First Letter from Tim Ferguson to Erica Payne, Morris Pearl, and Bob Lord, April 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.

April 13, 2024

Dear Ms. Payne and Messrs. Pearl and Lord:

In Steven Spielberg’s 1997 movie Amistad, John Quincy Adams (Anthony Hopkins) famously said “in court, whoever tells the best story wins.” If only this were so in the realm of tax policy. But as your 2021 chat with Town Hall Seattle seemed to suggest, when it comes to tax policy, whoever writes the biggest checks wins. The quid pro quo which governs our tax system arises from the natural symbiosis existing between wealthy donors wishing to minimize their tax liability and ambitious candidates wishing to maximize their campaign funds. And so long as that bargain persists, the donor-candidate bond shall prevail over every appeal to reason and fairness unless it is overcome by a stronger influence, exerting a more powerful wedging force upon the self-interest of the donors. That’s why we structured our own wealth tax proposal as an incentive plan, applied to households, and actuated by the self-interest of the latent but supreme authority in our constitutional system: any given thirty-eight States.

But the narrative is still important, if for no other reason than that the prevailing realpolitik is utterly incompatible with the democratic values we still profess. And on both the rhetoric and logic of tax policy, our side in general – that is, those like us who believe that some form of wealth tax is essential to restore America as a middle-class democratic republic though we could debate the particulars – hold the high ground.

Although I alluded to our policy above and attach it below, I won’t pitch it in detail here. I’ve already discussed a version of it with Mr. Lord in 2020 who as I recall appreciated our 10,000:1 median-top ratio that we first rolled out in 2019. We sent a later version to the entire Congress in 2021 – press release also attached – and it’s encouraging to see by the example of the OLIGARCH Act that the idea of median benchmarking is gaining some traction. This letter’s purpose is rather to facilitate a “talking point exchange” in support of our core belief noted above. To that end, we are impressed by two of your talking points in particular:

Patriotic Millionaires Talking Point One: The “Wealthy” Don’t Create Jobs. Conventional wisdom holds that the “wealthy” generically – or employers specifically – create jobs. But you’ve shown that this assumption is incomplete because, while capital accumulation facilitates innovation and scale, and employers marshal and organize human resources, it’s consumers who create the underlying markets for goods and services and thus the ability to generate profits. This means that capitalism’s payoff is finally only as good as consumer demand, which is in turn only as healthy as consumers are wealthy. This reality therefore militates in favor of political intervention as appropriate to ensure the financial viability of ordinary American households.

Patriotic Millionaires Talking Point Two: Most Ordinary Americans Already Pay Wealth Taxes. Most middle-class Americans already pay a wealth tax on the lion’s share of their net worth, while wealthy Americans only pay a pittance. This is because the largest component of most American household’s net worth is equity in their primary residence – from almost half to two-thirds at the median and far less at the top – which is subject to property taxes at the state and county level.[1] Inasmuch as the economy was historically agrarian, and land was so taxed, the wealthy were once accustomed to wealth taxes in the form of property taxes, to which a shift in the prevailing medium of wealth arising from a change in the mode of economy has made them quite allergic and too many ordinary Americans quite oblivious.

In exchange, I submit four of our talking points that don’t appear to be well-represented on your website – correct us if we’re wrong – but which would be appropriate for your narrative:

Adams Institute Talking Point One: America Was Born Middle Class. Americans must always remember the disjunction between our founding ideals and founding circumstances, especially as regards the institution of slavery. But the principal fact of America’s founding is that despite slavery, America was born middle class.[2] The Founding Fathers understood this is precisely what enabled them to establish the United States as a republic in an age of aristocracy.[3]

Adams Institute Talking Point Two: The Founding Fathers Advocated Intervention to Facilitate Wealth De-concentration…Even Wealth Caps. Popular governments have visited mankind in only two great historical waves, and they do not long subsist in the presence of extreme wealth concentration.[4] True to its namesake, a republic or commonwealth requires broad wealth diffusion in a predominant middle class.[5] Whereas a shared prosperity sedates political faction, middle-class insecurity is the root cause of popular faction and authoritarian drift.[6] Not only would our Founding Fathers agree with this diagnosis, they would, despite all anti-interventionist rhetoric, urge us to take measures as necessary to preserve America as a middle-class republic.[7] John Adams’ praise of the Lex Sempronia Agraria even shows that the Founders would support wealth caps.[8]

Adams Institute Talking Point Three: The Middle Should Own Half a/k/a We’ve Got a $30 Trillion Problem. We could cite any number of causes and metrics to tell the story of how, from the standpoint of wealth distribution, our country now more resembles the stratified aristocracies our Founding Fathers repudiated than the hopeful egalitarian republic they established. But our favorite metric for narrative purposes is the ultimate metric for policy purposes: What is the middling share of national wealth?[9] From ancient Greek philosophy to surveys of ordinary Americans, the opinion has held steady for twenty-four centuries that the middle should own half.[10] But today, the middling share stands at less than a third, which establishes the damage model: it’s on the order of about $30 trillion.[11]

Adams Institute Talking Point Four: Palliatives and Sedatives are Easy. Curatives are Hard. History furnishes no example of a curative to reverse extreme wealth concentration but gives many examples of palliatives to ameliorate poverty and sedatives to quell revolution.[12] Since no power is required to diffuse wealth where it is already adequately diffused, no conveyance of economic sustenance via government intermediary, whether direct or indirect, settled in cash or in kind, or styled as safety net, subsidies, stimulus, welfare, or basic income, can, by definition, actually reverse the extreme wealth concentration which demands it. Nor, indeed, would that be good business for anyone whose greatest qualities lie in the arts of rhetoric and patronage.[13] Which is all to say that, though conventional redistributive schemes may solve for financial insecurity, they manifestly cannot solve for political dependency: Yet to maintain authentic popular government, it is necessary to solve for both.

Well, that’s all for now. I’ll continue to watch the Patriotic Millionaires with interest. I hope to continue the conversation, and also that our paths cross at some point soon.

Sincerely,

Tim Ferguson

[1] See Census Bureau, Wealth and Asset Ownership, The Wealth of Households: 2021, 27 June 2023, Table 1. 2020. Reports the median net worth as $140,800, and the Net Worth (Excluding Equity in Own Home) as $46,870. For variation on race, see Rakesh Kochhar and Mohamad Moslimani, Pew Research Center, Report, 4 December 2023, Wealth Surged in the Pandemic, but Debt Endures for Poorer Black and Hispanic Families,

[2] 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.” See also a letter from George Washington to Richard Henderson, 19 June 1788, celebrating “the equal distribution of property” and Tocqueville, Democracy in America, introductory remarks. See also Peter H. Lindert and Jeffrey G. Williamson, American Incomes 1774-1860, National Bureau of Economic Research Working Paper 18396, 2012, showing that in 1774, New England and the Middle Colonies were the most egalitarian place in the measurable world.

[3] See James Harrington, Commonwealth of Oceana, Part I (the Preliminarys): “If one man be sole landlord of a territory, or overbalance the people … his empire is absolute monarchy. … If the few or a nobility … overbalance the people to the like proportion… the empire is mix’d monarchy, … And if the whole people be landlords, or hold the lands so divided among them, that no one man, or number of men, within the compass of the few or aristocracy, overbalance them, the empire (without the interposition of force) is a commonwealth.” See also a letter from John Adams to James Sullivan, 26 May 1776, invoking Harrington: “Harrington has Shewn that Power always follows Property. This I believe to be as infallible a Maxim, in Politicks, as, that Action and Re-action are equal, is in Mechanicks.” See also Noah Webster, An Examination into the Leading Principles of the Federal Constitution, 1787: “We observe that the power of the people has increased in an exact proportion to their acquisitions of property”. See also Mercy Otis Warren, History of … the American Revolution, 1805 Vol. I. Ch. I.: “Democratic principles are the result of Equality of condition.”

[4] On how 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. On the moderating influence of the middle classes which makes popular government possible, see Euripides, Suppliants, Line 238 et seq., Plato, Laws 679b, Aristotle, Pol., 1291b, 1295b, and Alexis de Tocqueville, Id.

[5] 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.”

[6] See James Madison, Federalist No. 10: “The most common and durable source of factions has been the various and unequal distribution of property.” See also Aristotle, Id., and Tocqueville, Id.

[7] 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, Miscellaneous Remarks, 1790: “The basis of a democratic and a republican form of government, is, a fundamental law, favoring … a general distribution of property.””

[8] See John Adams to Abigail Adams, 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, Id., 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, 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 in Miscellaneous Remarks: “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.” See also Thomas Jefferson’s draft 1776 Virginia constitution, reviewed by James Madison, establishing a viritim of 50 acres. These lessons would not have escaped Radical Republicans like Thaddeus Stevens. 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.

[9] Or, in other words, an examination of America’s cap table pronounces its winners and losers more clearly than its financial statements. See statements of Jacksonian Democrat Tennessee Congressman John Bell, 1832: “I deny … that it is either proper, or consistent with the object of our government, to promote the growth of the country in wealth, without regard to the manner of its distribution.” Statement of John Bell (June 8, 1832), 22d Congress, 1^st Session, in 8 Register of Debates in Congress, pt. 3, 3357-3359, as cited by Joseph Fishkin and William E. Forbath in Chapter 1, Footnote 23 The Anti-Oligarchy Constitution, Harvard, 2022.

[10] See Aristotle, Pol., 1295b, and James Harrington, Id. That the intuition of ordinary Americans believes the middle should own half, 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. Cf. my Uber driver today (Pamra), her intuition being that the middle class (middle 60%) should own 60%.

[11] Achieving this target would require the movement of around $30 trillion into the middle class when defined as the middle three quintiles by income percentage or the middle forty percent (between the top ten and bottom fifty). Q2 2023 Federal Reserve data shows that total U.S. household wealth is ~$150 trillion and the middling share is: (a) 28.1%, when defined as middle three asset quintiles by income; and (b) 28.6% when defined as the “middle 40%” (between the top 10% and bottom 50%), averaging 28.35%.

[12] That extreme wealth concentration has never been serenely reversed, 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. That said, a temporary improvement of the Roman census was observed following the implementation of the 133 BC Lex Sempronia Agraria, but it appears (per Appian, The Civil Wars, 1.4.27) that the 118 BC Lex Thoria cancelled distributions under the Gracchan plan and that a 111 BC Lex Agraria quieted title for many private holders. Despite the uncertainty, and attempts by Saturninus in 103, Drusus in 91 and Rullus in 59 BC, the issue was decided in plutocracy’s favor. Historic examples of palliatives include the Roman Cura Annonae (grain dole) old-age pensions in the Han Dynasty, the Zakat. Your organization at least implicitly understands the main point here: Bob Lord’s June 22, 2023 blog post The real reasons we want to raise taxes on the rich enunciates these three: “to 1) infuse currency with value 2) keep the liquidity of the economy in the right position (i.e. not too much money floating around, but also not too little) and 3) control inequality.”

[13] See Alexander Hamilton, Federalist No. 73: “a power over a man’s support is a power over his will” and No. 79: “A POWER OVER A MAN’s SUBSISTENCE AMOUNTS TO A POWER OVER HIS WILL.”

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