The Divisions In The One Percent And The Class Warfare That Will Shape Election 2014


There’s general agreement that inequality will be the big issue of this election year. But to understand how this will play out you have to go well beyond the simplistic “one percent” against everyone else mantra that has to date defined discussion of inequality.

Instead our politics increasingly are being shaped by a complex interplay of class interests across the electorate; class, not merely inequality, is emerging as the driving force of our politics. As Marx among others recognized, class structures can be complicated and contain many separate tendencies. For example, even the much-discussed “one percent” is hardly a cohesive group, but one deeply divided in ideology, geography and industry.

For example, out of the 20 richest Americans on the 2013 Forbes 400 list, six have a record of favoring the Democrats in political donations, including the top two, Bill Gates and Warren Buffett. Eleven reliably back Republican candidates and causes, while Google founder Larry Page has only donated to his company’s PAC, Larry Ellison has funded both sides and Michael Bloomberg defies easy categorization.

All three of the top individual political contributors last year — the Soros family, Jets owner Fred Wilpon and Facebook co-founder Sean Parker — also lean to the “party of the people.”

The Democrats’ new and ascendant oligarchy, based in Silicon Valley, Hollywood, Wall Street and the media, are generally concentrated in the country’s most unaffordable cities, places with high degrees of inequality.

This alliance is based not solely on attitude, but also sometimes self-interest. Hedge funds siphon up money from public pension funds desperate for the large gains necessary to meet the extravagant, unfunded benefits increases of Democratic politicians. Venture capitalists and companies and core Democratic supporters invest in “green” technology, made profitable largely by mandates, subsidies and government-backed loans.

These oligarchs represent very different interests than the more traditional plutocracy, based largely in such mainstream endeavors as fossil fuel energy, agribusiness, manufacturing and suburban home development. These worthies, too, are obviously not slum-dwellers, but also live in more dispersed locations such as Houston, Dallas-Fort Worth, Atlanta, Oklahoma City and a host of much more obscure places, at least part of the time. They reflect the somewhat more conservative, fiscally particularly, world view of the broader 1% than their more left-leaning counterparts.

With the power of money and access to media (particularly the new oligarchs), the two competing factions of the “one percent” will pour millions into trying to win over the other classes. The two key ones are what I call the yeomanry — the small property-owning, private-sector middle class — and America’s modern-day “clerisy”: university professors and administrators, government bureaucrats and those business interests tied closest to the governmental teat.

One can expect with fair assurance that the clerisy will strongly support the president and the progressive wing of the Democratic Party. There are few groups as lock-step liberal as the universities, particularly the most important and influential ones. In 2012, A remarkable 96 percent of all donations from Ivy League employees went to the president, something more reminiscent of Soviet Russia than a properly functioning pluralistic academy. Public employee unions, charter members of the clerisy, have been among the biggest contributors to federal candidates, overwhelmingly Democrats over the past decade.

Less certain are the political leanings of the yeomanry. These are not the people who generally benefit from the expansion of government; they are basically stuck being taxpayers. Their distaste for regulation varies, but is most strongly felt when it impacts their businesses or their communities. In 2008, rightfully disgusted by the failures of the Bush administration, they were divided, but in 2012 small business shifted decisively to the right — not enough to save the awful Romney campaign, but they still helped maintain the GOP majority in the House.

The political calculus of the yeomanry, however, is very complex. Those who are older, and those who already own property, are likely to keep shifting toward the right, as long as the Republican lunatic fringe is kept under control. Obamacare taxes and the cancellations of individual insurance plans hit this group directly in the bottom line, and may do so even more in the future. But for younger members of this group, struggling to buy property or launch proper careers, may look to Washington to provide their health care and provide breaks on their student loans.

Arguably the yeomanry will determine the winners in 2014. The big issue here may be over expectations for the future. Today there are many, on both right and left, who are telling the yeomanry that their day in the sun is over. Tyler Cowen suggests in the future “the average” skilled worker can expect to subsist on rice and beans. If they stay on the East or West Coast, they also may never be able to buy a house. On the left, particularly among greens and urban aesthetes, the message is not so different except they tend to think abandoning property ownership is a good thing, since multi-unit rental housing is more environmental friendly and communal.

Sadly many member of the yeoman class — the vast majority of Americans today — believe that the pessimists are correct, and expect their children, will fare worse in the future. If they accept this conclusion, they may be tempted to join the third of Americans who consider themselves “lower” class. With increasingly little prospect of upward mobility, these voters understandably look to Washington and state capitals to redistribute wealth up to them.

How this class politics plays out this year will determine the 2014 results, and likely politics for the generation to come. Oligarchs favoring Republicans will focus on how redistribution takes from the yeomanry to give to the poor and associated crony capitalists. The failings of Obamacare, the rise in taxes and regulations all play to their advantage. This will play well with the income categories – $50,000 to $200,000 annually — that now constitute the class base of the GOP.

In opposition, the new oligarchs, and their allies in the clerisy, will seek to convince enough of the yeoman class that they need the government to enjoy anything like a middle-class life. The Obama cartoon The Life of Julia, with its emphasis on the helping hand of government , is not directed at the poor but what used to be an upwardly mobile class. Julia implicitly rejects traditional American middle-class values such as property ownership, marriage and family and embraces a new vision tied to growing dependency to both the Democratic Party and the state.

Sadly, neither of these approaches addresses the key issue: weak economic growth and a decline in upward mobility. Republicans, in particular, do not tend to associate these things. They seem to believe that faster GDP growth will rebalance our inequality, or at least make it palatable. This misses the fact that we have just gone through one of the most unequal recoveries in history, accelerating the concentration of wealth in ever fewer hands. Growth, clearly, is not enough; what kind of growth must be part of the discussion.

This perspective is critical if we are to address our class divide. Simply put we need to go beyond both “trickle down” economics — which both sets of oligarchs are understandably fine with — and a redistributionist approach, something that strengthens the hand of the clerisy and the politically connected at the expense of the yeomanry. What we need is something that combines largely free-market, libertarian economics with something like the traditional goal of social democracy.

“We can have democracy in this country, or we can have great wealth concentrated in the hands of a few,” noted Justice Louis Brandeis,“but we can’t have both.” Over time, even conservatives and libertarians have to recognize that a republic irrevocably divided between the rich and the dependent poor can not turn out well. And for their part, progressives need to realize that the middle class can not be expected to serve as a piggy bank to assuage their delicate consciousness.

The real issue before us is not inequality per se, but how to spread the ownership of property and improve opportunity; without this America devolves from the world’s exemplar into a second-rate Europe, with less charm, more division, and a national dream finally extinguished.

This story originally appeared at

Joel Kotkin is executive editor of and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

Creative Commons photo "Income Inequality" by Flickr user mSeattle.