Wealth Creators vs. Protectors

The Washington Times (Washington, DC), September 3, 2004 | Go to article overview

Wealth Creators vs. Protectors


Byline: Richard W. Rahn, SPECIAL TO THE WASHINGTON TIMES

A major reason the liberal elites so hate President Bush is the policies he pushes will reduce their power and influence. Sens. John Kerry and Edward Kennedy, Massachusetts Democrats, claim they are the protectors of the little guy and the middle class. Yet their proposals are designed to protect the elite like themselves who inherited rather than created wealth.

Much of the evidence comes from institutional financial consultant, Criton Zoakos, head of Leto Research. Mr. Zoakos reviewed opinion polls of voting behavior and noticed a most interesting relationship between voting preference and share of wealth. Starting with the basics, Mr. Zoakos noted: "Opinion polls suggest that Sen. John Kerry enjoys the overwhelming support of voters self-designated as 'upper class.' These comprise 4 percent of all voters."

In the 2000 elections, this elite group voted 56 percent for Al Gore and 39 percent for George Bush. Mr. Zoakos also noted that in 2000, self-designated "working class" (18 percent of voters) and "lower class" (2 percent of voters) supported Al Gore by 51 percent and 46 percent for Mr. Bush.

Mr. Bush did have a small majority of voters who defined themselves as "middle class" in the 2000 election, and recent polls indicate his "middle class" vote base has strengthened.

What is not well known (and contrary to the liberal media myth) is that wealth in America is becoming less concentrated, not more so. According to an extensive study by Professors Wojciech Kopczuk of Columbia University and Emmanuel Saez of Berkeley, published by the National Bureau of Economic Research in June, the share of wealth owned by the top 1 percent of Americans has dropped by half over the last 80 years (37.61 percent in 1920 to 20.79 percent in 2000).

Over the same period, the drop in holdings owned by the top 0.1 percent (tenth of 1 percent) was even sharper (10.07 percent in 1920 to 3.90 percent in 2000).

This drop in relative wealth holdings by the richest was more than offset by a rise in middle-class wealth holdings. It also appears from the Forbes Magazine data that the 400 richest Americans in recent years have also increased their relative share of the pie of the top 1 percent.

Thus, many in the top 1 percent feel squeezed, not absolutely, but relatively, by the rise of the middle and entrepreneurial classes on both flanks.

The very wealthy can be divided into two distinct groups - those who by their own skills, hard work and some luck created wealth and jobs, and those who were lucky inheritors of wealth. The Kerrys and Kennedys of the world, who owe their inherited fortunes to the hard work and risk-taking of others, tend to look down and fear the "noveau riche," forgetting that their own ancestors were once "noveau riche" or worse.

It is the conflicting economic interests between those who perceive themselves as upper class (by virtue of inherited wealth) and those who perceive themselves as middle or entrepreneurial class, which largely accounts for their different political choices. …

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