The US Economy Is a System of Plunder

Runaway inequality, regressive taxes, rampant labor exploitation. It’s often said the US economy “isn’t working,” but the truth is that capitalism is a class system that’s working exactly as intended.

A man cleans a sidewalk in front of the luxury jeweler Cartier in Manhattan on September 28, 2017 in New York City. Spencer Platt / Getty

Early twentieth century portraits of the future often envisioned a society of leisure where, thanks to the wonders of economic growth and the miracles of technology, people would be liberated from the toil of work and free to engage in their own pursuits. In the coming post-scarcity utopia, it was imagined, humanity as a whole would ascend to breathtaking new heights — generating boundless innovations, creating unfathomable works of art, and perhaps even colonizing new planets and exploring the galaxy.

Optimistic as they were, these conceptions of the twenty-first century were based on some decidedly flawed premises. Perhaps most obvious was the fallacy of endless growth — something we now know would end in ecological catastrophe. A second problem was excessive faith in the power of automation which, at least as of yet, has failed to give us a vast army of robots capable of performing basic labor or replacing the human workforce.

These issues, however, are more semantic than they initially appear.

That’s because, while ultimately misguided, the utopian strand in early twentieth century futurist thought did get something very fundamental right: namely that both technology and economic prosperity would eventually make something resembling an egalitarian society of leisure a real possibility — just not an inevitable one. As predicted, we do indeed have at our disposal the means to work less, to eradicate poverty, and to give every person a more comfortable and dignified life than the majority of human beings have known for thousands of years.

What we lack is a political order designed to make these possibilities a reality, and there is no better illustration than the United States in 2019 — a perpetually affluent and technologically advanced society with an economy that works millions to the bone and leaves even many members of the middle class struggling to meet basic needs.

As the data make clear, American society has wealth and lots of it. In fact, the US economy has never been wealthier, with net household worth coming in at over $98 trillion according to 2018 figures. It’s so much money that, as New York Magazine’s Eric Levitz points out, it would put a whopping $298,000 into every person’s pocket if distributed evenly — turning every family of four into millionaires. What’s more, the US economy is growing and has been for some time. In fact, as of July, it was enjoying the most sustained period of expansion in its history.

Amidst this economic boom, the wealthiest fifth of Americans now holds nearly 90 percent of the country’s total wealth. The number of billionaires, meanwhile, has more than doubled in the last decade while dependency on food stamps has risen 40 percent since the financial crisis. The list goes on: homelessness is up and life expectancy is down while America’s richest man pockets more than twice what the median worker earns in a week in less time than it took to read the preceding sentence.

What’s caused this state of affairs, at least in its present extreme form, isn’t difficult to identify. As Levitz notes, workers’ wages too simply too low, basic goods are too expensive, and the American welfare state is both weak and anachronistically designed. But moreover, according to new data, the 400 wealthiest Americans are now paying a lower total tax rate than any other income group. Vividly depicted in a recent New York Times infographic, the current American tax system is yet a further illustration of why the twenty-first century looks nothing like people once imagined it would:

The overall tax rate on the richest 400 households last year was only 23 percent, meaning that their combined tax payments equaled less than one quarter of their total income. This overall rate was 70 percent in 1950 and 47 percent in 1980. For middle-class and poor families, the picture is different. Federal income taxes have also declined modestly for these families, but they haven’t benefited much if at all from the decline in the corporate tax or estate tax. And they now pay more in payroll taxes (which finance Medicare and Social Security) than in the past.

It’s often said that the American economy is broken, an assessment that is hard to deny given the scale of the inequality it enables, its failure to meet basic human needs, and the breathtaking extent to which current policies and those of recent administrations have tilted things towards the rich and powerful.

But “broken” is ultimately a poor description when a system is working the way it was intended . By design, the American economy is a system of naked plunder that fails to provide for the basic needs of millions while depriving the vast majority of people a share in the wealth their labor creates — instead transferring it upwards to a gilded class with its hands on the levers of political and economic power.

Just as the optimists of the early twentieth century once predicted, in other words, the twenty-first century is an era of endless bounty and the technology necessary for most people to work less, live longer, and experience happier, more fulfilling lives is firmly within our grasp. But wealth and power are in the wrong hands — and nothing short of a political revolution is going to change it.