From bitcoin to big banks, why the concentration of American wealth is worsening

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In 1996, women made up only 0.2% of Fortune 500 CEOs, up from a record 8.1% in 2021. Unlike 1996, or any time before, today the US Secretary of the Treasury, the Speaker of the House and the Deputy Speaker are all women. Much progress has been made in power and influence in business and politics over the past 25 years. Where does he have it?

When it comes to the concentration of power and wealth, things actually seem to be getting worse, not better.

CEOs of America’s largest corporations in 1996 earned 154 times what their employees earned on average. In 2020, the CEO / employee pay ratio soared to 830 for some of the worst offenders. We have organized conferences, conducted campaigns and certainly talked a lot. But when it comes to the concentration of power and wealth, things actually seem to be getting worse, not better. The big guy kept winning big.

This in turn widened the economic and cultural divide as we became a country that we often say divided by red and blue. But it is also divided by green.

I started my career on Wall Street just under 25 years ago, when so-called locker room chats were the status quo. It was also the early days of the internet, which would lead to the frenzied dot-com boom, which meant that everything about the internet was gold to invest.

By then, the dot-com bubble has burst. The housing crisis has devastated millions of homeowners, wiped out banks, crushed markets and triggered regulation to protect consumers. The government came to the rescue.

This bailout stabilized our financial system, and the continued support of the Federal Reserve and central banks around the world provided a safety net for the markets. Investors have been encouraged to take greater risks and have enriched themselves considerably. People weren’t always doing so well. Those who had no money in the markets did not take advantage of the great recovery from major recessions. Meanwhile, things like the cost of college education and deficit spending have skyrocketed, leaving younger generations less able to pursue the American dream than their parents.

In other words, as the rich got richer, the poor got poorer … and angrier.

Much of this anger stems from the fact that many perpetrators of the financial crisis failed to secure the tough penalties demanded by lawmakers on both sides of the aisle. E-commerce giants have routinely ousted small brick-and-mortar businesses, and professional investors have bought massive swaths of distressed real estate, outbidding families.

Ironically, anti-American business sentiment helped elect Donald Trump, the richest president in U.S. history, who surrounded himself with senior executives and cabinet members from Goldman Sachs and industry. hedge funds after attacking Wall Street during the election campaign. (On his first international trip as president to Saudi Arabia, Trump was joined by Steve Schwarzman, CEO of private equity giant Blackstone.)

During the Trump presidency, the economy generally improved and pro-business policies supercharged the markets. But those overall gains were exponentially better for wealthy people.

During the Trump presidency, the economy generally improved and pro-business policies supercharged the markets. But those overall gains were exponentially better for wealthy people. The inequality gap has widened and while some business leaders have worked to transform corporate culture and promote ‘stakeholder capitalism’, these efforts have also been the subject of much criticism, with critics calling it changes in “economic revival”.

In the markets, we’ve seen anti-establishment sentiment fuel the explosion of cryptocurrencies and memes stocks. Cryptocurrencies arose out of the desire to decentralize power and control over our financial systems. Stock meme is part of a phenomenon where young people who congregate and communicate primarily online get together and buy stocks in near-bankrupt companies like AMC Theaters and GameStop, thus artificially driving up prices. Many of those same investors redeployed their earnings from meme stocks, buying up cryptocurrencies and furthering their meteoric rise in value.

It has been extraordinary to witness, financially and culturally, a rebuke from the current establishment. But the establishment also buys. We’ve also seen more traditional and established companies dive into crypto and memes stocks. These movements are less about politics and cultural movements and more about new ways that the biggest players already in the game can play and win (which they have).

Those who truly understand the complexity of markets and the potential of decentralized digital currencies have already made huge sums of money in these ways. But like so much about our financial system, the little guy’s future might not be so bright.

It has a lot to do with the new chairman of the Securities and Exchange Commission, Gary Gensler, who has been mostly silent on crypto but has extensive knowledge of the tricks of the trade and is on a mission to eliminate many of these tricks. . Gensler spent almost 20 years on Wall Street. It is as if someone who grew up in a criminal family becomes the chief of the police: he knows where the bodies are buried and is not afraid to dig.

We have no idea what to expect for this new wave of investing or the crypto craze. But when the SEC steps in, and I think it will, the early stage investors will have the most problems. The people who will come out of this again will be the big, sophisticated investors who were already big and rich to begin with.

When the SEC steps in, and I think it will, the early stage investors will have the most problems.

The rich will continue to get richer and the poor to get poorer, and inevitably attention will return (as it should) to Washington. Lawmakers will point fingers, call for hearings and denounce business leaders. But if history is our guide, little will change.

Despite public outrage, for the richest Americans and our most powerful corporations, profiting and exploiting the loopholes is the law of the land in the United States of America. Regulation and tax policy always seem to find a way to favor the wealthier.

The future may be different. There can be a whole new set of winners and losers, new technology and new visionaries. Or maybe the names will change but the story will stay the same.

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