Opinion

Chrystia Freeland

Obama, the super-rich and the election

By Chrystia Freeland
November 9, 2012

Among the losers in the United States this week are the super-rich, who spent unprecedented millions to evict President Barack Obama from the White House. The investing class turned sharply and vociferously against the president many of them had supported in 2008. On Tuesday night, the plutocrats lost their shirts.

“Boy, they threw away a lot of money,” Theda Skocpol, a Harvard professor, told me. “It was very interesting to hear on Tuesday night about all the corporate jets packed in Logan Airport” for Mitt Romney’s party in Boston.

One of the important questions in the United States today – and, eventually, in all democracies where income inequality has risen sharply, which is to say in pretty much all democracies – is what impact the political ineffectiveness of the super-rich at the ballot box will have on how the country is actually governed.

According to Skocpol, the answer will be determined partly by how we collectively choose to explain the president’s second-term victory.

“There will be an attempt to downplay the role economic populism played,” Skocpol said. “I would expect a lot of the Wall Street Democratic crowd to place the emphasis on social issues and immigration. There will be an effort to define it that way.”

To put it another way, one emerging explanation of Obama’s victory will be that it was about demographics trumping economic policy. Whether that argument becomes the dominant narrative matters, because it will shape what sort of a governing mandate Obama is deemed to have won.

“He clearly got a mandate for using the government to build an opportunity for the middle class,” Skocpol said. “He has a mandate for higher taxes on the wealthy. He has a mandate for Obamacare going forward. I think voters understand that these differences were clear.”

David Nasaw, a historian who has written biographies of Andrew Carnegie and Joseph P. Kennedy – two influential plutocrats from earlier eras in U.S. history – agrees.

“The media, with all due respect, is still frighteningly condescending to black and Latino voters,” Nasaw said. “The black and Latino voters did not vote for Obama simply because he had a black skin. They voted for him because they thought his policies made more sense.”

“This is no longer a nation where white middle-class suburbanites control the destiny of the country,” Nasaw continued. “Black voters, Latino voters, young voters aren’t going away, and they are going to vote their self-interest. Their self-interest is with a larger government and with a government that recognizes that there has been, over the past couple of decades, a power grab by the wealthy, by corporate interests, by financial interests.”

What makes that mandate particularly powerful is the president’s relationship with the 1 percent during the 2012 election campaign. Much of Wall Street fell in love with Obama in 2008. The support of some of America’s most admired and forward-thinking financiers had particular impact during the Democratic primaries, when Obama, then a relatively obscure Illinois senator, needed all the backing he could get against Hillary Rodham Clinton.

When it comes to policy, Obama wasn’t a particularly bad leader for the most affluent Americans, particularly those in the financial sector – incomes at the very highest levels have recovered much more swiftly from the financial crisis than those of the middle class, and the Troubled Asset Relief Program was essential for Wall Street.

But Obama was a severe disappointment when it came to the softer side of serving his wealthy supporters. The handwritten letters, White House photos and private policy discussions that are the accustomed quid pro quo for major donors did not happen. The result was a business community that nursed something much more painful than a mere substantive disagreement with the president – its leaders felt personally disrespected.

That drove many of the president’s political supporters to despair – would it be so hard, they wondered, for him to write a few thank-you notes? But he didn’t – and he won anyway.

“The president really chafed at the idea that he needed to kiss the ring of Wall Street,” said Jacob Hacker, a Yale political science professor and leading thinker about the role of money in U.S. politics. “He rightly resisted the calls to do that, and I think the result will embolden the president a bit.”

Hacker believes that money continues to play a huge role in politics, particularly through lobbying around specific issues, and in races that have less national visibility, like many congressional contests. But, overall, he sees in the results this week a vindication of the power of mass democracy.

“It means that your votes matter,” Hacker said. “If you can mobilize your voters, that is a pretty strong antidote to the role of money in politics.”

The good news for Wall Street, for the 1 percent, and for the United States as a whole, is that pretty much everyone expects the president to be magnanimous in victory.

“Obama is not going to turn into some Bolshevik,” Skocpol said. “He is going to try to work with the business community, as he always has. He is not going to be insulting them now; he’s going to be inviting them to dinner.”

Comments
23 comments so far | RSS Comments RSS

The Plutocrats just came to the realization money does not buy everything in America. It must be devastating to learn everything you live for has no real meaning.

Posted by JayJay1855 | Report as abusive
 

I am very pleased with Obama’s victory, but the midterm elections of 2014 will be here before we know it. I fear a repeat of 2010 when the GOP and its Tea Party wing were calling Obama’s policies a failure a mere 8 days after his inauguration. Will they use the same playbook and act as though the 2012 election did not happen? With the mercurial nature of the American electorate I think anything is possible.

Posted by IntoTheTardis | Report as abusive
 

Obama was the better man and his party has the smarter platform – with social issues, Obamacare and a balanced approach to deficit reduction. I’m a 59 yr old white female, who is a CPA. I didn’t vote for Obama because of any handouts or because of his color. I voted for him because his beliefs are more in line with my Christian beliefs.

Posted by weneedchange | Report as abusive
 

The best way to build opportunity for middle and lower class is to tax unearned money and money not serving the economy.

That is inheritances (estate taxes), capital losses (not gains), and sin business. The income of skillful doctors and persons starting firms that export or other wise serve the common good should be last thing you want to tax. People who make money by investing in firms that succeed should not be taxed, but people that put in losing firms should be; therefore you want to tax capital losses not gains.

Posted by Samrch | Report as abusive
 

Chrystia, you live in a free country – why haven’t you named any of these “plutocrats” you are rebel-rousing against (other then dead ones from 100 years ago)? Maybe you don’t have much evidence, eh? As a Ukrainian you of all people should know that class warfare and Marxist-style populism results in an Orwellian animal farm from which your ancestors fled to North America.

Posted by tx-peasant | Report as abusive
 

WASPs and their Waspish American political culture is at the centre of this re-election of first blackman in the WH.

Evidently they simply can’t accept his blackness or whatnot.

Slavery was a long time ago, me thinks.

But the South has yet to recover from its reconstruction period.

Posted by hariknaidu | Report as abusive
 

Interesting article, but it seems to me that we are still a nation governed not by men, but by law.

The vast system of Federal and state legislatures — quietly emitting, on paper, a stream of carefully crafted new laws drafted word for word by lawyers of the wealthy and large corporate interests — are far more important than who is in the White House.

Regardless of last weeks Presidential election, big money still completely controls the Federal and state legislatures, including both parties, without question.

And their control is increasing as our society evolves with new technology. Big business still controls and occupies those agencies that are associated with them.

Big pharma still controls the Food and Drug Administration, and has more seats on its committees than President Obama. Same with Wall Street and the SEC. Same with all so-called “government” agencies. They all have revolving doors. A President has almost zero control over these agencies. They are staffed by industry insiders.

By the way, tonight I had the pleasure of reading the introduction to the book, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else, by Chrystia Freeland. I ordered it online two days ago and it arrived today, hardcover.

I’ll quote from page xiv of the introduction:

“Political decisions helped to create the super-elite in the first place, and as the economic might of the super-elite class grows, so does its political muscle.”

It looks well done. I’m looking forward to reading it. Very glad I ordered it.

Posted by AdamSmith | Report as abusive
 

It is interesting that we spend time talking about mandates and the makeup of the American population. One needs to remember and recognize that the American populace was not privy to a significant amount of information about several national issues before the election. Information which is now becoming more “mainstream”. If we look at the percentage of the American populace that cast a vote for president Obama we realize that it is not a true majority. We do have to give credit where credit is due, the Democratic political machine was much more effective than their opponent. We also need to realize that we’re all in this together now and that the future for the next four years is yet to be seen. We can only pray that bipartisanship will will become more than simply a buzzword.

Posted by capinfergie | Report as abusive
 

Obama’s record since taking office regarding plutocracy speaks for itself. Income and wealth distribution are more skewed today than when he took office.

He is a servile sycophant of the billionaire class. Anybody that thinks otherwise has had their eyes and ears closed for the past 4 years.

His “Grand Bargain” will begin dismantling Social Security. Just wait and see…

Posted by upstater | Report as abusive
 

There is a difference between the business community and the Wall Street financial community. Those of us who make things for a living don’t care for Wall Street speculators, and don’t care for them holding so much financial power. The business community just wants some law and order in the financial markets so the lending markets do not freeze up again like they froze up in 2008. Wall Street really does not create prosperity, but they can certainly create chaos. Read the history of panics and economic depressions, and the common theme is a credit crunch at some point, usually caused by too much financial speculation.

Also, there has always been a political power struggle between the super rich and labor (via unions) trying to use their money to gain political power to gain economic advantage. I think people will look at the money wasted by the Koch brothers, the Adelsons, and all those people who gave Carl Rove money, and be a little gun shy about trying that again. At the end of the day, it was wasted because regular voters knew what was going on, and voted against Carl Rove as much as they voted against Romney. I like Richard Viguerie’s comments that Carl Rove should never again be given a dime for a political campaign.

Posted by randymiller | Report as abusive
 

The Koch brothers alone mounted a mini-works program via their legions of the Republican undead (a.k.a Tea Party).

And one can only feel a little sorry for “poor” Sheldon Adelson. There’s a man who spent the entire campaign backing one big-time Republican loser after another. It proves (once again) that wealth and power do not presuppose intelligence.

American plutocrats need a good and thorough whacking.

Obama should, at the very least, dilute the number of their shills in the Supreme Court.

Posted by jrpardinas | Report as abusive
 

Chrystia, the question I have not heard yet is, “Was there a back lash against all the anonymous negative ads?”

Within the last four years there as a run-off election in my city for mayor after the highest vote-getter did not get 50 percent in the first round. I knew she would win when I saw the number and intensity of negative advertising that led up to the run-off balloting.

Did American voters reject the “negative gossip” in Romney vs. Obama when they could not verify the true sources, financial sources behind those messages?

Your insights here were invaluable! I have not heard those opinions collected in any of the other readings or interviews. Thanks!

Posted by readingMunkirs | Report as abusive
 

I am afraid Wall Street & the Elite will now focus on yet another scheme & attack on our constitution.

You thought ‘Citizens United v. Federal Election Commission’
was over ?

In ‘Citizens United v. Federal Election Commission II’

” The Supreme Court declares each corporation is now entitled to its own electoral votes, proportionate to its size and wealth “.

Posted by EthicsIntl | Report as abusive
 

IntoTheTardis,

Don’t worry. The Fiscal Cliff will give Boehner and friends the opportunity to shine before the midterms by showing America they know how to compromise – opportunity which they will totally blow.

Of course they’ll refuse to compromise – just as they did the last time. They don’t know what the word means.

This time, Obama will call their bluff. That will spell the end of Bush’s tax cuts and the Republicans will get the blame. He’ll be able to pick and choose which laws he signs and which ones he vetoes.

2014, here we come.

Posted by LoveJoyOne | Report as abusive
 

Everyone seems to be concerned with the income of the wealthy and if we should tax them at this or that rate, but No one seems to want to attack the real issue of how they became that wealthy. I’m all for free trade, but on an international level it means a great leveling of the living standard, which is what we’re seeing. The 1st world will fall and the 3rd world rise and we’ll all be 2nd world, so to speak. There are only two ways to combat this. Either bring back the protectionist tariff so that jobs and manufacturing come back, along with higher prices and better quality, or, and this would be my preference, remove the monopolies and privileges that these companies and individuals operate under.

Posted by LysanderTucker | Report as abusive
 

“Among the losers in the United States this week are the super-rich, who spent unprecedented millions to evict President Barack Obama from the White House”

1st – There’s more money where that came from.

2nd – They are not the “losers,” we are.

3rd – Obama IS as much their man as Romney was.

4th – Obama WILL not “hold the line,” he will fold like a cheap suit. He’s the only politician who negotiates in reverse.

5th – There is NO real choice, only the illusion of it, and I voted for Obama. What choice do we really have? Romney would have just killed us out-right.

6th – There won’t be real change until the “super-rich” are visited by Black Hawk helicopters at their compounds in the middle of the night – like Bin Laden was. Put down a few of them, and there might be some real change.

Posted by Foxdrake_360 | Report as abusive
 

Many “plutocrats” went at this like they were buying a sports team, full of testosterone, ego, and ignorance. A lot of them will pack up their money and go home, to avoid further embarassment. But not all.

Politics is a serious business, emphasis on business. There is a nascent coalition of deep pockets that are vested in the beltway, or want to be, and that see the need for leaders who can move the party base to support electable candidates.

The ideology will have to change. The agenda, less so.

maximillianwyse.wordpress.com

Posted by maximillianwyse | Report as abusive
 

Gee, I wonder how much of all that plutocrat spending trickled down . . .

Posted by borisjimbo | Report as abusive
 

@LysanderTucker – Well said. The American protectionist tariff was originated by George Washington and Alexander Hamilton to protect American workers. It worked cleanly and quickly.

The American Tariff that made America grow to a gigantic commercial power for a hundred years. When America joined the WTO, it was the signing away of the future of the American middle class. America must abrogate its WTO membership and tear up NAFTA.

We need an immediate 50% tariff on all imported goods into America. New American manufacturers would spring up like grass after a rain.

This would not only create jobs here, it would also enable us to approach a balanced budget.

http://en.wikipedia.org/wiki/Tariff

Your second idea, removing the monopolies is to complex to be politically possible. The American tariff, on the other hand, is simple and has a history of outstanding success.

Posted by AdamSmith | Report as abusive
 

I enjoyed reading your recent book on the plutocrats/oligarchs. Keep up the valuable reporting. If possible, please add some more thoughts in the next edition on how to remedy the inequality. A more prescriptive book however might displease the rich censors!

The plutocrats in the western “democracies” seem to do quite well ruling indirectly whether through the Obama types or more hands-on through the Romney types. However they know that when the rule becomes too direct and repressive and the rewards too unequal, as in much of the world, instability and violence follows.

The current US system won’t change as long as people continue to participate. When the non-voters outnumber the voters, we might achieve some reform. And let’s stop buying/doing business with banks/ companies where the bosses’ total remuneration is more than say 50 times the lowest-paid minimum wage worker. That’s already a quite generous $1m/year. Does anyone maintain a list of acceptable companies such as PETA does for animal-friendly products?

Posted by logicus | Report as abusive
 

I enjoyed reading your recent book on the plutocrats/oligarchs. Keep up the valuable reporting. If possible, please add some more thoughts in the next edition on how to remedy the inequality. A more prescriptive book however might displease the rich censors!

The plutocrats in the western “democracies” seem to do quite well ruling indirectly whether through the Obama types or more hands-on through the Romney types. However they know that when the rule becomes too direct and repressive and the rewards too unequal, as in much of the world, instability and violence follows.

The current US system won’t change as long as people continue to participate. When the non-voters outnumber the voters, we might achieve some reform. And let’s stop buying/doing business with banks/ companies where the bosses’ total remuneration is more than say 50 times the lowest-paid minimum wage worker. That’s already a quite generous $1m/year. Does anyone maintain a list of acceptable companies such as PETA does for animal-friendly products?

Posted by logicus | Report as abusive
 

@logicus: Great post, well-said and insightful. Without some way to ameliorate the income inequality, we keep heading towards disaster on many fronts.

I’d love to see implemented a “list of acceptable companies”, as you say…for example, if a given business does X Y and Z (maybe keeps the wage gap low, allows flexible scheduling and paid vacations, provides great benefits, etc.), then they would qualify for some nice tax breaks. In other words, if those at the top of the company want to do the right thing by providing more for their employees (like paying them a living wage rather than minimum wage) and they therefore take a hit financially for providing it, they should be rewarded to reduce that hit somewhat.

Of course the details would be complex, but it would be a great step in the right direction. It would be a similar to companies which work with fair trade organizations or organically-grown foods: there’s obviously an economic penalty (these things simply cost more) but there’s a huge benefit for human rights, for the environment, for animals, or whatever else. It’s high time we considered what things are really “worth”, which means a lot more than just a dollar figure.

Life is far more complex than money, and there are many things you simply can’t put a price on. Why do we keep trying to?

Posted by seejayjames | Report as abusive
 

Well written, Ms.Freeland. The rich ‘uncle Scrooges’ took their money bags back to the money bins for hording. And then un-liked Romney on Facebook!

seejayjames and logicus, I do some of my investing with companies that are more likely to be “good people” and happily move on if they prove otherwise. I agree it would be grand for people like us to be able to identify the ones who have more “value’ in society.

Just as I would boycott for bad service, poor customer relations and unethical practices, so would I invest for being ethical, socially and environmentally responsible and are good to their employees and customers and not just shareholders and upper management.

Looking at the list of major Corporations to see which are considered “socially responsible”, I see a dubious list of businesses and banks where most are have been in the headlines for the bad things they do. No wonder no such “real” asset list exists… but if it did I would surely use it as a guide line. Nice to see there are others who think as I do…

Posted by youniquelikeme | Report as abusive
 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  •