Why Silicon Valley, Wall Street and Hollywood Now Rule

Power in America is shifting from George W. Bush’s Sun Belt mafia -- with its roots in post-1950s aerospace, energy and development -- to a new political triad: a handover of control from one oligarchy to another.

This new triad draws its power from three key postindustrial power centers: technology, entertainment and finance. Its geographic orientation is different as well. Rather than having its primary bases in boomtowns like Houston, Dallas, Charlotte or Phoenix, the new elite clusters mostly in the more established, refined reaches of Silicon Valley, Hollywood and Manhattan.

Nowhere is this shift more notable than in the extraordinary attention given to these power centers by the leading presidential candidates, particularly among the ascendant Democrats. A generation ago or even less, Democratic presidential hopefuls spent their time soliciting union bosses, African-American dignitaries, urban machine politicians and others who, for all their faults, had close personal ties to the party’s electoral base.

This shift has been accelerated because of the need for money to finance early primaries in large states. Today, aspirants Hillary Clinton, Barack Obama and John Edwards spend much of their time parading in something that resembles a Renaissance pageant for aristocrats, courting fabulously wealthy grandees and their entourages.

Republican hopefuls John McCain, Mitt Romney and Rudy Giuliani, of course, have also scoured the same turf for support, but it’s the Democrats who increasingly attract the bulk of triad money.

How much things have changed in the past few decades! Hollywood once split its loyalties carefully among the parties; its only president came from its right. Now, as much as 80 percent of its largesse flows to the Democrats. The schism between Obama supporter David Geffen and those hanging tough with Clinton is important, not only because of how it reflects Hollywood’s endemic pettiness, but because much of the party, instead of regarding these wealthy prima donnas as deluded minstrels, now treats them as enlightened policy gurus.

Not long ago, Silicon Valley was a bastion of middle-of-the-road Republicans. But as power once vested in industrial firms like Hewlett Packard has shifted to software and Internet-based companies, high-tech politics have shifted both left and dark green. The rising powers of the 21st-century Valley, firms like Google and eBay, generally don’t worry about trifles like groundwater regulations or factory emissions since they don’t manufacture anything. Nor do they worry much about labor laws, because their own employees tend to be young, well-educated and well-compensated. This makes it easier to curry favor with enviro-friendly, left-leaning politicians like former Vice President Al Gore.

Perhaps most important of all have been the changes on Wall Street, which now stands as one of the predominant sources of funds for federal office-seekers and related political action committees. Long the bastion of the old Republican establishment and a backer of Bush in his two presidential runs, Wall Street in 2006 gave more money to the Democrats, and that trend seems to be accelerating. Not surprisingly, the battle to be Wall Street’s anointed that rages between Obama, who has support from No. 1 Wall Street political contributor George Soros, and Clinton, has emerged as perhaps the most crucial contest between them.

How did this corporate power shift occur so quickly and dramatically? To a large extent, the answer lies in the utter failure of Bush and his administration. Bush came to office with the support of a Sun Belt elite that drew its wealth and power from the great economic surge west and south after World War II and for nearly a quarter-century dominated American political life

Donors from this group of businesses propelled the careers of such substantial figures as Arizona’s Barry Goldwater, and California’s Richard Nixon and Ronald Reagan. Arguably, their final triumph, helped by the demographic shift to the South and West, lay with Newt Gingrich’s 1994 congressional takeover by the GOP.

Back in the late 1970s, founding fathers of the Sun Belt power grab, such as oilman Henry Salvatori and Litton Industries founder Tex Thornton, shared with me their conviction that the old Eastern establishment lacked the power and conviction to lead the country. They felt America needed to be guided by more vital, more clear-headed leaders. Economic malaise of the Jimmy Carter years, as well as the perception of America’s weakness both against the Soviet Union and terrorist states such as Iran, lent credibility to these beliefs among a large part of the public.

Backers' Credibility Gone

Like most successful elites, these leaders possessed a relatively coherent agenda. It centered on gaining a free hand over the nation’s natural resources, a low-tax economic policy and support for a strong national defense. The divisive moral agenda, particularly helpful in wooing working-class and Southern voters, was grafted on later but was never widely embraced by the right’s corporate funders.

Bush’s disastrous tenure has pretty much destroyed his backers’ credibility on all three issues. High energy prices and shifting climate-change politics have decimated the traditional agenda of oil and gas companies. An uneven and poorly shared economic expansion has convinced many middle-class erstwhile conservatives that Bush’s low-tax, pro-business policies do not really work for them. Finally, the catastrophe in Iraq has undermined support for the overt, aggressive national defense policy long supported by Sun Belt conservatives and their defense industry allies.

Indeed, even if Republicans hold on to the White House in 2008, the old Sun Belt agenda seems likely to wane. Republicans on Wall Street, Silicon Valley and Hollywood, however personally profligate, are making a great show of embracing green technologies. They would also be likely, particularly given both elite and popular attitudes on social issues, to eschew a candidate with too close an association with the religious right.

Once they recover from their post-Bush euphoria, however, traditional liberals should realize that the ongoing power shift does not necessarily signify the rise of a populist agenda. The wealthiest fifth of Americans are now equally likely to be Democrats or Republicans, a shocking shift from the nearly 70 percent Republican cast of this same quintile just two decades ago. The "party of the people" increasingly now must appeal as much to the affluent as the working-class voter.

This development parallels the emergence of the ultrarich of the triad, who increasingly serve as Democrats’ ideological, as well as financial, vanguard. The modern Wall Street grandees may be socially enlightened and environmentally concerned, but they are not necessarily advocates for the middle class. "When candidates suck up to Wall Street," former Clinton Labor Secretary Robert Reich suggests, "watch your wallets."

More Fiscally Conservative

In fact, triad economic policy, which reflects the views of the new ultrarich and of figures such as former Treasury Secretary Robert Rubin, would likely follow a more fiscally conservative course than Bush’s supply-side agenda. Don’t expect either significant tax cuts for the middle class or bold infrastructure spending programs that could create both employment and new opportunities for small entrepreneurs.

Some middle-class Americans even could find that the new crusade against global warming may be waged at their expense. They can expect higher energy costs and perhaps increasing movement of energy-reliant jobs to Third World countries that have more concern for making cash than of ridding themselves of carbon. Unlike Gore or Wall Street traders cruising to work in hybrid limousines, these middle Americans cannot salve their consciences by trading "carbon offsets," or make a killing by investing in environmentally acceptable technologies or fuels.

One upcoming focal point may be a rise in electricity prices, such as the one that is likely to occur from the proposed buyout of Texas utility TXU. This $32 billion deal may well be a harbinger of things to come: a combination of a Wall Street financier, in this case Kohlberg Kravis Roberts, a deal widely celebrated by the media and backed by the political might of the environmental movement.

Internationalist Tilt

The bad news, some Texas regulators and legislators fear, is that the takeover, with its proposed cancellation of new coal-fired plants and its pile-up of new debt, could result in massive increases in energy costs. Financiers and the often well-to-do environmentalists might rejoice, but it’s not likely that the average residential user or the workers in Texas’ energy-dependent industrial firms will feel the same way. Other potential problems could evolve over trade and economic policy. The new triad tends toward internationalism and has few problems seeing jobs and opportunities move to China or elsewhere.

There is a sense among many in these elite industries that their generally well-educated employees are safe; at any rate, a Google or a Goldman Sachs has a smaller employee base to protect and draws from a much thinner sociological strata than a General Motors, a Honeywell or even an Intel.

By nature, such elite firms are less directly connected to everyday working Americans than even the most callous old bosses, and they don’t often have the same personal ties to the burgeoning cities to which the new middle class now is migrating. Due to their access to top talent from both here and abroad, they also do not have to cope with the most extreme consequences of America’s highly dysfunctional secondary-education system.

As a result, it may prove difficult for them to realize that policies that promote prosperity at the very top of the global food chain do not necessarily benefit middle America.

Over the next decade, the success of the new triad will rest largely on its ability to advance its agenda without grossly harming the rest of population. Now that Bush’s backers in the Sun Belt crowd have tried and failed, it will be fascinating to see whether their ostensibly more "enlightened" successors can blaze a more durable path to long-term political success.

A version of this article first appeared in The Arizona Republic.