Hating the rich has been a popular pastime since democracy was invented. The ancient Greek playwright Aristophanes even played on this fact in his comedy Ecclesiazusae, written four centuries before Christ, in which the idealistic Praxagora proposes building a utopian community in which “there will no longer be either rich or poor,” but “all property [will] be in common.” When a friend asks her “But who will till the soil?” Praxagora unselfconsciously replies: “The slaves.”
The rhetoric hasn’t improved much since. New York City Mayor Zohran Mamdani declared on Meet the Press last summer that he doesn’t think “we should have billionaires,” echoing Sen. Bernie Sanders—who has often said that “billionaires should not exist”—and Southern California looters who in 2020 stormed through Beverly Hills chanting “eat the rich.” Indeed, the one exception to the left’s professed concern about “erasure” seems to be that it is fine with eliminating the economically successful.
Stepping up to defend the wealthy is Northwestern University law professor John O. McGinnis, whose new book Why Democracy Needs the Rich argues that economic elites are uniquely positioned to “infuse democracy with fresh perspectives” and “reinvigorate community life” at a time when the values of discourse seem especially threatened. The wealthy, he argues, are able to fund the cultural and community resources that help build a healthy democracy, and their philanthropy helps ensure that voters are better informed than they otherwise would be.
Better still, McGinnis argues, the rich are particularly likely to bring a pro-freedom perspective to democratic debates. Citing examples from the Koch Brothers to Elon Musk, McGinnis argues that the wealthy “have incentives and the self-image to put the virtues of the market system before the public,” and turn it in a more libertarian direction.
That’s certainly a pleasant thought. Economic freedom is an essential value of American democracy (which, after all, was basically established by small businessmen fed up with being over-taxed). Libertarians and conservatives have often longed for a world in which business owners can stand up for their rights against demagogic politicians who seek to raid the pockets of the productive to buy political power for themselves. In her 1957 novel Atlas Shrugged, Ayn Rand even envisioned the world’s industrial titans leading a revolution to vindicate every person’s right to personal and economic liberty.
But the reality is quite far from Rand’s—or McGinnis’—fantasy. Historically speaking, the wealthy have not tended to be vigilant champions of liberty, but a mix of idealists and opportunists, of brilliant and foolhardy, of malevolent and benign, just like the rest of mankind. And while, like everyone else, they have something to contribute to democratic society, there’s no evidence that the rich as a whole are more likely to secure the liberal values McGinnis seeks to defend.
On the contrary, even Adam Smith observed in The Wealth of Nations that business leaders “seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” What he meant was that such leaders are driven by rational self-interest to seek ways to protect their market share against potential competition from outsiders—at the expense of liberty. This can take the form of anything from tariffs to occupational licensing laws, all of which make it harder for new startups to enter the market. This is not because they’re uniquely sinister—on the contrary, they’re nearly always sincere in thinking their pet schemes are somehow good for the public. But economic success is so hard to attain and easy to lose that those who rise to the top tend to desire stability. And stability is anathema to the free market, which is by definition dynamic.
In an unhindered market, consumer desires can shift on a whim, transforming yesterday’s behemoth into tomorrow’s bankrupt. Just ask Blockbuster or Woolworth’s or A&P. That’s why big business is typically an enemy of laissez-faire, and is often the loudest voice in favor of regulations and restrictions which, although couched in consumer-protection language, actually “stabilize” the market in favor of themselves by blocking new competition. And even if that weren’t so—even if, as McGinnis naively claims, “today’s wealthy individuals” are “likely to have interests that align with innovation and disruption”—they’re legally obligated as corporate managers to preserve corporate advantages—which are not served by free market “disruption.”
Take the 1933 National Industrial Recovery Act (NIRA)—a federal law that empowered the nation’s largest companies to impose “codes of fair competition” on entire industries, setting minimum prices and imposing unnecessarily demanding quality standards. NIRA was deadly for small businesses. In the tire industry, for example, large companies like Firestone and Goodyear adopted a “tire code,” enforced by the federal government, that barred tire manufacturers from charging low prices. Given their domination of the market, the code had little effect on Firestone and Goodyear, but it wrecked smaller companies whose only hope of competing lay in charging less. The same thing happened to every industry in the country, as corporate lobbyists proceeded to create cartels governing everything from the production of chickens to the prices that mom-and-pop laundries could charge for pressing suits. Nearly all the nation’s industrial and agricultural leaders supported this cartelization precisely because arming themselves with the state’s power to exclude competition enabled them to improve their bottom lines. And with the notable exception of Henry Ford, none of America’s tycoons resisted NIRA in the name of “innovation and disruption.” Instead, they got on the bandwagon.
Or consider a more recent example: the International Interior Design Association (IIAD), a trade organization that lobbies for licensing requirements for interior designers—that is, state laws that require you to get government permission before you can advise someone on what color drapes to put in their living room. It’s hard to imagine a more harmless business, yet the IIAD—funded by influential interior-design businesses—has managed to persuade itself (and several states) that these licensing requirements somehow protect public safety. In truth, they only protect existing designers against potential competition, who can thereby raise their prices.
Such examples give little confidence that the wealthy in general are supporters of free markets. But while McGinnis considers this objection, he dismisses it in a few blithe sentences that reflect a startling combination of overconfidence and fallacious thinking. “Such suppression of competition is unlikely in the context of a dynamic commercial republic that thrives on innovation,” he writes, because “a commercial republic naturally generates diverse interests—different factions—that do not align on policy. This diversity of interests helps prevent any single group, including the wealthy, from monopolizing power and stifling competition.” Maybe so, but that begs the question, because “diversity” and “innovation” are exactly what existing business owners often try to destroy by colluding with government to impose legal restrictions so that they can “monopolize power.” It’s true, as McGinnis writes, that “the constant threat of market disruption disciplines corporate bureaucracies”—that’s just why corporate bureaucracies try so hard to persuade government to halt that very disruption, by stifling liberty. His sole argument to the contrary brings to mind the old joke about the man who, told a crime has just taken place, refuses to believe it because “that would be illegal.”
McGinnis’ argument therefore ends up in a “motte and bailey” fallacy. That term describes an argument in which someone argues for point A (a sensible and easy to prove point) and then claims that it establishes point B—a more dubious proposition which doesn’t actually follow. Point A is McGinnis’ argument that the rich have something to contribute to democratic debate. True enough; so do we all. But far harder to prove is point B: that the rich are likely to be committed to substantive liberal values like economic liberty, constitutional government, or freedom of speech. Some surely are; Charles Koch, for example, has long drawn the curses of the left due to his support for economic freedom and private property. But for every such example, there are a dozen counterexamples. Andrew Carnegie and John D. Rockefeller helped fund the Prohibition movement and the Comstock Act. Millionaires and Hollywood stars fawned over Benito Mussolini. The Astors and Vanderbilts underwrote socialist journals such as The New Masses. And the Roosevelt and Kennedy families—wealthy champions of big government for generations—aren’t exactly known for supporting free markets.
There’s an old legend that F. Scott Fitzgerald once told Ernest Hemingway, “The rich are different from you and me”—to which Hemingway replied, “Yes, Scott: They have more money.” Hemingway was right. The wealthy, en masse, are still just people, with the same strengths and weaknesses, virtues and vices, as the rest of mankind. Do they play a role in democracy? Obviously. Are they likely to defend freedom? No more, and no less, than the rest of us.
