This column began as a postscript to yesterday’s Quick Primer On Stablecoins.
IF YOU’RE SHORT ON TIME, SCROLL DOWN TO THE CHART AND THE QUESTION.
Otherwise . . .
Sixteen years after Bitcoin was created there are still no clear use cases for cryptocurrency that don’t involve illegal activity. Yet at the time of writing the value of crypto assets was approximately $3.3 trillion. . . .
(Stablecoins, as suggested yesterday, could be the one exception.)
The above quote comes from Part 5 of what Nobel prize-winning economist Paul Krugman first planned to be a 2-part Primer on Rising Inequality.
But inequality has widened so much since 1980 (thank you Ronald Reagan, Grover Norquist, Republicans ever since, with much resistance, though some help, from Democrats), he is currently up to Part 7.
Inequality, Part VII: Crypto
. . . I should close out with an in-the-moment case study: A discussion of the rise of the crypto industry, which can be seen as a sort of hyper-powered example of predatory finance, influence-buying and corruption. . . .
I still sometimes see people conflating the case for cryptocurrencies with the general case for a digital monetary system. The truth, however, is that our monetary system is already largely digital. Your bank account consists of ones and zeroes on the bank’s server, not a pile of cash in the bank’s vault. Most people use physical currency, if at all, for a handful of small transactions. Even writing checks has become increasingly rare. Instead we use debit cards and payment apps, which are simply ways to transfer ownership of some of those ones and zeroes.
In case anyone brings it up: Yes, there’s still $2.3 trillion in cash out there. But more than 80 percent of that is $100 bills, which are almost unusable in daily life, and are presumably being hoarded, largely outside the United States, rather than used in transactions. . . .
Combined, his 7-part series forms a course in economics that should be of broad interest to those seeking to understand how we got here — a long-simmering rage leaving tens of millions susceptible to the false promises of a demagogue who pretends to be a victim of the elites, just like them — and seeking to understand how we might reverse the trend.
(For starters: support the party that fights for a minimum wage, unionization, affordable health care, and effective taxation of the uber-wealthy.)
Most of the series is behind a $6/month paywall.
But you can cancel at any time, so the real cost of this course, if you choose to cancel, is $6.
Herewith, a further preview:
Understanding Inequality, Part I
Between World War II and the 1970s income disparities in America were relatively narrow. Some people were rich and many were poor, but overall inequality among Americans in terms of wealth, income and status was low enough that the country had a sense of shared prosperity. Things are very different today, as American society is beset by extreme inequality, economic fragmentation and class warfare.
What happened? The economic data show a huge widening of disparities in income and wealth starting around 1980, eventually undermining the relatively equal distribution of income we had from the 40s to the 70s. Moreover, growing disparities in income have led to growing disparities in political influence and the reemergence of what feels more and more like an oppressive class system. . . .
Understanding Inequality, Part II: The Importance of Worker Power
As I documented last week, not only have the top 1% in the income distribution pulled away from the remaining 99%, but within the top 1% the top 0.1%, the top 0.01% and the top 0.001% are pulling even further away. And this concentration of wealth at the top is corrupting our politics. Elon Musk’s claim that Trump would not have won in 2024 without him is quite plausible, while those currying favor with Trump by giving millions to his inaugural fund and buying his crypto-coins are clearly receiving favorable treatment. . . .
In last week’s primer, I asserted that the most important reason for rising inequality since 1980 has been a shift in political and bargaining power against workers. While globalization and technological change have certainly been contributing factors, the numbers just don’t justify the claims that they are the primary reasons for rising inequality in America. Mostly it was about power. . . .
Understanding Inequality, Part III: Tariffs
Tariffs are regressive taxes that increase inequality. . . .
Inequality, Part IV: Oligarchs
This one leads off with a chart . . .
Share of the top 0.01% in total wealth:
. . . followed by a question:
Who said this?
<< If there are men in this country big enough to own the government of the United States, they are going to own it; what we have to determine now is whether we are big enough, whether we are men enough, whether we are free enough, to take possession again of the government which is our own. >>
No, it wasn’t Bernie Sanders or Alexandria Ocasio-Cortez. It’s a quote from The New Freedom, Woodrow Wilson’s campaign platform in the 1912 presidential election.
Inequality, Part V: Predatory Financialization
How Wall Street increases disparities . . .
Last week I cited the argument by Andrei Shleifer and Larry Summers that hostile takeovers “worked” largely through “breach of trust”: breaking implicit contracts with stakeholders in corporations, especially ordinary workers.
Financialization was both a cause and a consequence of such breaches of trust. A deregulated financial industry provided the financial backing for hostile takeovers; the profits made in hostile takeover helped fuel the surge in financial profits and compensation. Ordinary workers suffered slashed benefits, layoffs and often outright terminations.
At this point you might wonder how much trust is left to be breached. But the financial industry keeps finding new frontiers to exploit. In recent years health care has become a major focus of private equity investments, with private equity firms purchasing a number of hospitals.
What they do next, according to a study published last year in the Journal of the American Medical Association, is sell off land and buildings, then charge the hospitals rent for use of facilities they previously owned. The result, the study claims, is a reduced quality of care for patients . . .
Inequality, Part VI: Wealth and Power
[T]he current level of inequality in America is much higher than what would be expected in a truly democratic polity, one in which all citizens had an equal voice.
Clearly, the economic elite possesses political power greatly disproportionate to its share of the electorate. Some readers are no doubt saying “Well, duh — everyone knows that.” Indeed we do.
Yet how, exactly, does this work? What mechanisms give the 1 percent and the 0.01 percent so much political power in the United States — especially compared with other countries? And why has their power increased in recent years? . . .
There you have it.
I have many friends at the top of the wealth pyramid. Most of them are wonderful people. Some are Republicans (though few Trump supporters). Most of them decry today’s extreme and dangerous inequality — and are generous in their philanthropy.
So this isn’t about vilifying them; it’s about electing a Congress and President who will enact things like Social Security, child labor laws, the GI Bill, Medicare and Medicaid, “food stamps,” reasonable minimum wages, paid family leave, Pell Grants, Obamacare, the Infrastructure Act of 2021 and the CHIPS Act of 2022 — all Democratic of them initiatives, mostly or entirely opposed by Republicans.
Editor’s Note: This article was originally published on July 23rd, 2025 on andrewtobias.com, syndicated with permission.
Read the full article here
