Alec MacGillis’s article on why hedge fund managers have turned fiercely against President Obama has deservedly gotten a lot of attention (especially this thoughtful commentary from Rich Yeselson, to whom the hat tip). I take MacGillis’ main point to be that hedge fund managers’ fury is based more on self-image than on self-interest. It’s not just that the hedge fundis resent being asked to pay more taxes, though they do. It’s that they think that they themselves are grand and wise people by virtue of having created vast fortunes from modest beginnings, and the President has made clear that he doesn’t.
The vanity of the super-wealthy is not a new point. But the nature of that vanity deserves more attention. I think most of us fail to realize the extent to which hedge fund managers reverse the causal reasoning that most of us use to justify capitalism. For most people, the vast wealth of entrepreneurs is justified (if at all, or conditionally, or partially, or whatever) because their wealth drives a productive economy: it creates jobs, lifts people out of poverty, erodes distasteful ascriptive hierarchies. The few billionaires at the top, however, see it to a great extent the other way around: the capitalist system is to be praised because it makes possible fortunes like theirs.
Adam Smith scholar Ryan Hanley, writing in the latest issue of Society (no paywall, AFIK, though that may change), makes a striking point about why academics don’t appreciate capitalists. It’s not that we professors uphold, as a group, any particular anti-capitalist ideology but that the language capitalists speak, the values by which they justify themselves, doesn’t impress the kind of people who choose to enter academe:
In defendingÂ capitalism businesspeople are thus prone to argue that it isÂ ethically valuable insofar as [it] a) …affords everyone the opportunity to become wealthy; and b) allows individuals toÂ remain wealthy insofar as it protects their right to use their wealth as they will. Now, however legitimate suchÂ arguments may or may not be, seen as a means of persuading professors they are deeply flawed, insofar as they appealÂ to a set of values simply not held by most academics. PutÂ bluntly: few academics are rich, and even fewer, one suspects, chose to enter academia in the hopes of becoming so.
In this sense, self-selection serves to determine academics asÂ a group that simply doesnâ€™t much admire wealth. That itselfÂ is significant; if true, it may mean that the academic attitudeÂ to the pursuit of wealth is less due to moralistic sneering orÂ even envy and resentment than to simple factors of groupÂ selection. … [A] degree of relative personal indifference to wealth seems to define academics ratherÂ broadlyâ€”and indeed pro-capitalist academics nearly as muchÂ as anti-capitalist academicsâ€”and … there exist legitimateÂ explanations for this indifference that do not require recourseÂ to some theory of academic attachment to rival ideologies.
What jumps out from MacGillis’ article is the dynamic that Hanley traces, though I’m much more explicitly critical of it than Hanley is. The hedge fundis think that capitalism is great because it gives rise to meritocratic success stories like them. Beyond thisâ€”and Hanley leaves this part out, perhaps because it’s so distastefulâ€”they think that theyÂ are great because they themselves embody such success stories. And what might seem to us like imperceptible tax increases seem to them like direct insults. Their net worth proves, as it were, their net worth. And the President, in aiming at their bottom line, is threatening the personal quest that defines their lives.
Now, what’s true of academics is equally true of our president. As Yeselson points out, he could have chosen to make millions but preferred to work for peanuts as a community organizer, and later for walnuts (by hedge-fund standards) as a law school lecturer. Obama is hardly very “academic” if that means an attachment to abstract or impractical ideas. But he is very much an academic in dissenting from Ted Turner’s dictum, “life is a game and money is how we keep score.”
The hedge fundis are delusional if they think they can win this argument (except through buying the debate hall, indeed their plan). As MacGillis points out, they live in a very odd bubble in which everyone flatters them and nobody questions the superior worth of their opinions. But outside that bubble, most Americans neither know what such people think nor care. And most citizens’ attachment to capitalismâ€”real enough, to hard-core progressives’ dismayâ€”is based on the first kind of causal explanation I mentioned: wealth for the few is fine because it drives the larger system, not the other way around. Think of how difficult Romney’s defenders find it to explain why Bain Capital has been good for America. They’re not so much unable to make arguments based on efficiency and suchâ€”see this by Reihan Salamâ€”as very, very unused to having to make such arguments. Where they come from, Romney’s wealth doesn’t need justification. It isÂ the justification.
Obama is hated in hedge fund land not because he says anything particularly radical but because he speaks common sense to people who don’t commonly hear it. Â Literal meritocrats, who think their hard-earned wealth entitles them to dictate terms to the rest of us, hedge fundis erupt in existential rage when faced with a president whose relative indifference to wealth comes with a quiet, unremarkable attachment to democracy: who thinks each one of these capitalist titans is worth only one life, one voice, one vote.