Remember Samuel Insull? Probably not. Most people alive today don’t, but Insull’s life and the politics after his demise reveal some clues about where we’re headed today. Born in Britain to a modest family, Insull gained a position at Thomas Edison’s British operations and would later immigrate to the United States to become Edison’s personal assistant.
After moving his way up in the company, he would become head of Chicago Edison. Insull transformed Chicago Edison into one of the largest electric power companies in the United States, employing 6,000 people and serving 500,000 customers.
Despite his success, Insull would see the company he built collapse around him as a result of Black Thursday, where the stock market crashed, one the first signs of the looming Great Depression. With angry investors and consequences that trickled down to thousands of workers, compounded by indictments, Insull became the poster boy for excessive capitalism and greed. At the time, Franklin Roosevelt assured the public that he would “get the Insulls” of the world to set an example for those of unfettered greed.
The case of Insull and other tycoons like him led to mass regulation and expansion of government authority to prevent future disasters caused by men like him. Big government became the solution to addressing the shortcomings of the marketplace, and its reign would last for decades.
Today, we find ourselves in a different, yet similar predicament, where arguments for a return to big government don’t pertain to unfettered markets, but unfettered wealth. They are borne out of the same belief that big government and over-regulation is the only tool to correct course, regardless of any unintended consequences.
Fast forward to 2019, where Democratic candidates Sens. Bernie Sanders and Elizabeth Warren are running not against unfettered markets as Roosevelt did, but on what they deem unbridled wealth. They, too, seek to expand government through schemes such as a wealth tax and redistributive policies to control what they view as excess wealth. They invoke phrases such as the “ultra-rich,” “the 1%,” and “super-rich” to invoke anger among their supporters and the general public, attempting to change our notions and ideas of success.
“I don’t think that billionaires should exist,” said Bernie Sanders, further invoking his idea of a country where the government dictates what is success and how much of it any single person can have. This new wave of progressive Democrats argues that income inequality has become too widespread and rampant. They argue that some people have accumulated too much wealth — ignoring many people accumulated wealth through innovative ideas, running a great business, or maintaining a great business and brand passed down by a relative. None of this matters because to them, success can only be measured by government and only by expanding government authority can it be stopped and redistributed.
Americans gave $410.2 billion dollars to charity in 2017, most of which came from the wealthiest and most successful among us. They ignore that more than a dozen billionaires have joined Bill and Melinda Gates’ “Giving Pledge” to give more than half of their wealth away to philanthropic causes — joining 154 other billionaires from around the world who have agreed to do the same. They ignore these facts because then it becomes easier to pit one group against the other.
Their objective is simple: limit how much you can have, and then they decide how it is divvied up.
Just imagine someone doing that to you. Imagine someone saying you have earned too much, so they’re going to take half of it away and give it out to the rest of us — regardless of whatever good you have done or plan to continue to do. Wouldn’t you be mad? Wouldn’t that be a cause for concern? If not, it should be, because where does it stop? It will only be a matter of time before they lower the threshold of who they deem too rich, and at some point, it might be you.
An example illustrated by the New York Times shows that if Elizabeth Warren’s “wealth tax had been in effect since 1982, for example, [Bill] Gates, who had made his first billion dollars by 1987, would have had $13.9 billion in 2018 instead of $97 billion. Jeff Bezos, the world’s richest person, would have had $48.8 billion last year instead of $160 billion. And Michael Bloomberg, who is considering running for president himself, would have had $12.3 billion instead of $51.8 billion.” Warren’s plan calls for a 2% wealth tax on wealth over $50 million and 3% on wealth over $1 billion. Bernie’s plan starts with households and individuals with $32 million or more.
Despite what they may argue as good intentions, they ignore the deleterious impact this will have on communities of color, such as African Americans and Hispanics.
For example, out of the 14 million African Americans in the United States, less than 720,000 African American households have a million dollars or more in wealth, and that number shrinks significantly when discussing black billionaires (there are only five). The numbers are far worse for Hispanics, and while there are Latin American billionaires, there isn’t a single one who was born in the United States. The number of Hispanic households with a million dollars or more is comparable to that of African-Americans.
Minority billionaires such as Oprah Winfrey (who is known for her philanthropic work), Robert F. Smith (who gained notoriety for paying the student loans of the Morehouse College graduating class of 2019), or Jay-Z (who grew up in the Marcy projects of New York) would not only see their wealth dissipate, but would lose their billionaire status and as a result decrease their philanthropic giving, which are most valuable in the black community. This also doesn’t account for minority millionaires who would also see their wealth destroyed. The consequences alone should be enough to give us all concern.
What is being proposed is the greatest economic restructuring of wealth in the history of the United States and the world — and the unintended consequences will cause far more harm than good. Former Secretary of the Treasury and president of Harvard Larry Summers wrote in the Washington Post that, “Warren’s plan will discourage hiring, particularly of low-skilled workers, by firms that currently provide generous benefits. These firms will face the most burdensome taxes when they increase hiring and will gain the greatest cost savings by laying off workers.”
Expanding the scope of government to decide how much a person can have and what to do with what they shouldn’t have is not the role of government. Individuals are more than capable of deciding on their own the best ways to use their wealth to make differences. They’ve already done it, continue to do it, and there’s no need for government meddling to further it. There are alarming consequences that will disproportionately harm minorities who have gained a sliver of success and will undoubtedly make it more challenging for others to do the same.
It would behoove us all to be cautious of the purported good that Sanders, Warren, and others of the Democratic liberal movement purport. The consequences both known and unknown far outweigh their claims of good, and that should be enough to scare us all. Let’s not forget that sincerity is a dangerous and much-overrated virtue.
Shermichael Singleton (@Shermichael_) is a Republican strategist and political analyst regularly appearing on MSNBC.
