The capitalist case against extreme inequality

Mistakes like the “Big Beautiful Bill” discredit free markets more than any socialist

The United States just gave itself a Fourth of July gift: a turbocharged accelerant for inequality. The “Big Beautiful Bill,” rammed through Congress by Republicans, slashes taxes for the ultra-wealthy while gutting vital safety nets. According to the Congressional Budget Office, the top 0.1% will gain hundreds of thousands per year —while tens of millions of poorer Americans will lose healthcare and food support.

So the richest country in human history, already the most unequal in the developed world, has chosen to deepen the divide in a moral breakdown that highlights capitalism’s flaw: It structurally produces inequality and rightly so, since the successful must be incentivized; but when, left to its own devices, it takes this too far, the legitimacy that comes from popularity evaporates.

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Put another way, when the rich get too big for their britches and start buying politicians, via PACs for example, who would then make them richer still, the system is endangered because the extreme unfairness corrodes trust, discredits markets and invites rebellion.

We are approaching that breaking point. The US leads its OECD peers by far in inequality, with the top 1% controlling over 30% of national wealth (more than double the share held by the bottom 90%) and earn over 20% of national income, up from 10% in 1979. The top 10% hold more than 75% of national wealth, while the bottom 50% hold just 2.5%.

And, insanely, whereas 60 years ago the average CEO made 20 times more than the typical worker, which is a deserved and very nice paycheck to be sure, by 2022 it was over 340 times, which is an abomination. This, while despite productivity increasing by 64.6% from 1979 to 2021, median worker compensation rose only 17.3%. So working families are squeezed, social mobility stagnates and resentments boil over.

This is how populist movements rise — on the right and the left. Donald Trump, himself a billionaire born into wealth, brilliantly redirected economic anger into a culture war that protects people like him. But with figures like socialist Zohran Mamdani winning the Democratic mayoral primary in New York City, the pendulum could swing the other way. A more disciplined left-wing populism might soon emerge to harness that same fury — with a very different target.