Yesterday the stock market edged up again, with the Dow Jones Index cruising once more toward record highs. This ought to be good news for Republicans entering the presidential season. But is it really? Although Republicans are loath to be candid on this point, a surging stock market really does disproportionately help the rich and the super-rich. The accompanying growth in income inequality is a big, ripe target for a John Edwards, a James Webb, a Barack Obama, and others who want to frame the next election around themes of rich versus poor.
For a Republican party that wants to attract the votes of Bill O’Reilly’s “folks,” extremes in income inequality aren’t getting easier to defend. Private equity deals are now roaring through Asia, often enriching a relatively small handful of the American financial elite. Until Republican politicians know how to speak with confidence about globalization, capitalism, and wealth creation, Democratic calls to punish the rich can be made without fear of rebuttal.
Even with Robert Rubin and Gene Sperling whispering in her ear, Hillary Clinton, with her hand firmly on the pulse of her pollster, remains likely to join the economic populism gang. In 1996, with Ross Perot breathing down his neck, Bob Dole, a life-long trade advocate, suddenly started talking about trade restrictions and offering second thoughts on NAFTA. There is no reason to believe Hillary is more principled.
Of course, it is not clear what exactly the economic populist proposals will consist of. A new tax on the super-wealthy is probably an inevitable plank of their platform. But in his State of the Union response, Senator Webb spoke about how much more a CEO makes than an average worker. Will he unveil a proposal, beyond raising taxes, to fix that?
What aspiring Democratic and Republican presidential candidates alike should bear in mind is that the evidence of whether class warfare “works” as an electoral strategy is mixed. A much-cited paper by a group of Columbia University professors shows it is not easy to assume that wealth or perceived inequality determines voting preferences.