scale of the difference means they live what is simply a qualitatively different kind of existence. That gulf creates estrangement and alienation, and one of a particular sort in a democracy where such a minuscule sliver of the population can't hope to protect itself alone at the ballot box.

Let's call this socioeconomic acrophobia.

A second is tied specifically to the 2008 financial crisis. The last 35 years or so have seen a period in which the celebration of wealth and the wealthy has been near the extreme end of the pendulum swing that has moved back and forth over the course of American history. Let's not distract ourselves, for the moment, with whether this view is right or wrong. It's a pendulum swing as old as America. In this view, the super rich, the founders and most successful entrepreneurs, not only wow us by their genius and success but are also seen as the people driving forward the society and economy and prosperity for everyone. That's a nice climate to be wealthy in.

That all changed very abruptly at the end of 2008.

Suddenly, there was vast public animus at "Wall Street" and the Big Banks, exacerbated massively by the politics of the bailout. And not just from the left but from the right too, though in a different form. Pretty deserved on many levels: the financial sector, the figurative "Wall Street", had come close to crashing the global economic system by a mix of irresponsible risk taking and gaming the political system to permit this high-risk, wealth-juicing leverage. But if we're to understand the psychology of the individuals involved we must appreciate the whipsaw nature of that experience.

Quite simply, these were and are folks who just weren't used to public criticism. The whole "masters of the universe" mythology was basically, sure we're massively wealthy. But we're also the ones keeping the globe we all live on from spinning off its axis. So let us enjoy our Hamptons estates and our private jets in peace and we'll do our jobs and you do yours. The crossfire hurricane that ripped apart that social contract stung a lot.

And then there's the other really important variable in the equation. We know now that Wall Street came out of the financial crisis pretty nicely. But that was far from clear in the fall of 2008. The titans, under-titans and sub-titans saw the entire financial system spin on the edge of un-self-regulating collapse, something the reining ideology of recent decades said shouldn't have been possible along with the real prospect of whole personal fortunes evaporating in an instant. That kind of scare is not easy to forget. Mix it with the need to run to the political class hat in hand and that ocean of animus from the public at large and you get the makings of a political and psychological toxicity that breeds Perkinsonian nonsense at the extreme end and more pervasively the sense of embattlement and threat verging on persecution complex that I described above.

It is that mix of insecurity, a sense of the brittleness of one's hold on wealth, power, privileges, combined with the reality of great wealth and power, that breeds a mix of aggressiveness and perceived embattlement.

Third there is the simple fact of Obama himself. By various criteria you could argue that before Obama America hadn't had a progressive president in decades. Popular perceptions aside, Carter was actually part of the privatizing trend of the late 70s. And Clinton, while genuinely a progressive in many ways, served most of his presidency during a period when basically everyone was either getting rich or making at least some progress. And when everybody is getting at least some taste of the good times, these sorts of antagonisms find a way of getting overlooked or passed over. President Obama is far from being a Franklin Roosevelt or Harry Truman. But he is a progressive and sees the economy and the larger society's claims on the very wealthy differently than a Bush or a Reagan. And again, that was just not something any of these folks had experienced before.

But again, the answer is the confluence of these events, no one of them. It's worth remembering that Bill Clinton pushed through a reasonably substantial tax hike on upper income earners in 1993. President Obama meanwhile largely maintained the tax policies of George W. Bush, the guy who had in essence repealed Clinton's tax increase. These are all facts that are hard to ignore.

Put it all together and you get the climate in which someone like Perkins writes something as ridiculous as he did. As I said up top, his Holocaust analogy is so hyperbolic and ridiculous that he's getting dumped on by almost everyone. But we miss the point if we see this in isolation or just the rant of one out-of-touch douchebag. It is pervasive. The disconnect between perception and reality, among such a powerful segment of the population, is in itself dangerous. And it's led to what I would call a significant radicalization of the politics of extreme wealth. My evidence for this is only anecdotal. But it's come up in conversations I've had with many business reporters who cover these folks on a daily basis.

We take it more or less rightly as a given that people in finance will have generally right-leaning politics - low taxes, tight money, lax regulatory regimes. Basically traditional money Republicanism. But over the last few years (since 2008), I think there's been a pretty dramatic growth in what we'd call Tea Party politics in that set - extreme conservatism that goes beyond hands off fiscal and regulatory policy, the kind of feverish mindset in which you could write with a straight face that progressives might be building toward some sort of mass wealth confiscation or internment or even extermination for the likes of Tom Perkins.

It's a problem. And Perkins is just getting our attention because his self-censor and/or editor failed him so miserably.