The Origins of "Champagne Socialism"

"Champagne Socialism" or "Limousine Liberalism" are derogatory terms that are usually used to describe upper class people who are ardent supporters of left-wing causes. What's interesting is that the terms are used by people on both the political right and left, in both cases to showcase a sort of hypocrisy to these leftist causes. I should note that, while the terms are usually used interchangeably, "liberalism" and "socialism" are by no means identical, and in a second I'll talk about how I'm going to define things for this article.

This concept has really intrigued me for awhile due to its seemingly inherent contradiction. After all, it's something of a stereotype that rich people in the United States are, by and large, right-leaning. Indeed, in this article from 2012 there is a clear crossover point at around $75k annual income where voters begin to vote majority Republican (it's not a large majority though, there are still about 45% of high income earners that vote Democrat). This makes sense due to the very business-friendly and tax-friendly policies of right-wing politicians. It also makes sense that more impoverished people would be fans of left-leaning policies, since they would theoretically benefit from them.

I have no problems with either of these cases; they are acting in their own self interest, and I can't say that I wouldn't do the same thing if I were in their position. But why on earth would a rich person want left-wing policies that would, theoretically, be a detriment to them? On the surface it seems very illogical, and that's exactly why it interests me so much.

As with anything, I don't think there is one particular reason why a well-off person would support left-wing policies, so I'm going to attempt to come up with a list of different reasons that could be the case. Then again, I'm not a rich person so maybe there are some secrets that I'm not privy to...

Image Credit

What Exactly Is a "Champagne Socialist"?

Before I get started, I just wanted to define what exactly it is I'm referring to with the concept of "champagne socialism". In a technical sense, "socialism" refers to an economic and political structure in which the means of production are owned by a community (at least according to the Google definition). It can also refer to a transitional state between capitalism and communism. In either case, it is noticeably different than "liberalism", which can mean a lot of different things depending on who you talk to. In one sense it can refer to social liberty, in which people are free to make their own choices (sometimes referred to as "classical liberalism", which in many ways has more in common with the modern definition of libertarianism). In another sense it can refer to an economic structure of capitalism with a large social safety net (social security, universal healthcare, welfare, etc.) that is paid for with higher taxes, aimed mostly at the top income earners.

For the purposes of this article, I'm going to use the latter definition (capitalism with a large social safety net) when describing the people referred to as "champagne socialists". Now, it's possible that there are wealthy people who advocate for actual socialism, but I think the chosen definition is more accurate for the majority.

Finally, here's the list:

1. They Are Still Rooting for "Their" Team

Political preferences, like professional sports teams, are largely a result of upbringing. In theory, everyone would root for the sports team that is closest to them, but in practice that is not always the case. I live in Arizona, which is sort of the "Florida of the West", and as such there are a lot of people originally from colder climates who moved here for the mild winters. Even though Arizona has its own pro sports teams, you still see the Green Bay Packers, Chicago Bears, Minnesota Vikings, and other such midwestern teams represented loudly and proudly here. The reason for this is simple: just because you moved to a place doesn't automatically change your allegiance. The sports team you grew up rooting for is probably going to be the one you will root for the rest of your life, and perhaps even the one you will raise your children to root for...regardless of where you live.

Political preferences are not too different. If you grew up with your parents or people in your peer group saying that "Republicans are greedy, bigoted, dumb, etc.", then even if you reached a stage in life where Republican policies might act to your benefit, you might not want to accept that fact, as it would go against your sense of being. This is the nature of identity politics.

2. They Don't Have Faith in Their Rich Peers

In a sense, you might not think that being a "limousine liberal" is an inherent contradiction. You can, of course, be very wealthy and want to share your wealth due to a sense of personal responsibility (Andrew Carnegie famously wrote about this is The Gospel of Wealth). That's perfectly reasonable, but an obvious counterpoint is that nothing is stopping you from freely donating money to charity. After all, the government is not exactly known for its efficient allocation of resources, so personally donating money to a private charity certainly seems like a better option than having taxes withheld from your paycheck and used in a way that you have no control over.

A rich person might think the same thing, but offer a counterpoint that, while they themselves would donate generously to a variety of charities whose missions they like, they don't have faith in their fellow rich people doing the same thing. In turn, they think that the only way charitable causes would get enough money would be to use the government to take it from all rich people. Of course, perhaps they don't have much faith in themselves to donate either, so they want the government to act as a weird sort of accountability partner.

3. It's Part of Their Personality

Similarly to point #1, political preference can be closely tied to personality traits. People who score higher in the Big 5 traits Openness and Agreeableness are more likely to be left-leaning. These would be the same type of people that can potentially become very financially successful for their creativity and/or likeability (think entrepreneurs like Steve Jobs, Bill Gates, etc.) . In this sense, the very same traits that would allow these people to develop riches would also steer them towards more progressive political beliefs.

4. They Like the Social Policies

While the entirety of the arguments thus far have dealt with the economic policy features of "liberalism", there are of course social policies that some people care greatly about. So it may very well be the case that they may not like the higher taxes on their income, but consider it a small price to pay for the hope of more gun regulation or legalized abortion.

5. They Feel Guilty

If you are very wealthy in America then you either generated it from your own industriousness, or you were born into a family that did. In the former case, you may have come from humble beginnings, and those memories are still very much a part of who you are. You know that there are many other people who grew up like you did and were not as fortunate, and you want government policies to help them as much as possible.

In the latter case, you grew up in a family that has what is known in the business as "old money", and if reading The Great Gatsby taught me anything, it's that old money is the best money. Growing up in a world of luxury, however, tends to have some weird psychological effects on people, and might be one of the main contributors of champagne socialism. I think the reason is that when you don't feel like what you have is deserved, it tends to make you feel guilty about it. That guilt is most easily relieved by supporting policies that seem like they would help people.

So far, the reasons for champagne socialism have been pretty innocent, but the next few will be decidedly less so...

6. As a Form of Self-Preservation

One of the more interesting things I've learned about societal structure is the notion of income inequality and crime rates. It's often believed that crime rates are tied very closely to poverty, i.e. poorer areas experience more crime than richer areas. This is, however, not entirely true. The reality is that crime rates are tied more closely with relative poverty.

I first learned about this in a Jordan Peterson lecture where he discussed research that found crime rates were proportional to the Gini Coefficient in any size population. The Gini Coefficient is a statistical measure of income inequality that uses a complicated formula to express it as a number between 0 and 1, 0 being perfect income equality and 1 being perfect income inequality, i.e. one person controls all the income. In practice, neither of these extremes ever exist. For reference, the U.S. has a Gini Coefficient of a little less than 50%. What's interesting is that is scales with population, so a country with a higher Gini Coefficient will have more crime than a country with a lower Gini Coefficient, and a city with a higher Gini Coefficient will have more crime than a city with a lower Gini Coefficient, most of the time.

The reason for this is logical when you think about it: if you are poor and everyone around you is poor, then there is not a lot for you to gain from stealing. Conversely, if you are poor and your neighbor is filthy rich, you have a lot to gain from stealing. There are likely some psychological effects that come into play as well: you may rationalize stealing from your neighbor by saying things like "they wouldn't even notice" or "they don't even need it" or the coup de grĂ¢ce: "they don't deserve it".

A rich person, knowing this, may wish for more income redistribution as a means of self-preservation. If poor people in their community are kept at bay with government handouts, then hopefully they won't wander into the rich neighborhoods wanting to...forcibly...even things up. Even if a rich person doesn't necessarily want their money to be redistributed, they may still want to virtue signal these desires in an attempt to have the target off their chest.

7. They Don't Think It Will Greatly Affect Them

Rich people are, well, rich, and when you're rich there are certain luxuries you can afford. One of those luxuries is having a top-quality accountant, or accounting firm, handle all your taxes. And that's both a luxury and in most cases a necessity for rich people, because typically when you get a lot of money, your taxes get much more complicated. But that complicated nature can act as a benefit for our rich people in question, because numerous sources of income, various assets, and various liabilities can all be leveraged by a skilled accountant in order to avoid paying as much in taxes as one might think. Like a nerdy money ninja, a good accountant can find weird loopholes in tax law that his clients can, and will, take full advantage of.

Of course, there are also other sneaky ways rich people avoid taxes, like offshore bank accounts and other sorts of tax shelters that I don't know about because I'm not rich. So even though you might think some fiscal policy will take more money from the rich, they (and their nerdy money ninjas) will always be one step ahead. In this way, being publicly left on fiscal policy can get a sort of "best of both worlds" effect for our rich person, as they can get all the perceived benefits of everyone else thinking they are one of the "good guys" while not actually having any drawbacks for themselves.

8. They Actually Benefit from It

This is perhaps the most sinister of all the reasons, and I'm not entirely sure that it isn't the main reason for many of our champagne socialists. In the previous cases we saw varying forms of "sort of" selfishness, but in those cases there was no real benefit for our rich person. In this case there is a very real financial benefit for them. How? Well let's see...

It's generally thought that many big-government leftist policies are detrimental to "business", but they may actually have the opposite effect in some cases. The key factors are the type of regulations and the types of businesses. Imagine a made-up business, let's call it "Amazon", that spends a lot of money on building a lean workforce with lots of automation. Let's imagine their main competitor, who we'll call "Wal-Mart", has a greater dependence on a human workforce. Let's say "Amazon" decides to pay their employees at least $15 an hour (which is above the minimum wage at the time of this writing) to attract more workers and get good PR. Since they have fewer workers than a traditional retail company, they can absorb this cost. Now, "Wal-Mart" would see a drastic decline in profits if they paid their employees the same wage, so they will decide to keep paying the government-allowed minimum wage. "Amazon", seeing this, starts to lobby the government to increase the minimum wage, since it will not affect them but greatly affect their competition.

The same logic can apply to things like corporate tax rates. For an up-and-coming corporation that might rival an established power, these taxes might dig into their profits enough to not allow them to grow any more. For an established business, however, these taxes are merely an annoyance (and if they have good money ninjas, maybe not even that). It then follows that if you are an owner of a large business, the "anti-business" leftist policies may work in your favor, as they may not affect you too much, but they may certainly help stifle any new competition for you.

This may be an over-simplified take on the situation. Most people want smaller and upstart businesses to grow (if they are good) and don't want large mega-corporations to prosper, so public policy is usually structured in such a way to target just the big corporations. This isn't as easy as it seems, though, and there is often some collateral damage that affects the small and mid-size companies disproportionately more than the large ones. Of course, there are also some blatant examples of the opposite. The one that comes to mind is about a year ago, many cities across America offered Amazon all kinds of tax breaks in order to entice them to move their headquarters there. Why would they want to do that for just Amazon and not other businesses?

9. They Have a "God Complex"

I take it back, this is the most sinister reason.

If you're very wealthy, then it's pretty likely that you're a smart person. You're probably smarter than the average American...possibly by a lot. When you're really smart, and really successful, it can make you pretty confident...maybe even arrogant. Ideas begin to formulate in your head...ideas that start off as random hypotheticals and keep growing.

You look around the world and you see poverty, inefficiency, and an overall lack of creativity in its workings. You begin to think to yourself "I'm pretty smart, and I've solved so many problems in my life...if the world was controlled by someone like me, then maybe things would be better." It's that sort of thinking that leads people to be strong advocates for top-down forms of government, in which power is centralized to a few individuals. In theory, these individuals would be the cream of the crop...the smartest members of society. In doesn't usually work out quite like that.

Just For Fun: They Don't Want Their Ski Resort or Beach House to Die

Here's a joke reason I thought of that seems farfetched, but who knows...

While I've been focused solely on economic policy differences, it should be noted that the Democratic party in the U.S. has been much more concerned with the effects of global warming than their Republican counterparts. It's still a bit uncertain how much global warming will affect the world in the next century, but one industry it could certainly have a detrimental impact on is skiing.

Due to its expensive equipment and the fact that it can only be done in a handful of locations at specific times of the year, skiing is an expensive activity that is enjoyed by many a rich person. It would then make sense that a rich person would want any amount of government intervention necessary to stall global warming so that they can enjoy their hobby. More importantly, if they own real estate in a ski resort town, then the value of it would certainly plummet if all the sudden there was no snow. Similarly, if global warming caused a rise in ocean levels, then beachfront property would certainly be negatively affected. What types of people own beach houses? You guessed people.


Political preferences can be loosely tied to income, for which there are some obvious and not-so-obvious reasons. The objective of this article was to postulate some of the reasons why wealthy people might vote for more progressive politicians, not vilify their decisions. In many cases one's political preferences are a complicated mix of personality, peer groups, upbringing, and perhaps some more selfish desires. I think it's always good to recognize the latter reason whenever someone does something that is not obviously in their own self interest.

One thought on “The Origins of "Champagne Socialism"

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.