THE word "plutocracy" is in the air these days. Some say the era of the de facto rule of the mighty top 10%, or top 1%, or whatever insidious sliver of the income distribution is thought to constitute the moneyed power elite, is upon us, or nearly so. I'm not so sure. I am sold on the proposition that there's something deeply whacked about the American financial system, and that whatever that's whacked about it is significantly responsible for the top 1% pulling so far away from the rest of the income distribution. This needs to be fixed, whatever its other consequences. It's not clear to me, however, what exactly is whacked. I don't know whether to sign up for Tyler Cowen's "going short on volatility" story, Daron Acemoglu's "financial-sector lobbying and campaign contributions 'bought' an enriching (and destabilising) regulatory structure" story, or some other story. No doubt the truth is in some subtle combination of stories. In any case, accounts such as Mr Acemoglu's, according to which big players in certain sectors over time manage to rig the regulatory climate to their advantage, are quite compelling for reasons both theoretical and empirical. Yet I remain sceptical of the widespread progressive idée fixe that the super-duper wealthy constitute a coherent political bloc, unified by common interest and ideology, that works to rig the politico-economic system to their narrow class advantage. The evidence clearly shows that the rich have more and better access to politicians than the rest of us, and that their money gives them more influence. What is not so clear is the overall policy thrust of all this access and influence.

As Reihan Salam notes in a thought-provoking essay in National Review:

There is no denying that Americans in the top 0.01 percent of the income distribution have more potential for political influence than those earning $150,000. This influence is channeled through campaign donations and also through charitable giving, particularly to nonprofits devoted to shaping the ideological environment. Just as the Koch brothers have donated to various libertarian causes, their opposite numbers at the Ford Foundation, Atlantic Philanthropies, the Soros Foundations, elite research universities, and countless other lesser-known organizations have devoted themselves to providing intellectual support for the expansion of the welfare state. It is very difficult to tease out which side has had the most cumulative influence over time.

Indeed, it is difficult to know what the top 1% want. Evidently, as Mr Salam suggests, they don't all want the same things. We can expect the filthy-rich CEO of market-leading Widgets and More, qua CEO, to support policies which, in various ways, benefit Widgets and More at the expense of its competitors. However, most policy has no clear effect on the widget biz, and what our CEO wants from policy, qua citizen of the republic, is hard to say. At present, there is no good data on the policy preferences of the very rich, though a survey project headed by Benjamin Page and Larry Bartels, political scientists at Northwestern and Princeton, is now underway and promises to be revealing. A recent paper by Mr Page and Cari Lynn Hennessy, a Northwestern University PhD candidate in political science, nicely explains why it is important to better understand what the rich really want policy-wise:

If the preferences of the affluent are much the same as those of other Americans, it presumably makes little practical difference whether or not they exert disproportionate political power, because they exert it for the same ends sought by the citizenry as a whole. On the other hand, if the policy preferences of the affluent differ markedly from those of others, this could have major effects on what sorts of public policies are enacted and how our political system should be judged. For example, if the affluent pursue their own narrow economic self-interest through politics, the results could be damaging to democracy. They might use their political power to thwart policies favored by majorities of Americans—perhaps opposing progressive taxation, regulation of the financial system, or spending programs that favor low- and middle-income citizens. On the other hand, if affluent Americans—in the tradition of Progressive-era reformers and the philanthropic activities of Bill Gates, Warren Buffett, George Soros and others—actually tend to be quite concerned with the common good (perhaps even more concerned than others are), the implications of their political power are quite different. While not particularly democratic, disproportionate political power of the affluent might actually produce benefits for society.

Recent research using relatively rough-hewn income categories so far offers little by way of evidence that the preferences of the relatively wealthy are at odds with the rest of the electorate.

In their book "Degrees of Democracy: Politics, Public Opinion, and Policy", Stuart Soroka and Christopher Wlezien, political scientists at McGill and Temple, find that policy tends to track public opinion fairly closely, and that there is generally little difference between the preferences of voters in the lower, middle, and upper third of the income distribution. Income-based differences in policy preference are greatest, however, on issues clearly related to inequality, such as welfare spending and taxation. But on these issues, for which there is a relatively large gap in preference between lower- and upper-income voters, there is practically no gap between middle- and upper-income voters. And, of course, the middle-class is where most voters are. If the wealthy want what the middle class wants, a tendency among policymakers to cater to the wealthy will look a lot like a tendency to cater to the median voter. If it turns out the similarity between the preferences of high- and middle-income voters is merely coincidental, we might reasonably worry that this happy confluence will diverge down the road. But if these similarities reflect a further similarity in, say, level of educational attainment, the overlap in high- and middle-income preferences may be relatively robust. This may be cold comfort to low-income voters who disagree with the middle-upper consensus, but that's democracy. The minority does not prevail.

All this sounds nice enough. Our democracy, it would seem, actually works pretty well. But what about oft-successful corporate favour-seeking? The CEO of Widgets and More, a product of America's elite, thoroughly left-leaning universities, may yearn for social justice and take to the nation's opinion pages to plead for higher income-tax rates, for heartier estate taxes, and more generous progressive redistribution. But business is business, and anti-competitive subsidy-seeking is part of business. The public doesn't know or particularly care about the regulatory environment within which competitors in the widget industry vie for advantage, so public opinion can hardly rule. If there is a whiff of plutocracy in the American system, it is here, in the shadows of public ignorance and indifference, where the political business of politicised capitalism is conducted. Moreover, the dramatic growth of executive-branch power has made regulation decreasingly a matter of C-Span-able legislative-branch policymaking and increasingly a matter of bureaucratic fiat. The revolving door between business and government revolves for a reason. Connections in the EPA, the Treasury, the DoD, the NRLB, etc, or a lack thereof, can kill or clinch a firm's future. Corporate influence on policymaking need not work through electoral channels at all. It can work through a single phone call to a dear old friend.

Now, it's important to remember that corporate favour-seeking is a negative-sum game in which wealthy people mainly screw over competing wealthy people—a far cry from a conspiracy of the rich against the rest of us. But the cumulative effect of all this piecemeal, competitively anti-competitive rent-seeking—of all the major firms in all the economy's sectors constantly seeking a government break here, a government boost there—can be a comprehensive regulatory climate that appears for all the world as if it were designed by the executive committee of the top 1% for its exclusive benefit.

When the data is in, Messrs Page and Bartels may surprise us and report that the richest of the rich are actually a band of saints concerned above all with the commonweal. As voters, the highly-educated super-wealthy may have a better bead on policy in the public interest than the rest of us, as well as more admirable other-regarding motives. Their donations to think tanks and universities may reflect a sincere desire to promote good ideas. It may all be true! But would discovering this matter? Would it really lay to rest our concerns? Because so what if the mega-rich mean to do right by the rest of us when they step into the voting booth or write a check to the Center for American Progress? Then we'd know that the altruism and goodwill of the top 1% clearly does not rule out the power of bureaucrats and politicians to make and break fortunes. We'd know that the incentives facing our saintly executives, who take with all due gravity their duty to look after the interests of their creditors and shareholders, nudges them to run their businesses in ways that over time create and consolidate a political economy at odds with their admirable personal preferences.

If it turns out that the road to plutocracy is paved with co-opted political discretion, and not the selfish wishes of the conspiring super-rich, we'll need to consider carefully what to do about it. The good news is that democracy works reasonably well. Policy does tend to reflect majority public opinion if the public is paying attention to the right things and knows what it wants. The bad news is that the public isn't paying attention to the right thing, and I fear the way we have been talking about inequality and plutocracy isn't helping.