
By Heather Cox Richardson*
In his final address to the nation last night, 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 recognised 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 organise 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 industrialisation 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 industrialisation 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 organised money is just as dangerous as Government by organised 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 is an American historian. She is a professor of history at Boston College. This article was originally published here.
26 Comments
The US has been an oligarchy since at least the end of the second world war; probably even as far back as the 1920s when the house of labour was smashed. Other western capitalist democracies have spent decades trying to emulate this model, with varying degrees of success.
Trying to pretend that this is a recent phenomenon is willful ignorance.
No, the article's analysis is sound. It is talking about direction of travel for how democracy is evolving.
The direction of travel towards oligarchy vs away from oligarchy is quite recent, and it has accelerated dramatically in the last couple of years. You only have to look at the data on where wealth has gone under the UK Tories, previous Trump administration and where it is heading under the NZ coalition. Direction of travel is very very clear, the plebs are not going to benefit.
Citizens United vs. FEC (2010) was the final nail in the coffin of the "one person, one vote" fable. Ever since then it has very explicitly been "one dollar, one vote", and prior to that implicitly so.
The only reason people are suddenly crying bloody murder over this now, is that the rich guys in charge this time happen to be ones they don't like.
Wealthy people think they are entitled to buy votes in this country too:
Yeah. It's because the rich guys who ran the place historically hid behind the scenes and did what they wanted but didn't cause a fuss or raise their profile.
The problem seems to be that nowadays the rich folk have huge egos and want to be in the news the whole time.. which is making the divide and their real power over everyone highly visible.
The best history lesson for them is probably the French revolution.
No. The rich are being forced to become visible because the public are slowly becoming aware of how badly they are being fleeced.
Like the old saying goes ...
“You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.”
The Russian revolution is more recent. And IMO is just as good an example.
But there have been many others since then, e.g. Syria just a few months ago.
But what always matters is that a) babies don't get thrown out with the bathwater, and b) whether the new leadership is just as bad as the old.
And I'd mention, the USA revolt against English rule carried the catch-phase, "no taxation without representation" - and when you consider both US political parties are effectively controlled by billionaires ... Well, not that much different to now, ay?
Excellent article. The strategy of the super-rich does not change, even if the tactics do.
Let's hope an effective leader who can communicate what is effectively happening with the culture war narratives and divide and conquer approach comes along soon, it will be painful to have to ensure any longer under the current oligarchs.
Would be interesting to see a comparison of the total value of all contributions made to Biden versus those made to Trump, by individuals with a net worth more than, say, $50m usd (or other rationally derived figure). Otherwise, the core premise of this article lacks a basis.
This article also overlooks the very substantial effect that price setting behavior by central banks has had. Lowering interest rates (the discount rate) inflated the values of assets bought with borrowed money, putting them out of reach of many and enriching those who can afford them. This massively widened the wealth gap.
Well, thankfully, Trump has returned to stop this trajectory and along with Musk et al will bring in a new era based on "bro science". Exciting times ahead!
I assume you are being sarcastic, if not it wouldn't surprise me.
Poe's Law?
Nur noch ein Gott kann uns retten
There's something Nietzschean/Faustian/Herculean about Trump and the tech bros that appeals to many, perhaps unconsciously. They must be a manifestation of the zeitgeist
While Trump does appeal to some - I believe Americans voted for the message - "make America great again" (whatever that means). I think it is more about maintaining the status quo (that is the minimum) , or turning the clock back if possible. As an example according to a YouGov poll Americans believe 21% are transgender when in actual fact only 0.6% are transgender.
https://today.yougov.com/politics/articles/41556-americans-misestimate-…
The poll is fascinating "Americans overestimate the size of minority groups and underestimate the size of most majority groups"
The Republicans were happy to promote the myth when in fact it was false. The false narrative created an outsize fear and that is what Trump played on. I argue that Trump et al are fearful of people realizing that they have been played. The "greater" America will always be just around the corner.
Trump did refer to himself once as "The Messenger". He is an extraordinary character and so is Musk.
I think it is more about maintaining the status quo (that is the minimum) , or turning the clock back if possible.
And casting a vote for Trump was the only chance, albeit a slim one, of achieving this.
But the status quo isn't working and I suspect many politicians know this and are just trying to hold on to pass the problem on to someone else. Unfortunately this doesn't work forever
Electing Trump is like a rich guy going to the casino and putting all his money on red. Sure he could double his money and be even richer, but he could also lose the lot and have to live on the street. Why would they take that chance?
Interesting. I don't know what the future of inequality will look like but I'd point out that demographically the workforce is now rapidly shrinking as a proportion of the population across all industrialised countries (except Israel.) Given fewer people are to be producing goods and services but more people consuming goods and services I would suggest workers might do well over the next couple of decades just due to increasing demand.
Workers might increasingly be prized piggies until the populations of industrialised countries peaks around the 2060s.
Depends on the industry and character of those in charge.
Capitalism sees workers (humans) as a bottom line cost to be cut at first opportunity. Hence the increasing "investment" in technology to replace them with automation or AI.
It really is a weird scenario. Spend billions on technology to save millions on human resources. But prices must increase to recoup the investment.
Just goes to show you how long the time frame has been for the demise of the USA, Trumps not going to pull it out of the swamp in only 4 years. The rot will continue until they try and use WW3 to save themselves.
It’s easy to blame the rich guys, but really it’s technology at fault. But you can’t stop technology, if the Americans didn’t build it someone else would have.
"It’s easy to blame the rich guys, but really it’s technology at fault."
OMG !!!
The absurdity of such a statement is beyond monumental. Even colossal fails to describe how frivolous it is.
(I despair! "We're not going to survive, are we?")
Interesting that there’s no mention of what drove the ‘great compression’ - but in essence it was recognition that the sacrifices of the many (depression, world wars) could not be ignored and there was a common understanding that allowing a few to rise above those who had sacrificed so much was publicly untenable- hence widespread support and acceptance of limits on the power of corporations, the wealthy etc (obviously these didn’t prevent wealthy people growing wealthier - but it moderated the rate).
Since then many egalitarian measures have been abandoned as ineffective or inefficient (inheritance taxes, gift duty, etc etc) and as a result compounding wealth is compounding faster than ever.
Agree that the power may return to the working classes as working age populations collapse - however that will only be once migrant channels are closed/exhausted.
"Since then many egalitarian measures have been abandoned as ineffective or inefficient (inheritance taxes, gift duty, etc etc) and as a result compounding wealth is compounding faster than ever. "
Hmmm. Who convinced voters that such measures were either "ineffective" or "inefficient"?
Surely it wouldn't have started as the "haves" screwing over the "have-nots"? They'd have been 50/50 split when this started (back in the 70s)? What's it now? 90/10? 99/1? ... Voters aren't that bright in that they vote for the 'here-and-now' while the inevitable progression completely escapes them. (And in some instances, to be fair, voters were never consulted. E.g. in NZ.)
"There can be democracy or there can be concentrated wealth, but not both." -- Louis Brandeis
For those that have never heard of Louis Brandeis, more here. Amazing to think there are lawyers like this, ay?
It's the money that broken once we left the gold standard governments have been buying us off with ever increasing goodies we cannot afford. Any government who wants to the right thing would get voted out the next election as we've become 'entitled' to all the goodies they offered. The cost to us is inflation and an ever increasing debt that we can never pay back. It's go so bad we are now begging for more tax even though we are taxed to death already. Tax when you earn, tax when you buy, tax when you sell, tax when you save, it's insane!
Separation of money from state in the way that church was separated seems logical, so government cannot be corrupted by corparate 'donations'.
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