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The Future of Capitalism Itself May Be At Stake In 2018 Elections

By Joe Rothstein — April 24, 2018

Let’s say you have enough money to buy a luxurious home, even in the most expensive neighborhood of the one of the most expensive cities in the U.S. And let’s say you have enough money to buy a second luxurious home, perhaps in the mountains, or near the sea. You also are wealthy enough to own two or three or four Mercedes or BMWs, pay for your children to attend expensive schools, take extended vacations in five star spas, buy custom suits and couture clothing, eat at Michelin-starred restaurants, drink vintage wine, contribute generously to your church and other charities, stash away enough savings to pay for any medical bills that some day may come your way, and insure a retirement that maintains this life style after your working years.

How much money would all that require? A billion dollars? Hardly. My back of the envelope calculation tells me that I could do this in grand style for $100 million, maybe even $50 million if I cut a few corners.

If that sounds like a lot of money, you haven’t been reading Forbes Magazine. Each year, Forbes updates its list of the world’s richest people. Everyone of the top ten on that list was a billion dollars richer this year than last. There were so many billionaires on the wealthiest 2,000 list that 160 billionaires didn’t even make the cut.

While those at the top were getting richer, the share going to workers continued to stagnate. Worse, an International Monetary Fund report has confirmed the share of national income paid to workers in advanced economies has been falling since the 1980s. Classical economics says that wages should keep pace with gains in productivity. Clearly, they haven’t. Investors are winning, workers are losing and there’s no sign those graph lines are about to change.

This comes as no surprise to Thomas Piketty, the French economist who, in 2014, produced a 700-page tome that forecast even more inequality. Piketty argued that when those with wealth can get a higher return for their investments than the annual rate of economic growth, they use the economic system to increase their advantage. In the U.S., those signs are everywhere, most recently in the Republican tax plan weighted to profit the wealthy and business corporations. The first quarter, 2018, is one of the most profitable ever for U.S. corporations.

Piketty dug through centuries of capitalism’s history and found that the current arc of inequality is the rule, not the exception. You don’t have to be Piketty to understand that stock buy-backs, monopolistic mergers, favorable tax treatment of wealth, loosening of public interest regulations, the destruction of unions and other actions aided by compliant public policy are accelerating financial inequality---policy that’s being set by those ever more dependent on the wealthy to win and hold public office.

Piketty’s research shows that all of this is incompatible with democracy, and justice. Left unmanaged, he argues, capitalism is not sustainable.

Seen from this perspective, the Tea Party, the Occupy movement, and the blossoming of the Sanders and Trump faithful all share the same political stem cells—-dissatisfaction with the way the economic system is working. Now add to that the fact that fewer than 20% of voters approve of the job Congress is doing. The political system isn’t working right, either.

So, what’s to be done? It’s fairly clear that the public wants big change, not small change. Any doubt about that should have been dispelled by Trump’s election.

Piketty has one idea for change that has caused shudders throughout the worldwide monied class. He suggests a 15% tax on wealth. All wealth. Stocks, bonds, land, machines, patents, and all the ways that money earns money. If such a tax was imposed worldwide it would forestall the wealthy from shopping for the country with the lowest tax rate. A wealth tax would transfer trillions of dollars from those on the Forbes list and put it to other uses, such as higher wages, education, and stronger health systems.

In addition to taxing wealth, Piketty proposes a graduated income tax rate with a top rate of 80%, similar to the U.S. tax schedule in the 1950s, a period when the middle class began to close the wealth gap and consumer spending fueled one of the era’s healthiest economies.

But, you say, shouldn’t people like Gates and Bloomberg be allowed to keep all the wealth they’ve generated through their own hard work and smarts? To maintain a stable capitalist system, the answer would be “no.” There should be limits on how much wealth a few individuals can hoard while tens of millions of others, workers who are essential for the creation of that wealth, wind up struggling financially. It also is important to note that fully a third of those on the billionaires’ list got there because they won the gene pool. That is, they were born into the rich families.

When Piketty’s “Capitalism in The 21st Century” was published, Congress was firmly under Republican control with little prospect that would soon change. Piketty’s ideas were dismissed as irrelevant in that political environment. Now, with the possibility that Sanders-inspired Democrats may win control of Congress, the floor has been reopened for discussion. A Democratic sweep would signal that the public remains interested in a major break from the politics of the past, just not the GOP formula. In that environment, a large tax increase on the wealthy, job creating and higher income producing legislation and a more economic-leveling distribution of public funds all move into the realm of the possible.

Two years ago a YouGov survey asked respondents whether they had a “favorable or unfavorable opinion” of socialism and of capitalism. Those 30 years old and younger preferred socialism by a 43-32 margin. In the 2016 presidential election, polls indicated that young voters preferred Bernie Sanders because he is a Democratic-Socialist, not despite it.

It’s the young who are bearing the brunt of institutionalized inequality. More expensive education, larger student loans to achieve it, fewer income opportunities at lower pay then their parents. Less secure retirements.

And, the young are more likely than their parents to think that $100 million or thereabouts is quite enough wealth to live on very nicely.

(Joe Rothstein is a regular columnist for and author of the acclaimed political thriller “The Latina President and the Conspiracy to Destroy Her.” Mr. Rothstein can be contacted at

Joe Rothstein is editor of U.S. Politics Today. His career in politics spans 35 years, as a strategist and media producer in more than 200 campaigns for political office and for many political causes. He was a pioneer in professional political consulting and one of the founding members of the American Association of Political Consultants. During his career Mr. Rothstein has served as editor of the Pulitzer Prize-winning Anchorage Daily News and adjunct professor at George Washington University's Graduate School of Political Management. He has a master's degree in journalism from UCLA.