How the American Billionaires Got Their Power

“It was natural and perhaps human that the privileged princes of these new economic dynasties, thirsting for power, reached out for control over Government itself”.

-FDR June 27,1936

Today’s Princes of Privilege Standing Behind Trump at His Inauguration

This is the third post in the introduction/ overview section of my draft book. It builds on information in the earlier posts that begin with Understanding the Fury in America.

In his acceptance speech for renomination for his second term, FDR decried the super-rich as privileged princes and vowed to fight their control over government. On his inauguration in 2025, Donald Trump gave these princes the privilege of sitting behind him on the dais and proceeded to immediately give one prince direct control over the government itself.

America is fighting the same fight for control from the super-rich that it fought and won in the 1930s.

These American oligarchs have their power because of excessive money. The first step to take away their power is to take away their excessive wealth, as FDR once did so successfully. That can be done by looking at how these oligarchs acquire and keep their wealth.

In his best-selling , Thomas Piketty identified two main causes of present-day economic inequality:

* Executive pay has risen from 20:1 median worker pay prior to 1970 to about 300:1 currently.

* Capital (includes houses) is rising in value while worker wages are stagnating.

Note that executive pay is taken largely in their corporation’s shares, not cash.

Let’s look at the Gini coefficient graph prepared by Piketty that measures economic inequality starting in 1970 and compare it to the rise in CEO pay in the second chart by the Economic Policy Institute from that same date.

• CEO pay starts to rise slightly in 1970 (Carter).
• With a slight lag, economic inequality follows starting in 1980. (Reagan).

[Note: The Gini Coefficient stayed above 48% through Obama, the first Trump administration and Biden. ( Government Census Report, 2022, Fig. 1)

How they got that excessive money demands a look back into history to 1970. It is a direct product of the neoliberal concepts approved by the New York Times at that date. The supposedly democratic leaning Times gave a full page spread to conservative economist Milton Friedman promoting his idea that the only purpose of a corporation was to make money for its shareholders. It no longer had a duty to employees, the environment or innovation. For a more complete explanation of Friedman’s effective but harmful influence see: Preparing the Way for the Trump Revolution.

Where did the executives get the extra money? Largely by taking it from employee wages. Once, as productivity increased, the corporation proportionally increased employee wages. As data from the Economic Policy Institute shows:

• 1948–1973 productivity was up 96.7%; hourly compensation rose 91.3%
• 1973–2013 productivity was up 74.4%; hourly compensation up 9.2%.

When adjusted for inflation, employee wages have stagnated since the 1970s as the graph prepared by the Brookings Institute below reveals.

The Wall Street Journal ran a headline that captured the irony of bloated CEO pay: Best-Paid CEOs Run Some of the Worst-Performing Companies. The article cited research firm Morgan Stanley Capital International (MSCI) findings after an extensive review of CEO pay and corporate performance. Ric Marshall, a senior corporate governance researcher at MSCI, said: “The highest paid had the worst performance by a significant margin.”

For decades media headlines have blared about executive compensation gone wild. Politicians have attempted reform, but all have failed. Clinton made it a major plank of his Putting People First platform in 1993. Look at the chart of CEO pay above and see that not only did his reform fail, but CEO pay and economic inequality increased rapidly in response to his supposed reform ( Politico 8'31/2016 ). — As it did with all other attempts.

To understand why the past, present and future proposals will not work, voters need to know that current understandings about the corporation, and how it functions, are completely wrong. However, I will unravel the harmful myths about corporations in a section devoted to that subject. Take one example: the myth that shareholders in a public company are owners. Buy one share of Apple Computer, go to Cupertino and try to get past the reception desk waving your share.

Acknowledgement: President images added to Gini coefficient graph by David Brethauer.

Originally published at https://jandweir.substack.com.