Second Letter from Tim Ferguson to Jon Stewart, July 2024

July 15, 2024

Dear Mr. Stewart:

Our last letter to you diagnosed the cause of America’s political distress. We therein concluded that the most virulent symptoms suffered by the body politic – pessimism, anxiety, polarization, tribalism, anger, demagoguery, and authoritarianism – are ultimately attributable to the middling insecurity arising from extreme wealth concentration. We now undertake to prescribe a cure for extreme wealth concentration – a disease which no political society has ever cured and which if allowed to naturally progress will prove mortal to our republican form of government.

Although no society has yet corrected that disease, our last letter closed mentioning perhaps the nearest mankind has yet come, in a republic that then much older than ours. That republic was Rome. That law was the Lex Sempronia Agraria. And the man who brought it forth was Tiberius Gracchus, whose story illustrates a devotion to the republican cause that may never be surpassed. As John Adams once wrote that the best-known period of history covered the death of the Roman Republic[1] – and as Rome’s own historians blamed extreme wealth concentration for that death[2] – we should briefly consider the final throes of that republic whose superpower status furnishes the closest analogy to ours.

Rome’s achievement of global hegemony made the Mediterranean world the playground of the Roman elite.[3] But the tolls of that conquest destroyed the fortunes of ordinary Romans. Rome’s middle class of simple farmer citizen-soldiers constituted Rome’s republican backbone for centuries. It took only few generations to break that backbone: Protracted military campaigns put the smallholders into debt while an influx of slave labor put them out of gainful work. Lacking any protective economic intervention, their lands were concentrated into vast estates, while they themselves fled into the seething urban center. This precipitated the law of Gracchus conceived to rebuild the middling yeomanry through the subdivisions of lands.[4] This intervention John Adams praised in 1776 as “a genuine republican Measure” and Thomas Jefferson sought to emulate with 50-acre land grants in his draft 1776 Virginia Constitution.

After the Gracchi were murdered and their movement was finally halted,[5] Marius detached the Roman army and thus the great power in the state from its smallholder foundation, transferring the Republic’s fate to the hands of the generals. Sulla, the first to seize power by force, tried to return power to the Senate after an episode of bloody reprisals. For his resignation he was later mocked by Caesar, who briefly attained the de-facto monarchy that naturally devolves upon the benefactor-in-chief. Brutus vainly tried to save the republican form by demolishing the people’s champion rather than by rebuilding their economic dignity, opening the Republic’s final bloody chapter that would soon be closed by Augustus.

Our republic likewise began as a nation of middling citizen-soldier farmers. Given enough time and too little land, it may have aged as Rome’s. But land never became a fatal issue before technology and capitalism severed society from its agrarian roots, and the Founders early solved the challenges of representation over an extended territory. Also, good fortune and smart policy favored post-war American middle-class formation.[6] Yet, like Rome, it only took a few generations of bad economic habits to erode middling confidence and security, producing the populist and authoritarian effects we presently witness. Fortunately, modern demagogues do not wield lethal violence on the scale that only nation-states can unleash: No man can project the immense gravitas of Augustus and his fifty legions.

The most salient parallels between republican Rome and the United States are thus not in the specific causes of their distress or in the specific methods by which their elites may seize power. They are in the similarities of political faction and authoritarian drift arising from the common experience of superpower republic middling decline.

These parallels teach that middling confidence and security are no less important to life, liberty, and happiness than any Enlightenment precept bestowed by our Founders. Yet, though it may be true no corruption of the public morals ever proceeded from the sturdy yeoman farmers, it’s also true that economic life will not always remain agrarian. But middle-class primacy is as essential to genuine self-government as all the liberties and guarantees embodied within our founding documents. The great task of modern legislation is therefore cultivating the middling substance in which the virtue, optimism, and independence essential for popular government – and incidental to smallholding status – can take root as can most nearly be approximated beyond the agrarian mode of economy.

Various societies have managed to deploy palliatives and sedatives to the problem of economic insecurity,[7] but never a corrective. In this regard American political science is no more advanced than ancient political science, even if our economy is.[8] Liturgies, bread, circuses, safety nets, and basic income are no substitute for shared, dignified, and earned prosperity. Since stable and authentic popular government rests upon an independent and optimistic middle class – not a dependent underclass – we need a corrective. And since America has developed far beyond its original agrarianism to become the leader of world capitalism, the proper form of corrective must be a rule or technique of capitalism. As we search the features of capitalism to that end, we find that the one best suited is that of the incentive plan.

Incentive plans vary by structure, but those that are well designed reward the achievement of some objective metric. For our purposes, the best benchmark of middle-class welfare is the national median household net worth. Unlike income or purchasing power, net worth accounts for the cumulative economic effects of all factors impacting American households, including prices, taxes, savings rates, interest rates, debt, inflation, unemployment, underemployment, offshoring, immigration, automation, rentierism, and monopolization.

With that benchmark in mind, and given America’s current circumstances, we think the simplest, most effective, and most elegant design for a national incentive plan is median-top household wealth tethering at an efficient mathematical ratio. Anchoring those households collectively wielding market power to the national median such that their outcomes rise and fall lockstep in mathematical proportion to the national median would require them to raise the national median in order to enjoy any future gains.

Such a ratio would be enforced by taxing only those top households exceeding a multiple of the national median – say 10,000x to start – whose aggregate holdings imply market power.[9] As the value of 10,000x floats upon the national median, this property tax would be assessed only in proportion to market failure, imposing no absolute limit on elite prospects. This 10,000:1 ratio today implies an initial wealth cap of ~$1.5 billion (based on last 4-year average reported national median), surpassed by about 670 American households by the aggregate sum of $4.7 trillion. To illustrate the ratio’s incentive power, consider that at 10,000:1, every $1 gain to the median raises the cap by $10,000; every $10,000 by $100 million, every $100,000 by $1 billion.

Unlike ordinary property taxes intended solely to generate revenues, our main objective is to promote voluntary wealth de-concentration by market actors. Like a true incentive plan, this approach lets market actors determine how to raise the national median. No mandates would be imposed upon enterprise.  Howsoever they decide to raise it, the plutocracy must in any case open the gates of upward mobility and ensure the integrity of the commons, both of which must result in an infinity of positive feedback loops.

A good capitalist understands the beneficial effects of capital accumulation by enterprises. A better capitalist understands the baneful effects of wealth concentration in households. The best capitalist 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. By adopting the philosophy no gains for the middle, no gains for the top, this incentive plan is that intervention. It rewards positive-sum outcomes by raising elite gains in proportion to median gains. It claws back the fruits of parasitism and predation – including rentierism, automation, and monopolization – at the common expense of covered households, mobilizing the moderate elements of that class against the insatiable part. And once this wealth aspect ratio acquires the force of custom, future legislators could adjust the algorithm within a prescribed range to backsolve for a middle class of any prescribed target size. Our last letter to you already noted that target: It is the common intuition of mankind that the middle should own at least half. What we didn’t mention is that the middling share now stands at only around 25%, depriving our middle class of around $30 trillion worth of wealth.[10]

As a practical matter, this incentive plan is vulnerable to attack under the Apportionment Clause set forth in Article I of the Constitution. This requires its adoption through the legal form of a constitutional amendment. It’s also likely that Congress couldn’t be induced to submit such a measure to the States. But the States could bypass Congress through an Article V Convention. To incentivize them to do so, such amendment could distribute all revenues raised by ratio enforcement in equal shares to each State which timely ratifies it, in most cases covering fewer than 20 residents.

This proposal is neither radical nor socialist in form or substance. It’s as American as you can get. In his Second Inaugural Address, Thomas Jefferson proposed an amendment that would similarly divert luxury tax revenues to the States. He also wrote that “Legislators cannot invent too many devices for subdividing property.” James Madison likewise advised that we take measures to prevent “an immoderate, and especially an unmerited, accumulation of riches” and “reduce extreme wealth towards a state of mediocrity, and raise extreme indigence towards a state of comfort.” At the onset of the American Revolution, John Adams wrote that “Property monopolized, or in the Possession of a Few is a Curse to Mankind. We should … preserve all from extreme Poverty, and all others from extravagant Riches.”

The Founding Fathers would therefore certainly endorse our plan. Modern progressives would endorse it too, for its values of sustainability, fairness, and logic. But what about the group with which this discussion began and who you featured renouncing the Constitution in obsequious deference to their leader on The Daily Show – those disaffected American conservatives whose insecurity, pessimism, and anger have sent them to “seek security and repose in the absolute power of an individual”?

Conservatives can be convinced to endorse it too, on grounds of memory and virtue. Despite slavery, the principal fact of America’s founding was that it was born middle class. And despite segregation, the principal fact of America’s rise to global hegemony was post-war middle-class resurgence. The 1950s – the era of middle-class primacy – is the historical period American conservatives remember with the greatest nostalgia. Which in turn reminds us that what they value most connects to the “benevolent oppression” of the middling virtues; the “stillness” as Tocqueville put it, that “keeps all beneath them and above them still.” Conservative values are neither stupid nor frivolous, and there is a place for them in any enlightened society, alongside, and to counterbalance, innovations which may be radical or pernicious.

To win conservative support, I’d start here. I’d tell them: Let us take America back to the 1950s, without the racism and the sexism. To do that, we must restore the middling virtues. To restore the middling virtues, we must restore the middle class. To restore the middle class, we must roll America’s wealth aspect ratio back from 2,000,000:1 – perhaps not all the way back to 1776 when that ratio was beneath 1,000:1 – but at least back to 10,000:1. And every conservative of good will and common sense would agree that, even if we disagree on everything else, nothing would be more conservative than taking America back to the good old days, provided that this time around, they are good for everyone.

For these reasons, both sides of the political spectrum can eventually be convinced to endorse this incentive plan. My question for you is, will you endorse it now?

Sincerely,

Tim Ferguson