How You Are A Pawn To The Top 0.1%

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wealth inequalitypolitical oligarchydemocracy and powerprogressive taxationcampaign finance

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The speaker presents a comprehensive analysis of how wealth shapes political power in democratic systems. Using a landmark political science study examining nearly 2,000 policy cases, the lecture demonstrates that average citizens' preferences have essentially zero impact on policy change, while economic elites' preferences show clear correlation with actual policy outcomes. The talk explores how democracy and oligarchy coexist simultaneously, with different political issues operating on different dimensions: vertical issues (like taxation) pit the ultra-wealthy against everyone else, while horizontal issues (like culture wars) divide ordinary people among themselves. The speaker argues that horizontal divisions distract citizens from recognizing their shared economic interests. The lecture draws striking parallels to the Gilded Age, when oligarchs like Rockefeller and Carnegie wielded visible political power through corruption and monopolization, ultimately sparking a Progressive Era backlash that produced transformative reforms including anti-monopoly laws and progressive taxation. The speaker concludes by showing how these historical reforms—particularly progressive income taxation—demonstrably reduced wealth inequality, suggesting pathways for contemporary change.

Key Points

This lecture examines how wealth concentration enables oligarchic control of policy outcomes, even within democracies. Drawing on political science research and historical parallels to the Gilded Age, the speaker explains how ordinary citizens' preferences have minimal impact on policy while economic elites maintain decisive influence.

Summary

The speaker presents a comprehensive analysis of how wealth shapes political power in democratic systems. Using a landmark political science study examining nearly 2,000 policy cases, the lecture demonstrates that average citizens' preferences have essentially zero impact on policy change, while economic elites' preferences show clear correlation with actual policy outcomes. The talk explores how democracy and oligarchy coexist simultaneously, with different political issues operating on different dimensions: vertical issues (like taxation) pit the ultra-wealthy against everyone else, while horizontal issues (like culture wars) divide ordinary people among themselves. The speaker argues that horizontal divisions distract citizens from recognizing their shared economic interests. The lecture draws striking parallels to the Gilded Age, when oligarchs like Rockefeller and Carnegie wielded visible political power through corruption and monopolization, ultimately sparking a Progressive Era backlash that produced transformative reforms including anti-monopoly laws and progressive taxation. The speaker concludes by showing how these historical reforms—particularly progressive income taxation—demonstrably reduced wealth inequality, suggesting pathways for contemporary change.

Key takeaways

Political science research reveals that ordinary citizens' policy preferences have essentially zero estimated impact on actual policy outcomes, while economic elites' preferences correlate strongly with policy success.
Democracy and oligarchy coexist in the same system: your vote matters on horizontal issues (culture, religion, identity) where the ultra-rich don't have unified interests, but fails on vertical issues where wealthy interests directly conflict with the majority.
Horizontal political divisions—culture wars, immigration debates, identity conflicts—distract citizens from recognizing their shared economic interests and the vertical power imbalance between themselves and oligarchs.
The current era exhibits 'in-your-face oligarchy,' where billionaires' political influence is increasingly visible and undeniable, paralleling conditions that last existed during the Gilded Age over a century ago.
The Gilded Age oligarchs were ultimately constrained through popular backlash that produced the Progressive Era reforms, including anti-monopoly laws and constitutional amendments enabling progressive taxation.
Progressive income taxation proved transformative: when top earners' tax rates increased, wealth concentration among the top 0.1% decreased dramatically, creating the more equitable economy of the 1950s-1970s.
Historical precedent shows that structural change requires sustained political mobilization: it took nearly 20 years and a constitutional amendment for the income tax to become law after the Supreme Court initially struck it down in 1895.

Full article

The Wealth Distribution Problem

There's a famous YouTube video posted in 2012 by a channel that never posted again. It visualizes how people believe wealth is distributed in America. Most people think the wealthy have more than others, but not by an extreme amount. When asked how wealth should be distributed, people imagine something closer to equal. But when the video reveals how wealth is actually distributed, the disparity is shocking. The question that emerges from this visualization is straightforward: if the majority of us are at the bottom of this wealth pyramid, why can't we do something about it?

The Study That Changed Political Science

Two political scientists examined nearly 2,000 policy cases over 20 years and discovered something that upended conventional wisdom in their field. They found that average citizens' preferences have essentially zero estimated impact upon policy change. When they looked at economic elites—the ultra-rich—they found a clear correlation: the more that wealthy people want something, the more likely it is to happen in terms of actual policy decisions. If 100% of rich people want a certain policy to pass, it's very likely to happen. But when you look at the same graph for ordinary citizens, the pattern is completely different. The more the average person wants something, it doesn't change the likelihood of policy outcomes at all. It barely makes a difference what average citizens want.

This study revealed a sprawling dataset showing how economic elites have outsized influence on policy decisions, even when they're not politicians themselves. The problem is that wealthy people's interests are not always aligned with the interests of ordinary people. The conventional wisdom in political science had always been that in a democracy, if something is more popular, it's more likely to happen. This wasn't a guarantee, but probability favored popular policies. This study basically said: not really—if you pull apart the ultra-rich from everyone else, you see that popularity among ordinary citizens doesn't predict policy outcomes.

Democracy and Oligarchy Coexisting

So does this mean democracy is fake? That it's all an illusion? The study is actually saying something more nuanced: your vote does matter, but only as long as you're not in direct conflict with the ultra-rich. If the ultra-rich all agree they want something, and everyone else agrees they want something else, the ultra-rich will win almost every time. However, this isn't true for every issue. There are many issues on which the ultra-rich either don't care or don't agree with each other.

One way to understand this is to visualize the wealth pyramid differently. In reality, the pyramid isn't shaped like an equilateral triangle—it's more like the Space Needle or the Eiffel Tower. It's so extreme that you have to squish it to make it look like a regular triangle at all. You can think of different political issues as having different dimensions. Some issues have a vertical dimension—they deal with conflict or trade-offs between the very wealthy and everyone else. The question of higher taxes on the wealthy is the most obvious vertical issue in politics. But other issues have a horizontal dimension: they deal with differences among the rest of us. Abortion, religion, and culture wars are horizontal issues—things on which we fight each other. And on issues that are heavily horizontal, voters actually do have a lot of freedom to determine the outcome.

The Distraction of Horizontal Division

The truth is that keeping people heavily focused on the left-right dimension—who's getting what down the street or in the workplace—distracts them from asking the question that actually unites them: instead of what divides us, what unites us? The answer is that we don't have much, and others at the top have a lot. Political discourse becomes filled with statements like "Immigrants are taking our jobs," "We have a problem with white supremacy," "This transgender movement and LGBTQ issue," "The right-wing mob is our enemy," or "Our number one political enemy is women," or "A lot of these Republicans are dumb." The truth is that every single one of those statements is one that oligarchs are very comfortable with you making. It's not because they all represent the same political view—they extremely don't—but it's because of who they all don't point the finger at. That's the exact reason why our politics, as practiced by our leaders and our media, allows such an open playing field for these horizontal conflicts.

Participatory Inequality and the Rise of In-Your-Face Oligarchy

What's unique about our current era is what could be called participatory inequality. We actually have real freedoms. Democracy is not fake; it's not a sham. But it's very limited. Democracy is real, oligarchy is real, and they coexist. We live in both systems at the same time. It's a balance—an old balance. If things feel different to you right now, if over the last 10 years you've suddenly noticed that people worth $100 billion or more seem to be everywhere, controlling everything, buying political campaigns and standing behind the president at the inauguration, it might feel new. But what's actually happening is not that oligarchy just showed up—it's that it's becoming more obvious. We're in a moment of what could be called in-your-face oligarchy. It's so visible. People are beginning to recognize that there's something vertical about this, something that isn't just horizontal division among ordinary people.

The Gilded Age Comparison

The last time oligarchs were this visible and clearly present was the Gilded Age, over a hundred years ago. You may not recognize all their faces, but you know their names: Rockefeller, Carnegie, Vanderbilt, Duke. These men made enormous amounts of money in oil, railroads, steel, banking, real estate, and tobacco. They built huge empires in these industries and, in many cases, consolidated full monopolies over them. The dynamics then were basically the same as now: increased monopolization, little to no taxation, and lots of new technologies and businesses making some people incredibly rich while government regulation was minimal. The wealth concentration was gigantic. By the late 1800s, the richest 1% of Americans owned half the country's wealth.

These oligarchs defended their wealth through government corruption, paying off local judges, U.S. senators, and entire state governments to do their bidding. This is why they became known as the robber barons. Back then people used the Greek word "plutocrats." Today we use "oligarch." But all of this inequality, corruption, and unconscionable labor practices—along with the poverty at the other end of the pyramid—eventually produced a backlash.

The Progressive Response

In 1877, railroad workers went on strike in West Virginia. It turned into a massive uprising that spread across almost the entire country, marking the beginning of years of mass strikes and labor agitation. This wasn't just about strikes; it also gave way to populist politics and reformers who came into government looking to transform the system. The very visibility of oligarchs generated a backlash and a kind of politics aimed at limiting the power of the few. In 1890, Congress finally passed a major anti-monopoly law. Then in 1894, Congress passed a federal income tax law—a historic moment when the federal government gained the power to take concentrated wealth from the top and redistribute it to the rest of the country.

But here's what happened next: less than a year after the income tax law was passed, the U.S. Supreme Court stepped in and voted 5 to 4 that it was unconstitutional. Five men overturned the decision of the representatives of the entire country and struck it down. Eventually, the Gilded Age gave way to the Progressive Era, when reformers gained more power and tried to right the wrongs of that period. They passed strong anti-monopoly laws and campaign finance laws. They passed constitutional amendments that allowed people to vote directly for their senators for the first time. And finally, they did get an income tax—but they had to do it via constitutional amendment. That was 1913, nearly 20 years after Congress had first passed it.

The Transformative Power of Progressive Taxation

Look at what happened next. There's a graph with two lines: one showing the income tax rate for top earners, and another showing wealth concentration among the top 0.1% in America. When the income tax goes up, massive wealth inequality goes down. The golden age of American capitalism—the 1950s, 1960s, and 1970s—was a period when a lot of people made a lot of money, but it wasn't concentrated to the degree it is now. The income tax fixed a lot of things and was transformative. But it's important to review that story. Congress passed the income tax in 1894. It went into effect. It became law. Then in 1895, the Supreme Court overturned it, saying it was unconstitutional. Five justices overturned the representatives of the entire country, and it took almost 20 more years—an entire generation—before the country was able to actually get that law through a constitutional amendment.

Topics#wealth inequality#political oligarchy#democracy and power#progressive taxation#campaign finance#labor movements#policy influence#economic justice

Transcript

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0:00 There's a YouTube channel that has posted one viral video and never posted again.

0:04 They posted it in 2012.

0:06 It basically visualizes how people believe wealth is distributed.

0:11 They believe that the top have more wealth, but like, around this much.

0:15 And then they believe that it actually should be distributed more like this.

0:19 And then the video shows how wealth is actually distributed.

0:24 Whoa.

0:25 The question for me is, like, the majority of us are down here, right?

0:30 Why can't we do something about this?

0:33 Yeah, so this is where we gotta talk about this study.

0:35 Two political scientists looked at almost 2,000 policy cases over 20 years.

0:40 They found that average citizens' preferences have essentially zero estimated impact upon policy change.

0:48 What that middle chart is showing us is that for what they call economic elites, or what you could call the ultra-rich, the more that the ultra-rich want something, the more rich people want something—that's the horizontal axis—the more likely it is to happen in terms of policy decisions.

1:03 So, like, if 100% of rich people want a certain policy thing to happen, you know, it's very, very likely to happen.

1:08 There's a correlation between rich people wanting something to happen in terms of policy and it happening.

1:12 And if you go to the top chart, that's showing that exact same thing, but for everybody else.

1:16 It's like, the more the average person wants it, it doesn't change the likelihood at all.

1:22 It barely makes a difference in terms of policy outcomes what average citizens want.

1:27 A sprawling dataset highlighting this economic elite that is able to have all kinds of outsized influence on policy decisions, even if they're not politicians themselves.

1:37 The problem with that is wealthy people's interests are not always aligned with the interests of ordinary people.

1:43 This was a huge deal because basically the conventional wisdom in political science had been, in a democracy, if something is more popular, it's more likely to happen.

1:50 It's not a sure thing, but the more popular something is, probabilistically it's more likely to happen.

1:55 And this was basically saying, well, yeah, but if you pull apart the ultra-rich and everyone else, then you actually see that that's not the case.

2:03 Is the implication here that, like, democracy is not a thing, that it's all fake?

2:07 What the study is basically saying is it's not saying your vote doesn't matter.

2:10 It's saying that your vote can matter as long as you're not in conflict with the ultra-rich on something.

2:14 In other words, if the ultra-rich all agree that they want something, and all the everyone else agrees that they want something else, guess who's gonna win pretty much every time, right?

2:23 But that's not every issue.

2:25 There are a lot of issues on which the ultra-rich, as a class, either don't care or they don't agree with each other, right?

2:32 And a good way to think about this is to sort of, like, visualize, to picture the wealth pyramid as a triangle.

2:37 In reality, it's more like, it looks more like the Space Needle or the Eiffel Tower.

2:41 You sort of have to, like, squish it.

2:42 Like, it goes like that.

2:43 Pretend it looks like a regular triangle, right?

2:45 And sort of one way to think through, like, different, different issues in society, different political issues, whatever, is that you can think about them as having, A, a vertical dimension, right?

2:53 Which is to say, if the rich are at the top and everyone else is sort of at the bottom of the pyramid, the vertical dimension of some kind of issue is what deals with any kind of conflict or trade-off between the very wealthy and everyone else.

3:03 The question of higher taxes on the wealthy is the most obviously vertical question in politics, right?

3:08 But issues can also have a horizontal dimension.

3:10 That is, like, something that deals with the differences among the rest of us.

3:14 Like abortion, religion, basically culture wars.

3:17 You might call it, like, the things on which we fight each other.

3:19 And the truth is that on these issues, on issues that have a heavy horizontal dimension, we do have a lot of freedom to determine the outcome as voters.

3:28 And it turns out keeping people heavily focused on that left and right of you dimension, who's getting what down the street or at my place of work, distracts them from an ability to all say, well, instead of what divides all of us, what actually unites us?

3:46 And that is the fact that we don't have much, and others at the top have a lot.

3:52 Immigrants are taking our job.

3:54 We have a problem with white supremacy.

3:56 This transgender movement, this LGBTQ.

3:59 The right-wing mob.

4:00 Our number one political enemy is women.

4:02 A lot of these Republicans are dumb-ish.

4:04 The truth is that every single one of those statements is one that oligarchs are very comfortable with you making.

4:11 And it's not because they all represent the same political view, they extremely don't, but it's because of who they all don't point the finger at.

4:19 And what Winters would say is that that is the exact reason why our politics, as practiced by our leaders, as practiced by our media, allows such an open playing field.

4:29 What's so unique about our era is that we have what I call participatory inequality.

4:36 We actually have real freedoms.

4:39 Democracy is not fake.

4:41 It's not a sham, but it's very limited.

4:44 Democracy is real, oligarchy is real, they coexist.

4:48 We live in both systems at the same time, right?

4:51 It is a balance.

4:52 It's an old balance.

4:53 And if things are feeling different to you right now, if the last 10 years you're all of a sudden feeling like people who are worth $100 billion or more, they seem like they're really everywhere and they seem to really be controlling everything and, you know, they're buying these political campaigns and they're standing behind the president at the inauguration.

5:08 If it feels new, what Winters would actually say is that it's not just that oligarchy just showed up, it's that it's getting more obvious.

5:16 We're in a moment of what I've called in-your-face oligarchy.

5:20 It is so visible.

5:21 I think partly what's happening is that people are beginning to say there's something that isn't horizontal about this.

5:27 There's something vertical about it.

5:29 And the last time oligarchs have been this visible, this clearly present, was the Gilded Age.

5:38 These guys.

5:40 You may not recognize all of their faces, but you know their names.

5:44 Rockefeller, Carnegie, Vanderbilt, Duke.

5:48 These are guys who made huge amounts of money in oil, railroads, steel, banking, real estate, tobacco.

5:54 They built huge empires in these industries, like, over 100 years ago.

5:58 And in many cases, they consolidated full monopolies over these industries.

6:02 Basically the same dynamics that we're seeing right now.

6:05 Increased monopolization, lack of actual taxation or success in implementing taxation.

6:11 Lots of brand new technologies and businesses getting in on them, making some people incredibly rich, all while there was very little government regulation.

6:20 And the wealth concentration that it produced was gigantic.

6:24 By the late 1800s, the richest 1% of Americans owned half the country's wealth.

6:30 These were these eras' oligarchs.

6:32 And their wealth defense wasn't these stock footage guys.

6:35 It was government corruption, paying off local judges and U.S.

6:39 senators and entire state governments to do their will.

6:42 Which is why they became known as the robber barons.

6:46 Back then they used another Greek word, plutocrats.

6:49 Today we use oligarch.

6:51 But all of this inequality and corruption and unconscionable labor practices, all of this poverty at the other end of the pyramid, it eventually produced a backlash.

7:00 In 1877, railroad workers went on strike in West Virginia.

7:05 It turned into a massive uprising that spread almost to the entire country.

7:09 It was the beginning of years of mass strikes, labor agitation.

7:14 And then this wasn't just strikes.

7:15 This also gave way to populist politics, people who came into government looking to reform the system.

7:22 The very visibility of oligarchs then generated a backlash, generated a kind of politics of limiting the power of the few.

7:32 And in 1890, Congress finally passed a major anti-monopoly law.

7:36 And then in 1894, we got the federal income tax.

7:40 The federal government now has the power to take the money from the top that is highly concentrated and redistribute it to the rest of the country.

7:48 This was a very big deal.

7:51 But here's what happens next.

7:53 Less than a year after the income tax law is passed, the U.S.

7:56 Supreme Court steps in and votes 5 to 4 that it's unconstitutional, struck down.

8:07 Eventually, the Gilded Age would give way to what we call the Progressive Era, when reformers gain more power in the U.S.

8:14 and they try to right a lot of the wrongs of the Gilded Age.

8:18 Strong anti-monopoly laws, campaign finance laws, constitutional amendments that let us vote directly for our senators for the first time, which we couldn't do that before.

8:28 And finally, we did get an income tax.

8:31 We had to do it via a constitutional amendment.

8:35 That was 1913, nearly 20 years after Congress had first passed it.

8:39 And now look what happens.

8:40 This line is the income tax for the top earners in the country, and this line is the concentration of wealth among the 0.

8:49 1%, the top 0.

8:51 1% in America.

8:52 Watch what happens.

8:54 Okay, play the graph.

8:56 Look at this graph.

8:57 Look, look.

8:59 The income tax goes up.

9:00 This huge wealth inequality goes down.

9:03 The golden age of American capitalism, 1950s, 1960s, 1970s, where a lot of people made a lot of money, but it wasn't concentrated to the same degree that it is now.

9:13 I want to just go back because we got the income tax and it fixed a lot of things and it was transformative.

9:19 But I just want to, like, review part of that story.

9:23 1894, Congress passes the income tax.

9:26 It goes into effect.

9:27 It becomes law.

9:28 1895, Supreme Court overturns it, says this is unconstitutional.

9:34 So it's a 5 to 4 decision, which means that five men overturn the representatives of the entire country.

9:41 And then it takes almost 20 more years, like, a whole generation passes before we're able to actually get that law via constitutional amendment, which is insanely hard to pass a constitutional amendment.

9:52 The only way to stop the Supreme Court, which had made this decision in favor of oligarchs, was to change the constitution.

9:59 There was no other way.

10:00 And this is the thing that Jeffrey Winters emailed us about.

10:05 He wanted us to understand that the American system, where five men can overrule the will of millions like this, this is very, very deliberately designed.

10:17 This is an example of how oligarchy is baked into the system to begin with.

10:21 And to understand what he wanted us to know about this, we have to go back even farther in history to the beginning of the United States.

10:28 Federal U.S.

10:28 government, it's split into three sections, right?

10:31 Congress, the president, the federal courts.

10:34 So Congress, bicameral, split into two houses, right?

10:36 Lower house, the House of Representatives.

10:38 This one is voted on directly by us.

10:41 We get to vote on who our representative is, and they represent us directly in the House of Representatives, right?

10:47 The Senate, today, we do the same thing.

10:49 Today we do vote for who our senator is.

10:51 But for the first 100 plus years of the United States, it was not that way.

10:56 The way it's written in the Constitution is the state government, the state legislature gets together and they decide this is who New York's senator is going to be.

11:03 So it's not democratically elected.

11:04 It's decided upon by the state.

11:07 The president, chosen by famously the Electoral College, which today, again, has a connection to how we vote in each of the states, but at the time didn't really.

11:15 It was supposed to be the electors, a wise group of men who was going to decide who the president was.

11:19 And then you have the federal court system and who the judges who sit in the federal court system are selected by the president and they are confirmed by the U.S.

11:27 Senate.

11:28 And the second thing you have to understand is that for any law to exist in the American system, all these bodies have to align.

11:34 So both houses of Congress have to agree to pass a law.

11:37 If either of them disagrees, it doesn't pass.

11:38 The president can always veto a law that he doesn't like.

11:41 And the court system can always decide this is unconstitutional, this law is actually not allowed.

11:46 So there's a lot of different ways a law can fail in the American system.

11:48 And what we learn about in school is that's called checks and balances.

11:52 Another way of saying that is that it spreads power around multiple bodies.

11:57 If you look at who's actually choosing who gets to be in these different bodies within the federal government, distributing power among them is not really spreading power around, because only this one part of it is designed to be responsive to the democratic will of the people, and the rest of them are chosen by other powerful people.

12:16 The Supreme Court's role is to make sure democracy can't do certain things.

12:21 And the function of the Senate is to block what the House does.

12:25 That's its historic function.

12:27 Which is the whole theory of the founding of the United States is that the Constitution, the American Constitution, doesn't spread power around.

12:33 It is consolidating power with rich people.

12:36 You're telling me that, like, there's an alternative set of quotes that, like, tells this other story that these guys were actually designing an oligarchy.

12:44 What were they saying?

12:45 I'm curious what those are.

12:46 It's true.

12:46 Like, you can go into the transcripts of the Constitutional Convention and you can tell two different stories.

12:50 Which of those stories is correct?

12:52 They're probably both correct.

12:53 But so let's look at this one, right?

12:55 So you have James Madison warning that, you know, under democracy, poor and working people, or as he says, those who labor under all the hardships of life and secretly sigh for a more equal distribution.

13:06 Under democracy, those people are going to outnumber what he calls those above the feelings of indigence, so rich people, right?

13:13 And that power will slide into the hands of the former.

13:16 In other words, democracy might not give rich people enough power.

13:21 Or there's another one.

13:22 Another founder, he basically reminds his colleagues, he's like, guys, remember, a big reason that we created the Senate was to secure the rights of property.

13:32 This is another one saying the evils we experience flow from the excess of democracy.

13:36 I don't know if any of these things is a smoking gun, but to me, what it sounds like it adds up to is they weren't just sort of, like, ideologically skeptical of a democracy that hadn't been tried before.

13:46 They were specifically skeptical of regular, working, and poor people having too much power.

13:52 It is this idea of a tyranny of the majority, that you need to balance out the majority with something else.

13:57 And this is a core part of America's system of government.

14:00 And I don't think it's wrong.

14:01 It's just that Winters says there's another way to look at it.

14:04 What he says basically is that is a big part of why it's important to talk about the U.

14:09 S., even though oligarchy is a global system.

14:14 The United States in the 1780s set the model for how oligarchy and democracy were going to coexist.

14:23 Many of the limitations on what democracy could do were thought up, put in place institutionally in the United States, and that really became a model for democracies around the world.

14:37 So what Winters would call the oligarchy that's baked into our system, this idea that you can't have a tyranny of the majority, that you have to have these tempering forces that counterbalance what the majority wants, we definitely exported that.

14:51 It coexists with a true democracy, with a place where the regular people do have a voice.

14:57 But there's a tension and a spectrum between oligarchy and democracy.

15:02 That's like a slider that goes back and forth.

15:05 And we, as we've seen that one graph that dips down when the income tax comes in and then comes back up, we're just sliding back and forth on that spectrum.

15:13 And again, the point is not that, like, oh, the U.S.

15:15 is an oligarchy at heart.

15:17 No.

15:18 It's that the U.S.

15:19 is both of these things.

15:21 And globally, if you live in a democracy, you almost certainly live in a system that is both of those things.

15:25 And the U.S.

15:26 is not unique in this sense.

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