Chapter 1

Wealth in America

The Indispensable Rich

Every man thinks God is on his side.

The rich and powerful know He is.

—Jean Anouilh

Few Americans—including few wealthy Americans—have given much thought to the role that wealth plays in the American polity. We tend to take it for granted that America always has and always will consist of wealthy families, middle-income families, and poor families. And when we do think about it, most Americans—including most wealthy Americans—tend to imagine that wealth constitutes, at best, a necessary flaw in the way the American democracy should work. Perhaps, we concede, the lure of wealth is necessary to encourage people to work hard, to come up with and commercialize new ideas, to build the companies that provide employment. But still and all, in a society where we are all created equal, there is something incongruous about the fact that some people have so much more money than others.

If the wealthy constitute a flaw in the way American society should work, why should we tolerate it? If we really put our minds to the problem, couldn't we come up with a system that offered similar incentives but that didn't produce wealthy families in such profusion?

What is it, then, that accounts for the persistence of wealthy families in the American democratic republic? Why do we tolerate the rich, with their godlike influence over people and affairs, when it is abundantly clear that the wealthy, like everyone else, are not endowed with godlike wisdom in deciding how to wield that influence? Certainly it is apparent that the rich, whether they are dealing with their own companies, with politics and the affairs of state, with social and cultural issues, with charitable organizations, or even with their own families, have far more impact than other citizens, for good or ill. The rich are a bit like the gods of the Greeks or Romans: not omnipotent or all-seeing sages, but powerful, fascinating, mischievous creatures we don't completely understand but which we find riveting, annoying, alarming and, like it or not, essential.

Indeed, the wealthy, virtually alone in a democratic society, constitute a natural, unelected aristocracy. I say “natural” not because there is anything fundamentally natural about wealthy aristocracies, but because the development of wealthy families is an organic by-product of the way we have chosen to organize our economic affairs in the United States. The American market economy is designed to pit individuals against each other in a free economic competition, the incentive to compete being the possibility of becoming rich. We believe that this sort of competition is most likely to lead to improved conditions for the broader society, including those who “lose” in the competition to create wealth (the poor), and including those who refuse to compete at all: individuals who select professions that rarely lead to wealth, such as academics, social workers, nurses, artists, and so on. (Even these people compete for power and recognition in their chosen fields.) We can easily imagine societies in which wealth-creation activities would not be valued so highly—communist, socialist and many primitive societies, for example—and in those societies different individuals would perhaps¹ constitute the “natural” aristocracy.

I say “unelected” because the wealthy are not selected by any representative body. They simply happen as the result of economic competition and opportunity, much the way great athletes simply happen when athletic competition and opportunities are made available. That's not to say that people who create wealth don't work enormously hard at it, just as great athletes work enormously hard at it. But no group of people sits down and conducts a vote to determine who the best athletes are going to be, and no one sits down to vote on who the wealthy are going to be. The same is true of great artists, musicians, writers, and so on. Rules that define excellence are established through complex cultural mechanisms, but thereafter individuals compete with each other and there will be winners, losers, and a great body of people in the middle who develop competence but not greatness—as well, of course, as people who chose not to compete at all.

Most individuals in American society who possess influence on a scale equivalent to that of the rich actually have been elected in one way or the other. Politicians are the most obvious example, but union chiefs, university presidents, heads of large nonprofit organizations, corporate bigwigs, and even capos of crime families have all been “elected” by some body that is considered reasonably representative in those worlds. The governor of California, an elected official, is undoubtedly the most powerful individual in that state. But I could name eight or ten wealthy men (and two or three women) who would share top twenty billing for power-wielding in that biggest of American states, alongside a few elected officials and a few corporate CEOs. No one elected those men and women, but they made their fortunes and have used those fortunes in part to influence California affairs. Appalling as this might be to some, it is and always has been a fact of life in America.

I say “aristocracy” because, as noted in the California example, the wealthy have power and influence far beyond that of other unelected centers of excellence: They represent an aristocracy in the precise meaning of the term.² The difference between the wealthy and great athletes (or great artists, musicians, writers, etc.) is that the former end up, through the power of their wealth, with the ability to influence much of what we hold dear in our world, whereas the latter, except in rare instances, exercise little influence beyond their area of specialization. It is so natural to expect the rich to wield influence over important matters that we hardly stop to think about how unusual it is that one social subgroup should have been vouchsafed this influence. Why should wealth-creating skills be entitled to far greater influence than, say, the skills required to score consistently from the three-point line or the skills required to compose a piano concerto?

America didn't decide to organize a society that would produce wealthy families—far from it. America organized a society that produces wealthy families as a by-product of an economic competition that is considered desirable. That by-product may have been anticipated, but it is not universally welcomed. Indeed, in a land where “all men are created equal” it may easily be considered an unhappy by-product. Because the wealthy have unelected power and influence, must it not be the case that the wealthy have illegitimate power and influence? Do not the rich constitute a serious flaw in the way a democratic society should operate? Is it not, indeed, an important task of the democratic process to eliminate or minimize the disproportionate influence of any one group? And because there are ways to operate democratic republics without producing so many wealthy families—the Scandinavian and most Western European societies are organized in this way—might not Americans be tempted to adopt those models as well? Certainly the persistence of the rich in a democratic society is at the very least incongruous.³

In this introductory chapter, I will argue that private wealth persists—indeed, grows luxuriantly—in the United States for reasons that are not only sound, but that go to the very heart of America's success in its competition with other civilizations. Wealthy families are not simply a minor pothole on the grand highway leading to uniform middle-classness in America. On the contrary, the production of private wealth is a crucial aspect of the singular success of the American experiment. Private wealth, as distinct from and as a counterweight to government wealth, is both central to and the principal symbol of America. Moreover, given America's special role among nations, America's wealthy families also play a central role in the evolution of other nations and of the prospects for billions of people worldwide.