Money matters
There's plenty to go around, but not if the rich just keep getting richer.
Like Donald Trump’s entire business career, his newfound status as an actual billionaire seems yet another scam; a paper fortune built on bluff, bluster, and his pathological addiction to taking advantage of the stupid, gullible, and desperate.
Just last week, Trump was unable to post the $454 million bond required from losing a civil trial in New York for systematically lying about the value of his properties (an appeals court on Monday reduced the bond to $175 million). But then, suddenly, a lifeline! Shareholders of Digital World Acquisition on Friday approved the merger of their special-purpose IPO company with Trump Media & Technology Group, clearing the way for the owner of Trump’s pathetic Twitter/X social media rival, Truth Social1, to list on Nasdaq. On Tuesday it did, and the share price rocketed.
“By most traditional measures,” the New York Times tried to say with a straight face, “Trump Media’s valuation is inordinately high.”
It’s not “inordinately high”—it’s insanely high, and there are no “traditional measures” under which the valuation can be justified. Trump Media & Technology Group posted revenue of $3.3 million and a loss of $49 million in the first nine months of 2023. Yet its market capitalization was yesterday more than $9 billion.
The bat-shit crazy valuation—which may or may not be propped up by foreign actors eager to see Trump return to the White House and do them all sorts of favors—made Trump’s stake worth more than $5 billion on paper. And so, once again, the not-as-rich-as-he-claims-but-still-rich former president has screwed the system to his advantage. Then again, it’s a lot easier to make money when you already have it.
I often note America is a poor country filled with rich people, and it’s only confirmed by Trump’s latest shenanigans, which will no doubt result in a whole lot of rubes losing their shirts (they’ll still have their astonishingly ugly gold sneakers). But the country’s obsession with wealth is only getting worse, as are the consequences of widening inequality.
When I was reporting on Australia’s media sector back in the late 1990s, it became an annual event to see if Rupert Murdoch’s News Corporation would crack the magical barrier of achieving net annual income of $A1 billion ($650 million). Oh, the old days! Back then, a billion dollars seemed an enormous sum of money for any company or individual. Australian billionaires were unicorns: at the turn of the century, the BRW rich list had just a handful of them, led by Kerry Packer with $A8.2 billion. Making the list of Australia’s 200 richest people in 2000 required being worth $A85 million.
Today? You need $A690 million, and the latest list has 141 billionaires. Of course, Australia is just a canary in the wealth coal mine: globally, there are now 2,640 billionaires with a combined wealth of $12.2 trillion. In the US, the top 10% of households account for 66.6% of the country’s wealth; the bottom 50% just 2.6%. The top 1% of American households are worth $38.7 trillion—more than the combined wealth of America’s entire middle class.2 Oh, and corporate profits? Apple reported net income of $33.9 billion for the first three months of the current financial year, and is sitting on $162 billion in cash reserves.
Just to be clear: I’m a capitalist. But does anyone need the $198 billion Jeff Bezos is worth today, as tracked by Forbes’ real-time list (the fact the accumulation of wealth is treated like a contest is one of the problems)? Maybe how Bezos spends his money answers that question: he’s building penis rockets and sticking a sculpture of his fiancee on the prow of his $500 million yacht, while Elon Musk is blowing $40 billion-plus on Twitter as his cars keep getting recalled.
They do philanthrophic work, of course. But it’s hard to shake the feeling our general attitude to wealth—and the responsibility the wealthy once felt to better society rather than just accumulate more and more—has shifted dramatically, and not for the better. In 1965, America’s highest marginal highest marginal tax rate was 70% and CEOs earned an average of 21 times the salary of a typical worker. The gap between the top and the bottom wasn’t that outrageous, and corporate leaders weren’t terribly removed from the communities in which they operated.
Today, the highest marginal income tax rate is 37%, and CEOs are on average paid 344 times as much as a typical worker. Average workers live in the suburbs and commute; CEOs seem to gather in increasingly wealthy enclaves far removed from both the employees who drive their companies and the communities where their colleagues, their families, and customers actually live. Not far from me, a private-equity billionaire is building a $77.4 million lakefront home (in Winnetka, where the average household income is $250,000). To underscore the delusional world of the super wealthy, his wife tearfully claimed construction delays caused by opposition to the project meant their kids were “missing out on being able to live our dream of a quiet, authentic, suburban life.”
I know I rave about Brunello Cucinelli, even if I’m the first to admit no cotton t-shirt is worth $795. But I admire his notion that what’s good for his workers is ultimately good for his business, and life is about leaving a legacy far greater than numbers on a balance sheet. Cucinelli grandly calls it “humanistic capitalism,” but that’s just rebranding an older tradition of people building businesses alongside colleagues rather than above them and viewing their broader role as custodians not only of a company but its community. Today, corporate America more often seems an opportunity for leaders to grab as much for themselves as quickly as possible, consequences be damned.
There are definitely issues of personal responsibility, but late-stage capitalism feeds this winner-take-all mentality. America is, after all, the land of opportunity: part of the country’s DNA is the persistent belief everyone is on the verge of becoming rich, even if the odds for most are barely better than winning the lottery (as it happens, the total on offer from America’s two biggest lotteries was last night around $2 billion).
“There is no country on Earth minting as many millionaires and billionaires as the US,” Scott Galloway noted last year in a column I earlier touched on. “Regardless of the odds, and the harsh reality that success is more about when and where you are born than your talent, most Americans believe they have a shot at extraordinary prosperity. And that’s a good thing. We can’t—and shouldn’t—weaken the pull of capital. The profit motive is capitalism’s driving force, and it’s driven a greater increase in prosperity than any other human creation. The problem is our better angels are outmatched; we need counterweights.”
In his State of the Union address two weeks ago and the budget that followed, Joe Biden proposed some. He’s long called for raising the corporate tax rate to 28% from 21%, and lifting the corporate minimum rate from its current 15%. But he pushed for stricter limits on business income deductions for executive pay and the use of corporate jets, as well as a 25% minimum income tax for Americans with wealth of more than $100 million. While the tax rate for the average US worker was about 25% in 2022, Biden noted the average tax rate for 1,000 billionaires was 8.2%.
"I'm a capitalist,” Biden said. “You want to make a million, or millions of bucks? That's great. Just pay your fair share in taxes.’
As the divide between rich and poor only widens—as does the nation’s political divide—regulation seems the only feasible response. That means lifting tax rates on the wealthy and aggressively enforcing anti-trust laws to reduce industry consolidation and concentration, while investing in education, training, and initiatives that help build wealth at the lower end of the income scale.
It sounds economically a lot like America right after World War II—the so-called halcyon days Trump supporters want to return to. Their motives may be different, but they’re voting for Trump. I’m pretty sure we can fool ‘em.
A note about whatever this is …
After writing a few thousand articles for newspapers and magazines, I spent a long time trying a bunch of other stuff. I guess I figured what came (relatively) easily must by definition be less valuable, so I wandered in the corporate wilderness, becoming increasingly frustrated and doing work that felt increasingly lousy.
Sometimes with age comes wisdom, and I’ve realized finding something (relatively) easy ain’t a bad thing. So, this is a space where I’m resurrecting writing for myself, on topics weird and wild and wonderful.
Posts will appear when the mood takes me, but I do try to be consistently inconsistent—sometimes it’ll be a couple of days between drinks; sometimes a week. But if you subscribe, you’ll get a email letting you know I’m ranting. Again.
The name is obviously sarcastic, just like Fox News’ “fair and balanced” motto.
Defined as the middle 60% of households by income. In the US, these households have about 26% of all wealth.