Class War Comix

Class War Comix 1, by Skip Williamson, ca. 1970

Eric Levitz at New York informs us:

In a 2019 report, the consulting firm Cerulli Associates projected that, over the next quarter century, roughly 45 million U.S. households will collectively bequeath $68.4 trillion to their heirs. This transfer will constitute the largest redistribution of wealth in human history. Generation X stands to inherit 57 percent of that $68.4 trillion; millennials will collect the bulk of the rest.

Millennials, in other words, are one day going to be a lot richer (or at least, some millennials are). In the coming years, that reality is likely to heighten the generation’s class contradictions – and just might redraw the dividing lines in American politics.

How many millennials, exactly? Not too many, apparently. Levitz calls it about 10% who will be getting all that money, while the other 90% will continue being "one of the the poorest generations ever", crippled by debt and largely unable to build wealth, unstable in employment, often deprived by employers (in the gig economy) of benefits, and delayed in starting families. The typical Millennial holds 41% less wealth than an adult of similar age did in 1989, according to one report in 2019, and these meager holdings are very unequally distributed, especially on ethnic-racial lines:

The most recent wealth data from the Federal Reserve shows that the average wealth holdings of the typical Black Millennial are approximately $5,700, compared to $26,100 for White Millennials, while the typical Hispanic Millennial had a net worth of $14,690. And while there are disparities in the distribution of both income and wealth according to race and ethnicity, the wealth gap is wider. Among Black and White Millennials, wealth inequality was 2.6 times greater than income inequality, according to the most recent data; among Hispanic and White Millennials it was 1.5 times greater. 

And it's going to be much more unequal as that tenth of the cohort who are inheriting the $30 trillion, overwhelmingly white, start collecting it. Because although a lot of estates will go to relatively less wealthy young households, those will be smaller than the ones who go to the richer ones; the gap in estate size is also getting a lot bigger, as represented by the chart below (where the green line represents the typical, median inheritance, and the purple one the mean, illustrating how much higher the higher ones are getting):

Via Capital One Investing.

Then it's going to be harder for most of them to prosper by working, as wages remain stagnant and capital holds on to productivity gains from automation, and as climate change exacerbates inequality by displacing people when more places become less habitable (Levitz adds that wealthy Millennials will profit off water shortages, as their mutual funds continue become more heavily invested in water shortage products).

It's enough to turn a whole generation socialist, it is, and guess what: Millennials are certainly a lot more Democratic than the over-40s, and the Democrats among them a lot more "left" in orientation, toward Senator Sanders and Representative Ocasio-Cortez, than their seniors like your correspondent here. Levitz points out that Millennials without college degrees were more likely to vote Republican than those with, but it's worth nothing that his source is from the 2016 election, and the 2020 results suggest that the young blue collar worker has been getting a lot more Democrat-curious, according to—wait for it—Eric Levitz, in a New York piece from last month:

In November’s general election, meanwhile, Biden won 47 percent of the non-college-educated vote, according to an analysis of voter-file records from the data firm Catalist. That isn’t a majority, but it’s no negligible fraction, either. In absolute terms, Biden received more votes from working-class Americans than he did from college-educated ones. And that holds true even within the white population: The president won more total ballots from white working-class voters than from white college graduates; he also won more votes from non-college-educated whites than he did from Black voters of all stripes.

(Though there is probably an age issue here with older blue collar workers being more likely to vote at all than younger ones.)

Levitz's conclusion is that we are accumulating the conditions for a real class war here, which he allows could be fought on the political field, but he doesn't even mention the thing that could bring a conflict to a peaceful resolution, and which are so remarkably prefigured in President Biden's Track Two infrastructure budget reconciliation measure, the American Families plan—the progressive tax proposals on income over $400,000, on capital gains and inheritances, and on corporations, based on the recommendations of the administration's Piketty caucus, Senator Warren and economists Emanuel Saez and Gabriel Zucman, along with the improved IRS enforcement that just got dropped from the "bipartisan" infrastructure bill; a $3.6 trillion down payment (taken from the rich over the next ten years to fund those good-paying green and educational and healthcare jobs) on the much larger transfer of wealth that needs to take place over the next 30.

It's all still there, I'm pretty sure; it has to be, because Senate Budget Committee chairman Bernard Sanders and King Joe Manchin both say it has to be, for different reasons, though word is also that Sanders has cut it down to just $2.4 trillion. But a lot of people in high places don't seem to know about it. There are people all over asking of the reconciliation proposal, "But how are you going to pay for it?" and House Budget Committee chairman John Yarmuth has gone on C-SPAN waxing wild about Stephanie Kelton and how the US government can pay for anything (fortunately the bill will be written entirely in the Senate).

I really hope everybody, including Sanders and Manchin, understands (as Biden has clearly understood for at least quite a few months now) what's at stake. In the short term, it's a great topic for the 2022 election (alongside the extended fully funded child tax credit and the universal pre-K and whatever else they come up with); in the medium term, where adding more debt over the next ten years, as interest rates inevitably begin to rise again (as the Fed works to contain the inflation prompted by all this necessary spending), would mean an increasing proportion of the budget being paid in interest to the fat cats instead of the country's needs; and in the long term, as this cataclysmic transfer of wealth looms ahead of us, threatening to take our already horrifying inequality to a genuinely feudal level (Levitz really channels Piketty when he talks about a "descent into a neo-feudal dystopia").

Now, with voters passionately aligned in favor of taxing the rich, is the time to start reversing the regression that began exactly 40 years ago. Fixing taxation is the most important thing the Biden administration can do.

Cross-posted at The Reconciliation of Names.