Don’t Eat the Rich

But Understand Why Some Want To.

Genevan political philosopher and architect of The Social Contract, Jean-Jacques Rousseau, had an outsized impact on numerous societal-shifting events, from the Age of Enlightenment and the French Revolution to the development of modern-day economic principles.

But within his prodigious breadth of work, found amongst his treatises, discourses and musical compositions lies one ostensibly simple quotation that he’s perhaps most famous for: 

“When the people shall have nothing more to eat, they will eat the rich.”

And while those words, uttered some 250 years ago, may now seem passé, the rapidly expanding gap between high-net-worth individuals in this country and their so-called middle-class counterparts make Rousseau’s words just as relevant today as they were in the 18^th century. 

That said, we wouldn’t expect Consommé du Country Club CEO to be particularly appetizing. Instead, there are ways to personally combat runaway wealth inequality and improve your financial standing … without having to ingest bourbon-cured boardroom members.

But first, we should all understand that while the past several years of elevated inflation hurt average Americans … they had an outsized net benefit for the rich, who saw their compensation and investments rise and their taxes dramatically lowered. Again.  

What Drove Inflation? 

Without delving into America’s rigged tax code, hand-out legislation, unscrupulous political stock trading, the unretirement crisis, runaway housing costs or any other issues that’ve exacerbated the wealth gap in this country … let’s briefly focus on one thing: corporate greed.

Corporate price-gouging was the prevailing factor behind what was just two years ago the highest inflation since 1981.  

But tuning into mainstream media would have many believing the main drivers of inflation have been: (1) workers’ pay increases and (2) COVID-era stimulus checks. 

A quick reality check debunks both: 

1.    A Thinktank report says “resounding evidence” shows companies continue to keep prices high even as their inflationary costs drop, accounting for as much as 53% of recent inflation. 

2.    COVID stimulus checks, on the other hand, were issued over three years ago and totaled just $1,200 per qualified American adult … or $814 billion. 

For context, former President Trump’s tax cuts for the wealthy and corporations cost the country $8 trillion. (And, in case you haven’t heard, he also raised taxes on everyone making under $75,000/year, every two years, until 2027.) 

Pay, Productivity & Taxes

Meanwhile, worker pay is still largely stagnant, especially when juxtaposed with productivity gains and executive pay increases over the past 50 years. 

Last Monday, the Associated Press reported that CEOs made nearly 200x what their workers got paid last year. The median pay package for CEOs rose to $16.3 million, up 12.6%. Meanwhile, wages and benefits netted by private-sector workers rose 4.1% through 2023.

This has little to do with Trump, though. In fact, it can be traced directly back to the man he stole his “Make America Great Again” slogan from: 

During President Reagan’s administration, the tax code was radically altered to cut the corporate tax rate (and the tax rate for upper-income earners) by ~50%, all under the pretext of “trickle-down economics.” 

This coincided with the expansion of the 401(k) and the subsequent disappearance of the employer-funded pension. In short: Corporations and the rich got tax cuts while the burden of saving for retirement was shifted to the worker. 

Fun fact: Before being convinced to run for office by moneyed interests, Reagan was a registered Democrat who called President Franklin D. Roosevelt “a true hero.” It’s funny what money can buy. Like literal actors running for governor and president. 

In the decades since, not only did nothing trickle down, but Regan’s policies facilitated an environment in which productivity — for the first time in modern American history — began to drastically deviate from pay. 

For the record, the London School of Economics conducted a longitudinal study (across 50 years and 18 advanced economies) finding that not only do trickle-down economics not work, they significantly worsen wealth inequality in developed nations that’ve implemented them. 

Same Old System, Just a Different Day

Need more proof of how this whole system is based on the illusion of perpetual growth fueled by corporate greed? 

Last week, Amazon Fresh announced a 30% price reduction for its groceries, joining Walmart and Target in similar efforts to lure back inflation-weary consumers.

Let’s translate that: Some of the largest grocers in America are cutting prices by as much as 30%because they’ll (1) still turn a massive profit and (2) fear that the general public is becoming aware of their profiteering ploy in which they: 

• Increase prices in excess of inflation.
• Blame it on inflation.
• Watch as their corporate earnings continue to break records. 

The writing’s on the wall. Price gouging and profiteering — and not middle- or lower-class compensation — are the culprits for the inflation we’ve all endured since the pandemic. 

And anyone that says otherwise is either poorly informed, blinded by partisan media’s indoctrination … or both. This isn’t about political parties. It’s about American workers historically getting the short end of the stick … and then both parties — who are bankrolled by the same wealthy people and corporations — pointing fingers at one another.   

No matter who you vote for in November, one thing’s certain: The bottom half of all Americans will continue to pay more in taxes than the 400 richest families in the U.S.

What Can You Do About It? 

Not much, unfortunately. The rich are getting richer while typical Americans struggle with their household budgets. The 6,871-page U.S. tax code is written with the wealthy in mind. 

So why dedicate this week’s issue to a history lesson? Because knowledge is power, and on a micro level, there are some things you can do to better your personal situation:

1.    We recently discussed how the FTC’s ban on non-compete agreements this year has opened the door for millions of Americans to improve their financial standing. If you’re feeling stuck, it’s a good time to start exploring job openings. People changing jobs average a 33% pay increase vs. those who stay in their positions and get standard raises. 

2.    Follow the money. Due to 2012’s STOCK Act, members of Congress are now required to make public investment disclosures within 45 days of any purchase or sale exceeding $1,000. And their track record beats the market — something most professional fund managers fail to do. Funds like the Unusual Whales Subversive Democratic Trading ETF (NANC) and
Unusual Whales Subversive Republican Trading ETF (KRUZ) mirror the investments of members of Congress, with NANC outperforming the market so far this year.

Starting next week, on July 1, we’ll have four consecutive issues providing practical personal finance tips that can help you better your financial standing. 

Until then, temper your hunger. The rich don’t taste good.