Tuesday, December 15, 2015

Understanding the Mindset of America's Wealthy and Their Political Agenda

We all know that the most wealthy Americans who live among us have a far different life than we have and it is becoming increasingly apparent that they have far more control over the political agenda and politicians in particular than the "sweaty masses".  A new study of the one percent looks at how different they are from "us" and what drives their political agenda.

Let's open this posting by looking at how the Gini coefficient, a measure of income distribution, has risen  for the United States since 1967:

With a value of zero showing perfectly even income distribution and a value of 1 showing perfectly uneven income distraction (i.e. one person has all of the income), we can see that income distribution in the United States has become increasingly uneven over the past five decades.

The unprecedented study by Benjamin Page, Larry Bartels and Jason Seawright through Northwestern University and the University of Chicago looked at a sample of  wealthy Americans living in the Chicago area.  They conducted 45 minute interviews with Americans would would be considered "one percenters"; their mean wealth was $14,006,338 and their median wealth was $7.5 million.  Their average income was $1,040,140 and one-third of them reported annual incomes in excess of $1 million.

Here is a table showing the wealth distribution of the 83 participants:

The respondents to the survey had the option to either have a face-to-face meeting or be interviewed by telephone.  The questionnaire was designed to include many policy preference questions that had also been conducted with members of the general public, enabling the researchers to compare the responses of wealthy Americans to the rest of us.

Let's look at several key aspects of the survey:

1.) Political activity among the wealthy:  The study found that wealthy Americans tended to be very active in politics as shown here:

Pay attention to politics most of the time - 84 percent
Talked politics - 5 days per week (median)
Voted in 2008 - 99 percent
Attended political meetings, speeches or dinners - 41 percent
Contributed money to politicians - 68 percent
Helped solicit or bundle contributions - 21 percent

The average political contribution made by the sample group was $4,633.  It is interesting to note that over two-thirds of these wealthy Americans contributed money to politicians; this compares to only 14 percent in the general population.

Not only are the one percent involved with the political process, they are much more likely to initiate contact with federal government officials or their staff as we can see on this graphic:

In total, 47 percent of those surveyed made at least one contact with a congressional office and 41 percent made two or more contacts of the above types.

2.) Government priorities:  Here is a table showing the percentage of America's most wealthy that feel that eleven potential problems facing the United States are "very important":

When asked an open-ended question about which issue facing the United States was of most concern, one-third of respondents listed either budget deficits or excessive government spending as the most critical issues, by far the most of any other issue.  Surprisingly, unemployment came in second place; as you will see below, the wealthy have a far different idea of how this problem should be solved and who should solve the problem.  Only 16 percent of the wealthy see climate change as a very important issue with 53 percent feeling that it was somewhat important.  When looking at the public as a whole, a survey taken in March 2011 noted that only 7 percent of respondents felt that either deficits or the national debt were the most important problems facing the nation.  It is interesting to note that wealthy Americans prefer to deal with the debt and deficit problem by cutting spending rather than through tax increases.

3.) Job and Income Programs:  Here is a table showing the differences between wealthy Americans and the general public when it comes to government intervention in both job programs and income support:

Nearly half of the wealthy Americans surveyed believe that the government must see that no American is without food, clothing or shelter, however, only one-in-five (19 percent) believe that the government should ensure that everyone who wants to work can find a job compared to 68 percent of the general public.  This is surprising given that 84 percent of the wealthy feel that unemployment is a very important problem facing the United States.  Overwhelmingly, however, the wealthy do not want to see the federal government intervene in the jobs market with only 8 percent stating that the federal government should provide a job for those who are able and willing to work but cannot find a job in private employment.  Over half (53 percent) of the general public would disagree with this attitude.

4.) Education:  Here is a table showing the differences between wealthy American and the general public when it comes to government intervention in America's education system:

Nearly 80 percent of the wealthy respondents in the survey feel that problems facing the education system are very important and 58 percent are willing to pay more taxes for early childhood education.  That said, only 35 percent of the wealthy respondents felt that the federal government should spend whatever is required to ensure that all children have access to a good public school system; among the general public, 87 percent were in favour of this policy.  Another of the larger differences can be found in the wealthy attitude toward the federal government providing universal access to college; only 28 percent of the wealthy are in favour of this policy compared to 78 percent of the general public.  I would suggest that this is because the wealthy can afford to send their offspring to any college of their choice.  One of the more interesting aspects was the attitude toward the federal government ensuring that minorities have access to schools that are equal in quality to those attended by white students even if it means that taxes will rise; only 53 percent of the wealthy were in favour of this policy compared to 71 percent of the general public.

5.) Income Inequality:  Here is a table showing the differences between wealthy Americans and the general public when it comes to income inequality and redistribution of incomes and wealth:

It is interesting to observe that, for many of the factors including "differences in income in America are too large", the wealthy among us have basically the same attitude toward income and wealth inequality as the remainder of the general public.  Where the biggest difference lies is in the involvement of government in income and wealth redistribution; only 17 percent of wealthy Americans feel that the government should redistribute wealth by imposing heavy taxes on the rich compared to 52 percent of the general public.  Only 13 percent of the wealthy feel that it is the government's responsibility to reduce the polarity in incomes between the rich and those with low incomes compared to 46 percent of the general public. 

The authors of the study noted that the political persuasions of the wealthy respondents followed a typical pattern which shows that wealthier Americans tending to be Republicans.  Of the respondents in the study, 58 percent were Republicans and 27 percent were Democrats, however, when it came to economic issues, the wealthy Democrats tended to be more conservative in their attitudes than Democrats in the general population.

Over the past decade, particularly since the Citizens United decision, it has become increasingly apparent that moneyed interests have become most important to the political process in the United States.  Unfortunately, the wealthy that live among us have very little firsthand experience with the issues that ordinary citizens face; unemployment, low wages, paying for an education, bankruptcy and home foreclosures.  As intelligent as they may be, their lack of intimate knowledge with the issues that the rest of us may face during our lifetimes colours their perspective and their political leaning.  With their political donations buying them access to policymakers that ordinary Americans can never hope for, we can easily see how government policies can be slanted to protect the interests of the wealthy while ignoring the plight of the many.

As Spock said "the needs of the many outweigh the needs of the few".  I would add, "except in the case of wealth distribution in America" or "when the government involves itself in the process of wealth distribution".


  1. The Gini Chart was an eye opener. Eye-ball regression says the line took a big shift upwards in Clinton's time in office and then continued on at the same rate of increase. The line from the 90's onward is parallel to but higher than the one from the 70's to the 90's.

    1. It is interesting to see how it took off just after the 1990 - 1991 recession. Perhaps the next commenter is correct and that so-called freer trade benefitted one sector of society over the other. This is around the time that unions started to lose their power.

  2. Research Nafta and repeal of Glass Steagall act most of the big increase can be attributed(in my opinion) to those two things that occurred during Clintons presidency. The very basic short reason is Nafta screw over the blue collar working driving down his wages, and the other created a way for the rich to get ever richer.

  3. The Gini graph above is before taxes and transfers. It's irrelevant.

  4. The main benefit of unions has been to better distribute labor the rewards of labor. This gives more people a path to finding real and fulfilling work. Today the cost of inequality is taking a toll on our culture. Robots and new technology have streamlined and increased productivity and at the same time eliminated many jobs. The value and role of labor is changing throughout the world.

    Many other issues exist such as the role of big business. What is good for big business is not necessarily good for the masses. Consolidation often means a gain in efficiency, but this often comes at the cost of losing diversity and a "robustness" to both society and the economy. The benefits of efficiency sometimes have a huge hidden cost.

    How the fruits of labor are divided is important, this includes not just the wage deserved by a common laborer, but how much those in management, top CEO's, and those that can't, or choose not to work, should receive. We don't live in Utopia, but still it would be nice if a fair, logical, and just system did exist, such a system cannot be "mandated." The article below delves into this important and complex world wide issue.