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- [00:00]
A
Foreign. Welcome Back to the 10 Blocks podcast. This is Brian Anderson, the editor of City Journal. Joining me today is John McGinnis. He's the George C. Dix professor in Constitutional Law at Northwestern and he's been a longtime contributor for City Journal. He has a new book coming out next month from Encounter, and it's called why Democracy Needs the the Hidden Benefits of Wealth in a Free Society. The book grew out of a 2021 City Journal essay, but it arrives at a moment when hostility to wealth has moved, one can say, from rhetoric to governance. John, thanks very much for joining us.
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B
Delighted to be here and thanks for giving this book it start.
- [00:57]
A
BRIAN now, it's probably fair to say that it's always been fashionable to complain about the rich in democracies, but the attack on the wealthy in our political discourse, I think has intensified recently and not just symbolically. The progressive left has pursued substantive policies animated by hostility to wealth accumulation and inequality. A socialist, or at least quasi socialist agenda has propelled some politicians to national prominence. AOC for sure. And now most recently, of course, New York City's brand new mayor, Zoran Mamdani. So as you see it today, John, what's driving this resentment of wealth? Is it simply old fashioned envy? Is it concern, legitimate concern over too extensive inequality? You know what's going on exactly. And does the current moment differ in any meaningful way from earlier bouts of anti elite politics, we could call it?
- [01:55]
B
I think you're right. There's always been envy of the rich and that is part of the background of all of these attacks. What's driven this is the sense on the left that the rich are creating a structure in which the left doesn't control as it has all of the heights of the media, the academics, even the entertainment world. I think it's important to understand that from the very beginning of democracy, democracies, far sighted analysts of democracy recognized that there would always be leaders in democracy and they talked about it. Cole, Samuel Coleridge talks about it as the clericy. These are essentially the symbolic class, the thinkers. They're going to be the leaders in democracy, leading people on. And it's turned out that these leaders have rather homogeneous views than they lean strongly to the left and they've leaned even more strongly to the left over time. Academics, it's 20 to 1, left to right in political science, other humanities. In entertainment it's even larger than that. In the media it's overwhelmingly left. The rich pose a problem for the clericy because not because they're all so conservative, but because they have a broad range of views. And so they break the monopoly of the left on these sectors. And recently the rich have actually started to move into these sectors. For instance, Musk buys Twitter, creates a whole new media sector. Bari Weiss, even after this book is published, is enabled by takeover of Paramount to take cbs. And again, it's not because he's so conservative, but she's not a traditional left leaning person. And so I think this is really about the fear of the left that the rich are going to break down the overwhelmingly left wing dominance of the heights of what we might the conversation of democracy, which doesn't only come from the media, but comes from entertainers and from academics. And so what they want to do is hobble the rich so they can maintain this quasi monopoly they have.
- [04:16]
A
Interesting. Yeah, that seems very plausible as an account of this kind of new intensity. I wonder substantively, how are you defining wealthy or rich in your account? Are you talking about a specific threshold or income level or is this more of a functional category? People who control capital, let's say, and make long term economic and cultural decisions?
- [04:39]
B
Yes, I think that it's more that of course it's hard to have a clear definition. But we're talking, I think about, as I say in the book, about people with at least $50 million. $50 million. Those are actually the people who are being targeted by wealth, taxes and things. And of course as you get wealthier, that people can do more. An essential aspect of wealth is independence. And that's very important in democracy for to have people who are independent of their need for even connections, immediate connections with other people, because they can actually stand up for the voiceless. And one of the things I articulate and talk about in the book is how often it has been the wealthy stand up for the minorities abolitionist movement because they can take it on the chin, as it were. And moreover, they're able actually to produce public goods that sometimes democracy is unwilling to do. They're very important in the environmental movement, as you know. They're very important in school reform. And the reasons for that is they're not beholden to special interests, which political scientists recognize as a real problem in democracy, because most people, individuals really don't have any incentives to go against the special interests like teachers unions or bureaucrats. And the rich have both the independence to do that and they have the resources. And so they promote a variety of reform schemes. And it's important to understand these are not only right wing schemes. The rich have a very wide variety of views, unlike academics and you see that in something like environmentalism or in school reform. Some are for in school reform or for vouchers, others for charter schools. Some want to give more money to more traditional public schools. And what they do share, again, sometimes unlike the clericy, they like results because actually that's where they come from. They come from a world where results matter. You can't talk yourself out of bankruptcy. And so they actually evaluate what happens. And that's very important for democracy because democracy really moves by trial and error. And they're creating many more trials of different proposals than we would actually see if we just relied what the legislature would do. And so that's very valuable.
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A
You noted before that the media, the academy and the federal bureaucracy are all kind of dominated by progressive worldview. And that the pluralism, let's say, of worldviews among the wealthy is actually more wide ranging. That's an important point. I don't think people fully understand that.
- [07:25]
B
Yes, I think it is very important. It leads to a lot of confusion because people are sometimes actually surprised why Republicans, for instance, are not more enthusiastic about preventing the rich from donating in elections. Because they point out some of them, well, actually Democratic donors who give a huge amount of money. But the difference is that it makes more difference to Republicans because the clericity is totally against it. And so this at least gets their message out. That's what makes the rich more valuable to Republicans than Democrats. Not because there are not a lot of Democratic in politics, not because there are a lot of Democratic donors, very large donors, but because otherwise the conversation would be wholly dominated by the clericy.
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A
Entrepreneurs have played a fundamental role in American history and that remains true today. Quite importantly, that roughly 2/3, I think you say, of the Forbes 400 were individuals who built their own businesses. They're self made in the American sense, in other words. So with all of this renewed anti wealth rhetoric in our politics and culture, I wonder, do Americans still understand that basic fact? Or has the story of how wealth is often created been lost?
- [08:39]
B
I think they do understand it. I think ordinary Americans understand it. Again, I think the clericy is more motivated by power. They certainly should understand it because it's not only that their 2/3 are essentially self made. In other words, they don't have comfort from large inherited wealth that's becoming larger over time. In other words, the first Forbes 100 actually reflected more inherited wealth than the current Forbes 400. And I think there's an important reason for that. It's the rise of tech. Tech is changes the world much Faster. And so there's much more change among the rich. I mean, Bill Gates is no longer even, I think in the top 10 because new tech people have overtaken him. And that shows the fluidity of the rich. And that actually in my view suggests there's less problem from the rich today than there were in classical times. It was classical. Political philosophers said, well we're a little worried about the rich because they're a static class. And they were essentially a static class. They really got their money from land. And that didn't change very much over time. Today actually the rich in some sense are an anti oligarchical force because tech produces new rich people and they actually have a new perspective, a slightly different perspective on society each generation of rich people. So it's actually a renewing force in society rather than an oligarchical or entrenching force. And I don't think that point is well understood.
- [10:08]
A
I wonder if we could make this a little more concrete from a policy perspective. You have measures like wealth taxes as we see being proposed in California, aggressive inheritance taxes being proposed, punitive capital gains regimes. These kind of things are justified as ways to democratize the economy and curb elite power. I wonder what do you think the future holds in terms of the likelihood that such policies will be imposed and what will be the result?
- [10:37]
B
Well, it's hard to know the likelihood. Although as you point out, the California referendum attempt to have a referendum to actually take 5% of everyone's, every billionaire's wealth in California, claiming just we'll do it once. Though of course once you do it once, the temptation is to do it a lot more times. I don't know what's going to happen at the moment. I look today at poly markets, it says it has a 50% chance of passing. And that's it. That's it. That really would be dramatic difference in the kind of incursion on wealth I think be different from anything we've seen in American history. Moreover, it comes at a moment when these wealthy and because it's largely aimed at Silicon Valley, these tech titans are essential for American productivity. But it's national security AI and this reflects often what the rich do is not just a private good. In other words, it benefits more than the consumers and the firms that produce it. It's essential to our national security. We're in an AI race with China and if we don't win that race, our national security will be at risk. Moreover, AI has potential benefits for climate change, for disease. So it's an example of and it's all being coordinated by ultra wealthy people, by Musk, by Altman. The government can't produce this potentially by startups. This kind of wealth tax is a real problem because you have actually illiquid wealth in startups that if you, the government takes a good deal of its wealth away, you're going to have much more trouble producing your products. So I see this as, oddly enough, a kind of, at least if it continues a kind of national security threat because the rich are so important in creating public goods generally, but particularly this public good of AI. So there's a real, it's not an abstract danger, it's a particular danger because of what AI means for American society today.
- [12:41]
A
You wrote in the past about the effects of technological advance on the legal profession. You wrote an essay for us about that. I think you also wrote a book that looked at technology and democracy. I wonder though if the anxiety over job displacements that some people say are coming with AI is fueling some of the anti wealth sentiment and sometimes rage that we're seeing in the culture.
- [13:07]
B
That's possible. One wants to recognize that there well may need to be government subventions to help for transitions. I'm not one of those people who at least think for the next 20 or 30 years we're going to see jobs disappear. That's not the history of technology. The history of technology is for technology to create new but different kinds of jobs. And that's sometimes a transitional problem for society. But that could be one of the concerns, I think self defeating to attack the rich as a way of addressing that. Because these technologies are going to come in in any event. And one of the things I think we can expect the rich to do is to provide philanthropy to think about how to address these problems. Because one, one issue is politicians need ideas. They're actually not so much in the idea business, but in the getting elected business. And one of the things, the left gets ideas from universities, but the right really depends on think tanks like the Manhattan Institute, like AEI to produce various ideas to deal with social change. So again, I think it's self defeating to attack the rich because their philanthropy is very unclear exactly what ideas are going to be optimal to deal with the transition to an AI society. And I'm quite confident we'll see wealthy, wealthy people of all political persuasions at the front of funding people who are going to think about that.
- [14:38]
A
One of the arguments left progressives make about philanthropy is that it wouldn't be necessary in a truly redistributive Society. I wonder what your response is to that claim. And what role does private wealth play that state redistribution can't easily replace?
- [14:55]
B
Well, it can't easily replace it because the government is a bureaucratic entity and it's afraid of taking risks. Just as entrepreneurs take long shot risks, so do philanthropists. And that actually expands the range of possibilities dramatically. We don't know what's going to work. On the other hand, governments are rather risk averse. If it goes badly, may be blamed by the public. So that's one big advantage of philanthropy. And I look in the book about how important the wealthy have been in philanthropy over time. Not only producing important public goods and new ways, for instance, of dealing with. We now have is a homeless crisis in some cities, but also funding private associations as well. Because one problem we face, Tocqueville talks about the importance of private associations to America. But one problem we face is there's so many distractions today. Private associations have had some difficulty and private money can replace that a bit, make private associations even more attractive for people to participate in. So those are kind of things government really cannot do. I'm not saying that philanthropy is a substitute for the welfare state for people who can't provide for themselves, but it provides all sorts of ideas that the government just is not going to do because it's more nimble, it's more risk taking, just in the way that entrepreneurship is.
- [16:21]
A
Speaking of city life, you mentioned cities. You know, these debates are no longer abstract in an urban setting. Now in cities like New York, we see political movements that are openly hostile to capital, profit, high earners, yet often at the same time those cities are struggling with stagnation, the homelessness problem you mentioned disinvestment, declining tax bases. You know, what does your argument suggest about the relationship between wealth, which has often been concentrated in cities, urban vitality, and effective city governance?
- [16:53]
B
Well, the book doesn't focus on cities per se. I think what it would suggest is that the rich are extremely important to cities because they again, and one thing I do point out, if you look at many of the great amenities of New York, a lot of them are at least private public partnerships, and some are all built largely by private money. The museums, all of what makes a city distinctive, are funded in large part by the rich. The museums, the cultural life of the city. I mean, after all, if you don't have that in New York City, why live in New York City? It's more expensive, it's more hectic, it's harder to get to work, and the rich are an essential part of that. And the government just can't replace that. The government isn't going to be able to figure out. Are you going to have a bureaucratic committee figure out what should be the new paintings in the museum? Are you going to have a government structure deciding what we're going to put on in theaters and things? That would be really quite dangerous, I think, for freedom of expression. I think you can see cities in some sense are a test case for the importance of philanthropy in their production of public goods in the city are really what make the city distinctive and worth living in. You could write a whole book just about that. That's not this book. This touches on it briefly. Over time, cities have been made great by the public spirit of their wealthy individuals that could not be replicated by some government bureaucracy. And that's true not only in New York City. It's been true since the Italian city states.
- [18:35]
A
Final question, John. And it's a way of steel Manning really the other side for a moment. Are there real pathologies associated with concentrated wealth that a healthy, vibrant democracy should be worried about? And if so, how would you distinguish sensible guardrails from the kind of wealth hostile politics you criticize in this book?
- [18:56]
B
I think the real guardrails with respect to the rich are not so different from the guardrails that you need otherwise in healthy democracy. What you need is a lot of disclosure of what people are doing with respect to the government. You need a lot of strong conflict of interest rules. That's not only the rich, but of course of unions and other people who might actually use the government for their own purpose. And you need also in some sense, limitations on government action. I don't mean that you don't prevent government from acting, but you force government to act slowly and deliberately. So you make sure that it's very hard for some small group of people. And again, it could be rich people, it could be special interests to take over government. So in some sense, I think it's really. I agree there's always a risk that wealthy concentrations of wealth will take too much power in government, as other interest groups might do so. But the essential recipe for preventing that is the recipe for good government, which means open government, deliberate government, and government with some substantial limitations. I want to say that this book is not a argument that the rich shouldn't pay progressive taxes. That's not the argument of this book. It comes up against the background of arguments that really the rich are, as people say, just the billionaire is a policy mistake that in my view is a terrible mistake. The ultra wealthy actually do important have important functions in democratic life and they improve it in ways that we can understand and I try to describe thank.
- [20:37]
A
You very much for this discussion. The book by John McInnes. It's called why Democracy Needs the the Hidden Benefits of Wealth in a Free Society. It's going to be published a little over a month from Encounter Books from when we're recording this, so it'll be out in February. John's writing for City Journal, including the piece that helped give rise to this book, is available on our website, so check out his author page. He often writes on Chicago for us in a very illuminating way. We'll link to it in the description and if you've liked what you've heard on today's podcast, please give us a rating and share the episode. Thanks for listening and John, thanks very much for coming on.
- [21:14]
B
Thank you so much, Brian.
- [21:16]
A
Thanks for joining us for the weekly 10 Blocks podcast featuring urban policy and cultural commentary with City Journal editors, contributors and special guests.