No Kings: American Billionaires, Then and Now

This past weekend was marked both by Easter on Sunday and hundreds of protests on Saturday. April 19 was designated as "No Kings Day" by the 50501 Movement, and thousands of people all over the US turned out to vent their unhappiness about recent actions taken by Donald Trump and Elon Musk.

Regardless of whether you agree with these protesters or not, you can probably concede that we are finding ourselves in a situation that we've been in before. During the Gilded Age of the 19th century (see the blogpost on this time period), multiple protests rose up against wealthy industrialists whose actions affected average people. In light of the current situation, I thought it was worth revisiting an earlier blog I wrote about those men:

Like many of my fellow TV watchers, I am intrigued by series that feature real people. In particular, my husband and I have become fascinated with the History Channel series about the influential businessmen of the late 19th and early 20th centuries. The Men Who Built America and its successive series, The Titans That Built America, are extremely well-done docudramas that feature the big movers and shakers of those times. The episodes express admiration for the drive and brilliance of these men; on balance, they also show their ruthlessness and its consequences.

The first series features Cornelius Vanderbilt, John D. Rockefeller, Andrew Carnegie, J. P. Morgan, and Henry Ford. These remarkable men shaped American capitalism into a force to be reckoned with worldwide. They created railroads that crisscrossed the nation, developed safe fuel to heat every home, and built bridges to facilitate national commerce. They perfected the steel that would make skyscrapers possible, a banking system that lent to European countries, and an automotive production system that made cars accessible to the middle class.

Image Credit: The History Channel

There is no doubt that the outsized vision of these men made America an incredibly powerful economic force in the late 1800s. Without the will they had to dominate their industries, much of the astonishing progress during that time would not have occurred. With great progress, though, often comes great sacrifice; and as is regularly the case in human history, the sacrifice was made by people who did not necessarily benefit from it.

Throughout the series, it is surprising just how many of the damaging choices these men made were the result of personal vendettas or ego. For instance, after railroad magnate Thomas Scott refused to stay out of the oil refining business, J.D. Rockefeller closed his refineries in Pittsburg, thus depriving Scott and his protégé, Andrew Carnegie, of vital shipping profits. This action resulted not only in hundreds of Rockefeller's workers losing their jobs, but also in Scott drastically reducing his workers' wages. This situation in turn prompted the Great Railroad Strike of 1877 against Scott, the stress of which contributed to his early death.

Mourning his mentor, Carnegie vowed revenge on Rockefeller. Carnegie's desire to humiliate his rival by overtaking his status as wealthiest man in America caused him do so at the cost of his steel plant workers. Not wanting to be ruthless himself, Carnegie nevertheless pursued his goal by handing over operational decisions to his partner, Henry Fisk, who had no compunction about treating workers badly. As a result, conditions in the steel plants became unbearable, and 1 in 10 steel workers died as a result of their job. In response to these deplorable conditions, a strike ensued, ultimately ending in the death of a number of workers at the hands of Fisk's hired guns.

As you can see, the actions of a few have consequences for the many. Would it have been possible for Rockefeller to honor his shipping agreement with Scott, thus ensuring jobs for his workers and decent wages for Scott's? The answer is an obvious "yes." There was more than enough wealth to go around; his actions were simply the result of wanting it all. Could Carnegie have put the welfare of his workers above his personal desire for revenge and glory? Of course he could have; his decision not to do so led to regret and penance (in the form of philanthropic endeavors) for the rest of his life.

From these and many other examples in our history, it is easy to see why the federal government (following Adam Smith's guidance regarding the role of government) was forced to create laws that limited corporate power in order to protect both workers and consumers. The sad part of the story is that if these men had acted with an ethic of economic mutuality, many people would not have suffered. It is sadder still to see business leaders such as Rockefeller, who claimed to be a devout Christian, ignore the most basic Biblical command of loving his neighbor as himself.

A wise passage in Proverbs states that "By justice a king builds up his land, but those who are greedy for bribes tear it down." In a sense, these men were the equivalent of kings, with great power and very little restraint on their actions. If they had dealt justly with those in their care and not looked only to their own interests, what a difference it would have made! I encourage everyone to view this series for themselves. It is not only a fascinating look at our own past as Americans but also a valuable lesson for all who are in positions of economic leadership today, including you and me. No matter how great or small our economic influence, every one of us can help create a better capitalism.

Fast forward to the present day, and we see the same pattern repeating itself, minus personal vendetta wars between billionaires. One trait of American capitalism is that it has consistently produced outsized earnings for a small number of its participants. In fact, the past four years have brought unprecedented income to the wealthiest of the wealthy. The chart below shows the meteoric net worth rise of the top 12 US billionaires (there are now 902 of them!) since March of 2020:

As seen above, Elon Musk has benefitted more than anyone else during the last few years; so much so that he has managed to do what Andrew Carnegie could not: break J. D. Rockefeller's long-held record as the richest man in modern history.

The centralization of US wealth has climbed steadily over the last few decades. Whereas in 1989, the richest among us controlled 20.8% of the country's net worth, they now claim 30.8%; and the top 10% of the 1% owns 13.8% of US total net worth. In terms of real dollars, we're talking about $49 trillion for the top 1% and about a third of that amount for the top 10% of that group! In contrast, the bottom 50% of Americans have 2.8% of the total net worth, down from 3.5% in 1989. Again, in terms of real dollars, this figure adds up to $4 trillion dollars for the bottom half, and $156 trillion for the top half.

We at Better Capitalism always support rewarding innovation, talent, and hard work. We also recognize the plain truth that it is not possible for a person to create great wealth without the help of others. This begs the increasingly asked question, "Is the wealth fairly distributed among those who generated it?"

The growing wealth gap is indicative of a skewed system--America's current form of capitalism--that distributes a disproportionate amount of wealth to a tiny percentage of individuals. The march toward putting more and more wealth into the hands of fewer and fewer people, especially over the last five years, is both unhealthy and ultimately dangerous for our society, as has been seen in the history of many past civilizations.

A number of individuals from this elite group attended Donald Trump's inauguration, and the total wealth represented onstage that day was over 1 trillion dollars--an astonishing amount to be shared between 10 people. Is it any wonder, then, with this kind of affluence on prominent display around the center of political power, that people are seeing and protesting the rise of modern day "kings" and their initiatives that adversely affect ordinary citizens?

I think we'd all agree that it's desirable for the US federal government to operate with a balanced budget. I believe the negative reactions we are seeing to DOGE come primarily from the speedy and reckless way in which it operates. You can't take a chainsaw to people's lives--cutting jobs without stated reasons and giving people 30 minutes to clear out their offices--without evoking strong reactions, especially when you strive to be the King Midas of your time. (Recall that President Carter used a planned approach to cut government spending and waste, while President Clinton did the same and, for the first time in modern history, handed a balanced budget over to the second President Bush.)

In addition, the US government spends only about 5% of its budget on the federal workforce. The vast majority ($4 out of $7 trillion) is spent on defense, Social Security, and health insurance programs. Even if every federal worker were fired tomorrow, you would only reduce the government's spending by a small fraction. In addition, there are many ways to reduce spending and add income that do not involve firing these workers, but that is a subject for another post.

In the past, kings had free reign to do whatever they wanted to do to whomever they wanted to do it to, often acquiring the label of tyrant along the way. In ruthlessly cutting the federal workforce and various programs, DOGE and its proponents have acted with the same reckless indifference as historical monarchs. They certainly have not applied the rule of economic mutuality to those they have affected with their cuts.

A better version of reducing government spending would involve informed review of departments and programs, judicious cuts where necessary, and reasonable notice to employees to seek other work. It would also involve other ways of budget balancing that would not unduly burden those persons who are least equipped to bear the weight.

The mutuality principle holds true whether we are talking about how owners manage their employees or how DOGE treats federal workers and program recipients. In both cases, the ones in charge must view people as more than a bottom line number if there is to be a positive outcome for all concerned. While it may be ego boosting to hold this level of power over other people's lives, even the modern day "kings" feel the effects of their actions, as demonstrated by the tumble of Tesla stock prices and the retreat of Elon Musk, under pressure from investors, to attend to his businesses.

History is one of our best teachers, and when we see a pattern re-emerging, we need to pay attention. We are seeing one of those patterns now, and it would do well for all of us, and especially for our "rulers," to heed the lessons of the past. We close with two pieces of historical wisdom that are as applicable today as when first penned:

You are headed for trouble! You say wrong is right, darkness is light, and bitter is sweet.- Isaiah 5:20 (CEV)

When the rulers are good, the people are happy. When the rulers are evil, the people complain. - Proverbs 29:2 (ERV)

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