Middlegarchs are the new Oligarchs

Sarah Gonzalez (0:00)

This is Planet Money, from NPR.

Greg Rosalsky (0:05)

Billionaires, man, am I right?

Sarah Gonzalez (0:07)

They're having a moment.

Greg Rosalsky (0:08)

They're launching rockets in the space, they're controlling algorithms that influence what we see and how we shop.

Sarah Gonzalez (0:15)

Funding elections, and there is this feeling among some, many, that the billionaires have too much power over the US right now.

Greg Rosalsky (0:22)

Some people are calling them the Oligarchs.

Sarah Gonzalez (0:24)

Yeah, but there's another influential group in America, a bigger group that sometimes has more power than the flashy billionaires.

Eric Zwick (0:32)

The Stealthy Wealthy.

Greg Rosalsky (0:33)

The Stealthy Wealthy.

Eric Zwick (0:34)

We call them the Stealthy Wealthy because they fly under the radar.

Greg Rosalsky (0:37)

Eric Zwick is an economist at the University of Chicago Booth School of Business. He says, many of us have a distorted picture of wealth and power in America. It's not just the so-called Oligarchs.

Eric Zwick (0:49)

So the Oligarchs, we're giving them too much credit for controlling things. We're not giving enough credit to the Middle-Garchs.

Greg Rosalsky (0:58)

The Middle-Garchs.

Eric Zwick (0:59)

I mean Middle-Garchy.

Greg Rosalsky (1:00)

Middle-Garchy is fun.

Eric Zwick (1:01)

It's fun.

Sarah Gonzalez (1:02)

Eric has spent more than a decade researching who is rich in America and how they got rich. And he has a new book out about what he calls the Middle-Garchy or the Stealthy Wealthy. It is about this specific group of three million multi-millionaires in the US who together make the billionaires look like small potatoes.

Greg Rosalsky (1:21)

Because this group collectively holds more than 13 times the wealth of the Forbes 400 richest billionaires.

Sarah Gonzalez (1:28)

They're way wealthier. But unlike the billionaires who mainly live in the big superstar cities with the tech industries and the finance industries, the stealthy wealthy are not just in Silicon Valley and on Wall Street.

Eric Zwick (1:42)

We call them Main Street Millionaires because they're on every Main Street.

Greg Rosalsky (1:45)

Eric has another name for them, the Everywhere Millionaire. It's actually the title of his new book.

Sarah Gonzalez (1:52)

You're into nicknames, it seems like.

Eric Zwick (1:54)

You can go through the appliances in my kitchen and I can tell you what they're all called.

Sarah Gonzalez (1:58)

What's your toaster called?

Eric Zwick (1:59)

Angus MacGyver.

Greg Rosalsky (2:02)

No hesitation there. Okay. But to be fair to Eric, there is a meaning behind each of these nicknames.

Sarah Gonzalez (2:09)

Yeah. Main Street Millionaire, Everywhere Millionaire. This has to do with where these people are and also the kind of like mundane industries that made them millionaires. Yeah.

Greg Rosalsky (2:19)

Like one made their fortune on hamburger buns. Another, steel garage doors.

Sarah Gonzalez (2:24)

And then the nicknames middle garkey or stealthy wealthy. Those have to do with this group's political power and how people aren't paying enough attention.

Greg Rosalsky (2:33)

At the center of this group's story is a quiet revolution in the American economy. The rise of a particular kind of private business.

Sarah Gonzalez (2:41)

Yeah. These millionaires, they are all the owners of what is called a pass through business.

Greg Rosalsky (2:47)

And these pass throughs, they are raking in more dough than all traditional corporations combined.

Move over corporate America. Hello and welcome to Pass Through America. I'm Greg Rosalsky.

Sarah Gonzalez (3:01)

And I'm Sarah Gonzalez. The US has had a giant blind spot when it comes to wealth in America. But Eric and his colleagues got their hands on a gold mine of data.

Greg Rosalsky (3:10)

And they uncovered an epic story of wealth and power in America.

Sarah Gonzalez (3:14)

Today on the show, how 40 years of preferential tax policies have helped propel a stealthy, wealthy class of private business owners into the 1%.

Greg Rosalsky (3:24)

And how today, those middle-garcs are wielding their power to shape how we buy cars.

Sarah Gonzalez (3:30)

Who gets to whiten our teeth?

Greg Rosalsky (3:31)

Where we get our beer? Whether a nurse can diagnose us or it has to be a doctor.

Sarah Gonzalez (3:37)

And how the middle-garcs also shape who pays what in taxes.

Greg Rosalsky (3:41)

Are they the protagonists of this story? Are they antagonists? Who are these people?

Eric Zwick (3:46)

They are the protagonists, but some of them are protagonists in the same way Tony Soprano is a protagonist of a show.

Sarah Gonzalez (3:57)

For a long time, we did not really know who is rich in America or how they got rich. I mean, we knew how much the CEOs of public companies make from SEC filings, we knew about the Forbes 400 list, their government surveys, but that left us with only a fuzzy picture of the richest Americans.