First Letter from Tim Ferguson to Joe Biden, August 2024

Abstract: On or about the Ides of every month except March, the Adams Institute will send two letters to prominent Americans whose words or actions are relevant to the proposed amendment, and whose contributions to the idea of democratic-republican government merit all of our attention. These letters will also carbon-copy other distinguished individuals who were somehow involved in the recipient’s words or deeds, or in our analysis thereof.

Our initial letters, along with correspondence explaining to copied individuals why they were copied, will be published as an open diary of correspondence in the hopes of inspiring discussion of our proposed amendment and emulation of the recipients’ good examples. PDF files featuring scans of all this original correspondence will be available for download, and the substantive content of each primary letter will be pasted in blog-post format.

Mr. President:

The moderate grip with which you’ve held the reins of power, and the causes which compelled you to relax it altogether, earn you an affectionate memory among the characters of republican history. Your example is particularly striking given our own republic’s place in that history: The long period of prosperity, stability, and hegemony we’ve enjoyed under the Pax Americana leave us no yoke of foreign oppression to overthrow, no new government to establish, no new continent to explore, and no plutocrat-slaveholder army to meet on the battlefield. Though there remain ceilings to be broken – perhaps most conspicuously the elimination of racial disparities and the election of the first woman chief executive – the circumstances of history do not furnish one the opportunity to earn a place alongside a Washington or a Lincoln, or a Cato or a Cicero, in the pantheon of republican heroes, right?

Wrong. In fact, the most eminent seat in the pantheon is still open, right beside Gracchus.[i]

The ultimate challenge of republican politics is yet unsolved: The implementation of a general law that guarantees the existence of the middle class upon which the republican model of government depends.[ii]

Even as far back as the ancient Greeks, political science had discovered that democratic and popular governments do not long survive without a middle class.[iii] Plato was first to give an order of regimes, describing democracy’s tendency to degenerate into tyranny.[iv] Aristotle advised the lawgiver to ensure that the middle class always comprise the majority of society to maintain popular government. And Polybius scaled Plato’s sequence up to the Roman Republic.[v] But though these lessons have lain in plain sight since Classical Antiquity, no political society has ever managed to consciously preserve its middle class from the otherwise inexorable march toward extreme wealth concentration. Indeed, all of history teaches that the only circumstances in which wealth has been structurally de-concentrated are through the shocks of plague, state collapse, mass mobilization warfare, or revolution.[vi]

While many societies have deployed various palliatives and sedatives to ameliorate the symptoms of extreme wealth concentration, none – including our own – has ever implemented a curative to eliminate the disease.[vii] No one; not Lycurgus or Solon. Not Brutus. Not Gracchus. Not Cato or Cicero. Not Washington, Adams, or Madison. Not Lincoln. Not Roosevelt. None in the exalted line of republican lawgivers have guaranteed the future of the middle class. Adams made a fair complaint to Jefferson after both retired from the office you now hold: “While all other Sciences have advanced, that of Government is at a Stand; little better understood; little better practiced now than 3 or 4 thousand years ago.”[viii]

Unchecked, the disease of extreme wealth concentration leads to middling insecurity. And from middling insecurity flows the acute political syndrome now threatening the future of our republic: insecurity, pessimism, polarization, demagoguery, patronage, and authoritarianism. This virulent political faction, arising from what Madison described as “the various and unequal distribution of property,”[ix] and which Washington warned eventually leads men “to seek security and repose in the absolute power of an individual”[x] will either be cured through a major, historically-informed intervention, or progress until the death of its republican host.[xi]

On the authority of America’s republican tradition and history, and in an effort to preserve it for future generations, we propose this as that intervention: We should put America’s plutocracy on capitalism’s own device of the long-term incentive plan. The governing philosophy of this plan would be “no gains for the middle, no gains for the top.”[xii]

This doctrine would be enforced through the technique of median-top household wealth tethering at an efficient mathematical ratio. Anchoring elite households which collectively possess market power to the national median such that their outcomes rise and fall lockstep in mathematical proportion with the national median encourages them to raise the national median in order to enjoy any future gains. This ratio would be enforced by taxing only a very few top households exceeding a multiple of the national median – say 10,000x to start – whose aggregate holdings imply market power.[xiii] Existing fortunes would generally be grandfathered to the extent repatriated to the United States.[xiv]

By anchoring the ceiling of our political economy to its foundation, this incentive plan rewards positive-sum behavior: The greater the median gains, the greater the elite gains. But any elite gains extracted via predation and parasitism – including rentierism, inflation, automation, and monopolization – would be clawed back at the shared expense of covered households. This would mobilize moderate elites against those who would fleece the commons and thus, by operation of the ratio, injure the entire elite class. Like a true incentive plan, this approach lets market actors determine how to raise the median. And because it only targets very few top households, no new corporate taxes are required, enlisting all but the most predatory and parasitical enterprises into the defense of this plan.

This plan must be implemented as a constitutional amendment.[xv] To induce the States to ratify it – bypassing Congress if necessary – such amendment could distribute all revenues raised by ratio enforcement in equal shares to each State which timely ratifies it.[xvi] In so doing, this plan returns America to its founding ideals: Jefferson proposed an amendment that would similarly distribute luxury tax proceeds to the States.[xvii] And the States can use the proceeds, worth billions over time, according to the wishes of their local voters, strengthening the principle of federalism as articulated by Madison and Hamilton.[xviii]

At the onset of the Revolution, Adams wrote: “Property monopolized, or in the Possession of a Few is a Curse to Mankind. We should preserve not an Absolute Equality – this is unnecessary, but preserve all from extreme Poverty, and all others from extravagant Riches.”[xix] In considering your legacy, already sympathetic to the republican cause, we ask you to also consider this most simple idea that, to have a commonwealth, the commons must have wealth. The greatest republican in history will by definition be whoever assures it.[xx]

Sincerely,

Tim Ferguson

[i] That Tiberius Gracchus deserves recognition as the greatest figure in republican history so far, see John Adams to Abigail Adams, 25 August 1776, on his reviving “the old Project of an equal Division of the conquered Lands, (a genuine republican Measure, tho it had been too long neglected to be then practicable).” The Lex Sempronia Agraria revised the Lex Licinia-Sextia, imposing hard caps on private use of public lands. Adams was influenced by James Harrington’s writings during the English Interregnum; see Commonwealth of Oceana, Part I (the Preliminarys), advocating an agrarian law that would balance the nobility with the commoners, capping landholdings at £2,000 annual revenues. See also John Adams to James Sullivan, 26 May 1776, advocating measures “to make the Acquisition of Land easy to every Member of Society: to make a Division of the Land into Small Quantities, So that the Multitude may be possessed of landed Estates.” See also Noah Webster’s favorable account of Gracchus in Miscellaneous Remarks on Divizions of Property … in the United States, 1790: “Rome, with the name of a republic, was several ages losing the spirit and principle. The Gracchi endeavored to check the growing evil by an agrarian law; but were not successful.” On two specific attempts to implement a viritim (land grant) in the Gracchan style, see the first three drafts of Thomas Jefferson’s 1776 Virginia constitution, reviewed by James Madison, establishing a 50-acre viritim, and General Sherman’s Field Order No. 15, approved by Abraham Lincoln, making 40-acre land grants to freedmen from lands along the South Carolina and Georgia coasts; despite efforts of Radical Republicans like Thaddeus Stevens, this order was later revoked by Andrew Johnson.

[ii] See Noah Webster, Id.: “The basis of a democratic and a republican form of government, is, a fundamental law, favoring … a general distribution of property.” That America was born middle class, see remarks from British Colonel Lord Adam Gordon in 1764: “The levelling principle here, everywhere operates strongly and takes the lead, and everybody has property here, and everybody knows it,” Benjamin Franklin, Observations Concerning the Increase of Mankind, 1751, and George Washington to Richard Henderson, 1788: “America … will be the most favorable Country of any in the world for persons … possessed of a moderate capital, to inhabit. … it will not be less advantageous to the happiness of the lowest class of people because of … the facility of procuring the means of subsistence,” Richard Price, Observations on Civil Liberty,1776, Charles Pinckney, speech of 25 June 1787, and Tocqueville, Democracy in America. See also Peter H. Lindert and Jeffrey G. Williamson, American Incomes 1774-1860, NBER Working Paper 18396, 2012, showing that in 1774, New England and the Middle Colonies were the most egalitarian place in the measurable world.

[iii] See, e.g., Euripides, Suppliants, Line 238 et seq., Plato, Laws 679b, Aristotle, Pol., 1291b, 1295b.

[iv] See Plato (Rep. VIII) (Laws, III. 676 A).

[v] (i.e. Anacyclosis (ἀνακύκλωσις), Polybius (Hist. Bk. VI), describing the default sequence of political evolution as tribal chiefdom, monarchy, tyranny, aristocracy, oligarchy, democracy, and ochlocracy or mob-rule. For the anthropology see, e.g., Pindar, 2^nd Pythian Ode, Herodotus (III. 80), Thucydides (VIII. 97), Plato, Id. Aristotle (Nic. Eth. 8.10; Pol. 1286b), and possibly Panaetius, Dicaercus, Isocrates, Protagoras, and Hecateus. See also Dionysius, (Rom. Ant. VII, 54-56) Cicero, De Re Publica, I, XXIX, II, XXV), Sextus Pomponius, Justinian’s Digest, I Bk. I, Tit. 2., 2. 1-11), Machiavelli Discourses on Livy, Ch. I. Bk. II. See also John Adams, An Essay on Man’s Lust for Power, All Men would be Tyrants if they could, with the Author’s Comment in 1807 (describing Polybius’ sequence as “the Creed of my whole Life.”) See also Alexander Hamilton, Federalist No. 9, alluding to Anacyclosis. See also David A. Teegarden, Death to Tyrants!: Ancient Greek Democracy and the Struggle against Tyranny, Princeton University Press, 2014. Figure A1 therein shows that ancient Greek city-state regimes peaked accordingly.

[vi] See Walter Scheidel, The Great Leveler: Violence and the History of Inequality from the Stone Age to the Twenty-First Century, Princeton 2018. Shows that structural inequality has only been reduced by the shocks of plague, revolution, mass-mobilization warfare, or state collapse.

[vii] Historical examples include the Lex Thoria, the Cura Annonae, the Zakat, pensions in the Han Dynasty, among other forms of poor relief. Modern examples include the social safety net, welfare benefits, and more recently, basic income. None of these actually reverse wealth concentration.

[viii] See a letter from John Adams to Thomas Jefferson, 9 July 1813.

[ix] Federalist No. 10 (1787), the primary essay in that series devoted to the question of domestic political faction.

[x] In his Farewell Address (1796), which James Madison and Alexander Hamilton helped to write.

[xi] That extreme wealth concentration destroyed the Roman republic, see Appian, The Civil Wars, I.1, Sallust, Conspiracy of Catiline, 10, 33. I; 37.3, 38, 53, The Jugurthine War, 4, Livy, History of Rome, Preface, Tacitus, Annals, 3.27, Florus, Epitome, I, XLVII, Lucan, Pharsalia, 1.63. Marcus Philippus said in 104BC that out of perhaps 400,000 citizens, only around 2,000 held any significant wealth.

[xii] The common intuition of mankind is that the middle class should own at least half; therefore, this is the target for which legislation should backsolve. See Aristotle, Pol., 1295b, and James Harrington, Id. That the intuition of ordinary Americans agrees, see Michael I. Norton and Dan Ariely, Building a Better America – One Wealth Quintile at a Time, Perspectives on Psychological Science, Association for Psychological Science, 2011. Achieving this target requires the movement of around $30-$35 trillion worth of wealth into the middle class when defined as the middle three quintiles by income percentage or the middle 40% (between the top 10% and bottom 50%). The figure is higher when the middle class is defined by wealth percentile. Total national wealth is around $150 trillion. The middling share is 25.9% when the middle class is defined as the middle 60% by income quintile (Federal Reserve, Q4 2022) and 30.51% when it is defined as the middle 40% by wealth percentile (Federal Reserve, Q1 2024).

[xiii] This 10,000:1 ratio today implies an initial wealth cap of ~$1.5 billion (based on last 3-year average reported national median), surpassed by ~670 American households by the aggregate sum of $4.7 trillion. Median figures given reflect the average of 2019-2022 Census Bureau Data.

[xiv] To lessen resistance and avoid wealth confiscation, the amendment would grandfather preexisting fortunes to the extent located within U.S. territory and provided their owners are not convicted of certain crimes, adding both repatriation and good behavior incentives to the market and ratification incentivizes. The amendment would also create a market imperative to reduce historic racial disparities. At 10,000:1, the delta between the Black and White medians reduces the cap by perhaps $400 million, subject to confirmation by abler mathematicians. The ratio creates the incentive; the specific methods used to close the gap (e.g., philanthropic giving or baby bonds) are left open. Median-top tethering should in any case accelerate mitigation of racial disparities relative to the slow pace enabled by income convergence alone; See simulations by Ellora Derenoncourt et al., which shows that “even by the year 2200, by which time the racial income gap would have closed in our model, we would still have a positive wealth gap of 1.4,” from Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020, NBER Working Paper 30101, 2022.

[xv] Otherwise it is vulnerable to constitutional (Apportionment Clause) attack, as well as the vicissitudes of ordinary politics.

[xvi] International arbitrage would be mitigated through various measures including an appropriately robust doctrine of tax nexus (disregarding exile, renunciation of citizenship, or expatriation of wealth), penalties, reporting obligations, and the satisfaction of liabilities from domestic assets. Net worth must be annually determined by independent third-party appraisal.

[xvii] See the Second Inaugural Address of Thomas Jefferson, March 4, 1805.

[xviii] With roughly 100,000 public schools, 1,600 public colleges, 1,500 public hospitals, 18,000 police departments, 29,000 fire departments, 19 million state and local employees, 35 million retirement system beneficiaries, and $6 trillion held in pension and university endowments, the States have the incentive to act, and can make efficient use of their respective shares.

[xix] See John Adams, Dissertation on the Canon and Feudal Law, 1765. For similar views from other Founding Fathers, see Thomas Jefferson to James Madison, 1785: “Legislators cannot invent too many devices for subdividing property,” Thomas Jefferson to John Adams, 28 October 1813, boasting that his 1776 laws abolishing entails and primogeniture in Virginia were the means by which he “laid the axe to the root of Pseudoaristocracy,” and the first three drafts of Jefferson’s 1776 Virginia constitution, noted above. See also, James Madison, Parties, 23 January 1792, advocating measures to withhold “unnecessary opportunities from a few, to increase the inequality of property,” and “reduce extreme wealth towards a state of mediocrity, and raise extreme indigence towards a state of comfort.” Measures such as these, he said, was the language of republicanism. Alexander Hamilton acknowledged that wealth concentration will cause society to “depart from the republican standard.” 21 June 1788, New York Ratifying Convention. See also Mercy Otis Warren, History of … the American Revolution, 1805 Vol. I. Ch. I.: “Democratic principles are the result of Equality of condition.”

[xx] On the etymology of the word “republic,” see John Adams’s Defence of the Constitutions (Paduoa): “The word res, every one knows, signified in the Roman language wealth, riches, property; the word publicus, quasi populicus, and per syncope pôplicus, signified public, common, belonging to the people; res publica, therefore, was publica res, the wealth, riches, or property of the people. Res populi, and the original meaning of the word republic could be no other than a government in which the property of the people predominated and governed; and it had more relation to property than liberty.”

Property monopolized, or in the Possession of a Few is a Curse to Mankind. We should preserve not an Absolute Equality – this is unnecessary, but preserve all from extreme Poverty, and all others from extravagant Riches.

John Adams, 1765