The Magazine

Millionaires' Brawl

America's real power struggle: super rich liberals vs. ordinary plutocrats.

Jun 8, 2009, Vol. 14, No. 36 • By ANDREW STUTTAFORD
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We are not Oceania, and there's a messiah in the White House rather than Big Brother, but it's not hard to read Lenin, Penn, and Orwell, and then decide that Penn's professionals are the coming Who. They have certainly (at least until the current economic unpleasantness) been growing rapidly in numbers. As Penn relates:

While there has been some inflation over the past 12 years, the exit poll demographics show that the fastest growing group of voters .  .  . has been those making over $100,000 a year. .  .  . In 1996, only 9 percent of the electorate said their family income was that high .  .  . [By 2008] it had grown to 26 percent.

This is a class that is likely to be more ethnically diverse and younger than previous groupings of the affluent--factors that may influence their voting as much as their income. Nevertheless, even if we allow for the fact that there is a limit to how far you can conflate households on $100,000 a year with those on $200,000, there are enough of them with enough in the way of similar career paths, education, and aspirations that together they can be treated as the sort of voting bloc that Penn describes. And it's a formidable voting bloc with a formidable sense of its own self-interest.

That sense of self-interest might seem tricky to reconcile with voting for a candidate likely (and for those making over $200,000 certain) to hike their taxes. In the wake of the long Wall Street boom and savage bust, however, it is anything but. Put crudely, the economic growth of the 1990s and 2000s created the conditions in which this class could both flourish and feel hard done by. Penn hints at one explanation for this contradiction when he refers to the alienating effect of the layoffs that are a regular feature of modern American corporate life. That's true enough. Today's executive may be well paid, sometimes very well paid, but he is in some respects little more than a day laborer. Corporate paternalism has been killed--and the murderer is widely believed to be the Gordon Gekko model of capitalism that Obama has vowed to cut down to size.

But Penn fails to mention (perhaps because it was too unflattering a motive to attribute to a constituency he clearly wants to cultivate) that this discontent stems as much from green eyes as pink slips--as well, it must be added, from a strong sense of entitlement denied. Traces of this can be detected in parts of Robert Frank's Richistan: A Journey through the American Wealth Boom and the Lives of the New Rich (2007), a clever, classically top-of-the-bull-market account of what was then--ah, 2007!--America's new Gilded Age. To read this invaluable travelogue of the territories of the rich (the "virtual nation," complete with possessions, that Frank dubs "Richistan") is to see how the emergence of a mass class of super-rich could fuel growing resentment both within its ranks and, by extension, without. By "without," I refer not to the genuinely poor, who have, sadly, had time to become accustomed to almost immeasurably worse levels of deprivation, but to the not-quite-so-rich eyeing their neighbors' new Lexus and simmering, snarling, and borrowing to keep up. The story of rising inequality in America is a familiar one: What's not so well known is that the divide has grown sharpest at the top. Frank reports that the average income for the top 1 percent of income earners grew 57 percent between 1990 and 2004, but that of the top 0.1 percent raced ahead by 85 percent, a trend that will have accelerated until 2008 and found echoes further down the economic hierarchy.

You might not weep for the mergers-and-acquisition man maddened by the size of an even richer hedge fund manager's yacht, but his trauma is a symptom of a syndrome that has spread far beyond Greenwich, Connecticut. Above a certain level, wealth, and the status that flows from it, is more a matter of relatives than absolutes. The less dramatically affluent alphas that make up the core of Penn's professionals--lawyers, journalists, corporate types, academics, senior civil servants, and the like--suddenly found themselves over the last decade not just overshadowed by finance's new titans but actually priced out of many things they view as the perks of their position: private schools, second homes, and so on. I doubt they enjoyed the experience.