Here’s a political mystery for you: Why do America’s superrich feel so victimized? And what does their sense of being unjustly maligned tell us about their relationship with the rest of us?
The anger is real enough. It has become almost commonplace among the wealthiest and most powerful capitalists in the United States to compare themselves to an oppressed ethnic minority, and to equate the President, their oppressor-in-chief, with Hitler.
Dan Loeb, an activist investor who came to the fore with his shake-up of Yahoo, sent an e-mail to friends in late 2010 with the subject heading “battered wives.” In the tongue-in-cheek text, he accused the President of treating his supporters on Wall Street the way abusive husbands punish their wives: “I mean he really loves us and when he beats us, he doesn’t mean it; he just gets a little angry.” Private-equity titan Stephen Schwarzman has likened this administration’s criticism of the special tax treatment of carried interest to Hitler’s invasion of Poland.
These are examples of hostility toward Barack Obama. But the anger doesn’t stop there. There is also a conviction among the plutocracy – not just the 1 per cent, but the 0.01 per cent who make at least $7-million dollars a year – that much of America is unfairly gaming the political economy.
This was the sentiment Mitt Romney expressed in his now infamous dismissal of the country’s 47 per cent – a gaffe, but only in journalist Michael Kinsley’s definition. “A gaffe is when a politician tells the truth,” he writes, “some obvious truth he isn’t supposed to say.”
Indeed, while the former governor eventually repudiated his comments, they are conventional wisdom among the superrich. In 2002, an editorial in The Wall Street Journal coined a term for Americans too poor to pay federal income tax – “lucky duckies.” The piece went on to offer a Romney-esque warning about the dangers posed by this underclass: “As fewer and fewer people are responsible for paying more and more of all taxes, the constituency for tax cutting, much less for tax reform, is eroding. Workers who pay little or no taxes can hardly be expected to care about tax relief for everybody else. They are also that much more detached from recognizing the costs of government.”
At a Thomson Reuters event I moderated last fall, billionaire and hedge-fund manager Leon Cooperman made the same point. “Our problem, frankly, is, as long as the President remains anti-wealth, anti-business, anti-energy, anti-private aviation, he will never get the business community behind him. And the problem and the complication is 40 or 50 per cent of the country are on the dole that support him.”
I found the plutocrats’ attitude to the 47 per cent – call it disdain, or hostility, or simply distance – to be particularly striking when I spoke to U.S. bankers about the financial crisis. I expected an apologetic tone, or at the very least humility. Instead, I learned that the crisis had been “caused” by those lower down in the income distribution.
One of Wall Street’s most successful investment-bank chief executive officers told me that he did not feel guilty about the crisis: The real culprit was his feckless cousin who owned three cars and a home he could not afford. One of America’s top hedge-fund managers made a nearly identical case, though this time the offenders were his in-laws and their subprime mortgage. And a private-equity baron who divides his time between New York and Palm Beach pinned blame for the collapse on a favourite golf caddy in Arizona, who had bought three condos as investment properties at the height of the bubble.
There’s one obvious reason the superrich feel so hostile toward the President, whom they see as the champion of those lucky duckies: self-interest. Mr. Obama has put a vow to raise taxes on “millionaires and billionaires” at the centre of his re-election campaign (although a similar pledge made in 2008 has not materialized). And it turns out that billionaires are just as averse to higher tax bills as the rest of us.
Certainly, those at the very top have a lot at stake. The past three decades have seen the rise of a super-elite, an international trend – true of both most Western, developed countries as well as emerging markets – with a particular spike in the United States.
And these plutocrats have done more than all right under the Obama administration. The $700-billion Troubled Asset Relief Program bailout, while certainly necessary for the country as a whole, was first and foremost a rescue of Wall Street, where compensation has rebounded nearly to pre-crisis levels. The stock market, too, has bounced back to within spitting distance of its earlier highs and corporate balance sheets are groaning with cash.