The Ruling Class Hates You
You Have Too Much Freedom, Say America’s Elites
The power elite really does hate you.
What Hillary Clinton said in 2016 about “deplorables”? Or Barack Obama said in 2008 about “bitter” people who “cling to guns and religion”?
Well, here’s the state of play today…
The Committee to Unleash Prosperity — an outfit formed by conservative econo-wonks like Steve Forbes, Arthur Laffer and Stephen Moore — recently hired the Rasmussen polling firm to conduct a survey.
The objective: to learn how attitudes among “the top 1%” contrast with those of the hoi polloi.
The results are unsurprising… and yet, astounding.
The sheer contempt that the power elite holds for folks in flyover country is on full display, loud and proud.
Before we get into the numbers, we’d better get our definitions straight: Who are “the top 1%” here?
According to the Committee to Unleash Prosperity’s report, “The elites are defined as those having a postgraduate degree, a household income of more than $150,000 annually, and living in a zip code with more than 10,000 people per square mile. Approximately 1% of the total U.S. population meets these criteria.”
Rassmussen made a point of surveying not just this elite group, but everyday Americans as well — to unearth any potential contrasts in attitudes.
Hoo boy, are there contrasts.
Get a load of this pie chart taken directly from the survey write-up — on the question of whether Americans have too much individual freedom.
It gets better — or worse. Here’s a question about “strict rationing” of electricity, gas and meat. (Admittedly the construction of the question is sloppy: Does “gas” refer to natural gas or gasoline? Then again, maybe it doesn’t matter…)
On and on it goes…
- Between half and two-thirds of elites seek to ban gas stoves, gasoline-powered cars, SUVs and “non-essential air travel” — in contrast with just one in four everyday folks
- Two-thirds of elites say education professionals should decide what kids should learn (with minimal input from, you know, those pesky parents); only 38% of regular folks feel that way
- 70% of elites trust the government to “do the right thing most of the time” — more than twice the average of everyday people.
OK, you get the idea. The whole survey is here if you want to read it and weep.
Revealing as all of this is, we have a quibble with the methodology here.
The problem isn’t “the 1%” as defined by the Committee to Unleash Prosperity. The real problem lies with “the 15%” as defined by George Orwell.
In the Oceania of Orwell’s 1984, the Party made up 15% of the population. About 2% belonged to the Inner Party, while the other 13% belonged to the Outer Party. The remaining 85% were the proles.
Several years ago, I observed that Orwell’s power structure has been more or less replicated in our own country and our own time.
According to a 2013 report from the McClatchy newspaper chain (Miami Herald, Kansas City Star, etc.), the number of Americans with some level of “access to classified material” is about 5 million.
At the time, the U.S. population was 312 million. So about 1.6% of the population was privileged to have “access to classified material.”
That’s your present-day Inner Party.
The Outer Party consists of… well, many people identified in the survey commissioned by the Committee to Unleash Prosperity, but also a large coterie of people who fall outside the Committee’s definitions by one measure or another.
Maybe they lack a graduate degree. Or they’re still young and just below that $150K income threshold. Or, most likely, they live in places like Atlanta or Phoenix or Seattle or Minneapolis — none of which meets the population-density threshold. Nonetheless, they share those elite attitudes.
We conclude with this unsettling thought…
“Orwell’s division of labor and power,” observed journalist Sam Smith in 2012, “was almost precisely replicated in East Germany decades later, where about 1% belonged to the General Secretariat of the Communist Party, and another 13% being far less powerful party members.”
East Germany, with its infamous Stasi secret police, was the ne plus ultra surveillance state of the pre-internet era. Helluva model to be following in the “Land of the Free,” huh?
Inflation and the Fed: Good News, Bad News
On the eve of a Very Big Week for the U.S. stock market, the Commerce Department is out this morning with the Federal Reserve’s favorite measure of inflation.
“Core PCE” for December rang in slightly less than expected. By this yardstick, inflation is running 2.9% year-over-year.
On the one hand, that’s the lowest since the spring of 2021. (It peaked at 5.6% in February 2022.) On the other hand, it’s still nowhere near the Fed’s 2% inflation target.
The Fed issues its next proclamation on interest rates next Wednesday. It’s all but guaranteed the Fed will hold the fed funds rate at 5.5% — but Wall Street and the corporate media will obsess on whatever Fed chair Jerome Powell hints at during his press conference. Will the Fed cut the rate in March? Or will it wait till May or June?
Also next week, we get earnings numbers for four of the “Magnificent 7” companies — Microsoft, Alphabet (Google), Amazon and Meta (Facebook). To no small extent, it’s been the Mag 7 powering the S&P 500 to record levels in the last week. The other 493 stocks in the index have been laggards.
If both the Fed and the Mag 7 disappoint… could be a rocky week on Wall Street as January moves into February.
But that’s next week: For the moment, the S&P is on track to notch a record weekly close, even if it ends today in the red.
At last check, the index has barely budged from yesterday’s record daily close of 4,894. The Nasdaq is likewise little moved, while the Dow is up a quarter-percent.
Precious metals continue to languish, gold at $2,018 and silver at $22.80. Bitcoin is back above $41,000.
For the record: A reliable recession indicator continues to flash a warning light.
The Philadelphia Fed State Coincident Index crunches four employment figures from all 50 states and puts the result on a scale from plus 100 to minus 100.
Since 1980, anything below plus 50 has signaled the onset of a recession — and it’s been below that threshold for four straight months now.
The survey turns up weakness in 22 states — worst of all in Massachusetts, West Virginia, Montana, Vermont, New York and Michigan.
Red Sea Shipping Crisis: China to the Rescue?
Crude is set to end the week over $77 for the first time since November — as Joe Biden’s foolhardy war in the Red Sea goes from bad to worse.
Maybe you saw a news item about how U.S. warships launched more missile strikes against the Houthi faction in Yemen on Wednesday. And maybe you saw how the Houthis launched an attack on an American-owned container ship, the M/V Maersk Detroit. U.S. Central Command says one missile landed in the water, and Navy ships intercepted two more.
Missing from most accounts of the latter incident is this: The missile that landed in the water came within 100 meters of the M/V Maersk Detroit — eluding the interceptors of the warship USS Gravely. The Gravely was escorting the Maersk Detroit, as well as the Maersk Chesapeake. The convoy had to turn around, abandoning its plans to transit the Red Sea.
“Was this operational plan inadequate?” tweets the Armchair Warlord account at X. “Almost certainly — reading between the lines, it reeks of a complacent assumption that Houthi missile batteries had actually been suppressed by a few rounds of air raids and that a single Aegis destroyer could handle anything the Houthis could throw at them with no need for additional contingency planning.
“In the event neither of these assumptions were correct — and because of it a convoy covered by one of the U.S. Navy's premier warships retreated from a battle that was going badly.”
And with that, the Biden administration is hoping China will save its bacon.
For real. “The U.S. has asked China to urge Tehran to rein in Iran-backed Houthi rebels attacking commercial ships in the Red Sea,” says the Financial Times. “Officials have repeatedly raised the matter with top Chinese officials in the past three months.”
Indeed, National Security Adviser Jake Sullivan is taking it up again today at a meeting in Thailand with China’s foreign minister Wang Yi.
So far, the response from Beijing has been, uhhh, cool. Back to the FT story…
On Wednesday, the Chinese foreign ministry said Beijing was calling for a stop to “disturbance to civilian ships” and had “been in close communication with various parties and worked actively to alleviate the tension in the Red Sea.”
However, in veiled criticism of the U.S. and U.K. attacks on the Houthis, the ministry urged the “relevant parties to avoid adding fuel to the fire,” adding that the U.N. Security Council had “never authorized the use of force by any country on Yemen.”
The Red Sea tension was also a “spillover” from the Gaza conflict, which should be ended as soon as possible, the ministry said.
Yep. As internet entrepreneur Arnaud Bertrand tweets — echoing your editor recently — the Gaza conflict is “something the U.S. could end tomorrow if it finally dared to use the considerable leverage it has with Israel.
“But no… crazily enough they’d rather go through the humiliation of begging their main geopolitical rival to bail them out out rather than rein in Israel.”
“Hi Dave, I imagine you are going to receive a lot of hits for raising this issue,” a reader writes after Wednesday’s “Doomsday Clock” edition.
“Personally, I found your writing in the piece to be thoughtful, informative, insightful, interesting and well worth reading.
“The hippies of my youth were wrong about many things, but they got one thing right. We really do need to 'give peace a chance.' Let's hope we do that very soon.”
Actually, I didn’t take any hits. Indeed, another reader chimes in: “I don’t write in often, but I want you to know I support your message. You’re doing it just right!”
And a third: “Thank you to Dave Gonigam for bringing up this most important issue of the potential for nuclear war and the violent and incredibly damaging results that can potentially ensue.”
“What insanity,” adds a fourth — addressing specifically the bizarre public service announcement (“You’ve got this!”) produced by the city of New York.
“I can't believe New York could put out such nonsense (on second thought, I can). It's as bad as some newsletters touting how to profit from WWIII.
“I'm reminded of a poster I once saw titled ‘What to do in case of a nuclear attack.’ It gave the following instructions: ‘Remove your glasses, loosen your tie, bend over and kiss your a** goodbye.’"
Dave responds: At this stage, the military analyst William Schryver pegs the likelihood of nuclear conflict as remote: “I strongly doubt any of the great nuclear powers are suicidal. At least not yet.”
That said, “ANY detonation of a nuclear weapon against a Russian target will be automatically regarded, by the Russians, as a nuclear first strike by the U.S./NATO” — even if it’s a tactical nuke detonated by a rogue actor.
“Therefore, providing Ukraine with nuclear weapons would be tantamount to intentionally provoking a full-scale nuclear counterstrike.”
Near as we can tell, no one in the White House is talking seriously about such a step. Thank God for small favors…
Mailbag Bonus: When Politics Intrudes…
“LMAO — these lefties are all the same,” a reader writes as reaction continues to pour in after the final item of our mailbag on Tuesday.
“First tell — the obvious lie about being a ‘I am a Reagan Republican in Alabama.’ And then the heavy threats and name calling as ‘right wing.’ Non-lefties will just unsubscribe and move on.
“Keep up the great work!”
On the broader subject of whether there’s an increasingly “political” tilt in Paradigm Press’ output (and this e-letter in particular), we hear from a longtimer…
“I’ve been reading for over a decade, and you’ve often been accused of being partisan (amusingly, for both sides, depending on who you upset). I liked the common response that The 5 was ‘apolitical’ and that ‘we ignore politics at our own peril’ but I think I see more of a rightward slant lately.
“I saw it earlier in Emily than in Dave. But now that you have confirmed that your readership is responding to it better, I don’t think the shift was my imagination. Anyway, this isn’t a ‘cancel my subscription’ letter. I still enjoy what you do.”
Dave responds: At my instigation, we had a looong discussion about this topic at our weekly editorial meeting on Wednesday.
Afterward, publisher Matt Insley wrote the following to members of our Omega Wealth Circle, and it’s worth passing along here…
The fact is, our team shares their honest research and analysis — without an artificial need to be ‘fair and balanced.’
It’s also a fact that Washington and Wall Street are more intertwined than they’ve been in a long, long time.
So we won’t apologize for being ‘too political.’ Instead, we’ll follow our research to its logical conclusion — even if those conclusions are out of step with the mainstream.
I hope you’ll keep that in mind as the election draws nearer. And we’ll continue ferreting out the stories no one else is telling.
Me personally, I will keep my focus here on the economy and the markets. But where politics intrude — as they so often do — I won’t hesitate to point that out. (Guess today’s issue is as good an example as any, huh?)
All the same, under no circumstances will I pander to the Trump-right-or-wrong crowd. I never have before, so why would I start now?
Have a good weekend,
Managing editor, Paradigm Pressroom's 5 Bullets
P.S. I guess I shouldn’t let this pass going into the weekend: Also from Will Schryver…