The Trouble with Trillionaires: Mordecai Kurz on Capitalism, Democracy, and the Second Gilded Age

**Andrew Keen** (0:00)
Hello, my name is Andrew Keen. Welcome to Keen On America, the daily interview show about the United States.
Hello, everybody. A day doesn't go by without some piece about billionaires and their billions. According to the New York Times today, billionaires' billions are increasing faster than ever. 15 years ago, the world's billionaires had $4.5 trillion. By 2024, their wealth had tripled to $14.2 trillion. Now they're at $20 trillion. Of course, it's being manifested in all sorts of political ways like Elon Musk, the world's biggest trillionaire or the world, perhaps the man who will become the world's first trillionaire, wrecking, at least in some minds, the American state with his doge initiative, his failed doge initiative.
Meanwhile, tech companies still claim that they are benefiting society with their innovation. Open AI is going to go public later this year. They just came out with a white paper which they published, authored by Sam Altman and Jacob Pataki about how AI is built to benefit everyone. Everyone apparently is going to get AI, although of course in previous tech innovations, not everyone benefits as much as the billionaires. One man who's been watching this with a great deal of concern is my guest today, a long time economist at Stanford University, one of America's most distinguished economists. In fact, Mordecai Kurz has a new book out. It's called Private Power and Democracy's Decline, How To Make Capitalism Support Democracy. Mordecai is joining us from Stanford. Mordecai, you've been teaching there since 1960, is that right?

**Mordecai Kurz** (2:18)
1961

**Andrew Keen** (2:20)
It's much changed in the last 60 years on Stanford campus. When you began in 61, the Internet barely existed.

**Mordecai Kurz** (2:29)
That's right.
That's right.
We used to typewriters.

**Andrew Keen** (2:34)
Yeah, those were the old days, Mordecai. So why is this different? I know you write extensively about the Gilded Age. Every technological innovation seems to create enormous wealth, great political turbulence, but we resolve it. Is our current age, what some people are describing as the Second Gilded Age, in many ways similar to what happened at the end of the 19th century?

**Mordecai Kurz** (2:57)
Yes, I'm one of the ones who keeps repeating the title Second Gilded Age.
In fact, my first book published in 2023 on the subject suggests that it explains the Second Gilded Age. The Second Gilded Age is similar to the First Gilded Age in a sense that we see great deal of inequality and rising of economic monopolists who turn themselves and who become centers of political power and resulting in decline of democracy and great deal of strife. The same thing that happened. I mean, the first Gilded Age that goes from the Civil War to the First World War, from 1864 to 1914, ended up with a big reform. And I think the second Gilded Age, which is today, I believe, ultimately will lead to a reform as well.

**Andrew Keen** (4:15)
What kind of reform do you outline? Is it a political reform? Is it economic reform? The subtitle of the book is intriguing, How To Make Capitalism Support Democracy.

**Mordecai Kurz** (4:27)
Obviously, the reform that I'm proposing comes at the tail end of the explanation. After all, there's a lot of arguments that leads to the reform and explains why the reform is what it is. But it has three principles of a reform that I'm advocating, mostly in Chapter 789 Number one, to reduce, to diminish the market power of many private firms in America, power which is based on technological superiority. Now, this is a long-winded statement. But the argument of the book is that technology is used as a method in a free market capitalism. Under free market capitalism, technology is being used as a weapon of gaining market power, and market power leads to political power.
And the first component of my reform is to reduce that power by various means, like changing reforming patent law, reform antitrust law, reform the law that deals with acquisitions and variety of other issues. The second component of the reform that I'm advocating is a increased fairness in the distribution of the gains from technological productivity.
Right now, the gains goes mostly to the top, and the bottom receives very little. In fact, between 1980 and 2010, workers without college education gained almost nothing in terms of income. Their income in 1980 and income in 2010 were basically the same.
And a large number of them lost their jobs due to a variety of forces that are discussed in the book. And what I'm proposing is substantial change in the distribution of income, raising the marginal tax rate on top income to 65% with a compulsory minimum 15% tax on income above 400,000 and increased corporate income tax to 45%. And the third component of the reform that I'm advocating is what I call creating the legal condition of ensuring the livelihood of workers. That is to say, one of the great evils of American society in this Second Gilded Age has been to abandon the millions of workers, their families, in regions of the country that were declining, that suffered from technological obsolescence and from import competition and a variety of other forces that we could talk about if you want to.