The Wealthy Elites, New and Old
After finishing Michael McGerr’s A Fierce Discontent, about the Progressive movement in the late 19th and early 20th century, I found striking the sheer number of parallels between Chrystia Freeland’s “new global elite” and Teddy Roosevelt’s “economic royalists” of the turn of the century. Thus, I found immediately suspicious one of Freeland’s initial claims, that “the rich of today are also different from the rich of yesterday.” Differences, in degree, yes, but not in kind. The individualist spirit of today’s mega-rich is of the same genus as that of the Carnegies and Rockefellers. Indeed, as Freeland goes on in describing today’s elite:
Its members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly.
In fact, this is precisely the attitude of the early 20th century elites that drew the ire of the Progressive movement. “[The] failures which a man makes in his life are due almost always to some defect in his personality, some weakness of body, or mind, or character, will, or temperament,” John D. Rockefeller wrote. As an exasperated Teddy Roosevelt warned the wealthy: “The operators forget that they have duties toward the public, as well as rights to be guarded by the public through its governmental agents.” “It is amazing folly on their part….” “Do they not realize that they are putting a very heavy burden on us who stand against socialism; against anarchic disorder?”
Yet, like Tyler Cowen’s in his recent piece on income inequality (summary here), Freeland acknowledges that affluence measured in dollars fails to tell the whole story: economic disparity in America has flattened in many of the ways that truly matter. As Cowen points out, “I have access to penicillin, air travel, good cheap food, the Internet and virtually all of the technical innovations that [Bill] Gates does. . . . [B]y broad historical standards, what I share with Bill Gates is far more significant than what I don’t share with him.” Thus, greater disparity in dollar figures tends to matter less than it did a hundred years ago, when long hours, unsafe workplaces, and unhealthful living conditions served to agitate the lower classes against the wealthy elite.
Another principal difference of today’s elite, Freeman notes, is its expansion beyond national borders in taking advantage of global rather than merely local or national markets. Freeland attributes the “rise of the new plutocracy” to “the revolution in information technology and the liberalization of global trade.” Thus, Freeman says, “today’s super-rich are increasingly a nation unto themselves.”
But Freelands’s new global elite is not different in kind from the early 20th century American elites. As McGerr observes, following capitalists’ wildly successful exploits in the American frontier, the closing of the west due to progressive regulation gave Americans “a sense of economic limits, new in the nation’s history. For the first time, there was a widespread understanding that forests, land, and other resources were not infinite.” “For all the talk of individualism . . . Americans realized that there was no being let alone anymore, even out on the frontier.” Predictably, then, today’s elite have transcended the limitations of local and national markets to explore the frontier-like global economy.
Freeland correctly draws parallels between the emphasis on philanthropy of today’s and yesterday’s elites. “[A]rguably the most coveted status symbol isn’t a yacht, a racehorse, or a knighthood; it’s a philanthropic foundation.” This, however, seems a far cry from how Carnegie or Rockefeller framed the philanthropy question. Carnegie remarked that it was the duty of the wealthy “to consider all surplus revenues which come to him simply as trust funds … for his poorer brethren, bringing to their service his superior wisdom, experience, and ability to administer, doing for them better than they would or could do for themselves.” Rockefeller likewise noted: “I can see but one way in which they can secure a real equivalent for money spent, and that is to cultivate a taste for giving where the money may produce an effect which will be a lasting gratification.” One does not glean from Freeland’s piece that the hyper-philanthropy of today’s elite is born of similar perspective. Indeed, she cites the following as a representative sentiment:
A Wall Street investor who is a passionate Democrat recounted to me his bitter exchange with a Democratic leader in Congress who is involved in the tax-reform effort. “Screw you,” he told the lawmaker. “Even if you change the legislation, the government won’t get a single penny more from me in taxes. I’ll put my money into my foundation and spend it on good causes. My money isn’t going to be wasted in your deficit sinkhole.”
Just as America needed its oft-loathed upper 10% a hundred years ago, it needs its modern elite. “In today’s hypercompetitive global environment, we need a creative, dynamic super-elite more than ever.” Yet, while the fierce individualism of “economic royalists” survived the Progressive attempt to destroy it a hundred years ago, it was forever hobbled, and to this day remains conditioned on guaranteed admission to a generous, upwardly mobile middle class. As FDR acknowledged, bold attempts to breed the individualist spirit out of Americans was a hopeless cause. Americans simply wanted controls to guarantee that the greater affluence of the elite class translated into greater affluence of the middle class and, once that were accomplished, that Americans be left free to indulge in the gratification of consumerism. As Freeland aptly puts it, “The lesson of history is that, in the long run, super-elites have two ways to survive: by suppressing dissent or by sharing their wealth.” As McGerr puts it, “The task of government was to make sure Americans could afford pleasure, and then get out of the way.”