First Letter from Tim Ferguson to Arnold Schwarzenegger, September 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.

Dear Mr. Schwarzenegger:

Although America has progressed in many ways since 1968, it has regressed in the most important: the health of its middle class. This isn’t open for honest debate. It’s numerical fact, demonstrable in mathematical terms.[i] While we should recognize the progress our country has made – the advancements in science and technology, the improvement of capitalism, a general intolerance of overt sexism and racism – we should also remember that none of them guarantee the middle-class foundation upon which our republican experiment in government always depended. That requires the broad, productive, and sustainable diffusion of wealth within the body politic.[ii]

As the history of the world leading up to the Second World War teaches, middling insecurity and pessimism are the stuff of which dictators are made.[iii] And as the history of the world after the Second World War teaches, left to fend for itself, the middle class stands no chance against the byproduct of peace and prosperity which finally resolves into the political faction which destroys both peace and prosperity: the inexorable march toward extreme wealth concentration.[iv] Indeed, as the entire history of the world teaches, extreme wealth concentration has never been serenely reduced, but only through the calamitous shocks of mass mobilization warfare, plague, state collapse, and revolution.[v] Many societies have deployed various palliatives and sedatives[vi] to ameliorate its symptoms, but never a cure to reverse the underlying disease. The full weight of human experience thus counsels that without an appropriate political intervention on behalf of the middle class, the survival of legitimate popular government is historically and theoretically improbable. Our future as a republic is on the line.

You can be instrumental in helping to advance one such intervention, the enclosed Operation Abigail: a market-oriented plan to restore our middle class. This is why we write you today. We ask you to take a minute to review it, and if you agree with our sentiments, to take ten or twenty more to help us. We appeal to you specifically for these reasons:

First, you’re a patriot. You were so proud the day you became a citizen that you walked around with an American flag around your shoulders all day. That flag stands for the greatest republic which ever existed, but, as you also know, you can’t have a commonwealth where the commons don’t own the wealth. Today, the commons only have about 25%-30% of our nation’s wealth; about $30-$35 trillion below target.[vii]

Second, you have immense influence. You were governor of our most populous state. Twenty years ago, you delivered your speech The American Dream, helping to reelect George W. Bush. You were so beloved by Americans that, had our Constitution allowed it, it may well have been George W. Bush speaking for your reelection, not the other way around.

Third, you not only have the influence to help direct our political narrative where it needs to go; you also have the experience to make the moral of the story stick. And the story is this: During the post-war Baby-Boomer years of 1945 until 1965, the distribution of gains to ordinary workers kept pace with national productivity. In that regard, the America which welcomed you in 1968 was in good shape. This era of middle-class primacy is why, despite the segregation and the sexism, so many Americans regard the 1950s as the good old days. But the golden age of the middle class began to close around the Bicentennial. Since 1975, the value of income that has been diverted to the top 10%, relative to post-war run-rate, exceeds $50 trillion.[viii] That exceeds the wealth of every other nation on earth except China! More than the Axis Powers combined![ix] What can we say but that the valor of the Greatest Generation won a peace which was truly squandered by its children to neglect the security of its grandchildren.

Now in 2024, gone are the days when a worker could quit at GM at breakfast, and start at Ford after lunch. Capital mobility, foreign competition, offshoring, and automation are just a few of the forces making the economic prospects of our youth increasingly grim. As a rich man, celebrity, immigrant, and Republican, nobody can give those who believe the meritocracy myth, however true it was in 1947 or 2004, a better reality check about the American Dream in 2024 than you. Yes, anyone can rise to the top in theory. But in reality, few, actual, normal people of ordinary abilities ever do. For the poor, it’s hard enough to rise to the middle. For the middle, it’s getting harder to stay there. As middle-class security retreats to an increasingly narrow upper band, avenues of upward mobility have likewise narrowed. Meanwhile, pessimism, depression, and addiction have exploded. Sure, we can be manly men and not girlie men; we can tell people to spend more wisely, to pull themselves up by their bootstraps, watch more motivational videos, or that life sucks. All that does is feather the bed of some future Sulla or Caesar or worse, as destroyed your father’s generation.[x] That political intervention is necessary is becoming clearer to the right and left alike. The form it will take is another question.

Which brings us to our last point: Having lived under Soviet rule, you know what socialism really is. Despite the advice of our Founders, who advocated intervention as necessary to preserve America as a middle-class republic,[xi] American conservatives retain the worst political habit of our age: They too often confuse every egalitarian intervention with “socialism,” and every act of capital appeasement with capitalism itself. A good capitalist may understand the beneficial effects of capital accumulation by enterprises. But a better capitalist is also a good republican, and understands the baneful effects of wealth concentration in households. And therefore the best capitalist of all intervenes as necessary to safeguard the middling republican backbone that nourishes the markets, protecting both capitalism and republicanism from any who would siphon the marrow of our commonwealth.

That is the plan of Operation Abigail, a plan which not only protects republicanism but perfects capitalism by scaling capitalism’s own invention of the incentive plan from the level of enterprise to nation. America has not heard too much from you lately, but America remembers you. We appeal to you now to come to its aid, to help bring back the values and virtues that brought you here, of which you daydreamed, when you were but a scrawny schoolboy.

Sincerely,

Tim Ferguson

A copy of Operation Abigail was enclosed behind this letter in the physical mailing to this recipient. Here is a link to the current version of Operation Abigail, which may have superseded the version that was submitted with this letter. Refer to the PDF scan of this letter for the version which was sent to this recipient.

[i] The middle-class share of national wealth has decreased by approximately 3.5% in the past 20 years, and by about 5% in the past 30. Distribution of Household Wealth in the U.S. since 1989, Federal Reserve (based on the Survey of Consumer Finances and Financial Accounts of the United States).

[ii] That the relationship between the middle class and political stability was already known to the ancient Greeks, see Euripides, Suppliants, Line 238 et seq., Plato, Laws 679b, and Aristotle, Pol., 1291b, 1295b. See also David Hume, Of the Middle Station of Life, 1742, extolling the virtues of middling status. 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: “6. Land being thus plenty in America, and so cheap as that a labouring Man, that understands Husbandry, can in a short Time save Money enough to purchase a Piece of new Land sufficient for a Plantation, whereon he may subsist a Family; such are not afraid to marry; for if they even look far enough forward to consider how their Children when grown up are to be provided for, they see that more Land is to be had at Rates equally easy, all Circumstances considered. 7. Hence Marriages in America are more general, and more generally early, than in Europe,” Richard Price, Observations on Civil Liberty, 1776, stating that “The Colonies consist only of a body of Yeomanry supported by agriculture, and all independent, and nearly upon a level; in consequence of which, joined to a boundless extent of country, the means of subsistence are procured without difficulty,” Thomas Pownall, A memorial address to the sovereigns of America, 1783, stating that America was characterized by “a general equality, not only in the Persons, but in the power of the landed Property of the Inhabitants” and that America stands on a “natural equal level Basis,” Charles Pinckney, speech of 25 June 1787, stating: “The people of the U. S. are perhaps the most singular of any we are acquainted with.—Among them there are fewer distinctions of fortune & less of rank; than among the inhabitants of any other nation.—Every freeman has a right to the same protection & security and a very moderate share of property entitles them to the possession of all the honors & privileges the public can bestow.—Hence arises a greater equality, than is to be found among the people of any other country, and an equality which is more likely to continue. … there will be few poor & few dependent,” 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.” For confirmation by contemporaneous observers, see Alexis de Tocqueville, Democracy in America, 1835: “Amongst the novel objects that attracted my attention during my stay in the United States, nothing struck me more forcibly than the general equality of conditions.” For confirmation by modern researchers, see 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. See also Noah Webster, Miscellaneous Remarks, 1790: “The basis of a democratic and a republican form of government, is, a fundamental law, favoring … a general distribution of property.”

[iii] See Franklin Delano Roosevelt’s State of the Union Address, 11 January 1944, during the height of World War II: “We have come to a clear realization of the fact that true individual freedom cannot exist without economic security and independence. ‘Necessitous men are not free men.’ People who are hungry and out of a job are the stuff of which dictatorships are made.” See also Thomas Jefferson, Notes on the State of Virginia, 1784: “Dependence begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition.”

[iv] That wealth concentration is the prime cause of political faction in popular states, see James Madison, Federalist No. 10, 1787: “The most common and durable source of factions has been the various and unequal distribution of property.” See also Alexander Hamilton’s warning on extreme wealth concentration: “While property continues to be pretty equally divided, and a considerable share of information pervades the community; the tendency of the people’s suffrages, will be to elevate merit even from obscurity. As riches increase and accumulate in few hands; as luxury prevails in society; virtue will be in a greater degree considered as only a graceful appendage of wealth, and the tendency of things will be to depart from the republican standard. This is the real disposition of human nature.” New York Ratifying Convention, 21 June 1788.

[v] 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.

[vi] 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.

[vii] 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).

[viii] Carter C. Price and Kathryn A. Edwards, Trends in Income From 1975 to 2018. Santa Monica, CA: RAND Corporation, 2020, calculating the gains that would have, but did not, accrue to ordinary Americans since 1975 relative to post-World War II run rates. The abstract states: “From 1975 to 2018, the difference between the aggregate taxable income for those below the 90th percentile and the equitable growth counterfactual totals $47 trillion. For a breakdown by racial group, which does much to explain the appeal of MAGA, see Tables 4a and 4b: A score of 100% indicates that a given group has kept pace with the post-War run-rate. At the 25% percentile of income, the scores by racial group are: White men: 4.5%; White women: 83.3%; Black men: 27.8%; Black women: 142.9%. At the 50% percentile of income, the scores are: White men: 13.3%; White women: 83.3%; Black men: 21.2%; Black women: 83.3%. The numbers show that White men have lost the greatest relative ground, followed by Black men.

[ix] See the UBS/Credit Suisse Research Institute Global Wealth Report 2023, reporting the following total wealth numbers for the former Axis powers (2022): Germany $17.4 trillion, Japan $22.6 trillion, and Italy $11 trillion, summing up to $51 trillion.

[x] That extreme wealth concentration destroyed the Roman Republic, which as history’s only other superpower republic furnishes history’s closes analogy to the modern United States, 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.

[xi] See John Adams, Dissertation, 1765: “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,” Thomas Jefferson to James Madison, 1785: “Legislators cannot invent too many devices for subdividing property,” James Madison, Parties, 1792, advocating measures to “reduce extreme wealth towards a state of mediocrity, and raise extreme indigence towards a state of comfort,” and Noah Webster, Id. That the Founders would even advocate wealth caps, see John Adams to Abigail Adams, 25 August 1776, on the Gracchi 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 Gracchan law revised the lex de modo agrorum of the Licinian-Sextian rogations, imposing hard caps on private use of ager publicus, lands acquired at public expense. Adams was influenced by James Harrington, recommending wealth caps during the English Interregnum; see Harrington, Commonwealth of Oceana (1656), advocating an agrarian law that would balance the nobility with the commoners, and cap 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 the Lex Sempronia Agraria, Id.: “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.” In that tradition, we may justly assert caps on private fortunes whose size exceeds some rational demarcation, acquired with the benefits of public infrastructure, government subsidies, or legal rights of market exclusivity. Also read the first three drafts of Thomas Jefferson’s 1776 Virginia constitution, emulating the Gracchan law via 50-acre viritim, especially in conjunction with his 1776 laws to abolish entails and primogeniture in Virginia, by which, he announced to John Adams, he “laid the axe to the root of Pseudoaristocracy.” Thomas Jefferson to John Adams, 28 October 1813.

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