When Thomas Piketty’s “Capital in the 21st Century” was first released in English, it followed the Culture War Playbook to perfection: First came the triumphant plaudits from like-minded thinkers, followed shortly by the hasty rebuttals of their ideological opponents, followed themselves by a torrent of commentary from pundits left and right who skimmed the book before adding their own two cents. Soon, there was the predictable “unskewing” by the right, after which came the fact-checking of the “unskewers” on the left… at which point the whole process had reached its inevitable conclusion. High-traffic angles fully juiced, our treadmill news cycle moved on to the next plank in our bitter, pointless culture clash, what author William Gibson has termed our “cold civil war.”
So it goes.
What’s so interesting about this Kabuki dance is just how few commentators at the time bothered to note that Piketty’s findings were never particularly controversial or groundbreaking. Piketty’s book became such a sensation on the left precisely because it gave weight to what anyone with a pair of eyes in the real world (i.e., not Lower Manhattan, the Washington Beltway, or Silicon Valley) can already plainly see: Wealth inequality grows each and every day, while the middle class keeps getting pummeled by this Glorious Free Enterprise System. What used to be good, stable jobs are converted into temp positions or contract work — automated, downsized or simply eliminated entirely, they’re replaced in the labor market by the worst-paying, most utterly dehumanizing low-wage gigs that our much ballyhooed “job creators” can imagine and implement.
The consequences for our democracy and our economy are perilous and unlikely to be easily remedied.
Whether or not one is generally convinced by Piketty’s thesis that r > g (or more plainly, that capital tends to grow at a faster rate than income without some form of outside intervention), it should be plain that in our system, the stage has been uniquely well-set for the unbridled expansion of wealth that his book describes. When the effective tax rates are lower for capital gains than for the incomes of the less affluent; when political processes are legally corrupted and circumvented for a price; when regulatory agencies are gutted, stalled, or simply staffed with careerists eager to make their way through the revolving door — this is not a political or economic system likely to become less unequal over time.
Will this trend toward inequality continue? According to “U.S. Trust Insights on Wealth and Worth,” a recent survey of wealthy Americans that aims to “[shed] light on the direction and purpose of the more than $15 trillion that will be passed across generations in high-net-worth families over the next two decades,” it seems increasingly likely.
The survey, which polled 680 Americans holding at least $3 million in investable assets, unearthed a troubling trend — the birth of a new American aristocracy. As the survey notes, “Nearly three-quarters of those over 69, and 61% of Baby Boomers, were the first generation to accumulate significant wealth. Among the younger Millennial generation, inherited wealth is more common. About two-thirds are from families in which they are the second, third or fourth generation to be wealthy.” Now, it should be noted briefly that this survey relies on self-reporting, which makes these figures somewhat suspect. (More on this in a bit.) But consider two charts: The first shows the highest marginal tax rates on income and capital gains throughout the last hundred years, while the second outlines the estate tax rate during the same period.
It’s hard not to notice that sudden dip in both charts — right around the late ’70s and early ’80s. Perhaps unsurprisingly, this is when the oldest of the millennial generation’s new aristocrats were being born — into a world with far less taxation on capital gains, high incomes, and most crucially, inheritance.
In the coming years, how will this affect our society’s conception of wealth and the American Dream? How will it affect our politics?
Before we go any further, it should be noted that the wealth of the super-rich is notoriously hard to measure. Oftentimes, these individuals — having gained prominence in society due to their money and stature — have the means and the desire to hide the true extent of their fortunes. This is a big part of the reason that Piketty, along with fellow economists Emmanuel Saez, Gabriel Zucman et al., have gained such esteem for their research compiling wealth statistics from the last couple hundred years; it’s the most comprehensive collection of data on privately held wealth ever created. Their work is a departure from the self-reporting that studies like U.S. Trust’s have traditionally relied upon, and so I was curious as to how they might respond to these findings. I reached out to Professor Saez via email to see what he thought of these conclusions — despite their obvious shortcomings. “When this generation leaves its wealth to their children,” he agrees, “then indeed top wealth will become much more aristocratic. It’s possible that the U.S. Trust survey is already picking up this trend. Certainly, absent any significant increase in estate and gift taxation, this trend will accelerate in the near future.”
And right on cue, enter stage left — a fresh new wave of (many wealthy) millennial Congressional candidates. Enthusiastic and idealistic, these young Americans paradoxically promote a style of bland, Washington Consensus politics, what Pennsylvania House candidate (and proud millennial) Nick Troiano has billed “radical centrism.” As a generation generally lauded for our commitment to civil service, noted for our love of structure, and gently mocked for our aversion to risk-seeking, surely we must be the perfect generation to fix America’s broken politics… Right?
Unfortunately, probably not. Our political system, where the cost of running for national office is prohibitively high for candidates of any age, is almost certain to bend further and further toward affluent candidates in coming years. On its own, this is troubling enough as it threatens the credibility and productivity of our democracy. But when considering the political views of affluent millennials — and the rest of the generation more generally — an ominous trend emerges. Consider three graphs from a recent Reason survey, “Millennials: the Politically Unclaimed Generation.” According to every metric Reason examined, the famed liberalism of young Americans fades as soon as their bank accounts grow:
The darkly comic silver lining here is that millennials aren’t gaining much wealth, so it’s not like we should expect some massive influx of Ayn Rand-loving hipsters in the upcoming years.
But the problem of inherited wealth remains.
Consider two current House Representatives born right on the edge of the millennial generation, Democrats Patrick Murphy (31) and Joseph Kennedy III (33). Their politics are quite divergent, but their individual circumstances are depressingly similar: Both are young white men from wealthy families who attended exclusive private schools starting at an early age. Patrick Murphy is a former Republican who switched parties to defeat conservative wacko Allen West (for which all Americans surely owe him a debt of gratitude). His politics might best be described as “smarmy,” a confusing hodgepodge of positions seemingly intended to appease his right-leaning Florida district. He’s pro-Keystone XL, pro-pointless Benghazi hearings and pro marriage equality. He says he supports “fiscal responsibility,” which is a nice way of saying that he’s a wolf in sheep’s clothing, a center-right politician who wears a donkey pin on his lapel. He’s young enough to surely see the writing on the wall, to sense that the Republican brand is toxic to the majority of his generation.
Joseph Kennedy III’s politics are somewhat less objectionable, which only serves to underscore the deeper problems at play. A fifth generation politician, it seems fair to characterize Kennedy as the poster child of our new American aristocracy. Agreeing with his positions on some issues won’t change the underlying problem — a system that’s far too likely to keep all but the wealthiest voices out of political power.
With a few notable exceptions, the latest batch of millennial candidates aren’t any better. Almost universally children of wealth and privilege, most embrace some token aspects of social liberalism while hurrying to display their fiscally conservative bona fides. They represent the status quo of the affluent, the powerful — the inherited wisdom of a political class that has overseen decades of economic failure for all but the wealthiest among us. When compared with other candidates, most of their positions are uncontroversial — which only makes their grand pronouncements about changing Washington all the more disheartening. If these candidates are in any way representative of the next class of Americans who are both willing and able to run for national office (and I suspect that they are), they should give pause to anyone who thinks that a new generation is coming of age who will rescue our captured politics.
Up until now, Pennsylvania Independent Nick Troiano and Republican Mike Turner have received the bulk of the media’s attention. (Turner recently lost his primary bid despite outspending his opponent 3-1.) Troiano has been in the public eye for a while, most prominently as one of the founders of “The Can Kicks Back,” a tragicomic millennial astroturfing outfit that tried to sell billionaire debt-alarmist Pete Peterson’s ideological vision to young people (slashing entitlement programs so that his gazillionaire buddies won’t be forced to help shoulder the programs’ expanding costs). The Can Kicks Back has been a monumental failure; the group has struggled to stay solvent, characterized as ”nearly broke” by internal emails discovered by Politico reporter Byron Tau last February. But this is America, and kids from upper-class families and cushy private schools always manage to “fail up.” Rather than departing from politics or taking on a more humble role, Troiano has opted to foist his entitlement reform obsession upon the voters of Pennsylvania’s 10th Congressional district. As for Mike Turner, at least he was honest about being a Republican: Turner’s campaign went viral recently when Mother Jones ran a story titled “This Millennial Bro Is Running for Congress Using the Family Trust Fund,” which is pretty much everything you need to know about former candidate Mike Turner.
Examining the full slate of the millennials running for Congress this term, a troubling trend emerges. Despite varying slightly on a number of other (mostly social) issues, the majority of these candidates display an almost monomaniacal obsession with “entitlement reform” and balancing the budget, as if that were the only long-term crisis facing young Americans. (It isn’t. At all. Even a bit.)
Take Republican Weston Wamp (27), son of former Tennessee Rep. Zach Wamp (who once suggested that states might need to secede if Obamacare were passed). On his official website, “conservative but independent” Weston Wamp promotes “holding the federal government in check” and “promot[ing] free market principles.” He’s careful to skate around most of the social issues that his generation supports, such as marriage equality, climate change and the War on Drugs (and didn’t respond to a request for comment), though he notes his support for the “right to life and the right to bear arms.” According to recent FEC filings, the Wamp campaign has raised over half a million dollars as of this writing, with more than half of that bankroll coming from 110 individuals who contributed the legal maximum of $2,600.
Or consider Andrew Walter (32), Republican candidate for Arizona’s 9th District. A former quarterback for Arizona State and the Oakland Raiders and the founder of a senior secured business lending firm, Walter claims (falsely) that “our national debt is larger than our entire economy.” He then suggests that we “decrease the size of government,” “cut spending,” and that we add a Balanced Budget amendment to the Constitution, which is basically the worst idea ever. Walter has already raised $383,945 (and borrowed $100,000 more); half of that was provided by just 72 individuals who contributed the legal maximum.
How about Elise Stefanik (29), a New York Republican running for the House? A long-time D.C. insider and Harvard grad, Stefanik was raised by a family that owns a flooring company worth upwards of $50 million (per manta.com, h/t DailyKos). A consummate D.C. insider who’s now posing as a local small businesswoman, her campaign site is much more cagey than any of the other candidates I researched for this piece. She resorts to generalities when discussing most issues, but does tout “fiscal responsibility,” stressing the need to “balance the budget and pay down the national debt.” Stefanik has already raised a staggering $836,126 from a wide-ranging group of individuals, companies, PACs and party leadership.
Young Republican candidates Isaac Misiuk (25) and Marilinda Garcia (30) are also convinced of our oncoming debt disaster. At Maine’s 2014 State Republican Convention, Misiuk stated that “we must reduce spending and balance the budget.” Garcia follows much the same script, calling for ”entitlement reform,” the full repeal of Obamacare, and “a balanced budget amendment.” To be fair, unlike the rest of these candidates Garcia and Misiuk are no aristocrats, as is immediately apparent when examining their latest FEC filings. Combined, they raised less than almost every other candidate mentioned in this piece. And yet, the song remains the same.
In an email exchange with Forrest Dunbar, a candidate for Alaska’s 1st Congressional district, Dunbar defended entitlement programs aggressively, despite what he sees as a “dark fatalism” among millennials skeptical that they’ll ever receive those programs’ benefits. Dunbar is particularly critical of recent plans to cut Social Security and Medicare, where “‘serious’ attempts at entitlement reform include the Ryan Budget, which would turn Medicare into a voucher, slash veteran’s healthcare, raise taxes on the middle class… and then turn around and plough those savings into a giant tax cut for the wealthiest people and corporations. If that’s the best Congress can do, then Medicare (and eventually Social Security) are doomed.” New Jersy Congressional candidate Roy Cho agrees, stating in an email that “[m]aking drastic and immediate cuts to so-called entitlements might balance the budget, but it will [...] plunge our economy back into a recession. Spending is certainly a large part of the problem with the dysfunction in Washington, but the bigger problem is that bipartisan cooperation no longer exists between the two parties.”
These few liberal millennials running for Congress this cycle — Wes Neuman (27), Roy Cho (32), Gabriel Rothblatt (31) and Forrest Dunbar (30) — tend to focus on more traditionally left-wing issues such as clean energy, education and campaign finance reform. They’ve also raised a lot less money than their conservative peers, a detail that only confirms the most cynical reading of this emergent political reality. With the exception of New Jersey candidate Roy Cho (who’s raised almost half a million dollars for his campaign — with about a quarter of that coming from 51 donors who gave the legal maximum), the millennial Democrats are tragically underfunded: They’ve raised just under $150,000 combined, or less than any of the Republican candidates besides Maine Congressional hopeful Isaac Misiuk.
Perhaps it’s no surprise, then, that campaign finance reform is featured prominently in the platforms of all four young Democrats running for office. As Cho sees it, we need “real campaign finance reform before the only people who have the means to run for office are those who have never known what it’s like to have to struggle to succeed.” But limiting the influence of money in our elections — if even possible — will not suffice. As long as mainstream politicians from both parties refuse to even consider the drastic, progressive measures that might start reversing our deeply rooted inequality, nothing will change. So it’s not particularly encouraging that common-sense solutions meant to narrow our wealth gap and expand the federal balance sheet — such as implementing a ”Robin Hood Tax” or raising rates for inheritances, gifts, and capital gains — currently exist so far outside the mainstream.
Wealth has always been a feature of American democracy, and perhaps these concerns seem overwrought. But the changing shape of America’s upper class, the $15 trillion projected to flow from the old to the young in the coming decades, is a force too powerful to be ignored or overlooked. As long as the cost of running for office continues to rise, the pool of potential candidates will continue to shrink. We must address this new reality before trust in government erodes beyond repair.
Without political intervention this country will become increasingly aristocratic, and faith in our democracy and her institutions will continue to diminish. That might be an acceptable condition for those affluent individuals who’ve already made their fortunes, who’ve seen their wealth rise to unprecedented heights in recent years.
But for the rest of us? Aristocracy can only spell disaster.
