This is a long article but rich in content. Early in the article the author highlights the wide wealth gap: “The wealthiest 1 percent of Americans hold more than half the stocks owned by households; the bottom 90 percent hold just 11 percent.” Think of the simple math behind that: The wealthiest 10 percent of the US population owns 89% of equities.
How did we get here? The author notes this entrenched position is enabled by policies that favor the wealthy (entrench wealth):
“Start with the tax code. Income gained from selling stock in a company is taxed at a lower rate than income gained from actually working at that business. A second transfer from poor to rich: A homeowner may deduct mortgage interest on a first and second home, while the less wealthy pay nondeductible rent.”
I mention often in class that there are only two professions in life. Either you own the means of production (bourgeois or ownership class) or you do not and therefore you are the means of production (proletariat or working class). I’ll offer a third example of wealth transfer from poor to rich. If you have sufficient wealth, you drop $50,000 on solar panels and batteries for your expensive home. Then, although the person with solar panels and batteries in their expensive home can afford electricity, they actually generate their own and even sell some back to the grid. Now, who’s buying that electricity off the grid? The poor people who are renting or who own a home where $50,000 solar panels/batteries approaches the value of the home!
Moving on through the article, I really like the term “name inflation” coined by the author:
“The name inflation of the Big Tech CEO class corresponds to its wage inflation: Eight of the 10 wealthiest people in the world are current or former chief executives of American technology companies, and their wealth consists almost entirely of shareholdings in those companies”
What does he mean by “name inflation.” The author points out how many times CEO names are mentioned in S-1 filings (filings to go public) over time:
1980, Apple, Steve Jobs mentioned 8 times.
1986, Microsoft, Bill Gates mentioned 23 times
2019, WeWork, Adam Neumann mentioned 169 times.
2021, Affirm, Max Levchin mentioned 131 times.
2021, Robinhood, Vladimir Tenev mentioned 109 times.
I came to a conclusion during one of my book club meetings: Wealthy insecure alphas (or insecure alphas that come from wealth), who know they are not alphas, use their wealth to create a narrative of their greatness to mask their shortcomings. By using the phrase “False Idols” in the article title, the author tells us that many Americans are not seeing clearly. Rather, many Americans are buying the paid-for narratives and making these insecure alphas false idols.
As further evidence of broader idolatry, the author further notes how valuations have gotten way out of hand:
“three electric-vehicle firms—Tesla, Lucid, and Rivian—were together worth more than the rest of the auto and the airline industries combined.”
Towards the end, the author points out how what was supposed to be distributed ownership and decision-making (via going public) is, in practice, concentrated control in the hands of a few. And, speaking to the insecure alpha funding idolatry narratives, you often hear founders justify dual-class shares by stating “the dual-class share structure ensures this company remains founder-led.”
But wait a second. Who said the founder of a private company is the best person to lead a large public company? Different skill sets? Are we to just buy the “I’m an all-knowing tech god” narrative, buy non-voting shares, and transfer more ownership and control to the few? As an aside, please know that Elon Musk is not the founder of Tesla: HTML. If this is a surprise, may the fact that Elon Musk did not found Tesla liberate you from big tech founder (and he wasn’t even the founder) idolatry.
I’ll end here because it is late. But also because this Atlantic article, as I said, is rich in content. Please take the time to read it. I believe it is worthy of the time.