- This video is brought to you by "Warby Parker".
(upbeat instrumental music)
What's up Wisecrack.
I don't know if you've heard
but there's a group of people that pretty much
the whole world seems to hate right now;
whether it's America's least favorite sunscreen enthusiast,
self appointed health czar, Lex Luther impersonator,
Hair transplant aficionado
or a teary-eyed hedge fund manager.
- I care.
- People across the political spectrum are pissed
that some folks have made bank off the recent
economic crisis.
Now we all know that America's filthy rich
have gotten filthier and richer in recent years,
while the rest of us are trying to make family size box
of powdered Mac and Cheese last a whole week.
(static white noise) You can save
on your water bill
if you just eat it dry.
Still, most of us have been taught to see this
as just a fact of life,
a natural extension of the free market.
But having massive wealth in the hands
of a few tech bros wasn't necessarily preordained.
We'll explain it in this "Wisecrack Edition"
on "Billionaires: What Went Wrong?".
And before we get into it,
I wanna give a shout out to this week's Sponsor
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Now back to the show.
Today having billionaires seems as natural
as eating a hot dog encased in a thick layer
of deep fried cornmeal batter.
But for early Americans
both things would have been unthinkable
and not just because of inflation and high cholesterol.
See our 18th century countrymen overwhelmingly
imagined themselves to be different from Britain
with its stuffy aristocracy, inbred Kings
and generational wealth.
Of course that didn't stop some early Americans
from making bank. (bell ringing)
There was a fledgling aristocracy flaunting their sick digs,
much of which had been acquired in sketchy ways
like looting British ships,
stealing Native American land and goods,
slavery or just ripping off the government's war effort.
And everyone else, they typically lived in small towns
running small farms or working as tradespeople or slavery.
As historian, Kevin Phillips notes
outside of plantations and fledgling cities,
social stratification was pretty limited.
You probably weren't jealous of your rich man and new shoes
because each most likely had only one pair
of homemade shoes.
While this may sound devastating to sneaker heads,
it also would have prevented the pain of waking up
at 7:00 AM on multiple Saturdays just
to have the sneaker zap break your heart again.
So when did America's first adjusted
for inflation billionaires really emerge?
Post civil war baby,
AKA The Gilded Age.
In good American fashion
some of these dudes initially made bank
from scamming the government.
Like selling uniforms during the civil war
that straight up fell to pieces in the rain,
hopefully making for some steamy moments on the battlefield.
But billionaire status was only really possible
with our first nationwide business; railroads.
This new transportation network made it possible
to ship supplies and consumer goods across the country.
And the dudes who built it like John D. Rockefeller
and Andrew Carnegie soon became the Zuckerbergs and Gates's
of their time.
Though, thankfully more stylish
and much like 70s, Meryl Streep Star Power,
life for the very wealthy would shoot up drastically
over just three decades.
By 1890, 73% of the nation's wealth would be held
by just 10% of the population.
And they do questionable things to show it off
like build a gold toilet
or import 10,000 butterflies from Brazil
for their daughters debutante ball.
Side note, all the butterflies died
and their corpses rained down on the party goers.
And what could I say?
I would watch the (beep) out of that Tik Tok.
But our new billionaires needed a way to justify having
enough dollar bills to wallpaper the great wall of China.
Because again, it was pretty new in America
to have so much money in the hands
of just a few cigar happy dudes.
Luckily they found a little thing called Social Darwinism.
This intellectual movement took Darwin's views
on biological evolutionary competition
amongst natural species
and applied it very pseudo scientifically to human society.
The thinking went; in a competitive economy like
on a competitive earth,
the creatures who rose to the top did so
because they were mother (beep) lions who deserve success
and also gold encrusted pedestals in their drawing rooms.
But despite being huge proponents of the free market
the wealthiest really relied on the government
to maintain their status as champions of capitalism.
For the most part, that meant keeping government
out of their way via laissez-faire economics
because the free market equals Bay.
And this was easy to finagle.
Being wealthy, gave you a lot of political sway
over a Congress to activision between millionaires.
And if you needed a little help
there was always corruption, bribery, and vote by.
So for a couple decades, the government pretty much (beep)
rather than say, outlawing child labor
or crafting regulations for on-the-job safety
as tens of thousands of workers got their legs chomped
by railroad machinery and some sick industrial version
of "Jaws 4".
But billionaires were also happy
for daddy government to be hands-on when
it meant helping their bottom line.
That's gets federal and state governments,
gifted railroad companies
approximately $100 million government subsidies
and 200 million acres of public land
between 1861 and 1871 alone.
It's not unlike Elon Musk
who celebrated as a role model for free market innovation
will sometimes complain about excessive regulations.
- Sometimes it can overregulate industries
to the point where innovation becomes very difficult.
- That's despite the fact that the vast majority
of Tesla's profit comes from
a government mandated regulation
that makes other car manufacturers
buy carbon credits from them.
Anyway, budding tycoons also relied on other shady methods
like manipulating the stock market,
building monopolies in order to control prices
and a whole lot of financial (beep) so boring
I'm almost glad I'm not rich, (sighing) almost glad.
But to be fair even some historical critics admit
that without the sheer force and breakneck policies
of you wildly robber barons
America couldn't have developed as quickly as it did,
which is to say, "Yes. Robber barons helped America
industrialized at lightning speed".
But at the same time many of them became well-known
for their philanthropy.
Most notably Carnegie
who by his death had donated 300 million to charity.
So counterpoint billionaires equal sometimes good?
To be determined.
The fact that some of these guys,
including Rockefeller and Carnegie had worked their way up
from humble origins also made them
sympathetic success stories.
Many folks admired and aspired to be like them
even as their mom and pop general stores were steamrolled
by increased corporate consolidation
spearheaded by their favorite millionaire bros.
Anyway, the gilded age wasn't all counting
luxury imported butterfly corpses all day.
To understand how the mega wealthy fit
into the social order,
we have to look at how the other 99% was living.
(eerie music) (indistinct announcement)
That's that's, that's not right.
Yeah that.
See, as America became the world's leading economy,
it also became a place of insane, never before seen poverty.
People who'd once survived humbly off the land were
increasingly forced to migrate to urban slums where
they worked 14 hour days in factories performing
the exact same task until they presumably had
a Charlie Chaplin-esque breakdown.
Okay, it's a good bit.
But this was seriously dangerous work.
And 35,000 people died each year in factory accidents
during the 1880s and 1890s,
making the average industrial jobs
somehow seem less safe than modern day commercial skydiving.
Meanwhile, by the turn of the century elementary school
for one in five American children looked like the inside
of a factory or the pits of a coal mine.
In the South small-scale farmers and especially
emancipated black folks working in sharecroppers
suffered as farming consolidated
and land speculation ran rampant.
Many fell into predatory high-interest debt,
just trying to pay for basic necessities
and across the board volatile markets fueled
by rampant speculation amongst the wealthy led
to regular boom and bust cycles
that made most people's experience of America,
feel like the Universal Studios' ride
Dudley Do-Right's Ripsaw Falls, which as we all know,
I'm legally banned from attending,
which again is absolutely
not how America works over centuries later.
- [Reporter] Dot com stocks crashed.
Billions of dollars in venture capital evaporated overnight
- [Announcer] The dow tumbled
more than 500 points after two pillars
of the street tumbled over the weekend.
- Unemployment claims skyrocketing with 6.6 million people
filing in the last week alone.
- [Michael] I'm just kidding. It totally does.
- [Female Reporter] "Hedge funds
and the private equity firms"
that she says, "has treated the market like casino..."
- Anyway, there's a reason gilded age billionaires
were called robber barons.
A lot of poor people really wanted to fight back
and had no access to Reddit.
Railway Car Magnet George Pullman was buried
in a lead line coffin within a steel and concrete vault
because his family was convinced angry workers
would vandalize his grave.
You thought Zuckerberg memes were cruel.
On a whole workers refused to silently
accept the new realities of the gilded age
in which millions worked punishing jobs
that collectively enriched a select few lucky dudes.
That's why in the 1880s alone
there were more than 10,000 strikes.
Many of the mass strikes that spanned entire cities
and regions.
And how did the wealthy industry giants respond?
With brute force of course.
Business owners would call in their own private militias
or even ask uncle Sam to send in troops.
Because if the free market means anything
it means crying to the government over contract disputes.
This wasn't just peacekeeping.
Strikes were often violently put down.
And the national guard was called on
to respond to labor turmoil
between 118 and 160 times from 1877 to 1900 alone.
Meanwhile, over the years
plenty of well-dressed businessman would form
armed vigilante groups to carry out justice in the streets.
Conflict inevitably broke out
during working class demonstrations.
Like the famous Astor Place, Opera House riot
when pissed off working folks invaded the fancy theater
throwing rotten potatoes and eggs at the actors
and shouting, "Shame, shame down with the codfish
aristocracy!"
A sentiment that I personally scream
into my pillow every night before I go to bed.
Less humorous is the fact that at least 22 people died
and over a hundred were injured in that riot alone
as a result of the state militia's response.
More explicitly labor-related kinds of agitations lasted
for decades like in the 1920 Battle of Blair Mountain
where thousands of co-workers faced off
against government and private militias
in a battle that saw approximately 1 million rounds
of ammunition fired and the dropping
of leftover world war one poison gas and homemade bombs,
particularly in the 1890s all of this violent confrontation
gunfire and death escalated to the point that
many Americans worried another civil war was coming.
Still the workers persisted.
One 1894 strike even shut down huge swaths
of American railroad lines
costing the industry millions in losses.
Keep in mind folks on strike weren't just quibbling
over low wages, many wanted the entire system uproot
suggesting radical changes like
collective ownership of company capital.
And in the 1896 presidential election,
William Jennings Bryan became
the first major political candidate
to build his brand off of a working class populist rage.
He was beat out when America's elite United
to throw millions behind William McKinley's
competing campaign.
A lot has happened
since the rise of America's billionaire class
and the riots and strikes against them.
The great depression gave way to the new deals,
civilized capitalism, and by the middle of the century
it was culturally not that cool to be super rich
or to show off your wealth.
Some old money families even sold
off their ancestral homes to become orphanages
or old age homes.
Unions and the companies they worked for
sort of found a bit of equilibrium.
Unions stopped agitating for the overthrow of capitalism
and businesses started providing living wages
and substantial worker protections.
Wealth inequality continued to decrease
from its gilded age Heights,
but over the last 50 years
the story has gotten a lot more complicated.
Perhaps most importantly for the very wealthy
finance has increasingly become the center
of the U S economy.
Now akin to what manufacturing was in the gilded age.
And if national railroads provided new opportunities
for never before seen wealth,
financialization is that but on roids,
thanks in part to developments like hedge funds,
venture capitalism and private equity.
According to author and Canadian politician
Chrystia Freeland, in the 70s finance began a transformation
from an industry dominated by large institutions
whose job was a conservative stewardship
of other people's money into a sector whose moguls
were iconoclastic entrepreneurs who specialized
in risk, leverage and outsize returns.
At the same time we saw an increased return economic laws,
fair policies with the usual caveats,
government's interference as well come when
it benefits the top 1% bottom line
as best exemplified by the bailout
of the big banks following the great recession.
The net result of the past five or so decades
economist Simon Johnson explains
that America now has the world's most advanced oligarchy.
And unlike the railroad tycoons, who were at least
producing something that helped the lives
of average Americans,
the financial activity generating billions
for the wealthiest today is not accounting
for 25% of corporate profits, but just 4% of jobs.
And by just about every metric
the economy has increasingly worked better
and better for the top 1%.
Today, America has almost 800 billionaires.
What's more vast economic wealth has become a largely
self perpetuating.
As economist Thomas Piketty notes
the current economic climate privileges creation of wealth
for those who already have existing wealth
at the same time at life has gotten worse for the majority
of Americans in just about every measurable way.
And for folks who set out to improve their lot,
well it's harder than ever before
because a little thing called the Great Gatsby Curve
which is not about Leonardo DiCaprio's
you know... (bell ringing)
Rather it's a depressing graph showing
that higher income inequality in a given country
makes it harder to rise above your station.
That's at least partly why most young Americans are worse
off than their parents for the first time in modern history
regardless of their genius Mac and cheese cost-saving hacks.
Are great. Ugh. Are great.
No, seriously. It's great. It really works.
None of what's happened is that surprising.
Over the past half century the very wealthy
have recreated the economy in a very, not fun, fun house
mirror image of the gilded age.
And with the 2010 citizens United decision bringing floods
of new money into politics,
economic power breeds political power like never before.
The billionaire-ization of politics is perhaps literalized
by self-financed political campaigns
like those of Michael Bloomberg.
Though he proved once and for all
that unlike my seventh grade nemesis Chip Van Der Rohe
of the Van Der Rohe dynasty once said,
"Money can't buy popularity."
(beep) you Chip and (beep) everyone that stands
with Van Der Rohe AND the whole Van Der Rohe clan
'cause me and the boys are coming for you. Okay?
But what's really most surprising to us though
is how little pushback we've seen to this reality.
as compared to the late 19th century
working class movements,
the reaction to growing wealth stratification
has been pretty anemic.
Sure. There's outburst of rage
in the form of occupy wall street
and even aspects of the black lives matter movement.
But compared to the widespread agitation
that characterize the gilded age, it's been pretty quiet.
Meanwhile, the remnants of social Darwinism remain strong
in most AP economics classes.
In spite of the fact
that the very wealthy continue to prosper
off government subsidies.
There's also the continued cultural lionization
of the Uber rich, particularly as with the gilded age
for those who appear to be self-made.
Rare success stories like bill Gates and Mark Zuckerberg
and Whitney Wolfe Herd, foster a false sense
of accessibility, suggesting that all of us,
if properly motivated can climb up a social ladder
that almost ubiquitously functions as a down escalator.
Of course, as the events of GameStop have shown,
people still do dislike or at least distrust billionaires,
like a lot.
Possibly as much as the folks throwing eggs
at the Astor Opera house did.
But perhaps the illustrious Reddit inspired
stock markets debacle kind of explains the change
that's happened.
Rather than questioning the rules of the game
that the very, very wealthy are playing
like workers during the gilded age did,
we're mostly just eager for a piece of the action,
which is why I'm still all in on AMC.
Hold on.
It's my hedge fund manager.
That failed too? (groaning)
(beep)
But anyway, what do you guys think?
Are billionaires awesome philanthropists
with great baby name ideas
or are they a pasty phase menace to society?
Let us know in the comments.
Big thanks to all our patrons for your support.
Hit that subscribe button like a Pinkerton agent
knocking out a peaceful steelworker,
and don't forget to ring that bell.
And as always, thanks for watching.
Later.
(upbeat music)
argh.
- [Man] Are you okay? (laughing)