Friday, February 12, 2010

Who is best for the super rich?

A blog on Vanity Fair reports that Obama is losing his support among the super rich. A lot of people do not realize that he had so much support among those of great wealth in the first place.
By working his charm and displaying certain touches of upper-class refinement, Obama persuaded the super rich to embrace his liberal vision for America.
The conventional wisdom is that the super rich are Republican because that is in their economic interest. After all, the Democrats want tax the rich in order to redistribute income.

However, what the rich want even more than increased wealth is security in their relative standing, and they do not get that from free markets. Free markets promote social mobility, allowing poor people to rise and rich people to fall. A system more favorable to the already-rich is crony capitalism. Moreover, a tax system that features high marginal income tax rates may also be in the interests of the very rich because it can reduce social mobility. High marginal tax rates on income make it more difficult for new people to rise to great wealth, but because the tax is on income and not wealth, it does not threaten the economic position of the already-wealthy. Crony capitalism is very popular in much of the world, and one of its charms for the elite is that it promotes a static social order.

So maybe the super rich were not the rubes that the Vanity Fair piece implicitly suggests they were. Maybe they were voting their economic interest by voting for Obama, crony capitalism, and high marginal income taxes. Why then the disillusionment? The piece is a bit unclear, but hints that the super rich are disappointed with Obama's liberalism. I think this paragraph may tell more:
And more to the point, his demeanor is that of a New England elite; he has the ease and confidence of someone who is well-to-do, and he is buttressed by a long list of friends in high places. Which explains how he initially won the allegiance of the rich so easily. It also didn’t hurt that his predecessor in the Oval Office, George W. Bush, a bona-fide member of the American aristocracy and a conservative Republican, had disappointed so many patrician believers with his problematic presidency.
It may not be the leftism but rather the incompetence of the present administration that makes it uncool to be identified with it.

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