The Dangerous Complacency of the Wealthy

Famous 18th century icon of the 0.1%

The rhetoric against the wealthy has grown more harsh, more bitter, more belligerent. Understandably.

The concentration of the wealth at the very top is historically high.

And according to Moody’s research, the aggregate spending of the top 20% is 50% more than the aggregate spending of the bottom 80%. That means the average household in the top 20% is spending six times more than the average household of the bottom 80%.¹ As Mark Zandi, Moody’s chief economist writes:

“No wonder most Americans are upset with their financial situations and the broader economy.”

Chart from Mark Zandi of Moody’s

Initially, no one took Donald Trump seriously. I suggest we take Bernie Sanders and his DSA (Democratic Socialists of America) associates seriously. Having seen the political pendulum swing wildly one way, we should acknowledge the possibility that it can swing just as wildly the other way. ²

The leftmost faction of the Democratic Party has gained popularity and won elections. Their policy proposals are anti-capitalist and anti-wealth. Their rage at the wealthy for the sin of being wealthy is unrelenting.

Accordingly, I see an increased risk that anti-capitalism will take hold. Inequality might then be “solved” not by raising some people up but by tearing everyone down. That would be a terrible thing.

Remembering Occupy Wall Street

In 2011, there was populist outrage that the people who had helped to cause the Great Financial Crisis had been neither prosecuted nor properly punished. In the meantime, while Wall Street had been rescued, millions of Americans had lost their homes and jobs. The country was deep in a recession. Median real household income fell from $73,000 in 2007 to $67,000 in 2011. ³

The injustice of it was overwhelming to enough people that Occupy Wall Street was born. There were mass protests in cities all over the developed world, but the beginning and the epicenter of OWS was in the financial district of Manhattan in Zuccotti Park where there was an encampment of thousands of protesters.

There was a great deal of media coverage while Zuccotti Park continued to be occupied. But that encampment only lasted two months, from mid-September until mid-November when Mayor Bloomberg dismantled the encampment and OWS on Wall Street was no more.

From the point of view of Wall Street people, most of whom actually worked in midtown as I did, Occupy Wall Street seemed like a piece of downtown, avant-garde theater, critically panned, and thus deserving of its short run.

The wrong lesson of OWS

The lasting effect of OWS is debatable. Some might say the effect was merely the widespread currency and permanent place in the lexicon for the tagline “We Are The 99%.” Others might say OWS generally raised consciousness about wealth inequality even if nothing was done to combat it and it continued to get worse.

But what if the effect of OWS was something more subtle, more of an absence than a presence? The implicit takeaway of the wealthy may have been that the “99%” were completely ineffective at accomplishing anything.

OWS was famous for its lack of any specific demands as well as for its lack of any organization. If that was the best the 99% could do in conditions ripe for real reform, then maybe the wealthy had nothing to fear.

Another implicit takeaway by the wealthy may have been the Ayn Rand/Atlas Shrugged idea that it is the 1% that makes the world work. Without the 1%, nothing could or would get done.

There hasn’t been a repeat of anything that resembles OWS. Big protests have largely been along political lines, rather than wealth and income lines. No encore after fifteen years might lead the wealthy to think that inequality was something that people talked about, agreed had gone too far…and that was it.

Self-interest properly understood

I no longer see the quick unravelling of Occupy Wall Street as a permanent reprieve for the wealthy but rather as evidence of a potent and enraged force that has not gone away. In fact, the rage and the potency have increased, available for use by a charismatic leader.

I fear that our current gilded age will end not by reform but by ill-considered, radical policies that severely harm our economy. Even if I had no other reasons, my self-interest alone would lead me to favor policies that reform the excesses of capitalism, including our current, heightened inequality, before it’s too late.

So, what would I have the wealthy do? Use your resources to support political moderation and to shun extremists, whether MAGA or DSA. Do good works. Avoid spectacles.

But maybe it’s already too late.

1. From Mark Zandi of Moody’s:

“The K-shaped economy remains firmly intact. That’s according to our updated estimate of personal outlays by income group for 2026q1, based on the Fed’s Financial Accounts and Survey of Consumer Finance. Americans in the top 20% of the income distribution (those who earn over $175k annually) account for an astounding nearly 60% of outlays.

The top 20% is driving spending and the economy. Their outlays increased by 6.5% over the past year and by 7.4% per annum over the past 3 years, well above CPI inflation of 2.7% and 2.9%, respectively. But outlays by those in the bottom 80% fell short of inflation. No wonder most Americans are upset with their financial situations and the broader economy.

ICYMI, our estimates have come under some criticism. Fair enough. While we use a methodology devised by Fed researchers long ago, even with the modest adjustments we have made, these estimates may overstate the case. But they make an overwhelming case that the economy is K-shaped and becoming increasingly so. Our methodology is an open book: https://economy.com/getfile?q=8D6D0EAF-E677-4FDA-988D-60C0E9D34A8B&app=download.”

2. From the DSA website:

“Bernie Sanders launched a political revolution and DSA continues to build it, training our chapters to effectively support democratic socialist candidates running for local and state office while lifting up our key issues.”

3. From the St.Louis Fed