In his final address to the nation,
President Joe Biden issued a warning that “an oligarchy is taking shape in
America of extreme wealth, power, and influence that literally threatens our
entire democracy, our basic rights and freedoms, and a fair shot for everyone
to get ahead.”
It is not exactly news that there
is dramatic economic inequality in the United States. Economists call the
period from 1933 to 1981 the “Great Compression,” for it marked a time when
business regulation, progressive taxation, strong unions, and a basic social
safety net compressed both wealth and income levels in the United States. Every
income group in the U.S. improved its economic standing.
That period ended in 1981, when the
U.S. entered a period economists have dubbed the “Great Divergence.” Between
1981 and 2021, deregulation, tax cuts for the wealthy and corporations, the
offshoring of manufacturing, and the weakening of unions moved $50 trillion
from the bottom 90% of Americans to the top 1%.
Biden tried to address this growing
inequality by bringing back manufacturing, fostering competition, increasing
oversight of business, and shoring up the safety net by getting Congress to
pass a law—the Inflation Reduction Act—that enabled Medicare to negotiate drug
prices for seniors with the pharmaceutical industry, capping insulin at $35 for
seniors, for example.
His policies worked, primarily by
creating full employment which enabled those at the bottom of the economy to
move to higher-paying jobs. During Biden’s term, the gap between the 90th
income percentile and the 10th income percentile fell by 25%.
But Donald Trump convinced voters
hurt by the inflation that stalked the country after the coronavirus pandemic
shutdown that he would bring prices down and protect ordinary Americans from
the Democratic “elite” that he said didn’t care about them. Then, as soon as he
was elected, he turned for advice and support to one of the richest men in the
world, Elon Musk, who had invested more than $250 million in Trump’s campaign.
Musk’s investment has paid off:
Faiz Siddiqui and Trisha Thadani of the Washington Post reported
that he made more than $170 billion in the weeks between the election and December
15.
Musk promptly became the face of
the incoming administration, appearing everywhere with Trump, who put him and
pharmaceutical entrepreneur Vivek Ramaswamy in charge of the so-called
Department of Government Efficiency, where Musk vowed to cut $2 trillion out of
the U.S. budget even if it inflicted “hardship” on the American people.
News broke earlier this week that
Musk, who holds government contracts worth billions of dollars, is expected to
have an office in the Eisenhower Executive Office Building adjacent to the
White House. And the world’s two other richest men will be with Musk on the
dais at Trump’s inauguration. Musk, Amazon founder Jeff Bezos, and Meta chief
executive officer Mark Zuckerberg, who together are worth almost a trillion
dollars, will be joined by other tech moguls, including the CEO of OpenAI, Sam
Altman; the CEO of the social media platform TikTok, Shou Zi Chew; and the CEO
of Google, Sundar Pichai.
At his confirmation hearing before
the Senate Committee on Finance today, Trump’s nominee for Treasury
Secretary, billionaire Scott Bessent, said that extending the 2017 Trump tax
cuts was "the single most important economic issue of the day." But
he said he did not support raising the federal minimum wage, which has been
$7.25 since 2009 although 30 states and dozens of cities have raised the
minimum wage in their jurisdictions.
There have been signs lately that
the American people are unhappy about the increasing inequality in the U.S.
On December 4, 2024, a young man shot the chief executive officer of the
health insurance company UnitedHealthcare, which has been sued for turning its
claims department over to an artificial intelligence program with an error rate
of 90% and which a Federal Trade Commission report earlier this week found
overcharged cancer patients by more than 1,000% for life-saving drugs.
Americans championed the alleged killer.
It is a truism in American history
that those interested in garnering wealth and power use culture wars to obscure
class struggles. But in key moments, Americans recognized that the rise of a
small group of people—usually men—who were commandeering the United States
government was a perversion of democracy.
In the 1850s, the expansion of the
past two decades into the new lands of the Southeast had permitted the rise of
a group of spectacularly wealthy men. Abraham Lincoln helped to organize
westerners against a government takeover by elite southern enslavers who argued
that society advanced most efficiently when the capital produced by workers
flowed to the top of society, where a few men would use it to develop the
country for everyone. Lincoln warned that “crowned-kings, money-kings, and
land-kings” would crush independent men, and he created a government that
worked for ordinary men, a government “of the people, by the people, for the
people.”
A generation later, when
industrialization disrupted the country as westward expansion had before, the
so-called robber barons bent the government to their own purposes. Men like
steel baron Andrew Carnegie explained that “[t]he best interests of the race
are promoted” by an industrial system, “which inevitably gives wealth to the
few.”
But President Grover Cleveland
warned: “The gulf between employers and the employed is constantly widening,
and classes are rapidly forming, one comprising the very rich and powerful,
while in another are found the toiling poor…. Corporations, which should be the
carefully restrained creatures of the law and the servants of the people, are
fast becoming the people's masters.”
Republican president Theodore
Roosevelt tried to soften the hard edges of industrialization by urging robber
barons to moderate their behavior. When they ignored him, he turned finally to
calling out the “malefactors of great wealth,” noting that “there is no
individual and no corporation so powerful that he or it stands above the
possibility of punishment under the law.
Our aim is to try to do something
effective; our purpose is to stamp out the evil; we shall seek to find the most
effective device for this purpose; and we shall then use it, whether the device
can be found in existing law or must be supplied by legislation. Moreover, when
we thus take action against the wealth which works iniquity, we are acting in
the interest of every man of property who acts decently and fairly by his
fellows.”
Theodore Roosevelt helped to launch
the Progressive Era.
But that moment passed, and in the
1930s, Franklin Delano Roosevelt, too, contended with wealthy men determined to
retain control over the federal government. Running for reelection in 1936, he
told a crowd at Madison Square Garden: “For nearly four years you have had an
Administration which instead of twirling its thumbs has rolled up its sleeves….
We had to struggle with the old
enemies of peace—business and financial monopoly, speculation, reckless
banking, class antagonism, sectionalism, war profiteering. They had begun to
consider the Government of the United States as a mere appendage to their own
affairs. We know now that Government by organized money is just as dangerous as
Government by organized mob.”
“Never before in all our history
have these forces been so united against one candidate as they stand today,”
he said. “They are unanimous in their hate for me—and I welcome their hatred.”
Last night, after President Biden’s
warning, Google searches for the meaning of the word “oligarchy” spiked.
—Heather Cox Richardson
