Bernie’s Conspiracy Theory

By Rich Lowry

Friday, October 30, 2015

Bernie Sanders is the most prominent conspiracy theorist in America.

He runs around the country saying that the economy is “rigged” by what he calls “the billionaire class.”

Sanders doesn’t mean this metaphorically. He’s dead serious. As he put it in his speech at Liberty University a couple of months ago, our economy is “designed by the wealthiest people in this country to benefit the wealthiest people in this country at the expense of everybody else.”

Designed. Per Sanders, the wealthy have built and maintained a self-serving system of income inequality at the cost of the 99 percent — “heads they win, tails you lose.”

The Sanders view has all the hallmarks of a good conspiracy theory. It finds a common thread in disparate phenomena and attributes them to the workings of a shadowy, nefarious force. It is simplistic, paranoid, and seductive. And it is, outside the hothouse confines of its own assumptions, wholly implausible.

Consider what vast, complex forces the wealthy would have had to manipulate to “rig” the economy as Sanders alleges. (In what follows, I draw on the proceedings of a conference on income inequality held by the free-market Hoover Institution.)

Since the top 1 percent mostly make their money not by sitting on inheritances but by earning salaries, they must have shaped broader economic conditions for their benefit.

They had to enhance the return to education. They had to forge a revolution in computing and invent the Internet to enhance the scale in which talent could operate. They had to open up the global economy. If you thought these were inexorable elements of the modern world, you underestimated the power of the billionaire class.

They had created the predicate for higher pay — and not just for CEOs, financiers, and lawyers, but for other talented individuals, including professional athletes.

But the work of the billionaire class wasn’t done. It had to cover its tracks. It ensured that the United Kingdom and Canada experienced basically the same trend of gains by the top 1 percent. It saw to it that the proportion of children born in the top 20 percent of the income distribution in the U.S. who stay at the top or drop lower in the distribution is roughly the same as in the U.K. and Scandinavian countries. Clever.

For whatever reason, the billionaire class constantly eases people in and out of the Forbes 400 list of wealthiest people in the U.S. and favors entrepreneurial newcomers. In 1982, only 40 percent of the Forbes 400 owned first-generation businesses. In 2011, roughly 70 percent did. Fifth- and sixth-generation businesses, inherited and passed along, had disappeared from the list. Even more mystifying, the share of the Forbes 400 who grew up wealthy has declined through the decades.

Who can understand why the wealthy conspired to increase the share of federal income taxes paid by the top 20 percent of the income distribution from 65 percent in 1979 to 93 percent in 2010? Or the share of the top 1 percent from 17 percent to 37 percent? Doesn’t this undermine the entire effort? According to the Congressional Budget Office, once taxes and transfers are taken into account, the proportion of income going to the top 1 percent in 2009 wasn’t much different than in the mid-1980s.

It’s not enough for billionaires to protect their interests unless dispossessed people beneath them are denied the means of ascent. Clearly, the country must have a rotten, utterly unaccountable public-school system — and so it does.

Yes, the billionaire class has a lot to answer for.

Even if you have a dim view of the wealthy, you have to admit that the story is more complicated than the lurid Sanders version. But sometimes it’s ill-advised to try to engage with an inflamed, hands-waving believer in a wild conspiracy theory. It’s best just to nod and back away: Yes, Bernie, it is all rigged. Whatever you say . . .