Strategic Insider – 29 November 2006 – William Rees-Mogg
An American friend remarked to me recently: “Of course, the Republicans have most of the millionaires, but the Democrats have most of the billionaires.” I think he probably had George Soros in mind, though he might also have been thinking of Mr. Lamont, who won the Senate Primary against Senator Lieberman in Connecticut, only to lose the run-off. Mr. Lamont is the grandson of a Morgan partner, lives in Greenwich – that village of billionaires – and has made his own pile. I suppose that one would now expect a New England billionaire to hold liberal views, particularly if the family fortune was based on old money. After all, the Harrimans became liberal Democrats, and if the Harrimans can be liberals who would not be? Even Nelson Rockefeller was a liberal Republican, and some of the Rockefellers have been Democrats.
This is important in political terms. The point about billionaires, even low-scale billionaires, is that they are very rich. Any properly invested billionaire expects an annual 10 per cent return on his money, either from the growth of his own business or from well managed hedge funds. That means that a family which is worth $1 billion has an income of $100 million. Quite how it happens I do not know, but billionaires do not pay a great deal of tax. In the 1970s, I remember telling a mere multi-millionaire how much of my slender income as a journalist went in tax. He was horrified. “If they got as much as that out of me, I would be ruined.”
Anyone who has a $100 million a year can afford to finance a political party out of income. There are about 1,000 billionaires in the United States, or closely related to the United States. Even if we suppose that the Democrats only have the support of a quarter of them, and that they only have $1 billion each on average, that means that the liberal billionaires have a total capital of $250 billion and a presumed income of $25 billion. If they want to back a political cause, they are not going to run out of the cash to do it.
Modern political campaigns are becoming more and more extravagant. Modern electronic data processing is expensive; those repulsive attack ads cost a lot to make and a lot to display. Yet the money is never going to run out. Nor will the laws which limit campaign contributions ever be effective in stopping the funding. The First Amendment guarantees freedom of speech – and that includes, as it should, the freedom of George Soros.
People worry that this will be an unfair advantage to rich conservatives. They do have an advantage. In total they must have more money than the liberals, and they probably always will. But nowadays the American people, or at least some people, have an awful lot of money. There will always be enough liberal billionaires to fund a Presidential campaign provided they are prepared to put their hands in their pockets and take out their wallets.