The Ancient Greeks Knew What Trump Doesn't - Vast Wealth Inequality Hurts A Republic

This thought-provoking post is by David Lay Williams (professor of political science at DePaul University) in The New York Times: 

Ever since Elon Musk became the world’s first trillionaire, people have been trying to grasp the scale of his incomprehensible fortune.

Some have noted that a stack of $100 bills amounting to $1 trillion would extend 679 miles high. The economist Steven Durlauf has observed that John D. Rockefeller’s wealth at one point equaled about 1.5 percent of the U.S. gross domestic product and that Mr. Musk’s wealth now amounts to at least twice as much, at more than 3 percent. It may not escape New York Knicks fans that even Jalen Brunson, who makes about $39 million per year, would need to play more than 25,000 seasons to accumulate that kind of money.

But of all the numbers I’ve seen, the one that struck me most forcefully was a calculation in The Times that Mr. Musk’s net worth is five million times as large as that of the average American family.

As a historian of political thought, I immediately thought of Plato, the first Western philosopher to really grapple with economic inequality. In his “Laws,” through the character of the Athenian Stranger, Plato contended that in a thriving republic, if anyone acquired more than four times the wealth of the poorest citizens, he should donate the surplus to the city. Not five million times the wealth of the typical family — four times the wealth of the poorest.

To be sure, it is difficult to imagine how a modern economy would operate with Plato’s proposed constraints on wealth acquisition. But it is not hard for a modern reader to understand the concerns that led him to his radical proposal.

Plato grew up in Athens, a city that once was nearly torn apart, as Plutarch wrote, by the “disparity between the rich and the poor.” It was saved by a heroic lawgiver, Solon, who canceled all the debts of the poor, to the great chagrin of the rich. And in Plato’s youth, as the city fought the Peloponnesian War, it suffered three successive class-based civil wars — an oligarchic revolution of the rich against the poor, followed by a democratic revolution of the poor against the rich, followed by yet another oligarchic revolution.

It’s no wonder that when Socrates reflected on inequality in Plato’s “Republic,” he observed that a state characterized by significant wealth disparity is not a state at all but rather “two states, the one of poor, the other of rich men, and they are living on the same spot and always conspiring against one another.”

For Plato, the source of inequality was a disease of the soul that the Greeks called pleonexia — a kind of insatiable greed. In Plato’s “Gorgias,” Socrates likened this condition to a leaky jug: No matter how much water one pours into it, it will demand more. For some, the desire for money extends only so far as is necessary to cover their needs; for others, the desire is infinite. Plato likened those insatiable souls to slaves who are ruled by their desires.

Someone consumed with his unquenchable desires comes to love himself far beyond what he can feel for the rest of humanity. He was, for Plato, “a poor judge of what is just and good and noble,” because he would always treat his desires as more valuable even than the truth. As a consequence, Plato wrote, “it is impossible that those who become very rich also become good.”

Plato’s fears about insatiable greed have been vindicated by Mr. Musk, who has already set his sights on $10 trillion. He has confirmed Plato’s concerns about the moral failures of the superrich by characterizing empathy as “the fundamental weakness of Western civilization.” With his so-called Department of Government Efficiency, he put the U.S. Agency for International Development program “into the wood chipper,” as he gleefully put it, contributing to the deaths of an estimated 600,000 people. Such carnage is a predictable outcome of a society that has chosen to place no upper limits on wealth.

Plato was acutely aware that ideal solutions, such as his 4-to-1 wealth ratio, are impossible to carry out where great inequality already exists. But he did not encourage legislators and citizens to throw up their hands in surrender. Rather, he urged citizens (including the few rich ones with a “sense of fairness”) to do what they could to level society, starting by shaming those with excessive fortunes. He stressed that true poverty “consists not in a lessening of one’s property but in an increase of one’s avarice.”

Only by teaching the evils of extreme greed can society begin to restore the healthy balance of wealth necessary for a thriving republic.

The Vast (And Growing) Wealth Inequality Must Be Fixed Before It Destroys Our Democracy

Economist Paul Krugman warns about the huge wealth gap in the United States and its danger to our democracy: 

On Sunday Donald Trump celebrated his 80^th birthday with a cage match on the White House lawn. The match and the events that surrounded it — especially the press conference with UFC fighters, shown above, held on the steps of the Lincoln Memorial — were a desecration of America’s capital, whose monuments and buildings have always endeavored to represent small-r republican virtues. The whole affair was an affront to the values on which this nation was founded and also unspeakably vulgar.

That last criticism may strike some readers as elitist and trivial. Yet the vulgarity that is the hallmark of Trump and his surrounding circle of oligarchs is a symptom of something not at all trivial: The collapse of social norms. As I argued yesterday, these norms historically played a key role in mitigating abuses of power and privilege during the Gilded Age, the last time America suffered from extreme income and wealth inequality (though not nearly as extreme as what we have now).

Norms matter. In his classic book The Theory of the Leisure Class — published in 1899, at the apogee of the Gilded Age — Thorstein Veblen famously argued that much of the behavior of his era’s elite was driven not by the desire to enjoy life but by the desire to impress others. Partly they did this through conspicuous consumption. Thus they built lavish mansions staffed by legions of servants.

However, members of the Gilded Age elite didn’t solely aim to display their wealth. They also tried to appear respectable. There were surely many private affairs and betrayals we will never know about. But the important point is that the super-wealthy of that era presented to the American public an image of being responsible members of society.

The contrast with the public behavior of Trump’s band of uber-wealthy is startling.

In addition to modeling upstanding behavior, the extremely rich of the Gilded Age were expected to have, or pretend to have, some virtues that were part of the aristocratic ideal, including a sense of noblesse oblige displayed by good works. 

Today’s oligarchs, by contrast, have largely given up on the old norms of social and individual responsibility. They give very little money to good causes and their vulgar taste reflects their in-your-face attitude towards the public. In our current hyper-Gilded Age, extreme vulgarity and the decline of philanthropy are really different aspects of the same phenomenon: the rise of an elite so disconnected from ordinary Americans that it feels no need to even appear to be honorable.

So in a real sense we are living in the midst of a reenactment of the decline and fall of the Roman Republic, not a second American Gilded Age. No, I’m not one of those men who thinks about ancient Rome all the time. But there are some obvious parallels.

While the causes of the decline of republican government and Rome’s eventual transition to one-man rule were doubtless complex, there is broad consensus among historians that a key factor was the emergence of extreme inequality. A handful of men became incredibly wealthy from the spoils of Rome’s eastern conquests, and their wealth and power eventually became too great for the rules of constitutional, republican government to contain. Sound uncomfortably familiar?

The death throes of the Republic went on for many years. Politicians declared their rivals enemies of the state, deployed violent gangs to disrupt the rule of law, established temporary dictatorships, and more. The installation of Augustus as emperor in 27 BC was just the final act.

And during this long twilight of constitutional government, one of the ways the extremely wealthy and powerful sought both to demonstrate their wealth and to curry favor with the mob was by sponsoring gladiatorial games.

Democrats Must Reclaim The Fight Against Economic Inequality And Corruption

This post is by Robert Reich:

A large portion of America has felt bullied and harassed for decades. They’ve worked their asses off but haven’t gotten anywhere. Employers have fired them without cause or notice, made them into contract workers without any security or rights, spied on them during working hours, and otherwise treated them like children. 

They’ve been bullied by landlords who keep hiking their rent. By banks that keep adding large fees to whatever they owe. By health insurers and hospitals that charge them an arm and a leg. By corporate grocery monopolies that push up food prices.

 

Many of them voted for Trump because he promised he’d be their bully. He blamed others — immigrants, people of color, transgender people, foreign traders — for what they endured. He thereby found scapegoats for their deep feelings of powerlessness, vulnerability, and shame. It’s one of the oldest of demagogic tricks. 

Democrats could have put the blame where it belonged — on monopolistic corporations and billionaires that abused their wealth and power by taking over our politics. 

Democrats could have demanded higher taxes on big corporations and the wealthy to pay for childcare and eldercare. Tougher antitrust laws to break up monopolies. Labor law reforms that made it easier for workers to form unions and gain bargaining power. Universal health care. Strict regulation of big banks so they couldn’t shaft average people. And an end to big money in our politics. 

But they have not — not loudly, not with one voice, not with the clarity the people need to hear. 

The good news is they still can. They must. And we must push them to.

Trump is the culmination and consequence of decades of worsening inequality and corruption.

 

We could not have remained on the road we were on. Now that we see what we have reaped by allowing these trends to continue, we have a chance of summoning the political will to reverse them.

 

If there’s a silver lining on these darkening clouds, this is it.

Economic Inequality Is Viewed As A Problem In U.S. And Around The World

 

The charts above are from the Pew Research Center in a survey done between April 1st and 7th of 2024. They questioned 3,600 people, and the margin of error is 2.1 points.

The Super-Rich Don't Pay Their Fair Share Of Taxes

The chart above is frustrating. And it has not changed since 2018. The super rich still pay a smaller tax rate than the bottom 50% (who are basically living paycheck to paycheck) when all taxes are considered. That not an equitable tax system.

Robert Reich explains why this is so, and what needs to be done. Here is part of what he has written:

I’m hoping Harris sticks with Biden on Biden’s most important tax proposal: A 25 percent minimum tax on Americans worth more than $100 million. This 25 percent tax would apply to a combination of their regular income and their unrealized capital gains. 

It would raise roughly $500 billion in tax revenue over a decade, according to the Treasury Department.

Biden would also tax unrealized gains at death for those holding more than $5 million worth of assets.

Why is Biden’s 25 percent minimum billionaire’s tax so important? 

Consider Warren Buffett. Several years ago, Buffett made a claim that would become famous. He said that he paid a lower tax rate than his secretary, thanks to the many loopholes and deductions that benefit the wealthy.

The 400 wealthiest Americans today still pay a lower total tax rate — spanning federal, state, and local taxes — than any other income group, according to newly released data. 

According to Forbes, Buffett now has $149.9 billion in wealth. On the conservative assumption that the rate of return on his wealth is 5 percent, Buffett’s real pre-tax income last year — his share of his company Berkshire Hathaway’s profits — was roughly $7.5 billion. Yet Buffet paid an effective income tax rate of less than 1 percent. 

How did Buffett accomplish this? His increasing wealth, consisting of shares in his company Berkshire Hathaway, is all in unrealized capital gains. One share now costs some $715,778 — more than 60 times what it sold for in 1992. 

To finance his personal lifestyle, Buffett has needed to sell only a few shares each year. By selling just 20 shares, for example, he moves $14 million over to his personal bank account. He then pays tax on the small amount of capital gains he realized by selling 20 shares. 

Alternatively, he can finance his lifestyle by taking out tax-free loans backed by the stock he owns.

This is why merely raising the top marginal income tax rate won’t affect Buffett’s (or Bezos’s or Zuckerberg’s or Musk’s) tax bills. They don’t have much taxable income in the first place. It’s why the important action is found in capital gains, especially unrealized — that is, uncashed — gains.

 

Under current law, if they hold most of their wealth until they die, their heirs can inherit it without paying a dime of capital gains taxes. That’s because it was never cashed out.

 

Here’s the thing: According to the tax code, the basis from which capital gains are calculated — the original price of the assets — is wiped out on death. Instead, the basis automatically rises to the asset’s current market value.

Which is why the United States is rapidly moving toward an aristocracy of dynastic wealth.

Our Inequality Is Causing A Shorter Life Span For Many

The following is part of a thought-provoking post is by Robert Reich:

I want to examine a root that hasn’t gotten nearly the attention it deserves: the remarkable reversal in life expectancy among those without college degrees, many of whom comprise Trump’s base.

In 1900, U.S. life expectancy was 47 years. Infectious diseases routinely claimed babies. Women died in childbirth or from complications arising from childbirth. Many diseases were incurable.

Then came antibiotics, insulin, vaccines, the surgeon general’s report on smoking and cancer — followed by a sharp drop in smoking, the introduction of CT scans and MRIs, and steady improvements in sanitation and water supplies. Poverty and sickness in the elderly were eased by Social Security and Medicare.

Life expectancy in America soared. By 2010, it was approaching 80 years. 

But then something happened — and it happened even before COVID. Life expectancy for most Americans reversed course. 

Why?

Research by economists Anne Case and Angus Deaton shows that life expectancy did not reverse course for the 30 percent of Americans with four-year college degrees. 

It reversed for people without college degrees. 

Life expectancy for those with four-year college degrees was 84 years on the eve of the pandemic — up from 79 years in 1992. During the pandemic, their life expectancy slipped a year.

But for those without college degrees, life expectancy has been falling since 2010.

 

In 2010, adult life expectancy for non-college graduates was nearly 77 years. By 2021, it had dropped to under 75 years. (And during the pandemic, their life expectancy dropped 3.3 years.)

Why does this widening gap in life expectancy correlate with whether someone has a four-year college education? 

Because Americans with college degrees have become far wealthier, on average, while those without college degrees have become poorer and less economically secure.

 

In 1990, America’s total wealth was equally split between those with and without college degrees. Today, three-quarters of wealth is owned by college graduates.

Meanwhile, the wages of people without college degrees have stagnated or declined. Average weekly nonsupervisory wages — a measure of blue-collar, non-college earnings — were higher in 1969 (adjusted for inflation) than they are now.

Most Americans without college degrees are now working harder and longer hours than they worked decades ago and taking fewer sick days or vacations. They also have less economic security. Nearly one out of every five American workers is in a part-time job. Two-thirds are living paycheck to paycheck.

 

Income and wealth have direct impacts on health and longevity. They determine access to life-supporting services like high-quality preventive health care, nutritious food, and housing. 

And they have a lot to do with whether someone is subject to life-threatening things like handguns, opioids, and economic stress.

Other developed countries — Japan, Canada, most European countries — have not experienced declining life expectancies among non-college graduates or a widening gap in lifespans between those with four-year college degrees and those without them. 

Why this discrepancy among developed nations?

 

Because other developed nations have stronger and more generous social safety nets. They finance their much less costly health care through government support rather than through what is essentially a flat tax on employment (employer payments for health insurance are effectively taken out of a worker’s salary).

 

And because a far higher percentage of non-college workers in other developed nations are organized into unions that have successfully pushed for higher wages and have enough political clout to resist efforts to erode the safety nets they count on.

Social and economic trends in the United States have fostered an increasingly angry and frustrated working class, highly susceptible to the resentments and grievances of Trumpism.

 

Americans who for decades have been on a downward economic escalator have become easy prey for demagogues peddling the politics of hate.