In an age of rising income inequality, one of the big questions is what impact the growing gap will have on democracy. Francis Fukuyama worries about it in this month’s Foreign Affairs magazine, in an essay that bears the worrying subtitle, “Can Liberal Democracy Survive the Decline of the Middle Class?” President Barack Obama, as he signalled again with his budget this week, is putting the issue at the centre of his re-election campaign.
The powerful connection between money and politics is also on vivid display in the roller-coaster Republican presidential race, where Rick Santorum owes his surge in part to the generosity of the Wyoming multimillionaire Foster Friess, whose “super PAC” helped keep Mr. Santorum’s candidacy alive by running TV ads on his behalf.
Mr. Friess, whom I interviewed a few days ago, has unequivocal views about the proper relationships among the wealthy, the state and politics. His most striking observation was about the value of what he called “self-taxation,” as opposed to taxes levied by the state.
“People don’t realize how wealthy people self-tax,” he said when I asked whether, given the U.S. economic troubles, it is fair to ask the rich to pay a bigger share. “There’s a fellow who was the CEO of Target. In Phoenix, he’s created a museum of music. He put in around $200-million of his own money. … You look at Bill Gates, [who] just gave $750-million, I think, to fight AIDS.”
His point is that the common good is better served when the wealthy “self-tax” by supporting charities of their own selection, rather than paying taxes to finance government spending.
“I think we should get rid of taxes as much as we can,” Mr. Friess said. “Because you get to decide how you spend your money, rather than the government. If you have a certain cause, an art museum, or a symphony, and you want to support it, it would be nice if you had the choice to support it. … It’s a question: Do you believe that the government should be taking your money and spending it for you, or do you want to spend it for you?”
As for the idea that an economic age that is conducive to creating vast fortunes should also be one in which taxes are high, Mr. Friess considers that absurd. “If you look at what Steve Jobs has done for us, what Bill Gates has done for society, the government ought to pay them. Why do they collect money from Gates and Jobs for what they’ve contributed? It’s ridiculous.”
Mr. Friess is unconvinced by the entire 99-per-cent paradigm. In his view, it is the Americans at the bottom of income distribution who are getting the free ride.
“I’m just so amazed at this concept that President Obama says, ‘I’m not going to let half the American people, that pay no taxes, bear the unfair burden of the other half, who are not paying their fair share.’ It’s pretty comical, when you think about it,” he said. “About 46 per cent of the American public pay no income taxes.”
Mr. Friess believes we all rely on the 1 per cent, and should respect them accordingly.
“It’s that top 1 per cent that probably contributes more to making the world a better place than the 99 per cent. I’ve never seen any poor people do what Bill Gates has done. I’ve never seen poor people hire many people,” he said. “So I think we ought to honour and uplift the 1 per cent, the ones who have created value.”
Given these views, you probably won’t be surprised to learn that his main concern about the role of money in U.S. politics is that it is too hard for the wealthy to directly support their preferred candidates. “I think the best system would be if we all had unlimited free speech and spending our money the way we want, but give directly to the candidates,” he said. “There’s just too much jumping through too many hoops. And I’m not happy with that process.”
That said, Mr. Friess added, “the role of money is overplayed.” Meg Whitman’s millions, he pointed out, had been insufficient to win the governor’s seat in California. Mr. Santorum, he added, owes his ascent among the Republican presidential contenders more to his tour of 381 towns in Iowa in a Dodge Ram truck than to Mr. Friess’s money.
Moreover, Mr. Friess argues that the 1 per cent is not exclusively bankrolling the right. “If money were able to make things happen, I think there’d be more Republicans, if they’re theoretically the people with money. But I think the Democrats have more billionaires than we do.”