The 50 Trillion Dollar Money Heist
Neoliberalism’s radical experiment with inequality
Photo by Ayiman Mohanty on Unsplash
In the last post, I discussed how the shift from modern liberal policies to neoliberalism reduced democratic performance by fostering uneven economic development, increasing crime and socioeconomic inequality, stoking political and economic unrest, and decreasing trust and social cohesion. This post describes what our radical experiment with inequality cost 90 percent of Americans. It first offers a broader look at neoliberalism’s global effects to show that the results at home are not an anomaly.
As discussed, neoliberalism advocates deregulating the private sector, privatizing the public sector, and providing tax breaks to businesses and (mostly) upper-income individuals rather than directly investing in people through the provision of public goods and services. In theory, these policies incentivize economic investment and the benefits (eventually) trickle-down to everyone through low unemployment and higher incomes. In practice, fifty years of neoliberal policies have benefited only one group—the superrich.
One study of 50 years of tax cuts (1965 to 2015) in 18 developed countries found that economic growth and unemployment were nearly identical after five years in countries that had and those that had not given tax breaks; the main difference was that the incomes of those at the top grew at a much faster rate in the former countries. Another shows that nearly two-thirds ($26 trillion) of the $42 trillion in new global wealth since 2020 has gone to the richest 1 percent. That means a single billionaire gained roughly $1.7 million for every dollar of new wealth earned by a person in the bottom 90 percent.
In fact, billionaire wealth grew by an astonishing $2 trillion in 2024 alone—roughly the equivalent of $5.7 billion a day—with the 10 richest men taking an average of almost $100 million a day. They would remain billionaires even if they lost 99 percent of their wealth overnight. In contrast, the number of people living in poverty around the world has barely changed since 1990.
Some have blamed the upward accumulation of income and wealth on structural changes in the economy—like automation and globalization. Others claim it reflects different work ethics and the so-called “skills gap,” meaning the failure of most workers to acquire the skills and education needed in a modern global economy. Both narratives view stagnating wages as the price of keeping businesses competitive in an increasingly cutthroat and technological global economy. Research refutes these claims. Rather than merit—defined as skill, education, grit, and hard work, the rich are largely getting richer from unearned sources of income and wealth, such as inheritance, monopoly power, crony connections, and the downstream effects of brutal wealth extraction under colonialism. The latter persists in the flow of vast sums of money from the Global South to the Global North, especially its richest citizens. The unwillingness to redress these issues has resulted in rising income inequality for more than 70 percent of the world’s population.
The same holds true in the United States. In the three decades following World War II, modern liberal policies under the New Deal and Great Society, including high taxes on the rich relative to other periods, vastly reduced socioeconomic inequality and ushered in America’s greatest period of prosperity by ensuring that most benefited equally from economic growth. That changed in the late 1970s when America began divesting in the middle class, defunding public goods and services, and investing in policies that privilege only a small percentage of the population. Since then, the majority of gains have gone to the top 1 percent while the total share of income claimed by the bottom 90 percent has steadily declined (see, e.g., here, here, here).
These policy changes were based on untested economic theory, not research. The results were staggeringly large yet generally predictable. This is why I am using words like “scam” and “heist.”
From 1947 to 1974, real incomes at every level—bottom, middle, and top—grew at close to the rate of per capita economic growth. Certainly, there were gender and racial inequalities within income levels; however, inequality between them steadily shrank and America built the world’s largest and most prosperous middle class.
From 1975 to 2018, the top 1 percent took $50 trillion from the bottom 90 percent—with the remaining 9 percent largely treading water. Actual income exceeded the economic growth rate for only one group—the top 1 percent. If economic growth had continued to be shared at a more equitable rate, 90 percent of Americans would have earned an additional $1,144 every month, every year since 1975.
The aggregate annual income of the bottom 90 percent would have been $2.5 trillion higher in 2018 alone. This is what our radical experiment with neoliberal inequality has cost us.
The study breaks down neoliberalism’s $50 trillion heist into detailed demographic data, including race, gender, education, income, and geographic location (urban, rural, suburban). The first important finding is that most of the so-called “gains” made by middle- and low-income workers were from increased hours rather than wages. Two people today need to work full-time to earn the same or less than what a single-income household would have earned had economic growth continued to be shared more equitably. And that’s just income. It doesn’t account for the rising costs of maintaining a middle-class lifestyle because housing, healthcare, education, childcare, and transportation costs have grown at two to three times the rate of inflation—in part because they have been privatized, deregulated, and/or defunded as a result of neoliberalism.
The second important point is that the U.S. workforce is better educated today than at any time in our nation’s history; it should therefore be earning more not less. College educated workers do better than their less educated counterparts, but that’s because those without a college degree have secured none of the gains from four decades of economic growth. It’s even worse for those below the 50th percentile; they have actually seen their real incomes decline.
The final important point it that the workforce is far more diverse. White men made up less than 45 percent of the prime-aged workforce in 2018 compared to over 60 percent in 1974. This matters because, as mentioned, there was more equality between income distributions in 1975 but less within them with respect to race and gender. We would therefore expect to see income grow at all levels as people are paid for the work they do and not their race and gender. That’s not what happened; gender- and race-based income disparities have narrowed since 1975 but much of that reflects four decades of flat or declining wages for low- and middle-income white men rather than gains made by women and nonwhites.
It’s understandable that white men—especially non-urban, non-college educated, white men—feel frustrated; they have seen the slowest wage growth in every demographic category. But this tells only part of the story. It leaves out two things.
White men still earn more than white women at all income distributions; they also earn substantially more than most nonwhite men and women. Only Asian American men do better.
Women and nonwhites have actually lost more from our radical experiment with inequality because, given their disadvantaged positions in 1975, they had far more to potentially gain from the 118 percent increase in gross domestic product (GDP) per capita, meaning economic output per person, over the following four decades.
The real story is not that white men lost income to women and minorities; it’s that they, and everyone else, are worse off because the top 1 percent have hoarded all of our economic growth—and that top 1 percent is almost exclusively white and male.
Because the analysis ends in 2015, the $50 trillion scam, $297,000 per household, does not include the sweeping tax cuts passed by President Trump and the Republican controlled Congress during his first term in office. Yet, like the tax cuts adopted by Republican presidents Ronald Reagan and George W. Bush, research shows the Tax Cuts and Jobs Act (TCJA) of 2017 disproportionately benefited big business and the richest Americans, failed to deliver the promised economic benefits, ballooned the deficit, and, in the process, shrunk the revenues available for programs that benefit everyone. Now, with a majority in both houses of Congress and Donald Trump back in office, Republicans have pledged to renew and make permanent the parts of the $4 trillion in tax cuts that are set to expire. A recent analysis by the Treasury Department shows that this newest Republican tax scheme will also largely benefit big business and the highest income earners.
Republicans have been building up to this moment by telling Americans that minorities, women, immigrants, LGBTQ+, and low-income Americans are to blame for stagnating incomes and a shrinking middle class. Let’s not sugarcoat it. Their claim that demands for more civil and economic rights in the 1960s and 1970s shrunk the economic pie and resulted in fewer rights and resources for low-, middle-, and upper-income Americans is a lie. It is a divide and conquer strategy that benefits only two groups: the top 1 percent of (overwhelmingly white and male) Americans and the policymakers who believe that they gain from catering to them. If Americans are fighting one another over the scraps, they are not asking difficult questions, such as “Why has income stagnated for 90 percent of us?”, “Why has income and wealth been transferred to the top 1 percent?” and “Why do disparities based on race and gender still exist in 2025?”.
The oligarchs who now have control of all three branches of the national government want you focused on the people below you and next to you so that you don’t look up. Don’t fall for it. People who frame your fellow Americans as the “enemies within” do not have your best interests at heart.
The immigrant picking your fruits and vegetables is not your enemy. Low-income Americans receiving food stamps to feed their children are not your enemies. Homeless people are not your enemies. Women, minorities, and LGBTQ+ Americans are not your enemies. Red states or blue states are not your enemies. Public servants are not your enemies either. Neither is the union worker fighting to raise the minimum wage or going on strike to protest the fact that, between 1978 and 2014, the wages of most workers remained stagnant or declined while worker productivity increased, the stock market and business profits boomed, and the compensation of top managers increased by close to 1,000 percent (see, e.g., here, here, here).
Economics involves political and social choices. Think about all of the things we could have had individually and collectively had Republicans and some conservative Democrats not chosen to line the bank accounts of the superrich at the expense of the rest of us. Your family, for instance, could have used that money to buy a new car, purchase a new home, and send your kids to college. We, as a society, could have funded universal Pre-K, health care, and free school meals, provided a free college education, built affordable housing, and invested in public schools, roads, and bridges. These investments would have stimulated economic growth and simultaneously built a strong middle class.
This upward redistribution of income and wealth is morally indefensible, but it is problematic for other reasons too. Let’s start with economic growth. Consumer spending in the United States makes up 70 percent of GDP—a measurement that describes the size of the economy. When workers and businesses prospered together in the decades that followed World War II, the vast majority of Americans had more disposable income to buy things. By intentionally constraining the earnings of all but the top 1 percent, neoliberalism depressed consumer demand and therefore economic growth.
Just as problematically, our experiment with radical inequality has reduced social mobility, meaning the percentage of adult children who earn more than their parents has been steadily falling and the birth lottery (the privileges associated with being born into wealth) has been steadily growing. There is still economic mobility; however, Americans now have less than the citizens of other economically advanced nations and the American dream of upward mobility through hard work and initiative has become increasingly out of reach (see, e.g., here, here, here).
We are also less secure individually and collectively. For example, other economically developed nations suffered far less from Covid-19 because they entered the pandemic more healthy, resilient, and financially secure. Compare that with United States where 47 percent of renters were cost burdened and only 40 percent had enough saved to cover a $1,000 emergency medical expense. These findings are important because two-thirds and close to half of those filing for bankruptcy cite health- and housing-related issues, respectively. While President Obama’s Affordable Care Act increased health insurance coverage to 90 percent, 28 million still had no health insurance and 44 million were underinsured. Both of these groups report high rates of going without needed care, making them at risk of serious illnesses down the road, including the preexisting conditions linked to more severe cases of Covid—like hypertension and diabetes.
As a nation, we would have been far more resilient had the $50 trillion been shared more broadly through higher wages and progressively redistributive policies—like Social Security, housing, health care, food stamps, and welfare—rather than funneled to corporations and the superrich. Progressively redistributive policies do not reduce overall economic growth; on the contrary, they have been the key driver for what little growth in income occurred for the bottom 90 percent. Now, President Trump is proposing to put these policies on the chopping block in order to protect the material interests of the rich and powerful through tax breaks, the deregulation of the private sector, and the privatization of the public sector. His reelection as president of the United States is an example of the political costs of radical inequality.
Since the 1970s, business interests and the uberwealthy have been working behind the scenes to shape public opinion, exert monopolistic influence over industries, and take oligarchical control of governments around the globe. Their triumph is clearly visible in the reelection of a billionaire president and his choices to surround himself with the world’s richest men at his inauguration, stack government agencies with his uberwealthy political allies, and put oligarchs, like Elon Musk, in position to co-run the world’s largest economy. These events should be a wake-up call for Americans, but people around the world should be concerned too.
Rising inequality is affecting more than two-thirds of the globe, but it is not inevitable. We have the domestic and global political solutions; we’re choosing not to use them (see, e.g., here, here, here). For instance, Nobel Prize–winning research shows that a fairer way to stimulate economic growth is through modest tax increases on the richest citizens and businesses—with the government then using those revenues to fund social welfare programs and put money into the pockets of middle- and working-class citizens; these groups then stimulate the economy through increased consumption. In other words, Nobel Prize–winning research supports using the policies pursued by the United States and other economically developed nations under modern liberalism.
It’s not going to be easy to mobilize on behalf of change but, make no mistake, our political and economic systems will collapse unless we choose to act. Some of the most effective actions can be done anonymously and/or from the safety of your own home. As mentioned, consumer spending is 70 percent of GDP in America. Businesses care a lot about how you spend your money. The key is to choose action over inaction. We’re all in this together.
In solidarity,
Jody Longo Schmid