Speaker 1: Today, I'm going to be speaking with Matthew Stewart, who is a philosopher
and author of several books, including most recently, The 9.9 percent the new aristocracy
that is entrenching inequality and warping our culture.
Really appreciate having you on.
Matthew, thank you.
Speaker 5: Yeah, it's great to be here, David, thanks for having me.
Speaker 1: So we often hear about the one percent we hear about, the 0.1 percent we
hear about the bottom 90 percent many times or the bottom 50 percent in discussions of
economics and society and culture.
What is significant about this nine point nine percent that made you want to study and
write about it specifically?
Speaker 5: So let's not forget that the 0.1 percent is actually deriving the wealth inequality
and the bottom 90 percent is the group that's losing.
So the there's two interesting things about the nine point nine percent.
One is that it's actually holding on to its wealth.
So that's, I think, really important.
And then the other thing is that it plays a much bigger role in driving our our values
and our culture.
So that's I think, what makes them especially interesting because I think we're all part
of it, even if we're not financially part of it.
Speaker 1: Can you talk about the ways in which that group drives culture?
Speaker 5: Yeah, I mean, so, for example, in education is pretty straightforward.
And the plan for making it into the nine point nine percent today is to is to go to college
and go to a good college and get a good degree and so on.
And that kind of plan made a lot of sense when college was inexpensive, when a lot of
it was publicly paid for and when there were jobs for people who got those kind of degrees.
But all of those realities are gone.
And yet the value system is, if anything, even more entrenched.
So there's even more emphasis on you can make it if you just go to the right college and
sort of figure out how the system works.
And then it turns out, of course, that the people who succeed in that or are the ones
who already start with a leg up whose parents were already in the nine point nine percent.
Speaker 1: What are the economic dispute?
What's the line for entering that group that nine point nine percent in terms of where
is the 90th percentile in terms of income and wealth and how far up does it reach?
Speaker 5: Yeah.
So but let me also just qualify and say that, you know, we don't have to fetishize about
the numbers because they move.
And also, it's not just about the numbers, but relative proportions, but you know, basically
you need about $1.2 million in net worth to make it into the top 10.
That's our 9.9 percent of the wealth distribution, and your income should be in the 120000 plus
range.
So that's what kind of gets you into it financially.
And then at the top end, obviously, it's it's a it's different as you get to the top at
about 20 million will push you at the top now in wealth and, you know, sort of 500000
or so in income, which, you know, sounds sounds like a lot.
But in fact, when you compare it to the very large sums that are going into the 0.1%, it's
actually pretty small.
So to Europe is more homogenous than people like to think.
Speaker 1: Now what's interesting is certainly, I would guess, the vast majority of the bottom
half of that group would consider themselves middle class.
And many who live in the most expensive cities would would absolutely insist that that they
are middle class is that part.
Is that culturally relevant that so much of that group considers itself middle class?
And is it accurate in some sense?
Speaker 5: Yeah, so what's happening is is the hollowing out of the middle class, but
the ideas are about, you know, 20 or 30 years behind the economic realities.
So a lot of people in this 9.9 percent, even in the bottom part, they don't get how wealthy
they are relative to the rest of society.
They don't quite get how, how much better they do have it.
And of course, part of the reason why I don't get it is because they are also being stressed.
I mean, it's pretty hard to stay in that group.
You have to work really hard and, you know, get some lucky breaks and be in the right
place at the right time and so on.
So I think there's a significant misperception in the group, which is how old they are.
And a lot of that shows up in surveys.
You ask people, you know, how much to the people at the top make and they say, Oh, well,
you know, the average CEO makes a million dollars a year.
And of course, that's that's preposterous.
And the average CEO makes 17 or 18 million dollars a year for top 500 companies.
So I think a lot of misperceptions and the when you mentioned the middle class illusion
is is really big one.
Speaker 1: Can you talk a little bit about the racial makeup of this group that you're
describing, generally speaking?
Speaker 5: Yeah, I mean, pretty simply, it's mostly white.
I mean, it's about 90 percent white as against, you know, and take measure at 65 to 70 percent
of the general population.
There definitely are people of color in in the nine point nine percent a significant
group.
But in relative to the representation in the total population, it's significantly lower.
So I think the Black shares about one point seven percent of the nine point nine percent,
as against about 13 percent of the general population Latinos roughly similar
Speaker 1: in terms of political power.
I mean, we understand the dynamics of money and political power in the United States,
generally speaking, but that top 9.9 percent is much bigger in terms of population by definition
than the top 0.1 percent in terms of aggregate power.
And that doesn't mean it's being wielded effectively, but in terms of aggregate power.
What is the power dynamic between that top 0.1 percent and the following nine point nine?
Speaker 5: You know, it's it's the nine point nine percent presents this big political problem,
especially for the Democratic Party, frankly, because that group now is leaning blue.
It's not completely blue, but it's more so than the general population, whereas the top
0.1 percent, and notwithstanding all the nonsense about limousine liberals actually functionally
leans very much to the right.
And and the dynamic between them, it's a really great question.
It's, you know, on the one hand, 9.4 percent is fundamentally dependent on the 0.1 percent
economically.
But on the other hand, culturally, there is a big gap and a significant part.
Shifting left is aware of that and tries to pull away the big danger for the Democratic
Party and the left is that this group, which is, I think has a disproportionate weight
in left politics, doesn't necessarily understand or share the interests of the other 90 percent
of the population.
So they tend to skew of the left in ways that can be ultimately go against the interests
of the large part of the population and sort of work indirectly for the top.
Speaker 1: Oh, that's interesting.
So let's see if we can think about that a little.
So you've got so the top 0.1 percent is leans overtly to the Republican side, and it's sort
of clear that the economic interests of that group in terms of the policy they want is
not good for the bottom 90 percent.
It sounds like you're saying with this the following nine point nine percent.
Nominally, these are folks who identify more as Democrats than Republicans and believe
themselves to lean more left than they lean right, but maybe without even really knowing
it.
The policies they want or the status quo that they reinforce is also not good for that bottom
90 percent.
Speaker 5: Yeah, I mean, a classic example for me is is the real estate game, so we don't
actually have a lot of attention to this issue in national politics, but it actually drives
a lot of our culture and it drives a lot of the issues that we have this huge segregation,
economic and racial in our neighborhoods.
And the role of the nine point nine percent in that, I would say on aggregate is really
pretty regressive because what it ends up doing is is saying, Oh, the issue isn't, you
know, our neighborhoods.
The issue is has to do with any number of other things, you know, personal prejudices,
with education, with economic policies that we're interested just more.
But in fact, the 9.9 percent tends to come down very heavily in favor of very restrictive
zoning and other very restrictive land use policies that drive up the price of housing
that have created an affordability housing crisis that reinforce segregation dynamics
that reinforce educational segregation dynamics.
And so they end up being very regressive, and it's something that the nine point nine
percent.
I think intellectually, the more self-aware members are are onto this, but functionally
the way they actually act.
And so, you know, reproducing these these divisions that in turn increase inequality
and work to the benefit of the 0.1 percent.
Speaker 1: One of the things that often comes up in conversation with people who do well
but are not in the top 0.1 percent and maybe not even in the top one percent.
So maybe we're talking about 90th to 98th percentile to kind of imagine again, you know,
we're talking about these are not exact, exact delineations, but there's often the feeling
among the 90 to 98 percent that, hey, the very top, it doesn't pay enough in taxes and
we do need to do things for the bottom 90 percent.
But also the taxes are a little too high on us, the 90 to the 98.
Can you talk a little bit about that dynamic and and really where some of these lines should
be in terms of taxation?
Speaker 5: Yeah.
So there's a grain of truth in that.
It turns out that the the real tax rate, when you throw it all in the federal, state and
local, you look at capital and income and so on.
The real tax rate for the at the very top is lower.
It's it's dramatically an absurdly lower than it is for the upper middle class and so on.
So vis-a-vis the 0.1 percent, yeah, the 9.9 percent is getting screwed like the rest of
society.
There's another side of it, though that's a little harder for people the nine point
nine percent to grasp.
And that's that our tax system is so arcane and complicated that it ends up indirectly
subsidizing a lot of people invisibly.
So, you know, a classic case in point is the mortgage interest deduction.
But there are many other bits and pieces like that that have the effect of subsidizing the
nine point nine percent in ways that are kind of invisible.
So people in that group think that their taxes are actually higher than they are another
going back to the real estate.
That's another kind of invisible subsidy we have.
We notwithstanding the fact that we do have property, municipal property taxes, we basically
don't capture the implicit rental value of real estate.
And so people who own their own homes end up getting an indirect tax subsidy, but they're
completely unaware of this.
They think they're geniuses for having bought into real estate market when they did.
And so they're kind of unaware that some of the money that's coming their way is really
an indirect tax subsidy.
So it's a really complicated picture.
And of course, I'm sure you'd agree if we can wave magic wand we replace the current
tax system have something radically more progressive and a lot more fair.
Speaker 1: Yeah, I've had very interesting conversations with folks who say, you know,
I don't really make that much and I'm touching the 33 percent federal tax bracket.
And then when I live, if I live in New York or California or Massachusetts, then you know,
you're throwing five to five to 10 percent on top of that.
And I'll often say to these folks, Listen, you don't have to tell me exactly what you
make but understand that you're touching that top 33 percent.
But not all of your income is taxed at that because we have, you know, these are these
are brackets, marginal tax brackets, and then you've got your standard deduction and you
have a mortgage and you've got, you know, all these different things.
You should really look at that first page of your 10:40, which says total tax, divide
it by your income and you are going to find a shockingly low number.
And many times it's 17 18 percent federally overall.
And these are folks absolutely in that 9.9 percent who themselves don't really have an
understanding of the degree to which they are paying federal taxes.
Speaker 5: Yeah, but but let's just not forget that, I mean, you know, the big money is at
the very top.
Of course, and the big question here absolutely is actually to go after this.
Speaker 1: Yeah, yeah.
Another two or three points for someone making one hundred and $80000 a year has almost no
impact compared to what we're talking about in the 0.1 percent, without a doubt.
Speaker 5: Right, right.
But then let me also mention on the other end, because this is something that happens
when we talk about the 99 percent we forget about people that are at the at the other
end of the economic spectrum.
We don't think about sales tax is the big issue.
Generally, if you remember the 99 percent, but that's actually a pretty significant hit
to a lot of people with lower incomes.
We don't think about the the fight, the, you know, the the payroll tax deduction, but that,
you know, if you've got it, if you've got a minimum wage job, that's a big, big chunk
of your income.
So things are much more regressive than than people understand in the 9.9 percent.
Speaker 1: Without question, the book is fascinating.
It's called the nine point nine percent the new aristocracy that is entrenching inequality
and warping our culture.
We've been speaking with the book's author, Matthew Stewart.
Really appreciate your time today.
Speaker 5: Yeah, great to be here.
Thank you.