John McGinnis
Subject: How the Rich Improve Our Democracy
Bio: Constitutional Law Professor at Northwestern Law School and Author of Democracy Needs the Rich
Transcript:
Larry Bernstein:
Welcome to What Happens Next. My name is Larry Bernstein. What Happens Next is a podcast which covers economics, politics, and history. Today’s topic is How the Rich Improve Our Democracy.
Our speaker is John McGinnis who is a constitutional law professor at Northwestern Law School.
John please begin with six minutes of opening remarks.
John McGinnis:
I would like to talk about my book Democracy Needs the Rich. It has three big ideas.
First, democracy does not need less elite influence; It needs countervailing elite influence. Representative democracy is never a system of equals. The real question is whether the influence of the rich on the top of the influence of other elites improves our political order. My core claim is that it does.
The rich are not the only group with outsize influence, and they are not the most influential. Journalists shape the short-term agenda, academics shape the long-term agenda, entertainers shape the culture that flows into politics, and bureaucrats shape the day-to-day operation of government. These people are the modern clerisy who lean sharply to the left.
It is not whether democracy will have powerful elites. It always will. The issue is whether one powerful and relatively homogeneous set of influencers will enjoy uncontested sway. The rich help prevent that.
This is the Madisonian point. In politics, liberty is preserved not by pretending power disappears, but by pitting ambition against ambition. The wealthy provide a crucial counterweight to professional influencers. They help make our democracy an open exchange of ideas not an echo chamber. They act like a lever amplifying the voice of the many against the concentrated power of the few. Counterbalancing both the intelligentsia and special interests. They help one of democracy’s great virtues, which is it is open to contestation.
Second, what makes the rich useful is their independence. The wealthy are not valuable because they are superior. They are valuable because they are freer. Influencing public debate is not their vocation, but they have the independence and resources to pursue influence as an avocation. That difference matters. The rich are not ideologically uniform. They come to wealth through varied pasts that create varied perspectives. And the rich are less shaped by gatekeepers than the clerisy is.
Consumers do not screen for ideology in choosing a new product or service. The rich thus have less power than professional gatekeepers of opinion to exclude those with unorthodox ideas from joining their ranks. In academia, by contrast, professors decide who gets tenure. In journalism, editors and institutions decide what counts as respectable opinion. The wealthy are less bound by those insular processes. Their financial independence also means they don’t need to curry favor with colleagues.
Wealth checks conformity, and that independence has democratic uses. The rich can fund institutions that break ideological monopoly. They can support causes that are broad and diffuse but hard to organize. They can back unpopular unfashionable ideas as they did with abolition and civil rights. They can support excellence against democratic mediocrity through their support of the arts. They can resist the paternalistic drift towards soft despotism as they do in calling out our fiscal crises. The point is not that every rich person is wise or good. The point is that a free society works better when no single elite has a monopoly of prestige, resources and voice.
Third, in America, the rich matter even more because ours is a commercial republic. They are not simply a pile of money. They’re often the engine of innovation. They widen prosperity by seeing what others miss, new combinations of talent and tools, better uses of existing resources, new ways of coordinating work. And they bear the uncertainty of trial and error. They often fail. When they succeed, most of the surplus of innovations go not to them but to consumers in lower prices, better quality, greater variety, and new capabilities.
In the digital age, these have even greater effects. A billionaire and a member of the middle class now enjoy relatively equal access to the wonders of the internet. What once required private libraries, chauffeurs, and privileged access can often be summoned on a phone. Ideas and information can be shared without diminishing their value. That changes the meaning of inequality. Technology equalizes production not just consumption. AI tools and digital platforms widen access to skill formation.
It is a mistake to imagine the rich in a dynamic capitalist republic are an entrenched oligarchy. In a static society, that fear made sense. But in a vibrant commercial republic, technological change and entrepreneurial churn constantly create new fortunes, new entries and new entrants. The wealthy remain an evolving group, not a closed caste. The same technology critics often fear democratize speech and opportunity by weakening old gatekeepers.
These are the three big ideas: The rich are Madisonian counterweight to other elites. They are a reserve of independence. And in a commercial republic, they are a relentless engine of innovation whose effects often broaden opportunity and democratize access. That’s why I argue that the rich are not democracy’s contradiction, as many argue. At their best, they are its collaborators. The reserve of independence that checks conformity, the counterweight that steadies the scale against rival elites, and the restless engine that helps renew our liberal democracy generation after generation.
Larry Bernstein:
John, what is the argument in opposition to your thesis?
John McGinnis:
The argument in opposition is that the rich have too much influence. They have greater influence than the ordinary citizen and that they will use this influence to entrench their power against the forces of democratic change.
Larry Bernstein:
Does Citizens United come out of that concept?
John McGinnis:
Yes. Citizens United is a poster child for that concern, even though it is a widely misunderstood case. The rich before Citizens United could spend as much as they wanted on elections that was the decision in Buckley v. Valeo. All Citizens United said was that all people could contribute to corporate forms to influence elections and issues. Citizens United was a little more democratizing because it allowed people even with small amounts of money to come together and collectively influence elections as they did in Citizens United, which was a group of upper-middle class people wanted to organize and say what was wrong with Hillary Clinton. So, Citizens United is completely misunderstood, but I do think it is a symbol for those who have that concern.
Larry Bernstein:
Where do we stand today as it relates to election finance from a constitutional and practical perspective, are there limits on money and speech?
John McGinnis:
Contributions to political candidates are sharply limited because of the fear that there will be a quid pro quo. The amount that can be contributed is $7,000. But increasingly, what’s important elections is not contributions but independent expenditures. I can create a PAC or spend money on my own so long as it’s not coordinated and say, “We should elect this candidate, or we should advance this issue.” I think that is correct decision because we do not limit the amount of money the press or others spend on getting out their messages.
So, it will be a strange world where we allowed only a portion of the elite the media and academics who could spend as much money as they wanted setting up their platform and use that to influence politics. The court is correct in saying that while money is not speech, all speakers necessarily use money to set up platforms to create their messages.
Larry Bernstein:
Fundamental to the purpose of your book is that the rich have been demonized and that needs to be reconsidered.
John McGinnis:
I do not think the rich would perform the same function in a dictatorship if they did not earn their money through commerce if they were just given their money by the state.
My argument is limited to a democratic market society, or at least the greatest virtues of the rich come out of that kind of society. To answer your question. One, the rich have always been a target because of envy. People have the illusion that money is going to make people happy, and they would be delighted to have some of it themselves and redistribute the money to them. That has been around forever.
Another issue in our society is this conflict among elites because insofar as the rich are confined in politics, that does not mean the influence goes to the average citizen. Most people are rationally ignorant of politics. It does not make sense for them to spend time on it because they’re not going to have much influence, but there are other big centers of influence: the media, entertainment, academics, and these people gain more influence if the rich are confined and limited.
That influence goes in an ideological direction because while the rich have very varied perspectives, what I call the clerisy in the book do not. I am an academic, we have around 10:1 Democrats to Republicans. Journalists are close to that. And the entertainment world is even more lopsided than that. So, there is an ideological reason that this is a way for the left to control public opinion.
Larry Bernstein:
Campaigns cost a lot more money than they have historically. A congressional election may require $10 million on both sides. They raised this money predominantly from wealthy people to articulate a message to a broad audience. The rich are funding more voice to get out the vote and make a case to a much larger audience. To the extent that the money is spent on arguments, on education, on persuasion, does that even further dilute elite influence? The rich are paying for this but they are doing it in a way that engages the public.
John McGinnis:
They are engaging the public has great benefits. Of course, campaign ads are often not what an academic would consider an articulate view of policy, but nevertheless, people have shown the more money that is spent, the better people can place a candidate on an ideological scale. And that is an advantage because then people know more about the candidates than they otherwise would. That is a virtue of democracy where the government spends so much money. We have a lot of money spent on elections, but it pales in comparison to the amount of money we spend on advertising junk food. Given a world where the government disposes of so much money and makes so many decisions that are important to our liberties, it behooves us to know where our candidates stand. The rich are helping people know where that is and a more informed vote.
Larry Bernstein:
Mancur Olsen, a British economist, wrote a classic work The Logic of Collective Action that highlighted the influence of special interests to stymie or undermine what the broader public wants. An example is the role of teachers’ unions to control school policy to maximize teacher compensation instead of the interests of the student. How do the rich act as a countervailing force against special interests that differs itself from other groups?
John McGinnis:
That is a great example. People across the country think education is the most important issue. The rich have been in the forefront to improve K-12 education, and the rich have a whole variety of suggestions. Some support vouchers and others charter schools. Still others like Mark Zuckerberg and Lauren Powell Jobs have tried to improve traditional public schools from within. They have spent billions of dollars and that gives us improvement in education and leads to a competition of ideas.
John Dewey famously said that democracy is governance through trial and error. And one of the things the rich do is they expand the choice set because they offer different ideas that government does not fund, and then we evaluate them.
The rich fund these ideas and fund studies to evaluate these ideas. And that is the only way we see progress in public policy is through evaluating public policy. Education is the best example of how the rich help improve our education and make it more effective as opposed to other industrial democracies.
Larry Bernstein:
The City of Miami Beach recently did a $159-million-dollar bond deal, and the proceeds were used to fund charitable organizations within Miami Beach like museums and the symphony. What seems problematic to me is that the city government may not be the best allocator of money to charitable institutions. If instead the money came from wealthy locals, they would get on the board and oversee the spending of their hard-earned money to make sure that it is spent wisely. There may be real agency costs by having government officials between the money and the spending. How do you feel about the application of your insight of the rich to charity?
John McGinnis:
That is exactly why government is less effective. I think you are absolutely right about that it allows one to differentiate between public goods what direction we need to go and therefore where agency costs can be extremely high. I completely agree with your pushback.
Larry Bernstein:
A friend of mine just joined the board of the symphony. He wrote a check to join, and he hopes he can contribute real ideas. Right next door to the symphony in Miami Beach is a for-profit theater. I just saw a David Byrnes concert there, place was sold out. When you are making money, there is no role for outsiders. It’s only when the institution can’t support itself, is when the rich are called in to help.
John McGinnis:
That’s right. And they perform an important function. It is one of the worries that goes back to Tocqueville, is that democracy may not create a culture of greatness. Most people do not take time to focus that leads to mediocrity. In areas like symphony and art museums, you need people who are passionate about it, who have the time to be prospectors for the sublime. And those are often wealthy individuals. They perform a function creating a culture of national greatness. That is what they have always done creating art museums, and great architecture that would not pay for themselves and become part of the country’s great treasures.
Larry Bernstein:
Can you end on a note of optimism about the role of the wealthy to improve democracy?
John McGinnis:
This is a timely book because of the attacks against the rich today. I think the rich are misunderstood. They are more independent and can inject those views into the body politic. That is valuable because we want to have diverse pluralist views with the great masses of people in democracy choose among the views.
What is worrying is if we do not hear different voices and the alternatives to the influence of the mainstream media, academics, and entertainment world. They marginalize ideas that the public needs to hear. The rich give us public goods, charitable goods that the government do not provide. And they are an engine of our commercial republic creating goods that make middle class people’s lives much more like the rich today than they were in the 18th century. Let me just end on this note. I often reflect how lucky I am. What if I had been born in the 18th century and had been an Oxford Don? My life would have been extremely different from a duke’s, much less pleasant in all respects.
But when I compare my life to some billionaire, we spend our lives in much similar ways. I am middle class, but I have access to the same information they do. I have a car. I have access to essentially the same healthcare. And that has been because of the great engine of our commercial republic that is, in large part, spurred on by the wealthy.
Larry Bernstein:
Thanks to John for joining us. If you missed it, I am doing a series of podcasts on the war in Iran.
The last podcast topic was Allies Fighting Together with Yaakov Katz who is the former Editor in Chief of the Jerusalem Post and the author of While Israel Slept about the 10/7 massacre.
Yaakov explained how the US and Israel are fighting in a way that is significantly different from our previous wars.
Before that I did a podcast entitled What Will Define Success and Failure in the Iran War with Hal Brands who is a Professor at Johns Hopkins. Hal discussed our war objectives and ways to improve our negotiating position.
I also did a podcast on the Opening the Strait of Hormuz with James Holmes who is a Professor of Maritime Strategy at the US Naval War College.
I had a podcast on Fine Tuning the OODA Loop: Observe, Orient, Decide, Act Loop to Win the War in Iran with Israeli Brig. Gen. Eran Ortal. He explained how the American and Israeli military have moved their command center to the battlefield so that the Iranian targets can be destroyed before they have time to react.
We started the series with former Trump National Security Advisor John Bolton about what steps we need to take to win the war.
You can find our previous episodes and transcripts on our website
whathappensnextin6minutes.com. Please follow us on Apple Podcasts or Spotify. Thank you for joining us today, goodbye.
Check out our previous episode, Allies Fighting Together, here.
