One of the most common ways that the ultra-rich maintain their power and wealth is by rigging the rules of the oligarchy economy in their favor. This can take many forms, but some of the most common are listed below.
- They use their political clout to get laws and regulations passed that favor their businesses.
- They use their economic power to drive down wages, benefits, and working conditions.
- They use their financial resources to buy up small businesses, driving up prices and putting people out of work.
- They use their media resources to control the narrative and shape public opinion in their favor.
- They use their philanthropic resources to buy influence and create a positive public image for themselves.
- They use private school education to groom the next generation and gain preferential access to education, jobs, and other opportunities.
- They use intergenerational wealth transfer mechanisms to create a self-perpetuating cycle of privilege that is passed down from generation to generation.
The present age is one in which political populism has taken center stage. However, it’s not the same as the populist democratic movement that followed the last Gilded Age, which fought to curb corruption and protect people’s rights while also increasing the power of ordinary citizens. The contemporary populism movement is connected with a style of government that is authoritarian—a type of government in which one person has a lot of power.
Populist authoritarian movements are led by charismatic leaders who appeal to and claim to embody the will of the people. They do this to consolidate their power. In this personalized form of politics, political parties lose their significance, and elections confirm the leader’s power rather than reflect the various allegiances of the people. Extreme nationalism, racism, conspiracy theories, and scapegoating of despised minorities are hallmarks of some forms of authoritarian populism. Each of these methods is intended to strengthen the leader’s power, divert public attention away from failures, and disguise the nature of the leader’s rule or the true causes of economic or social issues from the people.
Oligarchs use their political clout to get laws and regulations passed that favor their businesses. Specific examples of this include laws that lower the taxes on the wealthy, weaken environmental regulations, and loosen financial regulations. In 2017, for instance, the ultra-rich used their political clout to get a huge tax cut passed that favored them and their businesses. The top 1% of earners got an average tax cut of $50,000, while the bottom 99% got an average tax cut of $460. This was accomplished by lobbying congress and making campaign donations to lawmakers.
The Tax Cuts and Jobs Act of 2017 had a good-sounding name, but it was essentially a politically-motivated ruse. It was ushered in and carried out by a self-proclaimed billionaire and his accomplices, using language that was intended to appeal to average people. It has been widely criticized by tax experts as a poorly-designed and unfair law that benefits the ultra-rich at the expense of everyone else.
The sub-prime mortgage crisis of 2007-2008 was caused in part by the deregulation of the financial industry. This was accomplished by a concerted effort on the part of oligarchs and their political allies to weaken or eliminate laws and regulations that had been put in place to protect consumers and prevent another Great Depression. The deregulation of the financial industry led to widespread fraud, corruption, and abuse, which ultimately resulted in the loss of trillions of dollars of wealth and the displacement of millions of people.
The oligarchs who caused the crisis walked away with billions of dollars while average Americans were left to deal with the consequences. In 2008, Congress passed a law that bailed out the financial industry to the tune of $700 billion. This was done to prevent the collapse of the economy, but it was also a way to ensure that the people who caused the crisis didn’t suffer any consequences for their actions.
In 2010, the Supreme Court handed down a decision in the Citizens United case that allowed corporations and wealthy individuals to spend unlimited amounts of money to influence elections. This had a profound impact on American politics, as it essentially allowed the rich to buy elections. In the 2012 election, for example, outside spending by corporations and wealthy individuals totaled $6 billion. This was more than double the amount spent in the 2008 election. The vast majority of this money went to support Republican candidates. The Citizens United decision has been a boon for oligarchs, as it has allowed them to use their money to buy elections and gain more political power. It has also had a deleterious effect on democracy, as it has made it harder for average citizens to have a say in the political process.
The supreme court, which once was considered a nonpartisan institution, has become increasingly politicized in recent years. This is due in large part to the fact that the court has been stacked with conservative appointees, all of whom were nominated by Republican presidents who did not achieve victory in the popular vote but rather via an antiquated and undemocratic Electoral College. The court has grown more activist in recent years, and it has handed down several judgments that have benefited the wealthy and powerful. In the summer of 2022, the court ended 50 years of federal abortion rights, expanded gun rights, weakened the power of the Environmental Protection Agency, and appeared to be on track to undermine contraception access, same-sex relationships, and same-sex marriage.
In addition to using their political clout to get laws passed, oligarchs also use it to block laws that would benefit the average person. One example of this is the minimum wage. The federal minimum wage has been stuck at $7.25 an hour for over a decade, even though the cost of living has gone up significantly during that time. This has been a huge windfall for corporations, who have been able to pocket the difference between what their workers are paid and what it costs to live on. Other measures that would have benefited the middle class have been cut short, including rules that would have made it easier for employees to organize and laws that would have closed the loopholes that allow businesses to avoid taxes.
Oligarchs have also used their political clout to weaken environmental regulations. This has allowed them to pollute the air and water without consequence, and it has put the health of average people at risk. In some cases, oligarchs have even been able to get environmental regulations repealed outright. One notable example is the Clean Power Plan, which was a set of Obama-era regulations designed to reduce greenhouse gas emissions from power plants.
President Obama’s successor worked to repeal the Clean Power Plan, which would have been a huge victory for oligarchs, as it would have allowed them to pollute with impunity. On the last day of the 45th president’s term, the second-highest court in the land struck down one of the most damaging anti-environmental actions of his administration. During the same period, however, more than 35 million acres of public land were lost or threatened with loss of protection, amounting to roughly the area of Florida. After a uranium company lobbied the government, Bears Ears National Monument was reduced by 85% in December of 2017. Andrew Wheeler, who served as the 15th administrator of the United States Environmental Protection Agency (EPA) from 2019 to 2021, was a big part of this effort.
These are just a few of the political ploys enacted in a previous administration that, at times, appeared to be designed specifically to dismantle any progress that had been made toward a more just and equitable society.
The economic power of the present-day ultra-rich is unparalleled in our history. The level of economic inequality is even higher than it was during the Gilded Age when the top 1% of the U.S. population owned 51% of all wealth. The concentration of wealth in the hands of the few has had several harmful effects on our economy. It has led to a decrease in consumer spending, as the majority of people do not have the disposable income to purchase goods and services. This has been a major drag on economic growth, as consumer spending accounts for 70% of all economic activity.
Another effect of the concentration of wealth is that it has made our economy less stable. When the rich have a larger share of the pie, they are more likely to save their money rather than invest it in productive enterprises. In recent years, the increase in cash held by U.S. enterprises has been dramatic, exploding from $1.6 trillion in 2000 to roughly $5.8 trillion today. This trend has worried investors, who would want the money either invested or paid out as dividends rather than kept idle. This leads to a decrease in investment and an increase in economic inequality.
Some economists have argued that the concentration of wealth is not necessarily a bad thing, as it can lead to more investment and economic growth. However, the evidence does not support this claim. In reality, the concentration of wealth is a drag on economic growth and stability, and it gives the rich too much political power.
One of the most popular policies promoted by the government in recent decades, and which is still fiercely defended, is “trickle-down economics.” The trickle-down economics theory is the idea that when businesses, high-income earners, and people who own a lot of assets get tax cuts, the benefits will “trickle-down” to everyone else. Trickle-down economics holds that the Reagan and Bush tax cuts should have benefited everyone. The exact opposite occurred, as income disparity worsened. After-tax household income rose 6% for the bottom fifth between 1979 and 2005. That might appear to be good news until you compare it with what happened to the top fifth. Their income shot up by 80%. The top 1% increased their income by three times. It appears that prosperity has been trickling up instead of trickling down.
Now, there is increasing talk among political “conservatives” about cutting Social Security payments and Medicare reimbursements—programs that are vital to the economic security of millions of Americans. Calling these programs “entitlements,” as if they are some kind of handout instead of earned benefits that workers have been paying into for decades, they want to reduce or eliminate them. In reality, it’s a cynical ploy to get rid of programs that have helped millions of Americans and a way to further increase the concentration of wealth and power in our society.
Working conditions have fared no better during this second Gilded Age. Although we have some protections that were put in place following the first Gilded Age, such as the 8-hour workday, the 40-hour workweek, and occupational safety regulations, these have all been under attack in recent years. The right to unionize has been under assault, as companies use their power to keep workers from organizing. Many workers are now classified as “independent contractors,” which means they do not have the same protections as employees. This has led to a decline in wages and a decrease in benefits, such as healthcare and retirement savings.
A monopoly is when one company has a lot of control over an industry or sector, to the point where no other companies can compete. A few monopolies could be considered beneficial, such as electrical utilities or water providers, which are essential services that need to be delivered efficiently. However, most monopolies stifle competition and allow companies to charge higher prices and rake in huge profits. There are four main types of monopolies:
- Natural monopolies, where one company can provide a service more cheaply than any other company because of economies of scale.
- Technological monopolies, where a company has a patent or copyright on a product or service.
- Government-sanctioned monopolies, where the government grants a company the exclusive right to provide a service, such as the U.S. Postal Service.
- Market share monopolies, where one company has such a large share of the market that it can effectively set prices.
Monopolies create many problems for both the society and economy. When a monopoly exists, there is little incentive for the company to innovate or improve its products or services. The problem of monopolies is compounded by the fact that many of these corporations are now global in scope. This gives them even more power, as they can operate in countries with weak regulatory regimes and take advantage of workers there who have no protections. They can also use their financial resources to influence politicians and get favorable laws passed. This increases their power and allows them to further rig the system in their favor. Remember the concept of “too big to fail” from the 2008 financial crisis? That’s what happens when a monopoly gets too big and powerful. The government is forced to bail them out because they are essential to the economy, but this just makes the problem worse.
Oligarchs use their financial resources to buy up small businesses, driving up prices and putting people out of work. While we have anti-trust laws on the books to guard against monopolistic practices, the reality is that a handful of corporations now control vast sectors of the economy, from food production to healthcare to banking. This gives them an immense amount of power over our lives. And because these corporations are often global in scope, they are beyond the reach of any one government. This makes it very difficult to regulate them or hold them accountable for their actions.
Oligarchs use their media platforms to dominate the conversation and shape public opinion in their favor. In the United States, six businesses (Comcast, Disney, Time Warner, Fox, CBS, and Viacom) dominate almost 90% of media organizations. The Murdoch family, which controls the News Corporation (the operator of Fox News), has media and publishing branches on five different continents. News Corp. is notorious for practicing predatory capitalism in the news industry, which jeopardizes media diversity and democracy.
Broadcast and cable news outlets are not the only targets of media control. Social media platforms, such as Facebook and Twitter, are also increasingly dominated by a few large corporations. Eighty-three percent of all internet traffic is controlled by just four companies (Google, Amazon, Facebook, and Apple). This gives these companies immense power to shape the online conversation and control what information we have access to.
Tesla billionaire Elon Musk’s attempt to buy the social media platform Twitter has rightly drawn concern from critics. They worry that he will have too much control over the news media. But this is not just about free speech, as Musk would like to frame it. It is also about the quest by billionaires to control the news media. His goals are similar to those of Jeff Bezos, who owns the Washington Post, Rupert Murdoch, who owns Fox networks and several newspapers, and the descendants of Sinclair Broadcast Group, Inc. (SBG) founder Julian Sinclair Smith, the owner and operator of the most local TV stations in the nation—to shape public opinion around their world views. The problem with media consolidation is that it gives too much power to a small number of people. It allows them to control the flow of information and shape public opinion to their benefit. This is a dangerous situation for any democracy.
The U.S. population is more polarized than ever, and the media is partly to blame. At an annual media and communications conference in 2022, Sinclair CEO Chris Ripley told his audience that a politically divided America is “very good for our business.” His company’s local TV operation has a reputation for highly partisan commentaries and has required all of its affiliates to air “must-run” segments that were often criticized as biased and misleading. Ripley isn’t the only media executive to see divisions in society as a business opportunity. Rupert Murdoch, the chairman and CEO of Fox Corporation, said in 2006 that “the more divided the world gets, the better it is for us.” Rupert has shown that it’s relatively easy to “stir up the lizard brain” and cash in on fear in society.
The fairness doctrine was a policy of the United States Federal Communications Commission (FCC), introduced in 1949, that required the holders of broadcast licenses both to present controversial issues of public importance and to do so in a manner that was, in the Commission’s view, honest, equitable and balanced. The doctrine was rescinded by the FCC in 1987. The repeal of the fairness doctrine enabled the rise of divisive and vicious messaging and “news” based on ideology and opinion rather than facts. The devastating truth is that the majority of us who live in the middle-class share many of the same ideals and objectives. But, we are continually duped by wealthy people with warped viewpoints and political motives into fighting one another.
It’s no secret that the wealthy have more influence than the average person. But, what is less well known is the extent to which they use their influence to protect their wealth and privilege and further their interests. The truth is that the wealthy have a disproportionate amount of power to use their philanthropic resources to buy influence and create a positive public image for themselves. For example, the family of David and Charles Koch, commonly referred to as the Koch brothers, have a combined net worth is $100 billion, which is good enough to make them the second wealthiest family in America.
The family is also extremely influential in politics, especially in far- right-wing issues, and has been patiently reshaping the Republican Party and conservatism in America since at least the 1970s. The Koch brothers have donated millions of dollars to higher education institutions. In return, these institutions have given the brothers a platform to disseminate their political ideology and advance their business interests. The Koch brothers have also used their philanthropy to support conservative think tanks and policy organizations. These organizations help to shape public opinion and promote the brothers’ political and economic agenda.
These days, when wealthy individuals make large donations, they are celebrated as heroes. It was not always this way. John D. Rockefeller’s proposal for the establishment of the Rockefeller Foundation in 1909 met with fierce resistance. The notion was initially criticized by Former President Teddy Roosevelt and then-President William Taft, with Roosevelt declaring, “No amount of charities in spending such fortunes can compensate in any way for the misconduct in acquiring them.”
The lack of transparency and potential conflicts of interest inherent in most large-scale charity efforts are a major concern for democratic governments and customs. We should be more critical and skeptical of rich people giving away their money. It is often done with ulterior motives and can harm society. The charitable contribution tax deduction benefits the wealthy more than the middle-class or poor people. When rich individuals give to charity, they get a larger sum of money back from the government than do middle-class and impoverished persons.
From an early age, children of the ultra-rich are groomed to take their place in the American oligarchy. They attend private schools, which are often segregated by race and class. At these schools, the children of the wealthy are socialized with other members of their class and learn how to maintain and reproduce their privileged position in society. Relationships formed in these environments often last a lifetime and help to solidify the power of the American oligarchy. Variations of the “old boy network” can be found in all walks of American life, but it is especially pronounced among the ultra-rich. These cliques provide their members with preferential access to education, jobs, and other opportunities.
While the children of the wealthy attend private schools, the children of the working and middle class are increasingly attending underfunded public schools. In many cases, these public schools are overcrowded, understaffed, and lack the resources to provide quality education. As a result, the children of the rich are getting an even better education than they would have in the past, while the children of the poor are falling further behind. This increased educational inequality is one of the factors that is widening the gap between the rich and everyone else in America.
The American oligarchy is also perpetuated by intergenerational transfers of wealth. This concentration of wealth is made possible, in part, by the fact that wealthy Americans can pass their money down to their children. In addition to receiving a sizable inheritance, the children of the rich also benefit from their parents’ connections and social capital. These advantages give them a leg up in the job market and make it more likely that they will become wealthy themselves. The result is a self-perpetuating cycle of privilege that is passed down from generation to generation. In short, the American oligarchy is perpetuated by the intergenerational transfer of wealth. The ultra-rich can pass their money down to their children, who then use it to get a leg up in life. This creates a cycle of inequality that is difficult to break.
The family office is one financial structure that allows the ultra-rich to keep their wealth in the family. A family office is a private wealth management firm that provides financial and legal services to a single family. These firms often have teams of accountants, investment managers, and lawyers who work to grow and protect the family’s wealth. While the use of family offices is not new, they have become more popular in recent years as the wealthy seek to avoid taxes and protect their assets from creditors. One study found that the number of family offices in the United States increased by 50 percent between 2010 and 2015.
Trust funds and family foundations are other structures that are used to maintain control of the family’s wealth and pass it down through the generations. The benefits of trusts and foundations are not just available to the ultra-rich; however, they are more likely to be used by wealthy families because of the high cost of setting them up and the expert advice that is needed to manage them. But, the tax advantages and asset protection they provide make them an attractive option for the ultra-rich.
Another form of wealth transfer is real estate, which can appreciate over time and provide a source of income for future generations. Real property may take the form of a family home, a vacation property, or a commercial building. Whatever the form, real estate is often used as a way to transfer wealth from one generation to the next.
Non-traditional assets like collectibles and precious metals are some of the tools many wealthy families use. The art market has seen a boom in recent years, with prices for some pieces reaching into the hundreds of millions of dollars. Collectibles and precious metals can also serve as a store of value and a hedge against inflation. For the ultra-rich, these assets are often seen as a way to diversify their portfolios and protect their wealth.