Plutocracy beds in

The early Trump/Musk agenda makes plutocracy frighteningly close

In an earlier Substack post, I warned of the twin threats to democracy: plutocracy and gridlock. If that seemed alarmist, the early days of the Trump/Musk administration have shown that the plutocracy agenda is being pushed very rapidly.

If you wanted to establish a plutocracy in a modern country, how would you do it? First of all, you would want to seize control of the levers of government spending, say the payments system of the treasury department. By moving directly into government departments, you can influence the spending in key areas such as defence; a useful tool if you already benefit from government contracts. If you are a billionaire, then spending money on foreign aid probably seems pointless; why would you care if children starve and Africans lose access to vital drugs?

Then you would seek to reform the taxation system. Shifting the burden of tax away from income taxes and towards tariffs, for example. As this essay from the conservative Cato Institute points out, “the distributional effect of tariffs (i.e., how tariffs affect people of different income levels) tends to be regressive, meaning that tariffs impose higher burdens on people with lower incomes. In general, tariffs create a larger burden on poorer households because poorer households generally spend more money on traded goods as a share of their income than wealthier households.” In the short term, tariff revenue may be used to extend the 2017 Trump tax cuts, which were heavily skewed towards the better-off. But Trump has talked wistfully about the late 19th century, when the US government raised the bulk of its revenue from tariffs.

Such sentiments are obviously ridiculous, since the US state was so much smaller before World War One. Income taxes were brought in to fund spending on pensions, health, defence and welfare that make up the bulk of government spending today. Tariffs couldn’t hope to replace that revenue. Still, the direction is clear. Boost the rich and hurt the poor in the US and abroad. As the rich get richer, their control of political funding and social media will grow, making it easier for their political allies to be reelected.

In US democracy, the opposition lacks a clear leader except during Presidential campaigns. So the Democrats are struggling to respond. Some newspapers have clearly been cowed by Trump’s success. So the prospects for countering plutocracy currently look poor, unless something can awaken the US public from their slumber.