30 Oct 2006

Party of the Rich

Peter Schweizer, at National Review Online, argues, that while the Republican Party is often looked upon as the party of the rich, the very wealthy are more often democrats.

As U.S. News & World Report political reporter Michael Barone points out, John Kerry won only one county in the state of Idaho, but it was the county that included the super-rich enclave of Sun Valley. And he carried only one county in Wyoming, the one which included the super-rich community of Jackson Hole. Barone calls this part of the “trust-funder Left.”

So why are we seeing the emergence of liberal millionaires and billionaires?

Part of the answer may lie in the way much of this wealth was accumulated. Some of these individuals (Kerry, Dayton, Rockefeller, etc.) inherited their wealth and are thus less familiar with the rigors of the marketplace. Sure they have stock investments, but they haven’t spent time building a business or even holding down a demanding job in corporate America. Others, particularly in the high-tech sector and Hollywood, amassed their wealth quickly and faced fewer challenges in dealing with invasive government and regulations. They see wealth as something that happens quickly, not something that is build up over time. The Silicon Valley 30-year-old worth $200 million on a stock IPO after six years in the business is likely to have a different view of wealth accumulation than the industrialist who amassed a similar fortune over the course of a lifetime. A life of wealth seems more like a lottery, and less like the end result of hard work.

Ironically, Democrats, who talk about income inequality and plutocracy, are now the party of the super rich. The super rich have different priorities and concerns than other Americans. Taxes don’t bite as hard because they can hire accounts and lawyers to avoid or minimize them. They tend to be less religious and therefore less concerned with issues of faith. And they can embrace causes that will impact society and not really affect them… In short, a political party dominated by the super rich is going to have some issues knowing what concerns ordinary Americans.

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Dominique R. Poirier

The matter is quite interesting to probe. At first glance, it seems paradoxical that, overall, rich Democrats would be more numerous and richer than Republicans. Theoretically, Republicans are more likely to stand by Adam Smith, Frederick von Hayek, and Milton Friedman than Democrats who would prefer a Keynesianist approach in economics, let alone religious matters which have been already explained by Max Weber. That’s why I mulled over this paper for some times before attempting this contribution. Regretfully, I found impossible to express myself on the matter as shortly as reasonableness would command. I apologize for it.

Also let’s say I found the matter of my proposition in Nicholas Machiavelli, Vilfredo Pareto, Gaetano Mosca, and James Burnham, and an overwhelming part of this comment owes to these thinkers. But since I consider them as reliable thinkers, I’ll have to shoulder possible blame for my opinion.

In the United States, everyone has the theoretic right to become a millionaire and the owner of a great industry. In fact, however, at about the time of the first World War, newcomers, with less than a handful of exceptions; stopped becoming millionaire or big owners. Conversely there have been societies where though in theory the elite was closed (by rigid hereditary regulations), it was in fact opened, at least sometimes, by such means as adoption or clientage or re-definition of citizenship. This was true at certain periods in Athens and in Rome.
But since a perfectly free circulation according to ability is never found, a healthy and strong society is not assured merely by keeping the elite more or less open. The additional problem remains of the kind of individuals admitted or excluded from the elite.

Everyone will recognize that nearly all of non verbal conducts, such as is found in animals or in the purely instinctive behavior of human beings, is also non-logical. The peculiar and deceptive problems arise in connection with conduct which is verbal but at the same time non logical. Pareto examines a vast number of examples of this sort of conduct, taken from many times and cultures. From this examination, Pareto concludes that two quite different phases may be discovered. There is, he says, a fairly small number of relatively constant factors (or nuclei) which change little or not at all from age to age or from culture to culture. These constant factors he calls “residues”.

The term “residue” then, means simply the stable, common element which we may discover in social actions, the nucleus which is “left over” (hence perhaps Pareto’s choice of the word “residue”) when the variable elements are stripped away. It must be stressed that for Pareto “residue” is a sociological, not a psychological or biological term. Residues are discovered not by psychological or biological research, but by comparing and analyzing huge numbers of social actions. Presumably a residue corresponds to some fairly permanent human impulse or instinct or as Pareto more often calls it, “sentiment.” However, Pareto is not primarily interest in where residues come from, but in the fact that social actions may be analyzed in term of them, whatever their origin.
“Our detailed examination of one territory or another has in any case led to our perceiving that theories in the concrete may be divided into at least two elements, one of which is much more stable than the other. We say, accordingly, that in concrete theories, which we shall designate as “c” (derivatives) there are, beside factual data, two principal elements (or parts): a substancial element (part), which we shall designate as “a” (residue), and as contingent element (part), on the whole fairly variable, which we shall designate as “b” (derivation).
The element “a” (residue) corresponds, we may guess, to certain instincts of man, or more exactly, men, because “a” has no objective existence and differs in different individuals; and it is probably because of its correspondence to instincts that it is virtually constant in social phenomena. The element “b” (derivations) represents the work of the mind in accounting for “a”. That is why “b” is much more variable, as reflecting the play of the imagination. The residue “a” must not be confused with the sentiments or instinct to which they correspond. The residues are manifestations of sentiments and instincts…,” explains Pareto in The Mind of Society.

Pareto is not always strict about these distinctions, and sometimes use terms like “sentiment” or “instinct” where he should say “residue.” No great harm needs result, since from a rough common-sense point of view they are interchangeable. However, it is important to keep them theoretically distinct and to insist that a “residue” is a social and not a psychological term, in order to guard against the supposition that Pareto’s social theories could be disproved by a psychological argument, by for example showing, if it could be shown, that an “instinct” theory of psychology is false. Pareto’s theories, properly understood, do not depend upon any special psychological doctrine. Even if psychology says that men do not have any permanent instincts, it may still be true that there are certain permanent, or at least relatively constant, types of social activity.

According to Pareto, the basic residues within a given society change little and slowly. However, the character of the society is determined not only by the basic residues present in the entire population, but also by the “distribution” of residues among the various social classes; and this distribution may change quite rapidly. To put the matter simply: a given society will include a certain and relatively stable percentage of, for example, clever individuals; but an enormous difference to the society and its development will result from the extent to which these clever individuals are concentrated in its elite, or spread evenly throughout the entire population, or even concentrated in the non-elite.
The residues which in their circulation are of chief influence on the social equilibrium are those belonging to the Class I and Class II. Indeed, in discussing the circulation of the elites, Pareto expands his definition of these two classes so that the whole problem can be summed up roughly in term of them.

Individuals marked primarily by Class I (combinations) residues are the “foxes” of Machiavelli. They live by their wits and shrewdness. They do not have strong attachment to family, church, nation, and traditions (though they may exploit these attachments in others). They live in the present, taking little thought of the future, and are always ready for change, novelty, and adventure. In economic affairs, they incline toward speculation, promotion, and innovation. They are not adept, as a rule, in the use of force. They are inventive and chance taking.

Individuals marked by Class II (Group Persistences) residues are Machiavellian’s “Lions.”
They are able and ready to use force, relying on it rather than brains to solve their problems. They are conservative, patriotic, loyal to tradition, and solidly tied to supra-individual groups like family or Church or nation. They are concerned for posterity and the future. In economic affairs they are cautious, saving and orthodox. They distrust the new, and praise “character” and “duty” rather than wits.

Pareto cited ancient Athens as a typical example of a state with a heavy proportion of Class I residues in its elite, and an unusually large proportion even in the non-elite (where Class II residues almost always greatly predominate). From this distribution sprang many of the glories of Athens, as well as the extraordinarily rapid shift in its fortunes. In every field, economic, political, and cultural, Athens welcomed the new, and was ready for any adventure. After the defeat of Persia at Salamis, Athens could not return to the old ways. Taking immediate advantage of the fleet which had been built up for the war, she went on to establish her commercial empire in the eastern Mediterranean. While the tribute from the alliance was no longer needed for war, it was used to build the wonderful temples and statues. Philosophers and poets were honored for attacking the old traditional ways of life. But her glories were comparatively short-lived. She was always weakening from within by the numerous Class I individuals who were constantly forming factions, plotting with internal or external enemies, and organizing rebellions.
An Athens could not endure the long-draw-out trials of the Peloponnesian wars. On the other hand, the Class I tendencies led her to attempt too much: she refused peace when it could have been made with honor and profit, and launched the Sicilian expedition which in its outcome proved her ruin. On the other, wit and shrewdness were not a firm enough foundation to sustain the shock of plague, death, siege, weariness, and defeat.

Sparta, in extreme contrast, was a nation where Class II residues were wholly predominant both in the general population and in the elite: innovation in Sparta was a crime; everything was regulated by ancient custom and religion and the time-sanctified tradition. The individual counted for nothing, the group for all. Adventure was always to be distrusted. From these roots Sparta derived a tremendous power of endurance when faced with adversity. But she always stopped short of anything spectacular. She produced no philosophy, no liquid wealth, and little arts. She never tried to establish a great empire. Her own armies went home after the Persians were defeated. In spite of defeats and crushing hardships, she finally conquered in the Peloponnesian wars; but in the 4th century, when the conditions of life and warfare greatly changed, she too was lost. Because of her lack of Class I residues, Sparta could not adapt herself to new ways; so, defending the old, she perished.
The social combination that is strongest against external enemies, and at the same time able to bring about a fairly high internal level of culture and material prosperity, is that wherein:

(I) Class II residues are widespread and active among the masses (the non-elite);
(II) The individuals with a higher level of Class I residues are concentrated in the elite;
(III) A fair percentage of Class II residues nevertheless still remains within the elite;
(IV) The elite is comparatively open, so that at least a comparatively free circulation can take place.

The meaning of this optimum combination can be translated as follows into more usual terms:

(I) The masses have faith in an integrating myth or ideology, a strong sense of group solidarity, a willingness to endure physical hardship and sacrifice;
(II) The best and most active brains of of the community are concentrated in the elite, and ready to take advantage of whatever opportunities the historical situation presents.
(III) At the same time the elite is not cynical, and does not depend exclusively upon its wits, but is able to be firm, to use force, if the internal or external condition calls for it;
(IV) The elite is prevented from gross degeneration through the ability of new elements to rise into its ranks.

A combination of this sort does not, however, as a rule last long. The typical, though not universal, pattern of development of organized society goes along some such lines as these: the community (nation) becomes established and consolidated after a period of wars of conquest or of internal revolution. At this point the governing elite is strongly weighted with Class II residues — revolutions and great wars put a premium on faith, power of endurance and force. After the consolidation, activities due to Class I residues increase in importance and are able to flourish. The relative percentage of Class I residues in the elite increases; the foxes replace the lions. The proportion of Class II residues remains high, as always, in the masses.
A time of great material prosperity may follow, under the impulse and manipulation of the Class I residues. But the elite has lost its faith, its self identification with the group; it thinks all things can be solved by shrewdness, deceit combination; it is no longer willing and able to use force. It reaches a point where it cannot withstand the attack from an external enemy, stronger in Class II residues; or from within when masses, one way or another, get a leadership able to organize their potential strength. The combinationist elite is destroyed, very often, carrying its whole society to ruin along with it.

Let us put this process in the simplest possible terms by reducing it to the problem of force (noting that a willingness and ability to use force is primarily an expression of Class II residues). To ask whether or not force ought to be used in a society, whether the use of force is or is not beneficial, is to ask a question that has no meaning; for force is used by those who wish to preserve certain uniformities (e.g. the existing class structure of society, the status quo) and by those who wish to overstep them; and the violence of the ones stands in contrast and in conflict with the violence of the others. In truth, if a partisan of a governing class disavows the use of force, he means that he disavows the use of force by insurgents trying to escape from the norms of the given uniformity.
On the other hand, if he says he approve of the use of force, what he really means is that he approve of the use of force by the public authority to constraint insurgents to conformity. Conversely, if a partisan of the subject class says he detests the use of force by constituted authority in forcing dissidents to conform; and if, instead, he lauds the use of force, he is thinking of the use of force by those who would break away from certain social uniformities.

The analysis here stated with reference to internal relations who hold also for international relations. Pacifism, as advocated by the dominant powers means a disavowal of the force directed against the international status quo. Pacifism means just the reverse when advocated by the less favored nations. In the later case, it is a method of ideological attack on the international status quo, supplementing not contradicting, the violence of the “have not.”

That is one side of the matter. But in addition, the argument may be carried further, and directed against the use of force in any sense whatever. Such arguments express a concentration of Class I residues at the expense of Class II, in the elite whose spokesmen formulate the arguments. The dispute is really as to the relative merits of shrewdness and force, and to decide it in the sense that never, never, not in the exceptional case, it is useful to meet with violence; it would be necessary first to show that the use of cunning is always, without exception, more advisable than the use of force.

Suppose a certain country has a governing Class “a” that assimilate the best elements, as regards intelligence, in the whole population. In that case the subject Class “b” is largely stripped of such elements and can have little or no hope of overcoming the Class “a” so long as it is a battle of wits. If intelligence were to be combined with force, the dominion of the “a’s” would be perpetual, but such a happy combination only for a few individuals.

In the majority of cases people who rely on their wits are or become less fitted to use violence, and vice versa. So concentration in the Class “a” of the individuals most adept at chicanery leads to the concentration in Class “b” of the individuals most adept to violence; and if that process is long continued, the equilibrium tends to become unstable, because the “a’s” are long in cunning but short in the courage to use force and in the force itself; whereas the “b’s” have the force and the courage to use it, but are short in the skill required for exploiting those advantages. But if they change to find leaders who have the skill — and history shows that such leadership is usually supplied by dissatisfied “a’s” — they have all they need to for driving the “a’s” from power. Of just that development history affords countless examples from remotest times all the way down the present.

The result of such revolution — for the passage just quoted is simply the generalized description of the form of social revolution — is to get rid of the weaker elements of the old elite, open up the elite to the rapid influx of new elements, and to alter the balance of residues in the elite in favor of those from Class II. In spite of the cost of revolution in bloodshed and suffering, it may under certain circumstances, be both necessary and socially beneficial. Even in the latter case, however, it is always an illusion to suppose that the masses themselves take power through a revolution. The masses can never successfully revolt until they acquire a leadership, which is always made up in part of able and ambitious individuals from their own ranks who cannot gain entrance into the governing elite, and in part of disgruntled members of the existing elite (members of the nobility, for example, in the opening stages of the French Revolution, or dissatisfied intellectuals and middle class persons in the Russian Revolution). So long, therefore, as the governing elite is both willing and in position to destroy or to assimilate all such individuals, it has a virtual guarantee against internal revolution. If the revolution does take place, we merely find a new elite — or more properly a renewed elite, for the old is almost never wholly wiped out — in the saddle.
Nevertheless, the change may quite possibly be for the benefit of the community as a whole and specifically of the masses who, remaining the ruled and not rulers, may yet be better off than before.

Pareto’s theory of the circulation of the elites is thus a theory of social change, of revolution. It is a re-statement, in new and more intricate terms, of the point of view common to the modern Machiavellians and found, cruder, in Machiavelli himself.

Pareto claims that though we can come to objective conclusions about the strength of a society relative to other societies, we cannot make any objective judgment about what type of social structure is “best” from the point of view of internal welfare. Moreover, a certain tendency in his own feelings becomes evident from his analysis. To begin with, he plainly puts external strength first, since it is a pre-condition of everything else; that is, if a nation cannot survive it is rather pointless to argue in the abstract whether or not it is a “good society.” In order to survive, a society must have a fairly free class circulation; the elite must not bar its doors too rigidly. This freedom will at the same time on the whole operate to increase the internal well being of the society.

Second, in discussing the distribution of residues, Pareto implicitely joins the other Machiavellians in an evident preference for social checks and balances.
The strongest and healthiest societies balance a predominance of Class I residues in the elite with a predominance of Class II residues in the non-elite. But Class II residues must not be altogether excluded from the elite. If Class II residues prevail in all classes, the nation develops no active culture, degenerates in a slough of brutality and stubborn prejudices, in the end is unable to overcome new forces in its environment and meets disaster. Disaster, too, awaits the nation given over wholly to Class I residues, with no regards for the morrow, for discipline or tradition, with a blind confidence in clever tricks as the sufficient means for salvation.

The law of the circulation of the elites serves not only to clarify our understanding of societies of the past. They illuminate also our analysis of present societies, and even, sometimes, permits us to predict the future course of the social events. Writing in the years just prior to the first World War, Pareto analyzed at length the United States and the principal nations of Europe. He found that the mode of circulation of the elites during the preceding century had brought most of these nations into a condition where the ruling classes were heavily over weighted with Class I residues, and were subject to debilitating forms of humanitarian beliefs. The result of such a condition he summarizes in general terms as follows:

“I. A mere handful of citizens, so long as they are willing to use violence, can force their will upon public officials who are not inclined to meet violence with equal violence. If the reluctance of the officials to resort to force is primarily motivated by humanitarian sentiments, that result ensues very readily; but if they refrain from violence because they deem it wiser to use some other means, the effect is often the following:

II. To present or resist violence, the governing class resorts to “diplomacy,” fraud, corruption, – governmental authority passes, in a word, from the lions to the foxes.
The governing class bows its head under the threat of violence, but it surrenders only in appearances, trying to turn the flank of the obstacle it cannot demolish in frontal attack. In the long run that sort of procedure comes to exercise a far reaching influence on the selection of the governing class, which is now recruited only from the foxes, while the lions are black balled. The individual who best knows the art of sapping the strength of the foes of “craft” and of winning back by fraud and deceit what seemed to have been surrendered under pressure of force, is now leader of leaders. The man who has bursts of rebellion and does not know how to crook his spine at the proper times and places, is the worst of the leaders, and his presence is tolerated among them only if other distinguished endowments offset the defect.

III. So it comes about that the residues of the combination — instinct (Class I) are intensified in the governing class, and the residues of group persistence (Class II) debilitated; for the combination residues supply, precisely, the artistry and resourcefulness required for evolving ingenious expedients as substitutes for open resistance, while the residues of group-persistence stimulate open resistance, since a strong sentiment of group persistence cures the spine of all tendencies to curvature.

IV. Policies of the governing class are not planned too far ahead in time. Predominance of the combination instincts and enfeeblement of the sentiments of group-persistence results in making the governing class more satisfied with the present, and less thoughtful of the future. The individual comes to prevail, and by far, over family community, nation. Material interests and interests of the present or a near future come to prevail over the ideal interests of the distant future. The impulse is to enjoy the present without too much thought for the morrow.

V. Some of these phenomena become observable in international relations as well. Wars become essentially economic. Effects are made to avoid conflicts with the powerful and the sword is rattled only before the weak. Wars are regarded more than anything else as speculations. A country is often unwittingly edged to wards war by nursing economic conflicts which it is expected, will never get out, of control and turn into armed conflicts. Not seldom, however, a war will be forced upon a country by people who are not so far advanced in the evolution that leads to the predominance of Class I residues.”

Confronted with these circumstances, Pareto believed that analogies from comparable processs in the past made plain what was to be expected. In one way or another, probably catastrophically, the social unbalance within the elites would be corrected. Internal revolutions and the impact of external wars would re-introduce into the elites large numbers of individuals strong in the residues of group persistence (Class II) and able and willing to use force in the maintenance of social organization. This development might mean the almost total destruction of certain of the existing elites, and along with them, of the nations which they ruled. In other cases, a sufficient alteration in the character of the elite might take place in time to preserve the community though greatly changed.

This survey should seem familiar today. Pareto was writing, in advance, an outline history of the generation just passed, and the present. Munich in 1938 was, in its way, a definitive expression of his theory of the circulation of the elites. At Munich, there was demonstrated the impotence of an exclusive reliance on Class I residues: combinations, no matter how shrewdly conceived could no longer meet the challenge of the matured world social problems. And at the same time Munich revealed that only those two nations — Russia and Germany — where a redistribution of the elites had already taken place, had been able to prepare seriously for the war which was so evidently sure to come.

By social equilibrium, Pareto means the general state and structure of society, considered dynamically, at any given moment. That is, the term refers to the state of society insofar as it involves the interplay of those forces that both determine what it is at any given moment, and at the same time, through their operation, work to change its state and structure.

Pareto has thus a pluralistic theory of history. Changes in society do not result from the exclusive impact of any social cause, but rather from the interdependent and reciprocal influences of a variety of causes.

Whether certain theorists like it or not the fact is that human society is not a homogeneous thing, that individuals are physically, morally, and intellectually different. Of that fact, therefore, we have to take account. And we must also take account of another fact: that the social classes are not entirely distinct, even in countries where a cast system prevails; and that in modern civilized countries circulation among the various classes is exceedingly rapid.
We shall consider the problem (in order to simplify it) only in its bearing on the social equilibrium and try to reduce as far as possible the numbers of the groups and the modes of circulation, putting under one head phenomena that prove to be roughly and after a fashion similar.

Let us assume that in every branch of human activity each individual is given an index which stands as a sign of his capacity, very much the way grade are given in the various subjects in examinations in school (or GF or GS in certain countries). The highest type of lawyer, for instance, will be given 10. The man who does not get a client will be given 1 — reserving zero for the man who is an out —and-out idiot. To the man who has made his millions — honestly or dishonestly as the case may be- we will give 10. To the man who has earned his thousands we will give 6; to such a just manage to keep out of the poor-house, 1 keeping zero for those who get in. To the woman “in politics,” such as the Aspasia of Pericles, the Maintenon of Louis XIV, the Pompadour of Louis XV, who has managed to infatuate a man of power and play a part in the man’s career, we shall give some higher number, such as 8 or 9; to the strumpet who merely satisfies the sense of such a man and exerts no influence in public affairs, we shall give zero. To a clever rascal who know how to fool people and still keep clear of the penitentiary, we shall give 8, 9, or 10, according to the number of geese he has plucked and the amount of money he has been able to get out of them. To the sneak-thief who snatches a piece of silver from a restaurant table and run away into the arms of a policeman, we shall give 1. To a poet like Ezra Pound or T.S. Elliot we shall give 8 or 9 according to our tastes; to a scribbler who puts people to rout with his sonnets we shall give zero. For chessplayers we can get very precise indices, noting that what matches, and how many, they have won. And so on for all the branches of human activity.

In some such way we shall be able to distinguish at least roughly the “elite” or better the “elites” in society from the mass. We shall quickly observe, moreover, that human beings are not distributed evenly over the scale. At the top there are very few, considerably more in the middle; but the overwhelming majority are grouped near the bottom. The elite is always a small minority.

Within the elite we may further distinguish a “governing elite” from “non governing elite.”
The elite within many branches of human activity — chess playing, for example, from the list quoted — does not exert any appreciable influence on political affairs and social culture.
The character of a society, Pareto holds, is above all the character of its elite; its accomplishments are the accomplishments of its elite; it history is properly understood as the history of its elite; successful predictions about its future are based upon evidence drawn from the study of the composition and structure of its elite. Pareto’s conclusions here are the same as those reached by Mosca in his analysis of the narrower but similar concept of the “rulling class”.

One will probably notice that Democrats are more likely to be Class I residues, as Pareto depicts them. Once more, this comment is no more than the proposition of a way of explaining why Democrats would be richer than Republicans overall. Moreover, note that my way of tackling the subject somehow exceeded its frame. But, I think that the way any elite is represented conditions a country’s policy. Therefore, I think that this statistic about wealth and political opinion deserves much interest. I shall welcome any critics objectively. To people willing to probe still further on the matter I may recommend, first, the following books which are my main sources:

The Rulling Class, by Gaetano Mosca.

Mind and Society, by Vilferdo Pareto.

The Machiavellians, by James Burnham.

The Prince, by Nicholo Machiavelli.



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