Elon Musk speaks as his son X Æ A-12 and U.S. President Donald Trump listen in the Oval Office of the White House on February 11, 2025.
| Photo Credit: Reuters
If Donald Trump’s first administration was the wealthiest in American history, his second one has spectacularly beaten it. Its total worth is around $460 billion and 16 of its members are billionaires.
A democratic polity in which 0.0001% of its population has vastly disproportionate control over its political and economic decisions displays tendencies of an oligarchy. This is in a society in which the top 1% already controls 31% of its wealth.
The super wealthy in a democracy often influence public policy indirectly, by lobbying and by sponsoring other candidates. The wealthiest families contributed around $2 billion to the 2024 U.S. elections. But when the ultra-rich become a direct part of the administration, it gives political power a different magnitude. For instance, Elon Musk, the richest person in the world, after contributing $250 million to the Trump campaign, is now leading the Department of Government Efficiency. Research establishes a negative relationship between politically connected billionaire wealth and democracy.
The impact on the people
Wealth in itself should not prevent a citizen from joining government. But the problem is in the potential conflicts of interests despite measures such as American ethics laws and financial disclosures. In the Trump administration, the Commerce Secretary is the CEO of a financial services firm; the Treasury Secretary is the owner of an investment fund management firm; the NASA Administrator is a pioneer in private space exploration; and the ‘White House A.I. and Crypto Czar’ is a former senior executive of PayPal.
There is a fundamental disjuncture between public interest and the market. As a researcher asks, “Will someone who earns $14 million per day be able to appreciate how important $1,976.00 (the average monthly social security payment) is to millions of Americans?” When Mr. Musk, who has promised to cut $2 trillion off the $ 6.75 trillion U.S. budget, says that budget cuts involve “some temporary hardship,” it is painfully ironic. While Mr. Musk holds 100 business contracts with the American government, Mr. Trump’s firings are stalling over 30 investigations into Mr. Musk’s companies by 11 federal agencies.
Studies show there are significant differences between the views of the top 1% of U.S. wealth-holders and the public on taxation, economic regulation, and social welfare programmes. While 87% of the general citizenry agree that the government should fund good public schools, only 35% of the top 1% think so.
The influence of the wealthy elite on public policy is often disastrous. Mr. Trump’s slogan during the campaign trail was “drill, baby, drill” and the U.S. duly withdrew from the Paris Climate Agreement. In his first term, the Tax Cuts and Job Act gave 80% of tax benefits to corporations and high-net-worth individuals. It also exacerbated racial income and wealth inequalities besides increasing the government deficit. The first Trump term diluted the Affordable Care Act in health, leading to a rise in uninsured Americans.
Nevertheless, Mr. Trump is only a manifestation of socioeconomic changes heralded since the inauguration of neoliberal capitalism (under Ronald Reagan), with unbridled market powers. The results are staggering. As the complexity scientist Peter Turchin points out: the number of decamillionaires (households worth $10 million) exploded from 66,000 in 1983 to 6,93,000 in 2019. This led to an “overproduction of wealthy people” and the increase in the number of the wealthy seeking political power. According to the Economic Policy Institute, if from 1945 to 1973, the wages of most workers kept pace with productivity, from 1973 to 2013, compensation of a typical worker rose 9% while productivity rose 74%. In the same period, middle-class wages remained stagnant, low-wage workers’ wages declined by 5%, and those of very high-wage workers rose by 41%. If in 1965, the CEOs of the 350 largest public U.S. firms earned 20 times that of the typical worker in those firms, by the early 2000s, they were earning 383 times of the typical worker’s pay. The federal minimum wage, in real terms, was higher in 1968 compared to 2013.
Bipartisan issue
The implosion of the working classes and wealth concentration is a phenomenon that spans governments of both parties. If 14 billionaires donated to the Trump campaign, 21 did to the Kamala Harris campaign; if Trump’s first cabinet was worth $ 6.2 billion, Barack Obama’s second cabinet was worth $ 2.8 billion; and if corporate profits touched $2 trillion (after hovering around $1.8 trillion since 2012) under Mr. Trump, they skyrocketed to $3.17 trillion in 2024 under Joe Biden. The majority of the working classes voted for Mr. Trump while a majority of the college graduates voted for Ms. Harris.
What Mr. Trump has managed to do is to, ironically, tap into the anger of the economically dispossessed. This anger combines with existing racial hatred and is made to coagulate into fascist political imaginations. As the philosopher Richard Rorty had predicted in 1998: “…the nonsuburban electorate will decide that the system has failed and start looking around for a strongman to vote for… the gains made in the past 40 years by black and brown Americans, and by homosexuals, will be wiped out.”
In the U.S., only 3.5% of billionaires have entered politics unlike China (36%) and Russia (21%). Yet, the plutocratization of the oldest democracy and the world’s most powerful nation has deleterious implications beyond the shores of America.
Nissim Mannathukkaren, Professor, Department of International Development Studies, Dalhousie University, Canada. He is on X/@nmannathukkaren
Published – February 18, 2025 01:14 am IST