The Founding Fathers Backed Thomas Piketty—And Feared a Powerful 1 Percent
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Many of America’s Founders believed that excessive wealth inequality would be incompatible with having a representative republic. They did not expect wealth to be identically distributed, but many did envision a thriving middle class with very broad-based capital ownership and they supported muscular government policies to allow citizens to acquire property on an ongoing basis. Following their lead, our principal strategy to deal with wealth inequality should be to make every citizen a capitalist by encouraging meaningful broad-based profit sharing and employee ownership and remaking our tax system to make this possible.
In his 1787 book, “A Defense of the Constitutions of the Government of the United States,” John Adams, later the second U.S. president, wrote: “If all power be suffered to slide into hands not interested in the rights of property … one of two things cannot fail to happen.” His first prediction was that the majority “will unite against” those with property. His second prediction was that the dependence of the majority “will render them mercenary instruments of wealth.”
Adams opened this passage by asking his readers to imagine a nation with a population of 10 million where 1 or 2 million owned most of the property and 8 or 9 million had very little wealth. How prescient! Today, for total U.S. wealth and many specific asset classes of wealth, such as all capital gains, America is approaching a situation where the top 10 percent or the top 20 percent hold far more wealth than the 80 percent of land held by the English aristocracy at the time of the American Revolution.
As half of the country spends its time criticizing Thomas Piketty for doing his research and the other half spends its time figuring out what to actually do next, it is time to examine how some major American historical figures considered how to balance the tension between economic development and our democratic ideals of equality. There is much to be learned about what America’s early leaders thought about these problems, how they struggled to resolve them, how their favored solution – shares of property – has evolved in American history and how it could address the inequality dilemma that is top-of-mind today.
Some Founders tragically held on to the evil compromise with slavery and the widely accepted civil elimination of womens’ rights by limiting who could be a citizen. John Adams wrote if landed property was broadly distributed, so would be political power and the conflict between a majoritarian political system and wealth concentration could be lessened. Thomas Jefferson wrote that “legislators cannot invent too many devices for subdividing property,” a principle that he practiced, at least for those who were citizens then, in buying almost a million square miles of the Louisiana Territory from France to create, as he wrote, “an empire of liberty” where citizens had an opportunity for significant plots of land, then the major form of capital. Madison wrote that broad-based property ownership was the best way to resolve this dilemma and he laid out specific policy suggestions to advance the interests of the middle class to acquire property. President Abraham Lincoln pushed the Homestead Act through Congress in 1862, making 10 percent of the entire U.S. land mass and 20 percent of public land capital easy for citizens to acquire with some sweat equity if they improved the land.