I watched with bemused cynicism as reports of voter sentiments during the last presidential election trickled in. Many reported that prices dominated their choice of leader. In short, bacon cost too much. For that, a majority of Americans were willing to elect a wannabe autocrat who, just a few years earlier, attempted to subvert the Constitution to illegally remain in power. The electorate (once again) chose a malignant narcissist who shows every sign of being a pathological sociopath. Perhaps social norms prevented MAGA supporters from revealing their more authentic motivations … rank racism and virulent misogyny.

Admittedly, costly bacon is a pain in the ass. Still, it distracts us from the 900 pound gorilla in the room. For me, the reelection of Donald Trump is a defining capstone to America’s long march toward rabid self-abuse and a self- imposed decline. What could I possibly mean by that?

America’s economic history over the past century can be divided into two dominant chapters. From the Great Depression through the 1970s, public policy was premised on neo-Keynsian thought. Government would partner with the private sector to offset market failures and smooth out inevitable excesses intrinsically embedded in unregulated capitalism. During that period known as the great convergence (late 1930s through the late 1970s), economic want diminished dramatically (except where perpetuated through pure social discrimination), inequality was reduced substantially, and upward social mobility became a norm. Each new generation could expect to do better than the previous one.

The key policy inflection point reversing all that came with the election of Ronald Reagan in 1980. Call it supply-side economics or the return of neo-classical economic thought, a new paradigm became the default position of policy thinking. Government now was the cause of all our problems. The solution was to be found in a misapplication of Adam Smith’s views on unfettered capitalism (in truth, Smith articulated numerous warnings and caveats about free markets). 

Efficient and unhindered markets, with prices guiding individual and collective decisions, were suddenly glorified. Humans were now reduced to hyper-rational actors whose individual calculations of personal utility, when aggregated, would magically result in an optimal society. Choices based on any notion of the public good were derided as misdirected and wrong-headed, no matter the expressed intentions.

The re-emergence of classical economic thought was no accident. Its conceptual roots can be traced back to the creation of Mont Pelerin Society in 1947 where intellectual giants such as Milton Friedman and F.A. Hayek laid out the rational underpinnings for turning the clock back. The movement picked up steam in the early 1970s when future Supreme Court Justice Lewis Powell articulated a strategic plan for gaining control over qessential social institutions such as the media, the courts, and educational systems. By the 1980s, the policy and economic inflection points were realized. The kind of people and ideas that brought you the great depression were back in charge.

The results should surprise no one. Existential threats such as climate change are being ignored. After all, free markets will take care of that threat. Artificial Intelligence (AI), which some refer to as Industrial Revolution (IR 4.0), is being permitted to unfold absent serious reflection and systemic preparation. Equally serious, classical economic thought allows both wealth and power to be concentrated in the hands of a few oligarchs. That is the 900 pound gorilla I mentioned earlier. It is called hyper- inequality.

What does that mean? Well, today the wealthiest 1 percent of Americans hold some $56 trillion in assets, the equivalent to what 90 percent of the remaining population control. Some 87 percent of all stocks are owned by wealthiest households. In 2024, those at the top of the wealth pyramid (the infamous 1 percent) held about one-third of the nation’s goodies while the bottom half fought over some 2.5 percent of what remained. Economists measure inequality by what is known as the GINI coefficient. In recent years, the U.S. has had the highest GINI coefficient among all advanced nations.

The reasons for this growing imbalance are complex but an increasingly regressive tax system that rewards the rich likely shares a good deal of the blame. Unlike the post WWII era, when we expected the wealthy to pay a reasonable portion of the nation’s bills, we now largely exempt them from that basic civic responsibility. As Warren Buffet has asserted repeatedly, his appointments secretary pays disproportionately more in taxes than he does. Today, the federal government spends $7 trillion per year while collecting about $5 trillion in revenues. Trump’s extention of his earlier tax cuts favoring the richest Americans guarantees that our public debt will continue to grow exponentially.

The stock response is that we spend too much. This is nonsense when we comparatively position our spending in light of our peer nations. The real villain is that we don’t ask those who have seen their fortunes explode in recent years to pony up their share. And let’s face it, a $40 trillion dollar debt cannot grow indefinitely absent serious consequences. Our coddling of the elite will come back to bite us in the ass.

There are small signs (based on recent isolated election results) that the average American may be getting it, finally figuring out that classical economic thinking has done nothing except reward the richest among us while slowly impoverishing most of the remainder. Let’s face it, Americans generally are not the sharpest arrows in the quiver.

Prior to Reagan’s election, wages tracked productivity gains among workers with remarkable precision. After that inflection point, productivity continued to increase while wages stagnated. The surplus value accrued to the owners of capital, not to workers. A question remains … can this continue indefinitely? My response … not likely.

Even today, the top 10 percent of earners account for 50 percent of all consumer spending. This is the highest level ever recorded. Households in the bottom 60 percent of the distribution spend 95 percent of their income on essentials. They have no surplus resources. This is a far cry from the the post war period when  public goods were fostered and supported by proactive government actions. During that era, a robust middle class emerged. Back then, the so-called American dream was real. Even an average kid like me from a working class family could easily work his way to a doctorate degree and a marvelous career at an R-1 university. Today, upward social mobility is becoming a dream for the privileged few.

As the elite inches toward measuring their assets in trillions (not billions), might they conclude they have enough. Elon Musk conceivably could pass the trillion dollar threshold soon. Might he conclude that the next billion has such limited marginal utility to him that contributing to the greater good might become attractive. After all, Bill Gates, Warren Buffet and others followed the example of Andrew Carnegie by pledging a good deal of their fortunes to philanthropic purposes.

That is possible but not likely. Already, billionaires like Peter Thiel are fighting against such impulsive generosity by their fellow members of the elite. History does not afford us many examples of the wealthy voluntarily sacrificing  for the public good.

Looking back at our history, we did have periods of similar hyper- inequality. One period strikes me as particularly illuminating. Our ante-bellum southern society had a class of enormously wealthy plantation owners who were surrounded by poor whites and enslaved blacks (humans whose lives had been monetized and constituted much of the elite’s assets). The future Conderacy was marked by extreme wealth unevenly distributed and a similarly asymmetric power structure. The elite ran things with impunity.

Did the Southern elite ever consider replacing slavery with some model of paid labor, as many northerners advocated? No, they preferred to fight to preserve their privileges at the cost of some 700,000 lives. Even after losing that horrendous conflict, they managed to recreate an unequal society through sheer terror and egregious Jim Crow laws.

One basic problem we face is that disequilibria built into unfettered capitalism is self perpetuating. Inititial differences in economic outcomes increase as concentrated wealth seeks to control decision-making and thus shape future policies to their own advantage. More wealth translates into more power means more wealth and even more power. That cycle will continue unless some exogenous force (revolution or some government response) intervenes. Unfortnately, society’s safeguards have been eviscerated or dismantled over the past several decades. In consequence, that cyclical process appears to be accelerating. Look who controls the media and other key institutions today.

Finally, back to my main point. Think again as to how concentrated wealth has dealt with the public good in the past. In general, they used their superior resources for selfish purposes. Mostly, they fought social legislation tooth and nail. Worse, they resorted to violence to maintain their hegemony. How many robber barons hired private armies to attack workers at the end of the 19th century? It turned out to be a common practice.

Now, think about the following scenario: what is likely to happen when AI renders most humans obsolete. Right now, that is a likely outcome as the next revolution barrels ahead at warp speed. Most jobs, even many technical positions, will disappear.

Do you really think yhat the elite will say ‘let’s pause and consider the human costs of what is emerging.’ Of course not, at least not when considered in light of history’s lessons. So, let us consider the following conundrum. What will society do with all those (possibly) redundant humans that will emerge in a more robust AI world? And who will make those decisions when the elite fully controls our political processes?

Hmm, a disturbing dystopia indeed!