For the first time on a large scale, Americans are debating whether to allow the existence of billionaires.
On Thursday, The New York Times published columnist Farhad Manjoo’s “It’s high time we abolish billionaires” above the fold on the front page of its print edition. While Manjoo is far from the first person to articulate the idea — see freshman congresswoman Alexandria Ocasio-Cortez’s call for a 70% tax rate for income above $10 million or Sen. Elizabeth Warren’s call for a 3% wealth tax for fortunes above $1 billion — the unequivocal rallying cry was something different for the paper of record.
The ensuing arguments about his piece were about what you’d expect: ad hominem attacks and the pitting of capitalism against socialism. A Fox News panel called Manjoo “an idiot” and dismissed the critique of inequality as an attack on capitalism. Readers raised examples of “good billionaires.”
Democrats have been arguing for years now about the value of socialism, but as Ocasio-Cortez’s policy adviser Dan Riffle — known for his Twitter handle “Every Billionaire is a Policy Failure” — alluded to in a tweet, even if AOC, Sen. Bernie Sanders, or Warren are too radical for you, just look at what Trump-appointed Federal Reserve chairman Jerome Powell is saying.
“We want prosperity to be widely shared. We need policies to make that happen,” Powell said on Wednesday, according to the Washington Post. “The U.S. lags now in mobility. And that’s not our self-image as a country, nor is it where we want to be. … We have some work to do to make sure that the prosperity we do achieve is widely spread.”
Regardless of an ideological lens, there’s a growing consensus: The United States needs a course correction, and decreasing inequality is crucial.
The rich are clearly getting richer
The French economist Thomas Piketty wrote that, “the incomes of the top 1% collectively made up 11% of national income in 1980, but now constitute above 20% of national income, while the 20% of US national income that was attributable to the bottom 50% in 1980 has fallen to just 12% today.”
Additionally, he wrote, “while average pre-tax income for the bottom 50% has stagnated at around $16,000 since 1980, the top 1% has experienced 300% growth in their incomes to approximately $1,340,000 in 2014. This has increased the average earnings differential between the top 1% and the bottom 50% from 27 times in 1980 to 81 times today.”
It’s not wild, then, to call the moment we’re in America’s “second Gilded Age,” referring to the post-Civil War era of robber barons and industry, where the wealthy kept living better and the poor kept getting worse.
Occupy Wall Street remained relatively small in the wake of the financial crisis, but it did make income and wealth inequality, the language of the 99% and the 1%, a prime topic of discussion. Populist sentiment increased throughout the country, and Vermont’s democratic-socialist senator and New York’s celebrity real estate billionaire did better in the 2016 election than anyone predicted. The latter, Donald Trump, became president and right-wing rhetoric won, but it also brought with it standard conservative policies, like tax cuts for the rich.
‘Abolishing billionaires’ isn’t as radical as it seems
In his article in the Times and during a followup on Twitter, Manjoo proved to be less into the notion of going so far as to virtually capping how much money Americans could make — not even Ocasio-Cortez has advocated for that —but he is in support of significantly higher taxes on the rich. And you don’t have to be a radical for that. There have been many polls that show the majority of Americans at this point are in favor of the same thing.
While “abolish billionaires” is an eye-catching phrase with radical implications, raising taxes to pre-1980s levels is certainly not radical, said Stephanie Sterling, vice president of advocacy and and policy at the Roosevelt Institute.
Sterling told Business Insider that questioning the role of billionaires in our society “is an important contribution to the debate,” because it’s focusing on structural changes that need to take place, to keep extreme wealth from harming the economy.
What the country needs, she said, is “robust antitrust policy, meaningful limits on stock buybacks, much higher tax rates, and the meaningful restoration of the ability to form and join unions.” If getting riled up about billionaires leads voters to elect officials who support those policies, that will successfully correct for what she considers to be the mistakes of the past 40 years.
“I think we’re all passengers in a billionaire hijacking,” author and critic Anand Giridharadas told Business Insider about how the US got to a boiling point. “We were all drugged on the plane, and these guys are now terrified in the cockpit because they’re realizing that in the back there we just woke up.”
The billionaires themselves are taking sides
Potential presidential candidates and fellow billionaires Howard Schultz and Michael Bloomberg are not fans of Ocasio-Cortez’s call for a 70% tax rate for income above $10 million or Warren’s call for a 3% wealth tax for fortunes above $1 billion, and have used phrases like “un-American” and referred to chaos in Venezuela as proof of where these policies would lead.
Investor and progressive activist Nick Hanauer, however, saw this coming. Hanauer, whose fortune must approach $1 billion considering he signed Warren Buffett and Bill Gates’ Giving Pledge, famously wrote in Politico a few years ago that “the pitchforks are coming.”
He told Business Insider that he’s been seriously considering the notion that every billionaire is a policy failure, saying “there can be no doubt that the thrust of the argument is correct — that in a country where so many people are barely getting by, or not getting by at all, an economy that mints billionaires is structurally deficient. There is no reasonable moral or practical justification for these disparities in wealth and income.”
Hanauer noted that even with significantly higher taxes, America’s wealthiest would remain on top, and their buying power would remain relative.
“I also feel strongly that the Neoliberal contention that me getting immensely wealthy does not harm you, and that your objection to it is just petty jealousy is also wrong,” he said. “The richer the rich get, the farther apart the rungs of opportunity are stretched. An economy dominated by a few people with infinite wealth is characterized by arms races for status that benefit no one and harm most people.”