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No Mercy No Malice

The Great Grift

January 15, 2021

9-min read

The federal response to the pandemic has been massive — a $5 trillion effort. It has also been a con. Under the cloud cover of Covid-19, the shareholder class has used its outsized influence over government to toss a few loaves of bread at those suffering, all the while accruing trillions of dollars in wealth financed on the backs of younger, and future, generations.

How did we get here? In a healthy capitalist economy, wealth is always at risk. Competition spurs innovation, which disrupts the established order, creating winners — and also losers. Joseph Schumpeter called this the “gale of creative destruction.” Over the long term, the spoils (ideally) fund both a more empathetic society and the infrastructure for more innovation and prosperity — but this only happens if the gale is permitted to blow.

Naturally, the winners tend to lose enthusiasm for this process when their own wealth is creatively destroyed. So they fight back. And one of their preferred weapons of entrenchment is government policy.

Government by the Rich, for the Rich

The influence of money in politics is well known. Just 400 wealthy families provide about half the funding for presidential campaigns, and they speedball their influence through think tanks, legal advocacy groups, and friendly media. Rupert Murdoch, the Mercer family, Michael Bloomberg, Mark Zuckerberg, and Jeff Bezos all shape our views and influence national policy. 

The wealthy use this influence to expand their wealth and power. Consider the tax code: Income gained from selling stock in a firm is taxed at a lower rate than income gained from actually working at that firm. A second transfer from poor to rich: A homeowner may deduct mortgage interest on a first and second home, while the less wealthy pay non-deductible rent. If it makes no sense that we’ve functionally decided money (and the money it makes) is more noble than sweat … trust your instincts. 

These transfers are pitched to the American public as how to get wealthy (when in reality, it’s how to stay wealthy) and achieve the American dream (i.e., homeownership). But this messaging is nothing more than propaganda brought to you by the 10% of people who own 80% of the stocks in this country. The result is that since 1989, the wealthiest 1% of American households have increased their share of the nation’s wealth by a third, while the bottom 50% have seen their share halved. 

And that was before the pandemic.

Cloud Cover

A crisis is a terrible thing to waste, and Covid-19 provided the wealthy with the opportunity for the greatest economic grift in history. 

The pandemic and the measures taken in response to it have created an economic crisis of historic proportions. Unemployment leapt to 15% in April, and while it has gradually recovered, it remains twice as high as it was before the pandemic. Job losses and many other forms of harm have been concentrated among the lowest earners, and to a much greater degree than in other recent crises.

The response by the federal government has also been historic, and massive. But of the $5 trillion spent (so far), only around $1.5 trillion came in the form of direct aid to individuals. A quarter of that funded $1,200 and $600 stimulus checks, many of which went to people who had not suffered financially (only 15% of recipients of the first round of checks said they planned to spend the money). Read that last sentence: more than four in five recipients of money borrowed from future generations (debt) did not urgently need it. Another $1 trillion or so went to pandemic response (medicine, PPE, medical services), and while this was necessary, the money ended up largely in the pockets of health care company shareholders. 

The remaining $2.5 trillion came via mostly forgivable loans and handouts to businesses. But don’t let the name “paycheck protection program” fool you — recipients were not required to actually protect any paychecks. The final tally is about $1 trillion in direct aid to those who truly needed it, $1 trillion to the actual pandemic response … and a $3 trillion wealth transfer to the rich and powerful. We’re calling it: The Great Grift.  

What did we accomplish? $1 trillion in unemployment, food assistance, and other aid to those directly hit by the pandemic is an unalloyed good. We helped many of our most vulnerable American brothers and sisters. But it wasn’t enough. Huge swaths of America continue to suffer. In December, 18% of U.S. households with children could not meet their food budget, and 26% of renters with children were behind on their rent. These non-economic impacts have likewise fallen harshly on lower earning households (not to mention people of color, who have suffered disproportionately by every measure). 

Meanwhile, $3 trillion in new money and historically low interest rates have been the nitro and the glycerin, respectively, of the stock market’s ascent. The dirty secret is that there are two pandemics. While a quarter of America is food insecure and behind on rent, the shareholder class has experienced an explosion in net worth and spends less time commuting, more time with family and Netflix.  

A secondary effect is the underwhelming fight against the virus itself. Had Covid-19 preyed on wealthy white people and cut the Nasdaq in half, our response would have made the South Korean and Taiwanese responses appear amateur. Instead, the wealth of billionaires is correlated to infections and deaths, and we continue to see a death toll greater than 9/11 every 18 hours.

In the longer term, we have suppressed the creative destruction of capitalism. That $3 trillion will build thousands of piers — not bridges — for firms that are not viable for a post-pandemic economy. Once we stop propping them up, they’ll still reach the end. 

In the meantime, however, we are denying the younger generation the opportunity to open their own businesses at a lower cost. If a restaurant or movie theater is allowed to fail, the cost of rents and other inputs falls, which creates opportunities for a new generation of entrepreneurs. When I started L2 in 2009, for instance, I was able to secure office space in SoHo for $27/foot because a printer or an apparel manufacturer had gone out of business years earlier, leaving its building behind for the next generation. 

Consider what else we could have done with that money:

I’m not advocating for all of these (cancelling all student loan debt, for example, would be yet another unearned wealth transfer) but they show the scale of the Grift. Anyway … if these programs seem too big-government liberal, consider this: Instead of $3 trillion in handouts to the wealthiest Americans, we could have given $30,000 to every single one of the 100 million Americans who reported pandemic-related wage losses in 2020. Thirty. Thousand. Dollars. Or, we could have just given every American adult $15,000. This would have gone much further toward repairing the economy, as more money would have ended up in the economy, rather than in the markets. And who better to determine which firms deserve to survive and are prepared for a post-corona economy than consumers? 

The Bill Will Come Due

Where are these trillions of dollars coming from? Some will come from working people. It is a lie that lower income people don’t pay taxes. Because while nearly half of Americans don’t pay much or any federal income tax, lower income people nonetheless carry a higher tax burden. Payroll and sales taxes, along with any income tax they do pay, eat up a much greater share of their income than do the shareholder class’s taxes. 

In a sense, our democracy is working too well, as the mark for the Great Grift are people who don’t vote: young people and the unborn. In 1989, people under 40 owned 13% of the wealth in this country. In 2019 — before the pandemic — they owned just 6%, despite representing nearly the same share of population. The younger you are, the more you’ve been grifted. While savings rates have reached an all-time high, a fifth of Gen Z-ers report needing to use the entirety of their life savings to weather the pandemic. Young people, and our children, will be paying off the debts of the Great Grift for decades. We have borrowed trillions to not fund the war against the virus, and have taken debt levels to those not seen since World War II.   

What Should be Done 

Going forward, our pandemic response, including any additional stimulus packages, should be limited to supporting people who are food and housing insecure — not Delta Airlines, or your neighbor who owns seven dry cleaners. 

But since we’re already $3 trillion in the hole, we need to recover some of those losses. That calls for taxes. A pandemic occurs once every several decades — what is unprecedented is the explosion of wealth … that too few of us have actually experienced. So why are we so quick to discuss bailouts and stimulus, while seemingly allergic to the idea of increased taxes, in the face of extraordinary events?

We should end the favorable tax treatment of capital gains income. Capital appreciation has been the primary vehicle of both our 40-year wealth transfer and of the Great Grift. When the grifters cash out these assets, they should at a minimum be paying the same tax rates on that income as working people pay on theirs, so we can begin to chip away at the debt(s) incurred. 

We should impose a one-time wealth tax. A 2% tax on the richest 5% of households would raise up to $1 trillion. (The initial stock market bump triggered by the CARES Act’s passage led to the richest American-stock owners accruing an additional $2 trillion.) 

These measures only address the symptoms. How do we arrest the ongoing wealth transfer, and prevent the shareholder class from future grifting? 

The classic conservative answer to this problem is to weaken the government so it cannot be used in this way. It’s an attractive theory, but the reality of our modern world is that there are simply too many challenges that require collective solutions. From ensuring access to clean air, soil, and water to breaking up big tech, big(ish) government is here to stay, so we need it to be more robust, and more effective. 

We must reduce the impact of money on politics. Money is not speech, and if we can’t convince the grifters on the Supreme Court of that, we should override them with a constitutional amendment. We need greater transparency from our elected representatives about who they meet with and where their money comes from.  

Stop, Stop … It Hurts So Good

Finally, if we don’t align financial reward and penalties with the health of our commonwealth and its citizenry, we are doomed to a pattern of failed responses to crises. The explosion of wealth among the already wealthy has created unprecedented moral hazard, as the arbiters of policy haven’t even felt the real pain of this pandemic. 

Case in point: Doordash, a beneficiary of the explosion in meal delivery brought on by the pandemic went public last month, and is now valued at more than FedEx at $68 billion. In contrast, the TA-125, an index of the 125 largest companies in Israel, was down for 2020. And Israel has vaccinated its citizens at 7 times the rate of the U.S. If Amazon stock had been cut in half — vs. accelerating 87% since March lows — the 82% of households who are Prime members would be vaccinated by an Amazon delivery person and Chick-fil-A would offer to stick your arm at their drive-throughs. Let’s admit it: We’ve been conned.

Life is so rich,

P.S. Registration for my next Brand Strategy Sprint, where I teach the frameworks and strategies leveraged by the world’s most successful brands, closes on Tuesday. There are only a few spots left — Sign up now before it fills up.


  1. Jay says:

    The statement that 400 family’s funding half of campaigns cancels out the rest of your sound suggestions for remedies. Also the young not voting. We’re in for a rough go coming out of this. Wealth disparity of this magnitude never ends well.

  2. Cbilds says:

    Anyone with the right combination of a great idea, the right market, the right circumstances and a bit of luck can make it in the U. S. I don’t want that opportunity taken away because not everyone goes after it. Yes, the rules are stacked for the winners. Go out and be a winner.

  3. Richard Hoffman says:

    Why close this out or limit this message to only a few? …. learning from the grifters? Well done. I am, knowingly, in!

  4. tony guarisco says:

    “Money is not speech” is a good line. However, it is more accurate to say that corporations are not persons.

  5. Carlton Moore says:

    Have you considered stocks purchased w/ take-home pay would be effectively taxed 3 times? Income tax + Capital Gain + the suggested Galloway tax. If someone chooses to spend their take-home pay buying stocks instead of cars or vacations like their coworkers they are no less deserving.

    • Tim says:

      This is not a sound argument. The same earnings are not taxed against both income & capital gains: the principal does not get taxed when withdrawn. Having your money “work for you” is as much has anyone deserves for thinking long-term.

  6. College Grifter says:

    Leave it to a Grifter that preys on children by convincing them they NEED a college education to not be for cancelling Student Debt and forcing reform of the Predatory College systems.

  7. JdA says:

    Scott. Spot on. Everyone talks about the economic devastation, not about how some are making a killing on these times which should be the ones chipping in. I’m scared of the irresponsible money printing and the cluelessness of many politicians when the refer to trillions of fake money as “down payments”. 91 Stern Grad.

  8. Karen says:

    Has this genius professor applied any critical thinking to what political party keeps pushing for lockdowns that don’t work and have created economic catastrophe, and whether that party with its lapdog media used fear from the virus to “win” the last election?

  9. David says:

    The WESTERN World, particularly the US, must become FUTURE Generation focused – climate change, the environment, education, debt reduction (elimination…), and so much more…. We are leaving a TERRIBLE set of problems for our children and grandchildren…. and the debt problems will be among the worst, sadly. Alas, no one wants to talk about them anymore – just spend, spend, spend…. The targeted spending that is suggested above would be much more sensible. Other than true investments – such as infrastructure – there really should be NO DEBT financed spending…. Alas, the future generations will be cursing all of us for running up such massive bills to pay for Corona, useless wars, tax cuts for the rich and so much more…… THANKS!

  10. Bruno says:

    The problem with anything that is “one time only” and government is that eventually becomes permanent. The world is full of examples of that.

  11. Mary Keane says:

    Very helpful to have all this information compiled in one place.

  12. wayner says:

    I like the idea, but I don’t know that a one-time wealth tax is feasible. Wealth taxes are very tricky to calculate and determining the methodology on how you define wealth is not trivial. How do you value illiquid investments and how do you do this in a way that is not gamed? The tax bill will be enormous – $3B for Bezos. The amount of money expended to find loopholes will be more than astronomical. Smart accountants and layers will charge millions to save the likes of Bezos and Musk hundreds of millions. This is taxing unrealized capital gains. Some people may have to sell assets as they wouldn’t have the cash to pay the tax bill – does Bezos have $3B of cash sitting around to pay a 2% wealth tax? All large holders of stocks will have to sell – who will be the marginal buyer. This could cause a significant fall in the stock market – but maybe you want that? And what happens to wealthy individuals who have large holdings of private equity or real estate that can’t be sold in the short term and/or where you can’t sell 2% of an asset? I agree that cap gains rates could change. One argument for cap gains rate being lower than the regular income tax rate is to compensate you for inflation. If you hold an asset for 20 years and it just grows at the rate of inflation should you pay tax on inflation?

    • Harriett Hawley Morton says:

      These seem to be very logical questions. i hope Scott will reply.

    • Jon says:

      @Harriett Hawley Morton I disagree. These are the kind of question you’d get from someone seeking to push back against the proposals because they are contrary to his personal interests.

  13. John Ward says:


  14. Paul Blanchard says:

    Bravo! Spend the budget where it benefits those most impacted. I took my inoculation against the deficit hawks, who will reappear next week, by reading “The Deficit Myth”.

  15. Lorna hogg says:

    “the uncomfortable truth about middle class wages” bookings institute 2012it all started going sideways with reganomics The damage done

  16. Brent says:

    One additional idea is to put in an additional constitutional amendment for a balanced budget. It’s criminal that we had 2% unemployment, yet were running $1T deficits. As you point out, it’s not an unlimited piggy bank although it seems that way sometimes. Any excess spending today is a tax on future generations. If nothing else, it would force our politicians to do their jobs vs. handing out money like tic tacs (i.e. political favors).

  17. Threepm Nrg says:

    Prof G, why would anyone consider “canceling” poor decisions? I hope your boy “Joey Bag Of Doughnuts” doesn’t decide that college debt is another pandemic.

  18. Leslie says:


  19. Sk says:

    We should set coporate tax rates at 25% based on income on whats used for accounting and rigging the stock price.

  20. Jose Ortiz says:

    Dear Pros:,your proposal of taxing the rich with the excuse of the pandemic has recently been implemented in Argentina. Many of those taxed are considering leaving Argentina; why: 1) wrong and mistrust of the application of proceeds by one of the worst populist governments in Argentina and 2) that it will not be a one time tax; often new taxes once implemented last for many decades. It is very dangerous to combat capital as is the case in Argentina; years of underinvestment promoted by a distributive and not pro investment policy lead to inflation and more poverty and the worse: people not being proud any more of their work and subsequent pay check. Regards, be well and thank you for sharing your thoughts with all of us

    • Sk says:

      US is not Argentina. There are more people who have can and replace the monopolies. They should do a wealth tax of 7.5% above 100M and 5% above 25M. 30% above 500M. This will stop the greed.

  21. Montie Craddock says:

    Corruption in government must be trimmed back regardless of party . Well informed citizens are needed to spot corruption and vote it out . The boundary between business (lobby’s) and government officials need to be watched closely .

  22. Benjamin Stockton says:

    Prof. Galloway, You make a seductive argument. Except, I have it on good authority (@paulkrugman) that debt at this juncture is not a serious problem. It strikes me that many people who want humane economic policies supporting the largest part of the population (the 97%) don’t want to accept that there is a political cost of getting legislation done. Fat cats get fatter! But yeah, more targeted programs are better…

    • Sk says:

      Debt is not a problem? It’s a ponzi centeral banks are buying toilet paper i.e Sorveinge bonds to keep this thing blowing up. 30T US fed debt, 15T corp debt, 40T stock mkt, 40T in mtg, credit card,, muni, student, leverage etc debt. Grand total about 75-90T. Taxes collected 3.7T spent 5T/year. Covid spending 5T. Where we going encouraging more leverage. Now we ave Janet yellen who has never run a buisness and busy getting paid millions for zoom speech. Yellen had the best chance to get the rates and debt controlled but never did.

  23. Roger says:

    Capital gains are already taxes at the corporate level. Dividends are paid on after tax funds, and equity values are typically determined on after tax multiples of earnings. Capital gains taxes are nominally lower to offset that fact.

  24. Rick Minnich says:

    Thanks for your brilliant analysis. Have you ever considered running for office and changing the system from within?

  25. Dipa Patel says:

    Thank you for explaining the failings of our times. There is no doubt that we are feeling this shift in society but I haven’t seen anyone articulate it as well as you have. It’s high time we wised up to this Con and took some action to prevent more serious damage to the future (…you would think we would have learned our lesson from the 4 year old con we are hopefully finally recovering from next week, but who knows we are selected to be self serving so remains to be seen)

  26. Nabil says:

    Wow, that was a logical mess, glad you are in marketing. While I agree with some of your premises – specifically stimulus has been way too corporate oriented and corporate regulatory capture has dramatically undermined the dynamic parts of capitalism. The solution, make government bigger and more important to solve big problems while somehow magically expecting rational people to not try to increase the influence of the government is kinda funny. If I have a cockroach problem I assure you my solution isnt to leave out MORE food.

  27. GGG Wilcz says:

    Have to read it twice, but I understand. Great point to wrap up with.

  28. Matthew Gall says:

    Mr. Galloway, The information presented is both is fascinating and frightening. Claims that the wealth gap is expanding cannot be disputed. However, the difficult aspect to overcome in reading this article is your ability to detach yourself from the shareholder wealth creation that you seem to condemn. As an investor myself, and educated by investment professionals within my family, I am fortunate to understand how this asset class (albeit available to the 10% you mention capable of opening investable accounts that matter) will aid in my future financial standing. Until you serve some humble pie to yourself and your advocacy / activism as shareholders in these tech firms that shape policy, it is challenging to hear your perspectives authentically. Here is the 1st link for Scott Galloway “Net Worth” google search ( I will continue to read you newsletter due to the points presented, just with a grain of salt. Especially with the self-promotion of your book / seminars / etc. at the end of each column. See, capitalism has many different forms!

  29. Vaughn C. Glapion says:

    Excellent article. And yes the bill must come due. Disaster Capitalism at its finest for sure.

  30. Dreamy Argentinean says:

    ohh the bill will come due, in the form of inflation. It’s all a monetary illusion son.

  31. Mark Olding says:

    Dear Scott, In your last paragraph of a delightful article you wrote “ . If Amazon stock had been cut in half the 82% of households who are Prime members would be vaccinated by an Amazon delivery person..” Although I am very saddened by the Great Con, I cannot grasp the logic in your statement above. Could you or another reader explain that to me please? Best regards, Mark

    • Puru says:

      I think Prof Galloway is saying that if Amazon’s market valuation (or business of Chick-fil-a) was suffering due to the pandemic (indicated by stock price cut by half), these businesses would have done something to bring vaccines to the people faster, out of desperation to get the economy back on its feet.

  32. Leo says:

    This is heartbreaking and deeply frustrating, also very well analyzed and to the point. Why do you not push any of your ideas mentioned in this Post (or some of the former) forward, Scott? I guess a lot of young folks would support it.

  33. Dan Munro says:

    All roads (including systemic healthcare reform – not just around the edges) lead to the same conclusion: “Campaign finance reform isn’t the biggest problem facing the country – but it’s the first.” @lessig

  34. Steve says:

    Scott, thank you for another in a long line of thought-filled insightful columns. I accept your premise, but take exception to the comment that the neighbor with 7 dry cleaners doesn’t deserve PPP. You need to make an important distinction. I co own 6 empty dance studios in four locations in Seattle. All of my students are prevented from attending class. We used the PPP to retain our employee (teachers and admins) who very admirably preferred to work than draw unemployment. I get your point that many businesses didn’t abide by their employees and many businesses were/are able to remain open and viable and did not require PPP but took it anyway. We adapted to live-streaming and retained approximately 200 of our original 1,200 student base, but it doesn’t pay the leases, or cover the cost of salaries, or pay for the bewildering combination of digital subscription tools that need to stay online and visible. We have assumed alot, read ALOT, of debt. Okay, so I’m venting when all I had to say was I’d have appreciated it had you made the distinction between chains like ours, shut down by the pandemic response but still with expenses and desperate for PPP, and those chains relatively unscathed because business was unaffected. Your a national treasure, Scott.

  35. Richard Dias says:

    I’ll be having anyone paying attention, and anyone who works in the finance industry a big fat DUH! Thank you for this succinct and well written article

  36. MARK LOHR says:

    Again, an article so right it hurts. Time for some populist rebalancing: Fund deductible rents with corresponding decrease in mortgage/RE tax deductibility. Fund decrease in employment taxes with cap gains benefit reductions. One-time Covid wealth tax on the 400/equivalent

  37. Jose Perez says:

    Independently of my thoughts of wealth tax. If you want to cover the public finance hole is easier to tax public corporations with a one time tax on there market cap ( less said those with market cap above 1 billion) Maybe in that way the US government can raise half a trillion and even the equity market will may not go down because people will see as an extraordinary expense with no long term impact. Example Tesla , Mr Musk has become the world richest person without paying almost no tax ( in percentage of his wealth). The proposed tax will make Tesla paid 16 billion ( 2% of market cap) easily raised , easily audited by the US government My comment is not in favor of taxation , more if you are going to do it should be easy for the government to collect and not become an administrative burden for taxpayers.

  38. Srinivas Ramdas Sunder says:

    Seems odd to side with a member of the Quad (Rep Rashida Tlaib, I think), but the most effective thing the Govt could have done was send everyone a debit card with $2K (or whatever) on it for every month for a certain period of time. And provide no direct aid to businesses whatsoever. If consumers are protected, the effects will trickle back up to businesses and business owners eventually. Businesses small, huge and otherwise, would have figured things out in whatever way it made sense for them – shut down temporarily, scale back, restructure or shut down permanently – whatever the forces of creative destruction have ordained. And how to pay for it? Exactly as you said – stop treating capital gains income like it’s something special (narrator: It’s NOT) and treat income from capital on the same level as income from labor. And sure, throw in a one-time wealth tax too. If the stock market dies out of fright for a few days or weeks, why, that would have been freakin’ awesome as a buying opportunity.

  39. Peter says:

    Now you know Scott, so what are you going to do? It’s nauseating listening to the 1% complain about the world with little to no action behind their words. Yes “Life is so rich” and so are you. Let’s put our money behind our words and start helping those who need it. They need it more than ever right now.

    • Doug says:

      Donate to the barstool fund! Helping small businesses like we want. 2021 should be about doing what the government can’t – making the country a better place.

  40. Mahesh Bhat says:

    A lot of the stock market wealth is an illusion specially for the likes of Bezos or Musk- if they were to sell their entire stock and leave their respective companies would it be worth that much? Unless they plan it like Bill Gates an exit strategy they aren’t going to be that rich for ever. A lot of the pension funds too end up benefiting the population at large because of the stock market boom – in the end America still allows people to rise about their station in life because of the market economy it is and part of the blame (in in most cases all of it) for not having food on the table or unable to pay the rent lies with the people themselves that in spite of being in a rich country with so many options they still are’s able to make it – what chance would they have if they lived in Africa or places like India!

  41. Chip says:

    You leave out something very important. There would be much less Grift had the government not shut down business in the first place. Now its becoming more and more apparent that lockdowns were a huge mistake. As for the PPP loans, they should never have had restrictions. The government shut down the money. The business owners were being screwed not by the market but by the politicians. This isn’t just “evil capitalists”. An inept response by Fauci, the CDC and the WHO have been the crux of this problem.

    • Tony says:

      Exactly right. I also love that the professor(from an elite, expensive university with a sizeable endowment) cites the repayment of student loans as an alternative as what could have been done with taxpayer funds. Talk about the Big Grift…

    • Doug says:

      @Tony You never hear anyone say we should confiscate the endowments to pay for tuition. Tax that at 100%.

    • Ruben Kogel says:

      Sweden did not have any lockdown and their businesses were hurt the same + they had much higher contagion rates and mortality. Many states incl FL, SD, TX resisted the lockdowns only to suffer worse outbreaks and eventually relent and mandate masks and stay at home orders. Get your facts right, buddy.

  42. Paul Gaffney says:

    This is a timely and thought-provoking article given the events in the US over the last week or so in particular and the general response to the pandemic there. Given what our students are having to cope with in terms of accommodation charges and unchanged tuition fees at a time when they are receiving a severely limited student experience, your ideas on forgiving student debt certainly strike a chord with me. It is clear that the wealthiest who have benefitted from government handouts and policies during the recession should expect some of that wealth to be brought back into society in order to support the poorest and most disadvantaged groups who have suffered and are suffering so much. Some have already recognisd that and are making very substantial donations, giving back large amounts of wealth they have generated. I am thinking of McKenzie Scott and The Gates Foundation in particular but there are a lot of others ( and I always believed that such philanthropy was also an important part of the American dream

  43. Geoffrey says:

    A despairing comment made by a European politician some years ago seems relevant here – “We all know what needs to be done, but we don’t know how to be re-elected after we’ve done it.”

  44. pyg says:

    Thanks once again for this excellent and above all opinionated analysis of money transfers. While America excels at conning the game, the fact is that similar mechanisms are at work in Europe too, courtesy of negative rates. Try to have a wealth tax on London, Munich or Paris down town housing: that would solve the poor/generational imbalance overnight except that none of the existing European governments will survive. The inability of Europeans to act and raise wealth taxes to protect the young generation rights is a fascinating point as European governments are rather more social and redistributive than the US variety.

  45. Petar says:

    Scott cancelling student debt is a massive transfer of wealth from the poor to the upper income class…that seems to contradict a lot of the rest of the article.

  46. Shir bhadar says:

    All good points and thanks

  47. louis1204 says:

    Amazing post. We gotta treat those who are really hurting from this pandemic otherwise the capitalism experiment is going to end.

    • Doug says:

      You’re right. The grift though is enacting socialist policies, blaming capitalism for the failures and then solving it with more top down government. This is not capitalism, sorry to break it to the masses. I’m not a everything not free market is socialism but everything is rigged by tax code and laws and connections to elite institutions.

  48. John Azevedo says:

    Great article! I didn’t know that only 15% of people receiving stimulus actually spent it. Solutions? Publicly funded elections and ranked order voting so that we have less corrupt politicians. Also, 60% of our discretionary tax dollar goes to a bloated military that kills innocent people in other countries like Vietnam and Iraq. Imagine the good we could do with that money.

    • Michael says:

      John – agree on publicly funded elections. That and gerrymandered districts are why Dems allow teacher unions and police unions to hurt this country and why Republicans do nothing about the now mythical American Dream. Results from ranked order voting are mixed but maybe data set is too small for now.

  49. C and R says:

    I would caution against the option of cancelling student debt. The underserved need to realize that the wealthy liberal left used them to further employment of otherwise unemployable (eg ‘Gender Studies’ profs, diversity Deans). And, that it meant Universities could up the quality of Sherry in the Faculty lounge on their dime. Most underserved students ended up with no useable skills, just massive debt. Understanding that reality will shift politics to the right for the generation and return Universities to education instead of make work for the left.

  50. C and R says:

    All good points and important for our future. Right now, the young people who are most affected are standing behind the left politicians who are handing out the money. Speaker Pelosi wants to return the deductions for mortgage interest and state/local taxes, to pile-on the ‘deplorables’ and their more fiscally responsible states. The new administration will be run by and for the rich coastal states that will manipulate tax codes for the benefit of their campaign donors and Frat brothers. When I lived in Hong Kong, the tax form was half a page, three levels of taxation, no deductions. Why not here? A question to ask when you can’t complain about GOP any longer…

  51. Antigone Trivellas says:


  52. Yoav Michaely says:

    I am retired for some years now and enjoy a high annual income from my stock portfolio. It never ceased to amaze me that my daughter ( a former student of prof G) is at a much higher marginal tax rate than me , though making much less. It’s wrong. Donations are deducted from taxable income… Wrong too since in effect , rich people are allowed by this to decide where poor people’s taxes are spent. Mortgage and state taxes deductible. Same wrong thing.( for the same reason) Taxes should run on a sliding scale starting at (-) and ending at wherever they should , could be 20,25 or 30 and be applied to all income from all sources with zero deductions. This would make the system fair while at the same time simple. And that’s why it won’t ever happen. Too many interested people do not want it to be fair and do not want it to be simple.

  53. Doug says:

    The answer to bad government is more government? Talk about a grift. I don’t mind taxing income equally but a wealth tax is something I’m not in support of. I do have some sympathy for our elected officials when it comes to getting money to those in need because the guy with seven dry cleaners is hurting too. I don’t know how you do it efficiently. However I do think the government shouldn’t pick winners and losers by giving corporations any money. I’d also like to see people held responsible for their unpreparedness. When no one has $400 saving but financed a 30,000 car and a flat screen TVs and a PlayStation I think your priories are wrong and it’s not my job to fund your bad decisions. I’m trying to see both sides of the argument but I’m not interested in more government, but I could get behind bigger local government and less federal. Good luck with that.

  54. Sam Orso says:

    “ Government by the Rich, for the Rich” That says it all. Nothing will change anytime soon. We all can whine and complain, but at the end, it is what it is.

  55. E says:

    The question that’s been left unasked here – and the one most immediately pressing to small-scalers like myself is: how to you do the grifting? What are the signs to read to tell where to hitch myself to the train that’s going the fastest, and ride it while the con is still on?

    • Pierre Rasputin says:

      You know that old saying about how, if you can’t spot the sucker at the table, it’s you….?

    • Doug says:

      @John W Eskew The previous comment is stupid. Your response belongs on Twitter not here where we are trying to have a reasonable response.

  56. Jay G. says:

    Lots of posts on how to change government. The truth is we have the Government we all want. Americans want to consume more than they produce this starts at the individual level. We want a government that does the same by spending more than it takes in. Politicians get elected based on how much they give away, not for building a strong secure government. Talk all you want about what needs to be changed in government, but until we are willing to pay the taxes for what we get nothing will change. Just look how all the politicians wanted to give out stimulus before elections. Look at articles talking about stimulus. We get what we want. Until we change, Government will not. WE can demand accountability and term limits and they are good things but if we are not willing to change as individuals it will not help. JFK gave his state of union address Jan 20 1961 and said “ ask not what your country can do for you but what you can do for your country.” I doubt anybody today even understands what he meant. I was born in 1949 and heard the story of sacrifices made during WW II. In WW II 407,300 US men & women died. We will lose more than that to covid. Yet many of us find it bothersome to wear masks when we should.

  57. ben says:

    Incredible numbers and an enjoyable analysis… up to the point where we solve everything neat and tidy, by fiat, in a vacuum, using more government to get it done while excising the nasty boogiemen of the greedy and the conservatives (I repeat myself) – this is job well done by our esteemed lower chamber, majority D – would it be better if it were majority R? umm, no. I hate the lot of it – both game and the players at this point… but you well make the point I wish people would at least recognize: the logical fallacy of thinking that more of what got us here (guvment) will lead us out of here… wake up. More government (including in the form of more taxes) will fix inequality? c’mon man. I don’t see a way back to the republic as designed and sadly neither side is interested–more government does have the feature of breaking us sooner, so we got that going for us…

    • Doug says:

      I suspect the only “weapon” the feds are going to use is wealth transfer through high taxes and rewards to special interest. Nothing new just bigger.

  58. Kevin Shivers says:

    incredible piece. I want to stop giving hand outs to the rich and help the people that need it the most.

  59. Rit Chatterjee says:

    Scott, another great though provoking piece. When will our elected officials have the courage to implement such policy and the class/identity wars stop making us blind to the obvious (or at least 80% fair) solutions? No time soon I’m afraid. This was a great summary of what could be accomplished if we all just take a breath and look to logic and kindness as our guide.

  60. John K says:

    I love your work and this is one of the best. Fantastic work. Seems like we do not have a party for the poor and working class anymore, as both sides are owned and backed by Billionaires. Perhaps a third party looking out for working class and poor led by ________? Respond and fill in the blank

  61. Bill Rausch says:

    “Another $1 trillion or so went to pandemic response (medicine, PPE, medical services), and while this was necessary, the money ended up largely in the pockets of health care company shareholders. ” Do you have proof of the line I’ve quoted ?

    • Jay S Gehrig says:

      You are only partially correct. The bulk of money went to China which had the manufacturing capability to ramp up production of what was needed. I do not blame China for this. We have to figure out a way to make US a manufacturing country again. Our Grandfathers made more than they consumed the last 3 generations have increased consumption while decreasing production. Consuming the surplus our grandfathers accumulated. Now we use debt to continue this. It will breck eventually. This has opened opportunities for others worldwide. But not in US.

    • Yoav Michaely says:

      Nostalgic , lovable, but wrong. Fishing based economies used to be the richest in the world, then agricultural economies became the richest and fishing countries became the poorest, then industrial economies became the richest and agricultural countries became the poorest. Now service and innovation based economies have become the richest and industrial based economies are becoming the poor. Hang on to those manufacturing past dreams and we will become as rich as Vietnam or the Philippines .

    • michael schratter says:

      @Yoav Michaely You’re connecting dots that have no connection.

  62. Chuck G says:

    “We need greater transparency from our elected representatives about who they meet with and where their money comes from.” – Interestingly enough this is at the core of most societal problems. Sad to say it comes down to $$$ but it does. AND If we did know that simple bit of info, we’d then be able to approach issues on both sides – recipients and givers of $$. If we knew who was financing the money-trees and the financial-farmers, we’d also know who isn’t helping and why the most important issues are not being addressed. Thank you, Scott

    • Lulu says:

      It is nice when Scott points directly at the left once in a while. Unfortunately, he failed to mention all the pork in the most recent stimulus bill that had nothing to do with US citizens.

  63. Ted Murphy says:

    I support the massive injection of stimulus to directly to the most needy today. However, under our current tax system, we are only borrowing from future needy people. I believe in keeping tax rates low and being extremely judicious in the consideration of new and higher taxes because I want to maximize long term tax receipts. Wealth taxes are arguably confiscation of property, encourage wealth to go to other jurisdictions and have proven to be difficult to implement and unsuccessful at increasing tax receipts in other countries. Instead of higher statutory income tax rates or a wealth tax, both of which have proven to be avoidable, why don’t we consider a national sales tax to supplement existing tax receipts. It makes sense because it is hard to cheat on. Lawyers and accountants have myriad of ways to lower personal income tax, estate taxes, corporate income taxes and taxpayers have great financial incentive to employ them. However, unless you want to be a billionaire monk, sales taxes are collected at the time and place of consumption. People like Bezos and Buffett don’t declare huge incomes and avoid taxation yet spend a ton of money. Further, sale taxes are small amounts per transaction so there is no great incentive to spend money to avoid (you are not going to hire a lawyer and an accountant to avoid a 5% tax on your steak dinner and bottle of cristal). Another interesting feature is that you don’t just collect it from your citizens, you collect it from all the rich people who are coming to visit for pleasure or business from all over the world. Fifty years ago, the US represented more than 50% of world income. Now it is more like 30% and shrinking as a percentage. There is much more revenue up for grabs that is not domiciled here. Plus, all those weasels who located their companies in Ireland to avoid taxes will still come to the US for business and pleasure – then we will get our fair share. The primary objection to a national sales tax is that it is regressive, i.e., that as a percentage of disposable income, it effects poor people to a greater extent. This problem could be alleviated by using some of the sales tax receipts to fund a variation of Andrew Yang’s guaranteed income plan or a negative income tax. Sent from my iPad

  64. Andy Thorson says:

    I opened a new business in January of 2020. Broke even on March 3rd and laid off all employees on March 19th. I benefitted directly from PPP and will need PPP 2.0 to survive. PPP 1+2 are not enough to bridge the pandemic’s negative effect on the market I serve so I continue to invest my own funds. If we ultimately survive, this free market capitalist will have a new faith in government’s ability to actually help and a strongly increased sense of humility. I will happily share that with you. Your post is always a highlight. Keep it up.

    • jay g says:

      I hope you do not lose your business but some will. I live in a town of about 20,000. There is a bird food store that I use. they were closed last spring and are now. They started an Internet sales page and have free delivery with in 30 miles. Was talking to owner Sales are up over 20% YOY they have done well for over 20 years. They now employ more people but at lower salaries since all they do is drive. We have many casual dinning restaurants in town. Several have closed. Most of the ones that closed I have only visited once. The few I like are all doing a robust delivery business with a little inside business. We had a hardwar4e store in town which I did not like I took my business to another town. A new one opened across town about 4 years ago. I liked it and shopped there often. Recently the old one closed and the new one bought it and made it a rental business. Looks like they are doing fine. We all hate to see the old stallion of a heard removed by a young stallion but it is a cycle of life. As long as we artificially prop up an old and failing horse we just weaken the herd Which hurts all in it.

  65. Cole Inman says:

    I predict all the comments telling you you’re wrong will be from people over 40 and all the ones who support you will be under 40. I love when you point to the stark generational differences in your analyses, especially around wealth. Soon (now with covid?) the boomers will die off and millennials will begin to take the reigns of the world. For good or ill, things will change. There’s a lot of pent up animosity for older generations and bailouts, student debt, Trump, and republicans are only stoking that flame. We may reach a point where we change things simply for the sake of not doing things like the people who killed the world did. (re-watch Mad Max Fury road, when the girl says “then who killed the world?” Powerful.)

    • dallasboiler says:

      If you haven’t read The Fourth Turning. It aligns with your post very well. I don’t agree with all of Scott’s politics, but there is no denying we are watching a generational shift & conflict unfold before us. There will be winners and losers in all generations, but if you believe The Fourth Turning, it is inevitable that the pendulum which swung toward individualism since the late-1960s will reverse course to one espousing greater collectivism in the 2020s. I’m a Gen-Xer caught in the middle, but it is vitally important to me to leave my children a nation that grants them the same freedoms that I have had while giving them the same opportunity to work hard and bear the fruits of their labor. The reality is that we will all pay more taxes. The question is how will it be administered and what will the unintended collateral damage from it be.

  66. Joe Buhler says:

    Of course you’re totally right but the recommendations make too much sense to be implemented and I can already hear the opponents shout the word so many Americans hate because they don’t understand it: Socialism!

    • Michael says:

      Joe – explain Socialism for America to me. Real question. Not trying to be a snark. Thank you.

  67. Bill Griffin says:

    Wish I had written your piece; 100 % correct!

  68. Alan Chebot says:

    Where I agree with many of your points, the Capital Gains Tax is not the culprit. When someone invests in publicly traded stocks, alternative investments like venture capital, private equity, and especially angel or early stage investing in start-ups, they are taking a risk with their after tax dollars (unless in a retirement account). When those companies are successful, the investments fueled innovation, created more jobs, and added to the overall tax base with increased employment, not to mention the resulting increase in productivity from many new technologies. Those benefits should be tax-advantaged to incentivize more investment. Then you ended on a really strange correlation. Israel having a 20% decrease in stock-market value while having a high vaccination rate. That correlation is more attributable to the fact that the Israel exchange is highly new-tech weighted with companies that lost value, and Israel has a nationalized healthcare system that tracks patients more centrally in a population approximately the size of New Jersey’s at 9 million. That’s a lot easier to manage than 330M U.S. citizens subjected to disinformation around vaccines and no coherent policy as of yet for distribution. But how that is related to share prices is a major leap of logic.

  69. GeorgeK says:

    Errata “ transfer from rich to poor” @ mortgages – should be reversed. Best,

  70. LinMax says:

    Maybe hold the Chines Communist Party accountable for the virus pandemic instead of blaming Amazon? Is there a vaccine to cure your Amazon fixation? Maybe make sure that the Chinese treat the animal kingdom better from now on because the virus is a revenge, but this line of thought is probably not fitting with your intellect. And the concept of increasing overpopulation with diminishing resources and decreasing biodiversity is not politically correct. Biden is a slimeball but he has understood a thing or two about global warming. But we can agree on facebook, a truly horrendous company which grows like a cancer feeding on it’s followers.

  71. Bradley Dressler says:

    Sometimes you are one stupid mo fo. I’m in the real estate business. Sure, raise the capital gain rate, get rid of the 1031. Yeah get the rich!!! Except, whoops, no one will sell anything. How stupid do you think investors are? So what happens, all the transaction people, title companies, appraisers, surveyors,brokers etc lose their well paying jobs. Are they rich? Nope, but they are about to be poor. My second job out of college was working for a “super rich” family. Guess what I discovered? No investment was based on anything but tax consequences. A great idea that produced those high taxes was passed on. A lousy idea that avoided taxes was prized. Yes let’s go back to those days. The 70s were a real economic miracle .

    • Nick Hopkins says:

      I think you are proving his point quite well. Real estate prices are artificially inflated by virtue of the fact that investments in real estate that results in capital gains are treated preferentially. Yes, taxing capital gains would likely result in a drop in prices. But, while that would surely hurt those investors (every change has winners and losers) it would bring things back to where they should be – investment decisions made based on real returns on value rather than tax benefits. Tax policy should not be about skewing investment towards non-productive sectors, especially when doing so harms other parts of society by, for example, driving up rents and driving down home ownership rates.

    • jay G says:

      BD Your post is based on preservation of your own income. In the town I live in all new builds are in the 3500 SQ FT to 6000 SQ ft range. Anything selling for less than ~ 350,000 with a reusable lot gets knocked down and turned into another monster. Who buys these? DINCs. Who then cannot have children because of debt load, have to work hard to support. If it was not Interest and tax being deductible they could not afford them. 50 years ago when I bought my first house it was a 1400 SQ ft cape, worked fine for a couple with one child. Several upgrades latter I bought my current home about 2700 SQ. Now ready to down size. So plenty of sales occurred. The current system kills starter homes puts people in debt. Lets go backwards a little. Real-estate agents did fine back then on 4% commissions and they did far more work with no internet. They actually drove people by houses to get an idea of what they wanted. Scanned books of houses for the customer and made recommendations. We will all be better off when we look at homes as a place to live and not an investment.

    • Bill Rausch says:

      BD: calling names is not needed and contributes to the division within our country. As for getting rid of capital gains, I agree it would put a lot of people out of business in the real estate world. What if we kept it to transactions of stock only? If I buy Amazon at $100 and it goes to $1000… that hasn’t helped Amazon as a company invest because Amazon got their money when they IPO’d. I would suggest those types of transactions (public stock where you aren’t a participant in the company) would be a good way to start adjusting capital gains taxes.

  72. Diane S. Baker says:

    Re define the purpose. “For the country” Without a clearly defined “Mission” statement, individuals take advantage.

  73. Dan McConlogue says:

    Term Limits. Won’t cure everything, but they will help – and surely won’t hurt

  74. howard Miller says:

    Socialism works for the rich and revolutions are spurred by gouging the middle classes.