Paul Krugman
Today’s post is the first in a series on the economics of oligarchy in the United States, where wealth and power are increasingly concentrated in the hands of a small group at the top, and government policies have reinforced that concentration of wealth and power.
Saying that America is experiencing the creation and entrenchment of a tiny oligarchy of hyper-wealthy individuals is no longer controversial. The truth is that this process has been proceeding for several decades, largely via a concerted effort by extremely wealthy right-wing families such as the Koch Brothers. Until recently, however, the undermining of America’s republican vision largely flew under the radar of observers other than those tracking the changing landscape of campaign finance and the Supreme Court nomination process.
However, under the second presidency of Donald Trump, the rise of the tech billionaire broligarchs, who openly and lavishly supported Trump while enriching his family members, has put the dynamics of American oligarchy in the spotlight.
Moreover, today’s billionaire class is far more tightly linked in its interests and interactions than the earlier generation of hyper-wealthy – such as the Koch Brothers (fossil fuel), the Adelsons (Las Vegas casinos) and the Walton family (Walmart). As Henry Farrell notes, right-wing tech billionaires like Peter Thiel themselves
depict the tech industry as a place where everyone who counts knows everyone else. Venture capitalists are closely interconnected. Founders and CEO’s look at each other with a mixture of respect and jealousy.
Thiel describes how you want to build your company around a ‘mafia,’ and Silicon Valley is organized in ways that are not entirely unlike its Sicilian predecessor in its golden era. There is no central organization, but there are central cliques. You need to be connected to get things done.
A few hundred billionaires, around 0.0002% of the adult population, have a combined wealth equivalent to approximately 20 percent of GDP. This tiny set of hyper-wealthy individuals also accounts for approximately 20 percent of total campaign contributions and thereby exerts huge influence over public policy – a state of affairs that is a direct result of the Koch-created Roberts Supreme Court’s Citizens United ruling. The hyper-wealthy use their influence to push policies that are in their class’s interest, such as corporate tax cuts.
And because these policies are almost always highly unpopular, they also use their influence to undermine accountability and democracy in America. If that doesn’t make America significantly oligarchic, I don’t know what would qualify. Moreover, the self-reinforcing nature of oligarchic influence creates what I have called a “downward spiral of oligarchy” — extreme wealth leads to extreme political influence, which leads to greater benefits for the hyper-wealthy, and thus even more extreme wealth.
Some may ask: wasn’t it always thus? No, it wasn’t.
Granted, market economies always generate significant income and wealth inequality, and economic inequality always leads to some inequality in effective political power. But even a quarter century ago the wealth and power of the economic elite were far more limited than they had been during the Gilded Age — and far more limited than they are today.
A few days ago I argued, based on economic research, that the soaring concentration of wealth at the top since the 1970s largely reflects a decline in the progressivity of the tax system — the end of high taxes on the elite, which when in effect both limited the ability of the very wealthy to accumulate ever larger fortunes and limited their political influence. Today’s primer will do a deeper dive into the rise and fall of progressive taxation in America since the early 20th century.
This post will not engage in the debate over direct taxes on wealth. Such an important policy debate deserves a post of its own, which I will write soon. In addition, I will discuss in future posts other ways to limit oligarchy, such as anti-trust policy, consumer protection policies, and measures to limit political corruption
Forbes has been publishing its “rich list” of the 400 wealthiest Americans since 1982. In that first year, Forbes estimated the combined net worth of its 400 at $92 billion — not a small sum, but only 0.8 percent of total U.S. wealth and 3.2 percent of national income.
In 2025, the Forbes 400 were worth $6.6 trillion. That was 3.7 percent of national wealth and 26 percent of national income.
With great wealth comes great power. The New York Times estimated that 300 billionaires and their families made 19 percent of all political contributions in the 2024 election. America’s richest man, Elon Musk, bought Twitter in 2022 and has tilted the former public square drastically to the right, as well as making it a platform for authoritarian politics and white supremacists. Musk himself became, for much of 2025, effectively America’s second most powerful official, using his unelected, extralegal position at DOGE to eviscerate large parts of the federal government.
Moving down the list, America’s second richest man, Larry Ellison, has purchased CBS News, moving it rightward, and is trying to take control of CNN. America’s fourth richest man, Jeff Bezos, has purchased the Washington Post and shifted it, too, to the right. And so on.
There are, in other words, good reasons center-left politicians increasingly mention billionaires in fundraising emails, why concerns about the rise of American oligarchy have moved from the fringes of political discourse to the mainstream.
What can be done to reduce the concentration of wealth at the top? In last week’s primer I pointed out that over the course of the middle third of the 20th century America reduced the wealth and power of the hyper-elite via progressive taxation, but that extreme inequality reappeared after taxes at the top were cut at the end of the 1970s. Hence there is a strong case for restoring a highly progressive tax system.
But what form should taxes to limit extreme inequality take? They need not be the same as the taxes that reined in the super-elite 80 or 90 years ago. In fact, there is now widespread interest in a new form of taxation: wealth taxes. Today I’ll make the case for such taxes. There are, of course, many critiques — not all of them coming from the political right — warning that such taxes would be unworkable, destructive, or both. But I will have to address these critiques at length in a future post.