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thomas piketty
Piketty Offers a Vision for Sharing What We Have Left, But How Do We Convince the 1%?
It’s inspiring to see the World Inequality Lab researchers directly engage in the post-growth debate with a grand vision of global economic convergence. We can only hope it spurs a peaceful mass citizens’ movement to overcome the inevitable opposition of the ultra rich.
Jul 21, 2026
At the World Inequality Conference in June, the renowned economist Thomas Piketty and a team of 45 researchers from the World Inequality Lab unveiled the Global Justice Report. It’s a highly impressive and eloquent proposal to achieve "equality and prosperity within planetary boundaries" by the end of the century. Based on a fully quantified road map derived from extensive macroeconomic analysis, the 135-page report sets forth an ambitious vision: to construct a global economy that shares global wealth and achieves high well-being for all while rapidly decarbonizing energy systems, thereby maintaining emissions within the relatively safe limits of 1.8°C.
This hopeful outlook provides a welcome antidote to our times, in which the world is already reeling from climate breakdown, geo-economic confrontation, and a widening structural economic divide.
The core aim of the proposal is to achieve full income convergence across all countries by 2100, centered around a target level of €5,000 (about $5,700) per month for every person. To achieve this, the bottom 50% of humanity need to increase their global wealth share from 2-30%. The top 0.001%, in contrast, would see their wealth fall from 6% to 0.05%—a "striking redistribution," to quote the report, which would essentially abolish the billionaire class.
A Global Justice Fund serves to administer this immense effort at international economic sharing, financed by a global wealth tax and a top income tax levied on the richest 1% of the world’s population. Some of the revenue raised would go into a World Sovereign Fund, which is projected to accumulate assets equivalent to 60% of world GDP and replace tax revenue as the main source of financing. Country dividends are designed to be distributed on an equal per-capita basis, therefore providing more resources to poorer than richer countries and vastly more resources than currently allocated to development aid. These funds also come with strong conditionalities in terms of climate investments, inequality targets, and health and education expenditures.
A Vision of Sufficiency
The main novelty of the report is to put the concept of sufficiency at the center of its analysis, rightly arguing that we cannot stay within a 2°C carbon budget if the entire human population adopts a rich-world lifestyle of high private consumption. Sufficiency, as the report defines it, therefore requires more than halving average working time to 1,000 hours, roughly the equivalent of a two-and-a-half-day standard week.
This needs to be accompanied by a significant shift from material to immaterial sectors, such as health and education, which in turn would help refocus the economy toward low-consumption activities. A substantial change in food habits and reduced meat consumption could also allow for a strict deforestation ban, freeing up arable land while scaling down high-emitting agricultural practices. At the same time, sufficiency in production and consumption patterns must be combined with rapid decarbonization of the energy system, as spurred and enabled by the Global Justice Fund.
All this can read, at times, as a wish list of sustainability concepts and policies long espoused by environmental thinkers. But the work of the Global Justice Project is far wider in scope than Piketty’s best-selling tome, Capital in the 21st Century, which famously used vast historical and economic data to argue the case for a progressive global tax on wealth. Back in 2015, we at Share the World's Resources and others criticized the book for failing to take seriously the ecological limits to growth and planetary boundaries. So it’s inspiring to see the World Inequality Lab authors directly engaging in this debate, fully denouncing the rhetoric of "green growth" that assumes we can address environmental challenges by indefinitely increasing the size of the pie without reducing inequality, consuming less, or sharing resources globally.
Sharing Environmental Space
Their new report argues that technology alone is not enough to achieve rapid decarbonization. They acknowledge that to manage the green transition globally within a strict carbon budget, it will be necessary for today’s richest countries to radically downscale their resource and energy demands with near-zero growth in GDP. This will clear the ecological and carbon space needed for poorer countries of the Global South to continue growing their economies, enabling a fast energy transition while guaranteeing essential public services and a decent standard of living to all people.
It is hardly a novel framing of the issue, but the report emphasizes how their Sustainable Convergence Scenario entails a form of "class-based reparatory justice," in that the very rich—who have benefited the most from fossil-based global economic growth in recent decades—will primarily fund the Global Justice Platform. What’s more, the proposal is somewhat aligned with the concept of climate equity, and effectively translates the principle of "common but differentiated responsibilities" into quantitative policies for addressing climate change.
Another strength of the report is how it connects macroeconomic and environmental projections directly to questions of international institutional reform. It centrally highlights the need for a broader overhaul and democratization of the global economic and monetary system, including the reconstitution of the International Monetary Fund into a United Nations Central Bank that issues its own reserve currency. This would eliminate the exorbitant privilege of the US dollar and other major currencies that can borrow at much lower rates, ending a massive reverse redistribution of wealth from Global South countries to the Global North.
All other international institutions would be governed by strict rules and equal voting rights, further eradicating the special privileges and veto powers of dominant nations. A new international order would include the reform of World Trade Organisation rules and a reset of dispute settlement mechanisms. And the large financial resources allocated to the Global Justice Fund would de facto underwrite a major restructuring of the entire UN system, strengthening its many agencies, human rights protections and international laws.
From Plutocracy to Democracy
As the report affirms, these proposals to transform global governance from "plutocracy to democracy" are closely related to many other existing frameworks and initiatives. The Bridgetown Initiative in 2022, for example, also stresses the complementary role of global wealth taxation and international monetary reform. The UN Tax Convention process also focuses on democratizing the international tax system and curbing illicit financial flows, while the G20 initiatives led by Brazil and South Africa also champion global wealth taxes to fund climate policies and green energy transitions.
There are numerous other networks and organizations that aim toward similar tax and governance reforms, such as the work of Progressive International with their Program of Action on the Construction of a New International Economic Order. The Stiglitz Commission of 2010 and Brandt Commission of 1980 are gladly cited by the Global Justice Report as complementary discussions surrounding the reform of the international monetary and reserve system.
Above all, the report authors deservedly mention the Roadmap for Eradicating Poverty Beyond Growth—a major project coordinated by the former UN Special Rapporteur on Extreme Poverty and Human Rights, Olivier De Schutter, that puts forward an exhaustive policy toolkit for building a global economy with human rights and ecological justice at its core. Thomas Piketty and many other prominent economists have put their names to this plan, which is one of the most comprehensive policy documents of recent years to define "living well within planetary boundaries" through increased South-South cooperation, reparative climate finance, and support for universal social protection floors. De Schutter’s pioneering proposal for a Global Fund for Social Protection is arguably a less utopian prospect for closing chronic financing gaps in low-income countries, building upon existing structures like the UN’s International Labour Organisation, and seeking more immediately viable sources of international financing.
The operative question, as always, is how the political conditions will arise to implement these policies as an alternative to the far-right techno-authoritarian vision being championed by reactionary political elites and their billionaire supporters. It’s certainly true, as Piketty and his team write in a Guardian op-ed, that technical impossibility is not what is standing in the way but rather “the absence of a shared vision of social progress, at once concrete and radical.” And both the Piketty and De Schutter road maps make clear that formidable forces will oppose any socioeconomic shift toward global sustainable convergence, with the fiercest resistance coming from the ultra rich.
Both reports also briefly outline the need to build countervailing power from the grassroots, explicitly supporting collective action from progressive political parties, labor unions, and civil society organisations. The Global Justice Report even gives its conclusion the subtitle: "A global citizen movement for social justice," and it modestly proffers its analysis to the broader collective mobilization that is already (if all too slowly) advancing at the world scale. So whatever limitations and shortcomings these reports may contain, we can only hope they spur the massive groundswell of popular support that is urgently needed to share the world’s finite resources before it’s too late.
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To Crush Global Inequality and Secure Livable Future, Scholars Call for 90% Tax on Mega-Rich
"The current international order is plutocratic," said French economist Thomas Piketty. "It is essential to move away from this plutocratic system to a new democratic order."
Jun 04, 2026
A sprawling report released Thursday argues that averting the "bleak techno-authoritarian futures now being sold to us" and laying the groundwork for a just, livable future requires restructuring the world's economic order to widely redistribute wealth that has been hoarded at the very top for decades.
The report, compiled by hundreds of researchers from around the world and published by the World Inequality Lab (WIL), is billed as the first comprehensive attempt to lay out a plan to "reconcile planetary habitability and high well-being for all." Achieving that aim will be impossible, the authors argue, "without a drastic reduction in inequality of income, wealth, and power."
"The current international order is plutocratic," said French economist Thomas Piketty, a renowned expert on inequality and co-director of WIL. "It is essential to move away from this plutocratic system to a new democratic order."
The report outlines a number of proposals that would redress staggering levels of wealth and income inequality. Currently, the top 10% of the global population brings in more income than the remaining 90% combined. Wealth inequality is even more extreme, with the top 10% controlling 75% of global wealth, compared to 2% controlled by the poorest half of humanity.
Specifically, the authors call for a new, progressive global income tax that would peak at 90% for those who earn 5,000 times the average adult disposable income. They also propose taxing the wealth of millionaires and billionaires at a rate up to 20%.
Revenue from the new taxes would flow into a Global Justice Fund, which would distribute dividends to countries to help boost spending on climate, education, and healthcare. The fund would also invest in a World Sovereign Fund, whose returns on "sustainable assets" would be used to finance country dividends.
"The result is not a transfer from many to few but a gain for almost everyone," Piketty and other report contributors wrote in an op-ed for The Guardian. "Close to 90% of the world’s population would double their income between 2026 and 2100, and once leisure and a habitable planet are counted, more than 99% come out ahead."
"Technical impossibility is not what is standing in the way, but rather the absence of a shared vision of social progress, at once concrete and radical."
Redressing inequality would not be sufficient to secure a livable future, the report authors emphasize, given that continued fossil fuel use and expansion are pushing the world in the direction of climate catastrophe. What's required to prevent planetary disaster is a "fundamental transformation of energy systems," the report argues.
"This means electrifying energy demand wherever feasible (such as transitioning vehicle fleets) and switching to low-carbon fuels (for example, in steel and cement production)," the report states. "Crucially, electricity generation itself must be decarbonized, moving away from fossil fuels toward renewables like hydropower, solar, and wind."
The report also envisions a move away from overconsumption toward what the authors call a future of "sufficiency," which would entail shorter work hours for the global labor force, changes to land use, and other reforms.
Such ambitious goals will not become reality, the report stresses, without "a powerful citizen movement and a dense network of broad-based organizations (including labor unions, political parties, civic platforms, and other collective initiatives) which are sufficiently well-organized and effective at promoting broad institutional and policy change."
"A habitable, equal, and prosperous 21st Century is materially possible," the authors declare. "Technical impossibility is not what is standing in the way, but rather the absence of a shared vision of social progress, at once concrete and radical. What it will take instead is political choice, and the hard work of coalition-building behind it."
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500+ Experts Worldwide Call for Global Panel to Address ‘Inequality Emergency’
"Clear and proven steps can be taken to reduce it and build more equal societies and economies," wrote economists and other experts, "which are the fundamental foundation stone of a successful future for us all."
Nov 14, 2025
Emphasizing that economic inequality is "a policy choice," more than 500 economists and other experts on the global wealth gap are endorsing a call made earlier this month in the first-ever G20 report on inequality: The "inequality emergency" must be confronted by new international body inspired by the United Nations' panel on climate change.
The creation of an International Panel on Inequality (IPI) was a central recommendation of the landmark report set to be presented next week at the G20 Leaders Summit in Johannesburg, and renowned economists including 2024 Nobel economics laureate Daron Acemoglum, Thomas Piketty, Isabella Weber, Ha-Joon Chang, and Jason Hickel were among those who signed a letter Thursday urging the creation of the committee.
The inclusion of economists, climate scientists, epidemiologists, historians, and experts from a range of other disciplines "reflects a key fact," said the signatories. "High levels of economic inequality have a negative impact on every aspect of human life and progress, including our economies, our democracies, and the very survival of the planet."
"Just as the Intergovernmental Panel on Climate Change (IPCC) has played a vital role in providing neutral, science-based, and objective assessments of climate change, a new International Panel on Inequality would do the same for the inequality emergency," reads the letter, which was also signed by global economic leaders including former US Treasury Secretary and Federal Reserve Chair Janet Yellen and former World Bank top economists and leaders.
Since its inception nearly four decades ago, the IPCC has provided governments with the most up-to-date scientific information about planetary heating and its impacts. Its assessments have informed the creation of the United Nations Framework Convention on Climate Change; the 1997 Kyoto Protocol, which subjected wealthy countries to emissions targets for the first time; and the 2015 Paris Agreement, which has required countries to develop and implement plans to draw down planet-heating emissions.
An IPI, said the experts on Thursday, "would provide policymakers the best, most objective assessments on the scale of inequality, its causes and consequences, and consider potential solutions."
"We believe this is in the interests of policymakers from across the political spectrum, who see the importance of this issue and the need to base responses to it on data and evidence and sound analysis," reads the letter. "We know that scholars and experts across the world would readily contribute their time voluntarily—as thousands do for the IPCC—in support of such a necessary and vital international initiative. We are ready to assist in this process."
The letter followed the release of the G20 Extraordinary Committee of Independent Experts on Inequality's landmark report, which was presented to South African President Cyril Ramaphosa earlier this month ahead of the G20 Leaders Summit.
The Extraordinary Committee, which is led by Nobel Prize-winning economist Joseph Stiglitz and also includes inequality experts such as Winnie Byanyima of Uganda and Jayati Ghosh of India, warned that in the last quarter-century, the wealthiest 1% of people around the globe have captured more than 40% of all new wealth—$1.3 million on average—while the bottom 50% has seen its wealth grow by just 1%, or about $585, in constant US dollars.
One in four people around the globe—roughly 2.3 billion people—face moderate or severe food insecurity, meaning they regularly skip meals. The report found that the problem is getting significantly worse, with the number of food-insecure people rising by 335 million since 2019.
The report found that 80% of all countries—accounting for roughly 90% of the global population—have high levels of income inequality, making them seven times more likely than more equal countries to experience democratic decline.
“We are at a dangerous moment in human history," said Piketty, co-director of the World Inequality Lab and World Inequality Database. "Rampant inequality is dividing nations and communities, threatening our social fabric, human rights, and the very essence of democracy. A global effort to tackle inequality is needed—and rigorous analysis of its causes, drivers, and solutions is the first step."
"Governments need to live up to the G20 Summit’s promise of ‘solidarity, equality, sustainability’ and urgently establish an International Panel on Inequality," he added.
Countries with low levels of inequality included Norway, Sweden, Denmark, and Finland—places that also consistently rank high on global reports on happiness and that were found to have low levels of "health, social, and environmental problems," according to the report.
The countries with low levels of inequality have "generous universal transfers and social insurance, supplemented by targeted assistance," the report says.
“High inequality is the result of decades of a failed economics that has primarily benefited the richest in our societies," said Chang, research professor at the School of Oriental and African Studies at University of London. "Not only is there a lot of evidence showing that higher inequality produces more negative economic and social outcomes, there are quite a few examples of more egalitarian societies growing much faster than comparable but more unequal societies.”
The signatories of the letter emphasized that inequality "is not inevitable."
"Clear and proven steps can be taken to reduce it and build more equal societies and economies," they wrote, "which are the fundamental foundation stone of a successful future for us all."
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Leading Economists Endorse UN Expert's 'Economy of Genocide' Report After Trump Attack
A group of economists, including Thomas Piketty and Yanis Varoufakis, expressed solidarity with Francesca Albanese as the Trump administration pushes for her removal as U.N. special rapporteur on occupied Palestine.
Jul 08, 2025
A group of world-renowned economists has penned an open letter expressing support for United Nations expert Francesca Albanese's recent report scrutinizing the integral role that powerful corporations have played in sustaining Israel's genocidal assault on Palestinians in the illegally occupied territories.
The letter, first obtained and published in English by Zeteo on Monday, characterizes Albanese's report as "a major contribution to understanding the political economy of Israel's apartheid state, the ethnic cleansing of Palestinians, and, now, their genocide," and argues her findings "must be studied and debated widely and freely."
The letter's signatories include former Greek Finance Minister Yanis Varoufakis, French economist Thomas Piketty, and University of Massachusetts Amherst economics professor Jayati Ghosh.
The economists' endorsement of Albanese's report comes days after the Trump administration issued a statement calling on United Nations Secretary-General António Guterres to remove her as special rapporteur for the occupied Palestinian territories. The statement was released a day after the publication of Albanese's report, which the Trump administration characterizes as part of "an unacceptable campaign of political and economic warfare against the American and worldwide economy."
The top economists cited the Trump administration's statement as a key impetus behind their decision to publicly back Albanese's work.
"In view of the virulently hostile and indeed intimidating letter from the U.S. government to the U.N. secretary-general demanding the dismissal of Ms. Albanese and the quashing of her excellent report, we felt the need to express our strong support for Ms. Albanese and to encourage the U.N. to dismiss the shrill demands of the U.S. and Israeli governments," the economists wrote.
"Following a well-trodden path of genocide denial and of bullying anyone who challenges the right of the colonial power to dispossess Indigenous peoples," they continued, "the U.S. and Israeli governments, with most European governments too timid to take a stance, demand that the international community turn a blind eye to the ongoing genocide and, in particular, to the key role that multinational and national corporations are playing in maintaining the apartheid regime and enabling the subsequent genocide."
This is not business as usual.
My new UN report, From Economy of Occupation to Economy of Genocide, is out today.
It shows how corporations have fueled and legitimised the destruction of Palestine.
Genocide, it would seem, is profitable. This cannot continue, accountability must… pic.twitter.com/Ei3atw0TQ1
— Francesca Albanese, UN Special Rapporteur oPt (@FranceskAlbs) July 1, 2025
Albanese's report thoroughly documents corporate complicity and direct participation in Israel's assault on Palestinians, specifically naming dozens of corporations in a range of sectors—from Lockheed Martin to Microsoft to Chevron to Palantir.
"The complex web of corporate structures—and the often obscured links between parents and subsidiaries, franchises, joint ventures, licensees, etc.—implicates many more," Albanese wrote. "Israel's ongoing illegal occupation of the oPt creates an untenable situation for corporate entities to simply continue business as usual."
"The private sector must, in its own interests, urgently reconsider all engagement connected to Israel's economy of occupation and now genocide," she added.
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The World Bank Needs Better Metrics to Understand Inequality
The bank is pushing a statistical notion of “shared prosperity” that, as one expert puts it, “leaves the rich out of the equation!”
Aug 03, 2023
Been eating a bit too much ice cream this sweltering summer? Thinking about going on a bit of a diet? Well, imagine yourself counting calories but exempting anything with sugar from all your counting.
Would that approach help you make an appreciable dent on your excess bodily baggage? Of course not. We can’t eliminate what we ignore. And that goes for inequality as well, over 300 distinguished economists worldwide are charging in a new open letter to the United Nations and the World Bank.
Back in 2015, these eminent economists remind us, the world’s nations came together and adopted a series of “Sustainable Development Goals”—SDGs for short—designed to systematically attack both poverty and climate change. The tenth of these goals specifically aims to “reduce inequality within and among countries.”
Significantly narrowing our world’s deeply unequal distribution of income and wealth will, of course, always remain a tall order, given the political power that grand fortunes create. The World Bank, unfortunately, has made that order taller.
The progress so far on this inequality SDG? Practically nonexistent. By many measures, the open-letter economists note, our “inequalities have worsened,” and that worsening really matters. Without reducing the “deep divide” that separates our global rich from the rest of us, the economists suggest, we’ll forever be going nowhere on “ending poverty and preventing climate breakdown.”
Significantly narrowing our world’s deeply unequal distribution of income and wealth will, of course, always remain a tall order, given the political power that grand fortunes create. The World Bank, unfortunately, has made that order taller.
The U.N.’s member nations have essentially made the bank the world’s official inequality scorekeeper. But the metrics the World Bank uses to track inequality have turned out to be “very inadequate,” charges Jayati Ghosh, a coauthor of the economists’ new open letter.
We already have, Ghosh points out, a variety of established yardsticks for measuring inequality. The Gini coefficient plots actually existing income distributions between 0 for total equality and 1 for infinite inequality. The more easily understandable Palma ratio divides the income share of a society’s top 10% by the income share of its bottom 40%.
The World Bank isn’t relying on either of these standard measures. The bank is instead pushing a statistical notion of “shared prosperity” that, as Ghosh puts it, “leaves the rich out of the equation!” This World Bank measure defines success in the battle against inequality as what we have when the incomes of the bottom 40% are growing faster than the national average income.
On the World Bank’s scorecard, in other words, any nation where the incomes of the top 1% are rising ten times faster than the national average income would be making “progress” against inequality so long as the incomes of the bottom 40% were rising slightly faster than that national average.
This “bizarre notion of ‘shared prosperity,’” says Jayati Ghosh, “provides very misleading estimates of the extent of inequality or progress in reducing it.”
By this bizarre World Bank yardstick, over half the world—53% of the nations the bank sampled—were making progress against inequality just before the pandemic hit and another 11% were showing no change.
Researchers with the World Inequality Database, an ambitious statistical effort that takes inspiration from the ground-breaking research of scholars like Thomas Piketty, paint a starkly different picture. Only 26% of the world’s nations, as measured by the Gini coefficient, are actually showing progress against income inequality, and only 12% are showing progress in Palma-ratio terms.
For three top global inequality watchdogs—Oxfam, the Development Finance International, and the New York University Center for International Cooperation’s Pathfinders initiative—the World Bank’s “shared prosperity” scorekeeping makes plain the need for a real “data revolution” that spotlights the wealth of the world’s wealthiest.
The World Bank’s current approach, these three groups charged in a new report released last month, essentially “ignores what is happening to the rich.” We cannot afford that ignoring, the groups stress, not at a time when “the world’s wealthiest citizens continue to be largely responsible for extreme carbon emissions” while the world’s “poorest citizens pay the price through climate disasters.”
Will critiques like this get the World Bank to change its statistical ways? We’ll see. The bank’s first reaction to the economists’ open letter has been somewhat encouraging. The World Bank, says a spokesperson, agrees “we need to do more to address inequality” and “do better in measuring progress.”
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New Data Show Income of Top 0.1% Soared 345% While That of Bottom 90% Stagnated Over Past 40 Years
"It's all a matter of political choices," progressive economist Thomas Piketty said in a recent interview. "You can have economic justice together with economic prosperity."
Dec 01, 2020
U.S. wage data released this week reveal the continuation of a trend that began at the end of the 1970s, and which has given the United States the dubious distinction of having the worst income inequality among most-developed countries.
The Economic Policy Institute reports that between 1979 and 2019, the top 1% of people in the U.S.--whose mean income was nearly $738,000 in 2018-- have enjoyed 160% income growth, while wages for the bottom 90% have stagnated, rising just 26% over the same 40-year period.
The figures showed massive inequality even among the top 1%, as the highest 0.1%--those making an average of $2.82 million--skyrocketed 345% since 1979.
While U.S. income inequality is the worst among most-developed nations, its wealth inequality is even more egregious. According to a 2017 report (pdf) from the Institute for Policy Studies, the three wealthiest Americans at the time, Jeff Bezos--who has since become the world's first multicentibillionaire--Bill Gates, and Warren Buffett, collectively held more wealth than the bottom 50% of the population, or some 160 million people.
Experts say it is no accident that the period in which the yawning, ever-growing chasm between rich and poor began coincides with the rise of corporatist and neoliberal economic policies--colloquially dubbed "trickle-down economics"--implemented by conservative leaders including British Prime Minister Margaret Thatcher and President Ronald Reagan in the U.S.
Thomas Piketty, a French economist whose work focuses on economic inequality and who authored the seminal book Capital in the Twenty-First Century and the recently published Capital and Ideology, says the coronavirus pandemic presents an opportunity for U.S. leaders to finally make a serious attempt to address income disparities.
"We have to revisit some of our ideologies, some of what we believe is the conventional wisdom at a given point in time," Piketty told Hill.TV last week. "I think we should use this opportunity to develop more social state, social policies in general, by which I mean a better income support mechanism, safety net, and better access to education."
"There's nothing natural in the way the economy is organized," Piketty continued. "It's all a matter of political choices, of ideology. I think it's important to send a message to working America and to low-wage America that you can have economic justice together with economic prosperity."
Piketty implored the incoming administration of President-elect Joe Biden to embrace egalitarian economic policies espoused by progressives such as ex-presidential primary rivals Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), including a tax on billionaires, which he said is "actually pretty popular if you look at the polls."
"I think you need to have a more ambitious policy platform of giving a better chance to more disadvantaged socioeconomic groups," Piketty said. "We're talking about a higher minimum wage, more investment in public universities, more progressive taxation at the top."
"I think it will be a big mistake for the Democratic Party leadership to abandon this kind of idea," he added.
Standing in stark contrast to what economists like Piketty say must be done to combat inequality, the administration of President Donald Trump--who has boasted of giving billionaires a $1.5 trillion tax break--said this week that it supports Senate Republicans' proposal to freeze the wages of the more than two million people who work for the federal government.
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Why We Need a Wealth Tax
Not only would a wealth tax raise revenue and help bring the economy back into balance, but it would also protect our democracy by reducing the influence of the super-rich on our political system.
May 14, 2019
The crisis of income inequality in America is well-known, but there is another economic crisis developing much faster and with worse consequences. I'm talking about inequality of wealth.
The wealth gap is now staggering. In the 1970s, the wealthiest tenth of Americans owned about a third of the nation's total household wealth. Now, the wealthiest 10 percent owns about 75 percent of total household wealth.
"America is now on the cusp of the largest intergenerational transfer of wealth in history."
America's richest one-tenth of one percent now owns as much wealth as the bottom 90 percent.
Wealth is also passed from generation to generation. An estimated 60% of the wealth in the United States is inherited. Many of today's super-rich never did a day's work in their lives. The Walmart heirs alone have more wealth than the bottom 42 percent of Americans combined.
America is now on the cusp of the largest intergenerational transfer of wealth in history. As wealthy boomers die, an estimated $30 trillion will go to their children over the next three decades.
Over time, this wealth will continue to grow even further - without these folks lifting a finger. This concentration of wealth will soon resemble the kind of dynasties common to European aristocracies in the seventeenth and eighteenth centuries.
It's exactly what our Founding Fathers sought to combat by creating a system of government and economy grounded in meritocracy.
Dynastic wealth puts economic power into the hands of a relatively small number of people who make decisions about where and how to invest most of the nation's capital, as well as which nonprofit enterprises and charities deserve support, and what politicians merit their campaign contributions.
That means their decisions have a disproportionately large effect on America's future.
Dynastic wealth also magnifies race and gender disparities. Because of racism and sexism, women and people of color not only earn less. They have also saved less. Which is why the racial wealth gap and the gender wealth gap are huge and growing.
Today, government is financed almost entirely by income taxes and payroll taxes - totally ignoring the giant and growing wealth at the top.
So how do we address the crisis of wealth inequality?
A wealth tax, as proposed by Senator Elizabeth Warren, would begin to tackle all this by placing a 2 percent tax on to wealth in excess of 50 million dollars.
According to estimates, this tax would generate 2.75 trillion dollars over the next decade, which could be used for health care, education, infrastructure, and everything else we need.
Not only would a wealth tax raise revenue and help bring the economy back into balance, but it would also protect our democracy by reducing the influence of the super-rich on our political system.
We must demand an economy that works for the many, not one that concentrates wealth in the hands of a few. A wealth tax is a necessary first step.
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Looking Back at 1919: Immigration, Race, and Women's Rights, Then and Now
The 100-Year-Old Echoes of 2019
Apr 17, 2019
Reading about immigration policy, religious and racial bigotry, and terrorism fears in America in 1919 offers an eerie sense of decades melting away and past and present blurring together.
The blend isn't exact. Bigotry was expressed much more explicitly a century ago, not in code as it usually is now. Jim Crow laws in the South and other forms of racial segregation in the rest of the country were seen by most white Americans as the normal state of affairs. In the national debate on immigration, the most inflammatory rhetoric was largely aimed at immigrants from Asia, not Latin America or the Middle East; Slavs, southern Europeans, and Jews from Eastern Europe also faced widespread hostility. Religious prejudice was typically directed at Jews and Catholics, not Muslims. Yet despite those differences, many of the underlying attitudes and the tone of the immigration argument 100 years ago were strikingly similar to those that roil our society today.
I haven't read of anyone in 1919 saying "make America great again" or referring to unwanted immigrants' homelands as "shithole countries." But those exact ideas, if not precisely the same words, were commonly expressed a century ago. And some key words and phrases appeared then as now -- referring to immigration as an "invasion," for example, or disparaging immigrants as dirty, poor, and criminally inclined.
A pair of quotes illustrates the common thread, a widespread feeling in both eras that, after several decades of large-scale immigration, American identity itself was under threat.
In an article published in March 1919, the Immigration Restriction League, an influential anti-immigrant group, put it this way: "A preponderance of foreign elements destroys the most precious thing [a country] possesses -- its own soul." Fox News's Laura Ingraham delivered exactly the same warning when she claimed in an August 2018 broadcast that immigration had contributed to "massive demographic changes" in the U.S. population, and that "in some parts of the country, it does seem like the America we know and love doesn't exist anymore."
Facing a wave of criticism, Ingraham unconvincingly denied that she was referring to racial or ethnic groups, but it's impossible to find any other meaning in her words. The author of the Immigration Restriction League article was more straightforward, writing sentences like: "Races follow Gresham's law as to money; the poorer of two kinds in the same place tends to supplant the better" and "Just as we isolate bacterial invasions, and starve out the bacteria by limiting the area and amount of their food supply, so we can compel an inferior race to remain in its native habitat."
Reforming Immigration Law, Then and Now
The 2019 calendar is full of dates that evoke similar echoes. May 19th, for example, will mark 100 years since the 66th Congress convened in Washington with Republicans newly in control of both houses, a shift that set the course for a drastic revision of immigration laws in the 1920s.
Under the new majority, the chairmanship of the House Committee on Immigration and Naturalization passed to Albert Johnson of Washington, a newspaper owner and fervent supporter of the anti-immigrant movement. In his new post, Johnson, who wrote in one editorial that "the greatest menace to the Republic today is the open door it affords to the ignorant hordes from Eastern and Southern Europe," set about creating a completely new immigration system. Under his plan, immigrants would be admitted on the basis of country-by-country quotas that heavily favored northern Europeans, while drastically reducing immigration from less favored European countries. (Asians were already banned under previous legislation.)
In spirit, Johnson's effort reflected exactly the same view conveyed in President Trump's recent declaration that "our country is full" and his shakeup of the Homeland Security department leadership in pursuit of new and potentially extreme immigration and border control policies.
Johnson's initial quota bill was enacted in 1921. Three years later, Congress replaced that law with an even harsher version that he co-sponsored with Senator David Reed of Pennsylvania. The 1924 statute remained in effect for more than four decades until Congress abolished the quota system in 1965.
After the 1924 law was enacted, Reed made no bones about its motive. "The racial composition of America at the time," he declared, "is thus made permanent."
That story, too, reverberates in the present era. More than 90 years after the Johnson-Reed Act became law, Jeff Sessions, the Alabama senator who went on to serve as President Trump's first attorney general, cited it as a specific and appropriate model for new reforms. "It slowed down immigration significantly," he said in a 2015 interview. "We then assimilated through 1965 and created really the solid middle class of America, with assimilated immigrants, and it was good for America."
Sessions, a fervent advocate of more restrictive immigration laws, said nothing in the interview about the 1924 act's intentionally discriminatory nature. Whether he didn't know that part of the story or just didn't think it mattered enough to be worth mentioning is an open question -- but a telling one.
In 2019, lawmakers and Trump administration officials who are advocates for ever more restrictive immigration policies would not say out loud, and possibly not even to themselves, that their aim is to preserve "the racial composition of America." But there can be no doubt that, consciously or not, that is exactly what they want to achieve.
Linking Immigrants and Terror -- A Song We've Heard Before
Another similarity between 1919 and now is a phobic fear of "foreign-born terrorists." That fear was not invented in post-9/11 America. It was alive and well 100 years ago, along with the related fear that immigrants were potential carriers of a menacing foreign ideology that rejected American principles and endangered the country's security.
Today's rhetoric is about the threat of violent Islamist extremism. In 1919, the scare stories were about Bolshevism and anarchism. In our era we hear ideas like candidate Trump's 2016 proposal to ban all foreign Muslims from the country. A hundred years ago, the cry was that protecting the country required keeping out European immigrants, especially those from revolutionary Russia and other countries where radical movements were strong (or thought to be strong). If you blank out the names, though, you would be hard-pressed to tell which era you were reading about.
Russian immigrants in 1919 were suspect as possible followers of the Bolsheviks who had come to power in that country just two years before. Immigrants from Italy were associated with another kind of terrorist violence fueled by followers of an anarchist named Luigi Galleani who had emigrated to the United States in 1901.
In April and again in June 1919, a group of Galleanisti, as they were called, carried out attempted bomb attacks against prominent Americans, including John D. Rockefeller, J.P. Morgan, Oliver Wendell Holmes, and several dozen others. No one on the target list was killed, but one blast in the second wave of attacks did damage the home of Attorney General A. Mitchell Palmer.
Afterwards, on Palmer's orders, federal agents carried out widespread raids, rounding up not just suspected anarchists in the Italian immigrant community but leftist radicals of many stripes, as well as other activists who had opposed American participation in World War I. Immigrants from Russia, particularly Jews, were prominently targeted, reflecting fears sparked by the Bolshevik revolution. Large numbers of detainees were deported, while others were tried and imprisoned, often on transparently fabricated charges.
The Red Scare, or Palmer raids, as they came to be known, were executed more crudely but still were remarkably similar to the security sweeps, groundless prosecutions, and deportations in American Muslim communities after the September 11th attacks.
That chapter of 1919 history, incidentally, deserves to be more widely remembered than it is, because it played a decisive role in the history of two institutions that remain important today, the FBI and the American Civil Liberties Union (ACLU).
The Justice Department official whom Palmer designated to oversee those 1919 raids was a 24-year-old lawyer named J. Edgar Hoover who would become the FBI's first director some years later. The Red Scare experience clearly reverberated in his leadership of the bureau during his long tenure. Meanwhile, the ACLU was founded in 1920 in direct response to the Palmer raids, which -- as the FBI's own online historical account acknowledges -- trampled heavily on civil liberties and constitutional rights.
Racial Justice -- A Century Apart, Promises Unkept
On the domestic racial landscape, the parallels between 1919 and now may seem less obvious, but are nonetheless real.
In 1919, entrenched racial injustices were far cruder and crueler than they are today. Rigid segregation was unchallenged in the southern states, including laws that barred virtually all blacks from voting. Other forms of discrimination -- racially restrictive property deeds and strict racial barriers in employment, for example -- were standard practices in the rest of the country. Lynching was common. By one count, an African American was lynched roughly every five days in 1919, a figure that doesn't include several hundred more deaths that year in a series of race riots that largely, though not exclusively, involved white-on-black mob violence.
The differences between that era and now are profound, but there are also some striking similarities. The historical timelines, for example, are almost poetically symmetric. In 1919, 54 years after the Civil War ended slavery, racial oppression was still pervasive and the promise of true freedom for black Americans remained a distant dream. In 2019, essentially the same amount of time has passed since the civil rights movement, the 1963 March on Washington, and the federal civil rights and voting rights laws of 1964 and 1965. But the hopes of that era, like those after the Civil War, have hardly been fully realized and racial injustices in the criminal justice system and elsewhere continue to cast a shadow over American life.
To cite one symbolic example: 1919 was the year Confederate General Stonewall Jackson's statue was erected on a main thoroughfare in Richmond, Virginia. It still stands, despite a campaign -- supported by two of Jackson's great-great-grandsons -- seeking to have it removed, along with other Confederate monuments expressly built to symbolize and celebrate the segregationist ideology and institutions of that past era.
A May 1919 essay by W.E.B. Du Bois, the famed civil rights activist, is a reminder that words from that time can still ring powerfully today. Writing about the return of several hundred thousand black soldiers who had served in the strictly segregated armed forces of World War I, DuBois saluted their service, but also delivered a lacerating indictment of the country those soldiers came home to:
"For America and her highest ideals, we fought in far-off hope; for the dominant southern oligarchy entrenched in Washington, we fought in bitter resignation. For the America that represents and gloats in lynching, disfranchisement, caste, brutality and devilish insult -- for this, in the hateful upturning and mixing of things, we were forced by vindictive fate to fight also."
Some of the particulars may sound dated, but others are entirely relevant today, even if the details differ. Blacks may no longer be systematically prohibited from voting, as they were across the south in DuBois's time, but the more subtle present-day attacks on voting rights still give a sharp sting to his verdict: "The land that disfranchises its citizens and calls itself a democracy lies and knows it lies."
In his closing, returning to the theme of the homecoming of black soldiers, DuBois wrote that they were right to fight for their country with all its faults, but that their fight at home was not over:
"Under similar circumstances, we would fight again. But by the God of Heaven, we are cowards and jackasses if now that that war is over, we do not marshal every ounce of our brain and brawn to fight a sterner, longer, more unbending battle against the forces of hell in our own land."
A hundred years after those words were written, they remain urgent: that battle has not been won and still needs to be fought.
An Earlier "Year of the Woman"
June 4, 1919, marked another milestone event of profound importance, then and now, to the nature and meaning of American democracy. On that day, Congress passed the 19th Amendment to the Constitution declaring, "The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of sex."
The vote came exactly 41 years, four months, and 25 days after the amendment, identically worded, was first introduced in Congress. It was ratified the following August, in time for the 1920 elections.
Approaching the centennial of that suffrage amendment, American women are in the midst of another dramatic and rapid transformation of their political role. In last year's midterm elections, a record-setting number of women won seats in both houses of Congress, while women scored significant gains in elections for state-level offices as well. Reflecting the same trend, by mid-March of this year, no fewer than six women had announced their 2020 presidential candidacies, a lineup that no one could have imagined in any past presidential campaign.
It's hard to guess what the women of 1919 might think today, whether they would be surprised at how far women have come in politics or disappointed that, a century later, they had not come further. But they would certainly recognize themselves and their struggles and achievements in the women of 2019 and see that the fight for equality did not end a century ago, but -- like the broader struggle for a better, more just democracy -- lives on.
It would take a much longer essay than this to describe all the unexpected connections and continuities between 1919 and today. The start of Prohibition, for example, a cause that fueled an intense politicization of religion (as abortion does in our time); or that, in 1919, income inequality was on the threshold of a dizzying rise over the next decade in a rich-get-richer trend very similar to the one that has reached new peaks since the turn of the twenty-first century; or the U.S. Army's first motorized convoy across the North American continent in the summer of 1919, an early harbinger of the automobile age that would transform American life.
That expedition, organized jointly by the Army's Motor Transport Corps and a group of private-sector interests including automobile manufacturers, was explicitly staged to get publicity and promote political support for improving a road system then so primitive that it took the convoy 62 days to travel from Washington to San Francisco at an average speed of six miles an hour. One of the soldiers who made that drive in 1919 was a 29-year-old lieutenant colonel named Dwight Eisenhower, who as president nearly 40 years later initiated the interstate highway program that is the deteriorating backbone of our national transportation system today.
History may not repeat itself but, as the proverb goes, it often rhymes. The events of 1919 are particularly rich in examples of that metaphor -- a history full of moments that rhyme, in illuminating and often very surprising ways, with our own time.
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Socialism for the Rich, Capitalism for the Rest
While the weathly and powerful are coddled with public largesse, the rest of us are thrown into the jaws of an unforgiving economic system
Apr 11, 2019
"We renew our resolve that America will never be a socialist country," Donald Trump said recently.
Someone should alert him that America is now a hotbed of socialism. But it's socialism for the rich. Everyone else is treated to harsh capitalism.
In the conservative mind, socialism means getting something for doing nothing. This pretty much describes General Motors' receipt of $600 million in federal contracts, plus $500 million in tax breaks, since Trump took office.
Some of this corporate welfare has gone into the pockets of GM executives. Chairman and CEO Mary Barra raked in almost $22 million in total compensation in 2017 alone.
But GM employees are subject to harsh capitalism. GM is planning to lay off more than 14,000 workers and close three assembly plants and two component factories in North America by the end of 2019.
The nation's largest banks saved $21 billion last year thanks to Trump's tax cuts, some of which went into massive bonuses for bank executives. On the other hand, thousands of lower-level bank employees got a big dose of harsh capitalism. They lost their jobs.
Banks that are too big to fail--courtesy of the 2008 bank bailout--enjoy a hidden subsidy of some $83 billion a year because they have the backing of the federal government. This hidden subsidy gives Wall Street, giant banks a huge advantage.
In 2017, Wall Street's bonus pool was $31.4 billion. So, take away the hidden subsidy, and that bonus pool disappears, along with most profits. Trump and his appointees at the Federal Reserve are easing bank requirements put in place after the bailout. But they will make sure the biggest banks remain too big to fail.
When he was in business, Trump perfected the art of using bankruptcy to shield himself from the consequences of bad decisions- socialism for the rich at its worst -while leaving employees twisting in the wind. Now, all over America, executives who run their companies into the ground are getting gold-plated exit packages while their workers get pink slips.
Under socialism for the rich, you can screw up big time and still reap big rewards. Equifax's Richard Smith retired in 2017 with an $18 million pension in the wake of a security breach that exposed the personal information of 145 million customers to hackers.
Wells Fargo's Carrie Tolstedt departed with a $125 million exit package after being in charge of the unit that opened more than 2 million unauthorized customer accounts.
Whatever happened to the idea of a meritocracy - an economic system that allows everyone to get ahead through hard work, and economic gains go only to those who deserve them?
Around 60 percent of America's wealth is now inherited. Many of today's super-rich have never done a day's work in their lives. Trump's response has been to expand this divide by cutting the estate tax to apply only to estates valued at over $22 million per couple. Mitch McConnell is now proposing that the estate tax be repealed altogether.
To the conservative mind, the specter of socialism conjures up a society in which no one is held accountable, and no one has to work for what they receive. Yet, that's exactly the society Trump and the Republicans are promoting for the rich.
Meanwhile, most Americans are subject to an increasingly harsh and arbitrary capitalism.
They need stronger safety nets, and they deserve a bigger piece of the economic pie.
If you want to call this socialism, fine. I call it fair.
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Money Talks, Big Time
1% politics and the scandals of a new gilded age
Apr 02, 2019
Despair about the state of our politics pervades the political spectrum, from left to right. One source of it, the narrative of fairness offered in basic civics textbooks -- we all have an equal opportunity to succeed if we work hard and play by the rules; citizens can truly shape our politics -- no longer rings true to most Americans. Recent surveys indicate that substantial numbers of them believe that the economy and political system are both rigged. They also think that money has an outsized influence on politics. Ninety percent of Democrats hold this view, but so do 80% of Republicans. And careful studies confirm what the public believes.
None of this should be surprising given the stark economic inequality that now marks our society. The richest 1% of American households currently account for 40% of the country's wealth, more than the bottom 90% of families possess. Worse yet, the top 0.1% has cornered about 20% of it, up from 7% in the mid-1970s. By contrast, the share of the bottom 90% has since then fallen from 35% to 25%. To put such figures in a personal light, in 2017, three men -- Jeff Bezos, Warren Buffett, and Bill Gates -- possessed more wealth ($248.5 billion) than the bottom 50% of Americans.
Over the last four decades, economic disparities in the U.S. increased substantially and are now greater than those in other wealthy democracies. The political consequence has been that a tiny minority of extremely wealthy Americans wields disproportionate influence, leaving so many others feeling disempowered.
What Money Sounds Like
Two recent headline-producing scandals highlight money's power in society and politics.
The first involved super-affluent parents who used their wealth to get their manifestly unqualified children into highly selective colleges and universities that previously had reputations (whatever the reality) for weighing the merits of applicants above their parents' wealth or influence.
The second concerned Texas Senator Ted Cruz's reported failure to reveal, as election laws require, more than $1 million in low-interest loans that he received for his 2012 Senate campaign. (For that lapse, the Federal Election Commission (FEC) fined Senator Cruz a modest $35,000.) The funds came from Citibank and Goldman Sachs, the latter his wife's longtime employer. News of those undisclosed loans, which also cast doubt on Cruz's claim that he had funded his campaign in part by liquidating the couple's assets, only added to the sense that favoritism now suffuses the politics of a country that once prided itself on being the world's model democracy. (Journalists covering the story couldn't resist pointing out that the senator had often lambasted Wall Street's "crony capitalism" and excessive political influence.)
The Cruz controversy is just one reflection of the coming of 1% politics and 1% elections to America at a moment when the first billionaire has been ensconced in the Oval Office for more than two years, posing as a populist no less.
Since the Supreme Court's 2010 ruling in Citizens United v. Federal Election Commission, money has poured into politics as never before. That's because the Court ruled that no limits could be placed on corporate and union spending aimed at boosting or attacking candidates running for political office. Doing so, the justices determined in a 5-4 vote, would be tantamount to restricting individuals' right to free speech, protected by the First Amendment. Then came the Court's 2014 McCutcheon v. Federal Election Commission decision (again 5-4), which only increased money's influence in politics by removing the aggregate limit on an individual's contribution to candidates and to national party committees.
In an age when money drives politics, even ex-presidents are cashing in. Fifteen years after Bill Clinton departed the White House, he and Hillary had amassed a net worth of $75 million -- a 6,150% increase in their wealth. Barack and Michelle Obama's similarly soared from $1.3 million in 2000 to $40 million last year -- and they're just warming up. Key sources of these staggering increases include sky-high speaking fees (often paid by large corporations), including $153 million for the Clintons between February 2001 and May 2016. George W. Bush also made tens of millions of dollars in this fashion and, in 2017, Obama received $400,000 for a single speech to a Wall Street firm.
No wonder average Americans believe that the political class is disconnected from their day-to-day lives and that ours is, in practice, a democracy of the rich in which money counts (and counts and counts).
Cash for College
Now let's turn to what those two recent scandals tell us about the nexus between wealth and power in America.
First, the school scam. Parents have long hired pricey tutors to coach their children for the college admissions tests, sometimes paying them hundreds of dollars an hour, even $1,500 for 90 minutes of high-class prep. They've also long tapped their exclusive social and political connections to gin up razzle-dazzle internships to embellish those college applications. Anyone who has spent as much time in academia as I have knows that this sort of thing has been going on for a long time. So has the practice of "legacy admissions" -- access to elite schools especially for the kids of alumni of substantial means who are, or might prove to be, donors. The same is true of privileged access to elite schools for the kids of mega-donors. Consider, for instance, that $2.5 million donation Charles Kushner made to Harvard in 1998, not long before his son Jared applied. Some of the folks who ran Jared's high school noted that he wasn't exactly a whiz-bang student or someone with sky-high SAT scores, but -- surprise! -- he was accepted anyway.
What's new about the recent revelations is that they show the extent to which today's deep-pocketed helicopter parents have gone into overdrive, using brazen schemes to corrupt the college admissions process yet more. One unnamed parent spent a cool $6.5 million to ensure the right college admitted his or her child. Others paid hefty amounts to get their kids' college admissions test scores falsified or even hired proxies to take the tests for them. Famous actors and financial titans made huge payments to university sports coaches, who then lied to admissions officers, claiming that the young applicants were champions they had recruited in sports like water polo, crew, or tennis. (The kids may have known how to swim, row, or play tennis, but star athletes they were not.)
Of course, as figures on the growing economic inequality in this country since the 1970s indicate, the overwhelming majority of Americans lack the connections or the cash to stack the deck in such ways, even assuming they would do so. Hence, the public outrage, even though parents generally understand that not every aspirant can get into a top school -- there aren't enough spots -- just as many know that their childrens' future happiness and sense of fulfillment won't depend on whether they attend a prestigious college or university.
Still, the unfairness and chicanery highlighted by the admissions scandal proved galling, the more so as the growing crew of fat cats corrupting the admissions process doubtless also preach the gospel of American meritocracy. Worse, most of their kids will undoubtedly present their fancy degrees as proof that quality wins out in our society, never mind that their starting blocks were placed so far ahead of the competition.
To add insult to injury, the same parents and children may even portray admissions policies designed to help students who lack wealth or come from underrepresented communities as violations of the principles of equal opportunity and fairness, democracy's bedrock. In reality, students from low-income families, or even those of modest means, are startlingly less likely to be admitted to top private universities than those from households in the top 10%. In fact, applicants from families in the top 1% are now 77 times more likely than in the bottom 20% to land in an elite college, and 38 of those schools admit more kids from families in that top percentage than from the bottom 60%.
Buying Politics (and Politicians), American-Style
Now, let's return to the political version of the same -- the world in which Ted Cruz swims so comfortably. There, too, money talks, which means that those wealthy enough to gain access to, and the attention of, lawmakers have huge advantages over others. If you want political influence, whether as a person or a corporation, having the wealth needed to make big campaign contributions -- to individuals or groups -- and to hire top-drawer lobbyists makes a world of difference.
Official data on the distribution of family income in the United States show that the overwhelming majority of Americans can't play that game, which remains the preserve of a tiny super-rich minority. In 2015, even with taxes and government-provided benefits included, households in the lowest 20% accounted for only about 5% of total income. Their average income -- not counting taxes and government-provided assistance -- was only $20,000. The share of the bottom 50% -- families making $61,372 or less -- dropped from 20% to 12% between 1978 and 2015. By contrast, families in the top 1% earned nearly 50% of total income, averaging $215,000 a year -- and that's only income, not wealth. The super-rich have plenty of the latter, those in the bottom 20% next to none.
Before we proceed, a couple of caveats about money and political clout. Money doesn't always prevail. Candidates with more campaign funds aren't guaranteed victory, though the time politicians spend raising cash leaves no doubt that they believe it makes a striking difference. In addition, money in politics doesn't operate the way simple bribery does. The use of it in pursuit of political influence works more subtly, and often -- in the new era opened by the Supreme Court -- without the slightest need to violate the law.
Still, in Donald Trump's America, who would claim that money doesn't talk? If nothing else, from inaugural events -- for Trump's inaugural $107 million was raised from a host of wealthy donors with no limits on individual payments, 30 of which totaled $1 million or more -- to gala fundraisers, big donors get numerous opportunities to schmooze with those whose campaigns they've helped bankroll. Yes, there's a limit -- currently $5,600 -- on how much any individual can officially give to a single election campaign, but the ultra-wealthy can simply put their money into organizations formed solely to influence elections as well as into various party committees.
Individuals, companies, and organizations can, for instance, give money to political action committees (PACs) and Super PACs. Though bound by rules, both entities still have lots of leeway. PACs face no monetary limits on their independent efforts to shape elections, though they can't accept corporate or union money or take more than $5,000 from individuals. They can provide up to $5,000 to individual election campaigns and $15,000 per party committee, but there's no limit on what they can contribute in the aggregate. Super PACs have far more running room. They can rake in unlimited amounts from a variety of sources (as long as they're not foreign) and, like PACs, can spend limitless sums to shape elections, providing they don't give money directly to candidates' campaigns.
Then there are the dark money groups, which can receive financial contributions from any source, American or foreign. Though their primary purpose is to push policies, not individual campaigns, they can engage in election-related work, provided that no more than half their funds are devoted to it. Though barred from donating to individual campaigns, they can pour unlimited money into Super PACs and, unlike PACs and Super PACs, don't have to disclose who gave them the money or how much. Between 2008 and 2018, dark money groups spent $1 billion to influence elections.
In 2018, 2,395 Super PACs were working their magic in this country. They raised $1.6 billion and spent nearly $809 million. Nearly 78% of the money they received came from 100 donors. They, in turn, belonged to the wealthiest 1%, who provided 95% of what those Super PACs took in.
As the 2018 congressional elections kicked off, the four wealthiest Super PACs alone had $113.4 million on hand to support candidates they favored, thanks in substantial measure to business world donors. In that election cycle, 31 individuals ponied up more than $5 million apiece, while contributions from the top four among them ranged from almost $40 million to $123 million.
The upshot: if you're running for office and advocate policies disliked by wealthy individuals or by companies and organizations with lots of cash to drop into politics, you know from the get-go that you now have a problem.
Wealth also influences political outcomes through the lobbying industry. Here again, there are rules, but even so, vast numbers of lobbyists and eye-popping amounts of lobbying money now are at the heart of the American political system. In 2018 alone, the 50 biggest lobbying outfits, largely representing big companies, business associations, and banks, spent $540 million, and the grand total for lobbying that year alone was $3.4 billion.
Nearly 350 of those lobbyists were former legislators from Congress. Officials departing from senior positions in the executive branch have also found artful ways to circumvent presidential directives that prohibit them from working as lobbyists for a certain number of years.
Do unions and public interest groups also lobby? Sure, but there's no contest between them and corporations. Lee Drutman of the New America think tank notes that, for every dollar the former spent in 2015, corporate donors spent $34. Unsurprisingly, only one of the top 20 spenders on lobbying last year was a union or a public-interest organization.
The sums spent by individual companies to gain political influence can be breathtaking. Take now-embattled Boeing. It devoted $15 million to lobbying in 2018 -- and that's not counting its campaign contributions, using various channels. Those added another $8.4 million in the last two-and-a-half years. Yet Boeing only placed 11th among the top 20 corporate spenders on lobbying last year. Leading the pack: the U.S. Chamber of Commerce at $94.8 million.
Defenders of the status quo will warn that substantially reducing money's role in American politics is sure to threaten democracy and civil liberties by ceding undue power to the state and, horror of horrors, putting us on the road to "socialism," the right wing's bogeyman du jour. This is ludicrous. Other democracies have taken strong steps to prevent economic inequality from subverting their politics and haven't become less free as a result. Even those democracies that don't limit political contributions have adopted measures to curb the power of money, including bans on television ads (a huge expense for candidates in American elections: $3 billion in 2018 alone just for access to local stations), free airtime to allow competitors to disseminate their messages, and public funds to ease the financial burden of election campaigns. Compared to other democracies, the United States appears to be in a league of its own when it comes to money's prominence in politics.
Those who favor continuing business as usual like to point out that federal "matching funds" exist to help presidential candidates not be steamrolled by competitors who've raised mounds of money. Those funds, however, do no such thing because they come with stringent limits on total spending. Candidates who accept matching funds for a general election cannot accept contributions from individuals. Moreover, matching funds are capped at $20 million, which is a joke considering that Barack Obama and Mitt Romney spent a combined $1.2 billion in individual contributions alone during the 2012 presidential election. (Super PACs spent another $350 million to help Romney and $100 million to back Obama.)
A New American Tradition?
Rising income inequality, wage stagnation, and slowing social mobility hurt ordinary Americans economically, even as they confer massive social and political advantages on the mega-rich -- and not just when it comes to college admissions and politics either.
Even the Economist, a publication that can't be charged with sympathy for left-wing ideas, warned recently of the threat economic inequality poses to the political agency of American citizens. The magazine cited studies showing that, despite everything you've heard about the power of small donations in recent political campaigns, 1% of the population actually provides a quarter of all the money spent on politics by individuals and 80% of what the two major political parties raise. Thanks to their wealth, a minuscule economic elite as well as big corporations now shape policies, notably on taxation and expenditure, to their advantage on an unprecedented scale. Polls show that an overwhelming majority of Americans support stricter laws to prevent wealth from hijacking politics and want the Citizens United ruling overturned. But then just how much does the voice of the majority matter? Judging from the many failed efforts to pass such laws, not much.
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