For the first time in American history, the top 1% has more wealth than the middle 60%.

CEOs of large corporations making 350 times more than the average worker in that company and it's acting like a black hole in society. It's sucking the wealth away from the middle class. Seems like a recipe for social instability ultimately for revolution. That's right. From politicians to YouTubers, from the Pope to Nobel Prizewinning economists, voices across the spectrum agree on one thing. Inequality is rising and it's very, very dangerous. ... World famous economists like Pikati Stiglets and Ha Yun Chang have given us at least four extremely convincing reasons why inequality is not just unjust, it's bad for the economy as well. The first reason is because the rich don't spend as much as the poor, reducing demand in the economy, killing local businesses and therefore economic growth. Second, inequality causes crime, misery, drug overdoses, and even suicides as people naturally get miserable seeing their neighbors do well as they struggle. Third, inequality makes it less easy for young motivated kids to move up in the world as only rich parents still have the money to give their kids private tutoring, extracurriculars, and everinccreasing college fees. And ultimately fourth, increased inequality undermines our very democracies as the rich use their increasing wealth to capture the government to rig the game further in their favor.

But after going through mountains of evidence, our conclusion is actually quite optimistic. Inequality is not as bad as we thought for two reasons. The first is that maybe with the exception of the US where the richest 0.1% of the rich are still getting richer, inequality in general stopped going up. That is if we look at the most comprehensive data we have from anti-inequality researchers like Gabriel Zukman after rising a lot for sure between 1980 and 2010 income controlled by the top 1% the very very rich and especially wealth controlled by the top 1% and also wealth controlled by the top 10% have all stopped rising. That is great news. On top of that, these foreign negative effects that we expected would happen to economies where inequality went up a lot like the US and to a lesser extent the UK, we can't really find them in the data. For example, we expected that nations like the US or the UK where the top 1% of people got way richer in the last 40 years had far lower economic growth than countries like Austria or the Netherlands where inequality barely moved. However, as you can see, countries that got more equal, that is Austria, or where inequality did not change that much, like Belgium, the economy grew roughly as fast as countries that got way more unequal, like the UK and US. And as research by the author of this book, Professor Lane Kenworthy, has shown, the same effect holds for crime. For example, if we compare murders, which are the gold standard for comparing crime across countries because they are almost always reported, we can see that actually countries that got more unequal, like the UK, saw a reduction in murders similar to Austria. Meanwhile, the US, which got the most unequal by far, paradoxically, also saw the biggest reduction in murders.

Ideally, we would also test this across countries, but sadly the data is just not there. Luckily, the best data comes from the United States, the country where inequality has increased the most. It allows us to ask two simple questions. One, are rich children pulling further ahead of poor children in the US? And two, are poor children today less likely to move up than in the past? On the first question, this graph shows a worrying trend. Since the 2000s, rich kids are increasingly outperforming poor children on tests. However, poor children still perform significantly better than they did in the 1960s and 1970s when inequality was at its lowest. Moreover, most of the rise in inequality occurred during the 1980s and 1990s, a period when test scores for poorer students were still improving. So again, the evidence that for this theory is not super strong. On top of that, research produced by leftwing economists such as Raj Chetti and Emmanuel Saias suggests that intergenerational mobility in the United States has remained remarkably stable over time, even during decades when income inequality rose sharply.

Crucially though, all of this does not show us that money does not influence politics at all in the US. Of course, it does. Billionaires spend millions of political donations and they are buying media platforms. Clearly, they have a big influence. In fact, as Professor Kenworthy explains in his book over here, there is plenty of evidence showing that when the rich want something that the poor or middle classes do not want, they are more likely to get it. So yes, money buys the rich influence. But as California and billionaire paradises like Switzerland show us, not all rich people want ultra low taxes or hardcore inequality. or if they do want them, then potentially having more money to spend on politics just does not buy them more influence after some point, which means that we have now gone through each of our four channels. That on paper all makes sense, but the evidence to back them up is weak at best. Combine this with the fact that inequality is no longer growing in much of the world, except when it comes to the top 0.1%, not the top 1%... It's clear for me to see that inequality is bad, but not as bad as we thought. ... For example, if the US decided to tax Elon Musk at 100%, yes, 100%, they could pay for their military for roughly one year, one single year. Similarly, taxing all UK billionaires would only cover the UK government deficit, not all spending, just what they borrow for about 1 and a half years.