The Party of the Rich?

The Washington Times reports that the Democratic party is now the party of the rich. A new study found that “the majority of the nation’s wealthiest congressional jurisdictions were represented by Democrats.” Power Line argues that this has happened because, since 1994, tax increases have been off the table, eliminating the conflict between the Democrats’ ideology and the economic self-interest of the affluent. I think it’s actually been taking place since at least 1960. Richard Nixon, whatever his other flaws, understood that the Republican party was the defender of the middle class against both extremes. Analyzing its causes is complex. Partly, it’s a matter of the realignment of the political parties that coalesced around 1960. Partly, it’s a matter of the growth of guilt, which has led the affluent to promote the interests of those at the boottom of the socioeconomic ladder. Partly, it’s due to the left’s ideological domination of higher education and the increase in the economic returns on education brought about by the information economy. It may also be in part generational; large segments of the electorate are too young to remember wage and price controls, stagflation, the Carter administration, and other debacles of the 1970s. They take economic growth for granted, and have forgotten its presuppositions. We may have to relearn them.

10 thoughts on “The Party of the Rich?

  1. You might also factor in the rapid growth in the numbers of people with money. It’s not that people have changed their affliations but rather than the numbers have changed because you’re adding millions of rich people.

  2. Democrats tend to pursue policies that benefit poor and working class Americans.

    Republicans tend to pursue policies that benefit upper class and rich Americans.

    Regardless of the make up of Democratic districts, this hasn’t changed.

    So how are Democrats the “party of the rich?” A phrase that implies a policy preference for the rich.

  3. Jamelle,

    That’s certainly the way Democrats see the two parties, but I don’t think it’s an accurate perception. The Democrats increasingly seem to me to support policies that impede social mobility. For example, giving workers private accounts in place of a portion of Social Security—something that’s now been done in a wide variety of countries, with excellent results—could allow middle-class Americans to accumulate substantial wealth over a lifetime. But no Democrat will touch the idea. Higher taxes on income impede the accumulation of wealth as well. Keeping poor children in inadequate schools impedes social mobility. Promoting the legal lottery that the tort bar has become imposes huge costs on the economy while doing almost nothing for anyone other than the lawyers involved. In these and many other respects, the Democrats have become the party of the status quo. They have moreover become increasingly enthralled with environmentalism, which at this stage of its development directly works against the economic interests of all but the wealthiest Americans.

    Republican policies are a mixed bag, but they in general promote the accumulation of wealth and, correspondingly, social mobility.

    Here’s a simple way to put the point. Democrats want to give government more power than Republicans do—power to redistribute wealth and determine social priorities—at the expense of individuals (literally, in taxes, and figuratively, in liberties). The winners are those who can exert enough influence on the political process to get themselves ranked as high priority. In general, lower- and middle-class Americans can’t do that. The wealthy can. So, the Democrats, whatever they say they are doing, generally end up advancing policies that work chiefly to enhance the welfare of the rich and powerful.

    Republicans aren’t any more virtuous—they tend to do it too—but, by giving government less power, do so to a lesser extent.

  4. “Highter taxes on income impede the accumulation of wealth.”

    By that logic, any tax impedes the accumulation of wealth. Perhaps we should just get rid of taxes?

    I’m sure you’re aware of this, but the greatest expansion of the middle-class occurred in the fifteen years following the end of the Second World War, when marginal tax rates approached 90%, and there was a more than generous system of social welfare.

    That’s not to say that ultra high tax rates are necessarily good, but to say that the connection between wealth accumulation and taxes isn’t so clear cut.

    There’s actually a fair amount of evidence that suggests that high income inequality is what severely impedes class mobility.

    “Here’s a simple way to put the point. Democrats want to give government more power than Republicans do—power to redistribute wealth and determine social priorities—at the expense of individuals (literally, in taxes, and figuratively, in liberties). The winners are those who can exert enough influence on the political process to get themselves ranked as high priority. In general, lower- and middle-class Americans can’t do that. The wealthy can.”

    What you’re saying is that Democratic policies target redistribution towards the wealthy and away from the poor and middle class.

    But that is plainly false. By all objective measures, the tax cuts and spending priorities of this Republican administration have benefited the wealthy above every one else (hence the dramatic rise in inequality over the past seven years). You’re describing something that isn’t actually happening in reality.

  5. Taxes have not gone done for more than 30 years. When Ronald Regan was president, taxes were 500 billion per year. They now exceed 3 trillion.

    One of the reasons for a shrinking middle class is the large number of people who have been able to exit the middle class for the upper class. Just check the census data.

    The argument about the gap between rich and poor is really a false agrument. Unless you confiscate money from the rich the gap grows by simple math.

    Here’s how it works. Assume you have a family making 20,000 per year. Every year will give them a 20% increase. So the next year it’s 24,000 and so on.

    Now we’ll take someone like Bill Gates. We’ll let him but his money in a savings account at 1%. So the first year he makes 500,000,000. The next year he makes 505,000,000 and so on. The gap and accumlated weath continues to grow. To close this gap you have to say, “Bill stop what you’re doing, don’t save, don’t invest and we’re going to start taking a billion or two away every year.”

    And while this happens the government take in more and spends more. Don’t be fooled by tax rates. It the dollar amount that matters.

  6. Some how I don’t buy that the shrinking middle class is a product of how freaking successful everyone is.

    “The argument about the gap between rich and poor is really a false agrument. Unless you confiscate money from the rich the gap grows by simple math.”

    Wait. Huh? That’s my point. Because inequality grows naturally, and since stark inequality is a bad thing, the government should have redistributive policies. Since in the long run, they tend to benefit the society at large.

    I mean you can disagree, but you’d also be ignoring the last fifty years of economic history.

  7. If you look at the historical data, wealth in this country gets redistributed all on it’s own. According the the Bureau of Labor Statistics, since the late 1800’s more than 80% of all millionaires are first generation.

    Take a look at the personal history sometime of people in the Forbes 500. For the most part this is new wealth not old money. In particular look at the backgrounds of people like Larry Ellison and Andy Grove. Even Warren Buffet and Bill Gates are first generation.

    In addition, we no longer have a small wealth elite. We’re talking millions of new millionaires. (FYI, when the look at millionaires they exclude their primary residence.)

    The problem with redistribution is that it sends a signal to the most innovative and productive part of society that if they do well the government will take it. “You can no longer hire anyone new, open an new markets or invent anything. You’re reached your limit.”

  8. And the problem with that statement is that what you’re describing has never happened in American history. In fact, the last time there was a significant tax increase – Clinton’s increase in 1993 – the United States saw its biggest and longest economic expansion.

  9. Well I guess if the Bureau of Labor Statistics and Census Bureau are making up their data and people like Larry Ellison are faking their bios, I guess there isn’t much to say. If my math is right, 1993 to 2001 is eight years. Seems like a very short expansion to be the biggest.

    On the other hand, you do have an option to pay more taxes and be a good example. Why don’t you throw in another 20%?

  10. “The problem with redistribution is that it sends a signal to the most innovative and productive part of society that if they do well the government will take it. “You can no longer hire anyone new, open an new markets or invent anything. You’re reached your limit.””

    I’m referring to that statement. I have no doubt that most millionaires come from “new money,” I do doubt however that anything like you describe above has ever happened.

    “On the other hand, you do have an option to pay more taxes and be a good example. Why don’t you throw in another 20%?”

    Clever.

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