How Obama’s “Gentry Presidency” Undermines American Exceptionalism

by Michael Kaplan

The always insightful Joel Kotkin has written a piece on the crisis of Barack Obama’s “gentry presidency.” This is Kotkin’s term for the progressive blue model of politics and society and the technocratic elite at its head. Obama, Kotkin argues, has governed largely as the creature of the progressive leaning financial elites of Wall Street and their allies in high technology, real estate, the media, and academia. The whole thrust of the Obama administration has been to promote policies that benefit these blue model elites in both the private and public sector at the expense of the Jacksonian middle class. This is why Obama has not focused on job creation for his first two years in office. His policies, especially the focus on green technology, health care reform, and bailing out Wall Street, have not promoted and have often hindered middle-class entrepreneurship and small business development. But the Jacksonian middle class was never this president’s base. After all, these were the people he denounced as bitter clingers when he thought he was off the record at that San Francisco fund raiser in 2008. President Obama’s base lies instead “with the rising power of the post-industrial castes,” the new upper class that David Brooks called the bobos, “who have largely continued to flourish even through the current economic maelstrom.” Indeed

the major winners of the Obama years have been the big nonprofits, venture capitalists and, most obviously, the financial aristocracy. These have all benefited from the Ben Bernanke-Timothy Geithner—previously the Bernanke-Henry Paulson—policy of cheap money and near zero-interest rates, which have depressed the savings of the middle classes but served as a major boon to Wall Street. This has benefited mostly the wealthiest 1 percent, which owns some 40 percent of equities and 60 percent of financial securities.

This may come as news to many conservatives who insist that Obama is engaged in a campaign of demonization of Wall Street, business, and upper-income earners in his quest to transform America into a European-style social democracy. Progressive commentators, on the other hand, have become downright hysterical in accusing “their” president of betraying the hope that they placed in him, throwing the middle class under the bus in service to Wall Street’s plutocrats. Kotkin goes on:

These developments, as Marxists might put it, reflect the fundamental contradictions of gentry liberalism. Essentially, gentry liberalism reflects the coalescing interests among the financial, technological and academic upper strata. For these people, the Great Recession was brief and ended long ago. All depend heavily on high stock prices to maintain their wealth. Their interest in the overall U.S. economy—particularly the Main Street grass roots—has become ever more tenuous with their increasing ability to shift assets to East Asia and other developing country hot spots.

These prerogatives have been neatly protected under Obama. In the past, administrations let corporate scofflaws, like the savings and loan companies, collapse. Some were sent to jail.

But this time, the Wall Street elites have been allowed to skate through their own self-created crisis with astounding agility. Not only have they stayed out of the slammer, but they have been enjoying the best of times.

Chrystia Freeland has written of how this new elite of plutocrats and technocrats feels an ever lessening sense of common destiny with the Jacksonian middle-class majority of Americans. The plutocrats in particular—the hedge fund managers, high tech entrepreneurs, and media celebrities—feel a closer kinship with their counterparts in Europe and Asia than they do with their less successful countrymen. Freeland characterizes these new elites as “hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition—and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly.” As for the middle class, the view from on high was best expressed by the Taiwanese-born CFO of an American Internet company who told Freeland that Americans simply did not produce enough value to justify the standard of living they had come to expect. “So if you’re going to demand 10 times the paycheck, you need to deliver 10 times the value. It sounds harsh, but maybe people in the middle class need to decide to take a pay cut.”

Such attitudes, should they become more widely disseminated in the public discourse, would certainly shift some of the Tea Party’s anger at big government toward big business. Indeed Kotkin has written that the rise of the new global elite is generating a new global class war of which the August riots in London may be the harbinger. The Tea Party and similar right-wing populist movements in Europe, Kotkin argues, grew “in large part out of the conviction that the power structure, corporate and government, work together to screw the broad middle class. Left-wing militancy also has a class twist, with progressives increasingly alienated by the gentry politics of the Obama Administration.” Jacksonians have historically feared crony capitalism, collusion between big government, big business, and big finance. This is true of Andrew Jackson’s Bank War in the 1830s and of the Tea Party’s condemnation of Wall Street bailouts today. Sarah Palin, in tones reminiscent of Jackson’s 1832 Bank Veto Message, on September 3 in Iowa issued a powerful warning of the threat posed by crony capitalism to the health and survival of the middle class and of American democracy. Kotkin, likewise, offers this warning of the continuing power of class conflict in human affairs that conservatives ignore at their peril:

Many conservatives here, as well as abroad, reject the huge role of class. To them, wealth and poverty still reflect levels of virtue—and societal barriers to upward mobility,  just a mild inhibitor. But modern society cannot run according to the individualist credo of Ayn Rand; economic systems, to be credible and socially sustainable, must deliver results to the vast majority of citizens. If capitalism cannot do that expect more outbreaks of violence and greater levels of political alienation—not only in Britain but across most of the world’s leading countries, including the U.S.

In reality there is no contradiction between Obama’s gentry politics and his larger goal of transforming America into a European-style social democracy. Europe’s social democracies are controlled by the same elite of technocrats and plutocrats that Obama champions. Just think of Dominique Strauss-Kahn: financier, socialist, and womanizer. Obama’s policies are promoting a form of crony capitalism or coporatism where the government picks winners and losers in the private sector, which is a stepping stone to some form of, if not socialism, then a much larger role for government domination in the economy and civil society than Americans are historically accustomed to. From this perspective then Obama’s rhetorical assault on millionaires, billionaires, and corporate jet owners, calling on them to pay their fair share of taxes, is just smoke and mirrors meant to disguise his real policy agenda from progressive true believers and the American public.

Barack Obama does not believe in American exceptionalism. So it should not be a surprise that the gentry policies of his presidency have undermined the basis of American exceptionalism: independent small property ownership. “Overall,” Kotkin concludes in what I find his most disturbing passage,

gentry rule has fostered a sense throughout the American public of national decline and diminishing personal expectations. Small property ownership, the key to a democratic capitalist society, is fraying. Wall Street’s Morgan Stanley, for example, having helped create the housing crisis, now talks boldly of a “rentership” society.

This would extend the dominion of Wall Street and large landowners, like feudal lords, over the last redoubts of small property owners.

It would also mark a disastrous reversal of four hundred years of American history. American exceptionalism began in seventeenth-century Virginia and New England with the dream of independent small property ownership—of patriarchal landed power—by families of modest means. The richness of the land in the New World allowed such modest households to produce surplus harvests for their own material profit and benefit. This in turn gave them the economic resources for a degree of social assertion and political power unimaginable in hierarchical England. These families of modest means with their freehold farms created British North America’s society of independent households, bound together in strong self-governing communities, which became the basis of American democracy and the American middle class. The nature of small property ownership changed over the course of American history—the Jacksonian homesteader on his farm became the Jacksonian home owner in his suburb—but the dream of independence through property ownership remained. Small property ownership is the bedrock of liberty and the heart of American exceptionalism. It would be a historical tragedy should the independent property-owning American be reduced by twenty-first-century globalization and “gentry liberalism” to the bondage from which his ancestors came to the New World to escape.

© 2011 Michael Kaplan