Stop pretending billionaires built the future
America was more innovative when we taxed the rich.
This essay is part of my book We Should Own The Economy, which I am writing in public. Readers can still back the project and earn a share of the profits when it sells 👇🏻
America’s billionaires will call anything “socialism”—so long as it keeps them from paying taxes.
They parrot the idea that we need billionaires, because it’s the promise of million-dollar payouts that incentivizes them to build the internet, autonomous vehicles, and rockets.
“You want to avoid living in a Soviet hellscape?” Rainmaker CEO Augustus Doricko recently asked founders on X. “Work fucking harder. Stop fucking around with amounts of money for which most Americans would fall on their knees and cry to God with thanks. Proactively ensure everyone in the nation reaps a portion of the reward of your labor, or they’re going to take it from you.”
If founders were just more grateful for their money and worked harder for it, he says, rather than flexing their exuberant lifestyles, they wouldn’t attract the ire of the middle class who earn 1000x less, will never afford a house, and are now garnering righteous indignation against their corporate founders and calling to “tax the rich.”
Doricko admires the “old capitalists” who worked hard and built public works, instead. If only founders were like them, we wouldn’t be calling for “socialism.”
This is, respectfully, ridiculous. The Carnegies and Rockefellers and Morgans earned more than 50,000x the average worker. They may have installed beautiful public libraries and universities, but workers weren’t grateful—they striked and protested. Outrage culminated in the Fair Labor Standards Act: Capitalists were forced to pay employees a minimum wage in 1938, and the top marginal tax rate was increased to 94% by the 1940s.
It worked—big time.
Capitalists were forced to pay workers more, so they necessarily earned less. To avoid paying high income taxes, they invested more money in their companies and workers. Workers earned more, and could afford to buy what those companies produced. From the 1940s to the 1970s, the US was the most economically equal it had ever been. The share of income going to the top 1% fell to historic lows—only 10%—while production skyrocketed to an all time high. Middle-class families could buy homes, send kids to college, and live on a single income.
Because of progressive taxation and political capital after World War II, the American government made huge investments in the middle class. It sent 7.8 million WWII veterans to college and helped them buy 4.3 million homes through the GI bill. We built the interstate highway system and New Deal dams, bridges, and power plants. We funded NASA and united around the moon landing. It was one of the most prosperous times in US history—we called it the “Golden Age of Capitalism.”
Until the 1980s.
Ronald Reagan dropped the top marginal tax rate from 70% down to 28%, and corporate tax rates fell from 50% down to 30%. Executives began to get paid in equity, with investors and founders getting exorbitantly rich from stock options while the average worker’s wages stagnated. The minimum wage peaked in 1968 then ceased to keep up with inflation. We created a new generation of Carnegies and Rockefellers and Morgans, and now they want to build libraries and universities and call it even. They call any form of taxation a “Soviet Hellscape” as a scare tactic, when in fact we can look back at when America was most taxed and call it a “Capitalist Paradise.”
The problem now, as in the early 1900s, is not that the rich are being flagrant about their money, but that they are earning so much more than everyone else. The answer is not that the rich should be better about their money and build libraries for us all, but that they should pay their workers more. Our next labor movement should demand, not just a higher minimum wage, but also a minimum salary and a minimum equity share. The highest paid person at every company should earn no more than 20x the lowest paid person—the size of the earnings gap in the 1950s and 1960s—and that should go for equity too.
As jobs get automated, we should demand, not just worker ownership of our companies, but collective ownership of the economy. We should tax, not just oil and gas, but all production, so we earn dividends as our companies manufacture cars, spaceships, and even 3D print houses.
But how are we going to create collective ownership of the economy if we can’t even tax the production we already have? Or raise the floor of the workers that already exist? How are we supposed to talk about creating the utopian version of a fully automated workforce that produces everything society needs when we are rapidly heading toward a dystopian techno-feudal future where a few founders own it all and the rest of us work as wage laborers or eventually are automated out of a job?
The rich have no incentive to reduce the wealth gap. They benefit from owning all of our companies and all of our stocks. They benefit from owning our technologies and our satellites. They benefit from owning our space program and our media, our mortgages and our private health insurance. And they use the piles of money they earn from all of the above to ensure no one in Washington so much as whispers the words “tax the rich.” As a result, they bankrupt our country, which has become impoverished to the point that it is $37 trillion in debt, all because they engineer tax breaks for the rich and refuse efforts to raise revenue, even as the rest of us experience cuts to education, healthcare, infrastructure, and R&D.
When the government can no longer fund infrastructure for electric cars or space exploration, scientific advancement and medical cures, technological development and innovation, the private owners do instead and become even richer. Those who own the infrastructure and automation stand to accumulate disproportionate power and benefits so they peddle the myth that we can’t tax them, because we need them to build all this stuff the government can’t build.
“It’s good that America has risk capital,” Doricko says. “Wild and visionary ambition is part of what made our nation great.” And this is the refrain of every wealthy founder ever: We need to be able to get rich, because that’s what makes America so innovative. It is the promise of future million-dollar payouts that inspires entrepreneurs to invent the internet, create autonomous cars, and make it to Mars.
It is not.
We were incredibly innovative during World War II—churning out planes, ships, tanks, and radar at record speed. Defense contractors like Boeing, Lockheed, and Ford won huge government contracts, but profits were taxed at 90-95% as part of wartime regulations. We were incredibly innovative between 1950 and 1970, when income and corporate taxes were at their highest, and a third of the workforce was part of a union. That’s when the government funded satellites and space travel, computing and the internet. That’s when we came out with the color TV, microwave ovens, and jet travel. That’s when we debuted the polio vaccine, completed a successful heart transplant, and invented MRI technology. That’s when we built our first nuclear plant.
No one got rich building these things—yet we built them anyway! Inequality was at its lowest, and quality of life was at an all-time high. Workers didn’t have to worry about money and could spend their workday much higher up Maslow's hierarchy—as scientists and engineers, and with jobs that directly contributed to society. They had strong safety nets, stable jobs, high wages, and affordable education and housing. The companies they worked for—Bell Labs, Xerox, IBM, DuPont, and GE—were stable, well-funded, long-term oriented, and shielded from the short-term profit pressures companies face today. There was little to no venture capital forcing hypergrowth and quick exit events. Stock buybacks were considered manipulation until 1982 so companies invested in R&D instead. Government-funded R&D peaked at nearly 2% of GDP in 1964—compared with 0.62% today—funding the organizations crucial to human progress.
After 1970, we may have created a lot of tech companies, but innovation ceased. Nothing that came after revolutionized our physical living conditions the way airplane travel or telephones did. We shifted from government and corporate labs to startups and consumer tech. We created internet companies and apps, and we created more unicorns and billionaires, but we became much less innovative in the process.
calls this era the “Great Stagnation”—a period defined by slower productivity growth, stagnation of wages, and sluggish household income growth.The “Golden Age of Capitalism” had ended.
When, in 2023, Cowen said we might be coming out of the Great Stagnation, he cited the rapid growth of mRNA vaccines, green energy, and ChatGPT as evidence. All three were precipitated by spurts of government funding: $18 billion went into vaccine development during the pandemic through “Operation Warp Speed.” Green energy developments came from grants, tax credits, government-funded battery research and infrastructure development and a $465 million loan to Tesla. If, of that list, we can attribute ChatGPT to a particularly innovative startup founder, even he started out with a capped salary and built his company upon decades of machine learning and transformer research that came out of DARPA, NSF, and military research.
It was capitalism that caused our innovation, yes, but a capitalism that was funded by high taxes and high government spending. It was a capitalism with a high enough floor that a wide middle class had enough purchasing power to keep it going. It was a capitalism where companies were stable enough that we could spend our 40-hour work week contributing to human progress, rather than writing emails and attending meetings and “quiet quitting” from the tedium of it all. If we don’t want to tax the rich today, it’s not because founders will stop innovating companies—they didn’t before. And it’s not because we would be living in a Soviet Hellscape—we weren’t when we taxed the rich. It’s because founders want more money and power for themselves. Plain and simple. And as a result, workers have been cut off from innovating alongside them.
I’m a big fan of Augustus Doricko’s company. I’ve written about Rainmaker before and there is nothing I want more than for technologies like this to exist. I think an America that innovates is incredibly important, and a thriving and robust private sector is an essential part of creating that. But we don’t get there by hanging a $200 million carrot in front of the founder and hoping he chases it somewhere good. We get there with a government rich enough from tax dollars to fund R&D, a populace protected by a high enough floor that they can participate in the economy, and a people well off enough to start companies and contribute to the innovation from here.
Rich tech founders will continue to call any form of taxation “socialism,” and they will continue to say we wouldn’t innovate if they didn’t get rich doing it. Both are untrue, as evidenced by our own country and our own history. Innovation doesn’t require billionaire paydays. It requires taxing them, investing in everyone else, and remembering the Golden Age of Capitalism wasn’t built on greed—it was built on taxes and a minimum wage.
It was built on all of us contributing to innovation, not just a few tech bros hoping to make it rich and own all the capital.
I hope you’ll join us for further discussion in the comments.
Thank you
, Hara Kumar, and for editing an early draft and helping workshop my title.And thank you all for reading,
One might also argue -- and present plenty of evidence -- that the 1950s, when top tax rates remained in the 90-91 percent range, represented an even bigger "boom" for the American economy. One way or the other, the years since Reagan and "trickle-down" have clearly ushered in a very different type of "growth": the growth of the billionaire class at the expense of the middle class and the poor.
We need to get this message out in sound bites that the masses will embrace. Then we replace all of Congress- both sides- with people willing to serve the nation.