The United States has torn down the guardrails that held the republic together. As the ancient cycle of political decline reappears, the only question is whether we can escape the fall.
In 1873, Mark Twain and Charles Dudley Warner published a novel that gave name to their time: the Gilded Age. The title was satire, telling of a country covered in gold – industrial wealth, grand mansions, booming railroads – but hiding corruption and deep social inequality. “Beautiful credit! The foundation of modern society,” the character of Colonel Sellers exclaimed, “I wasn’t worth a cent two years ago, and now I owe two millions of dollars.” Twain captured a society dazzled by excess at the top and hollowed out below.
Today, America is in that same place again. The top glitters with “unprecedented” technology and eye-popping wealth, including a new class of billionaires who are shaping culture, politics, and markets. Many of the same problems lurk below, too. Rising inequality, democratic institutions under strain, and a growing belief that the system is broken. These aren’t random byproducts of globalisation or technological progress, but the result of policy decisions over the last fifty years dismantling the structures that once distributed power and prosperity more widely.
The big question now is actually simple: can American democracy correct itself, or has it already entered the cycle of decline? Are today’s imbalances just a bit of turbulence or the signs of deeper fractures – the ones that thinkers from the Founding Fathers to ancient Greeks believed could doom the republic? The answer to that question will determine whether the 21st century becomes a story of renewal or one of democratic decay.
To understand how we got here, it helps to look at a very specific (and historically unusual) moment in American life.
From the end of WWII to the late 1970s, many people look back on what they call a postwar “Golden Age.” But it wasn’t a golden age as much as a historical anomaly. The economy worked differently because policymakers made it work differently. They deliberately limited the power of concentrated capital and created rules that spread prosperity. This period – later named the Great Compression – wasn’t capitalism in its natural state. It was the product of political will, shaped by the trauma of global war and the Great Depression. Americans had seen what unrestrained wealth accumulation could do in the 1920s and built a system to prevent that from happening again.
The Great Compression
The defining feature of the Great Compression was that as the country grew richer, its citizens together grew richer, too. In the three decades after the war, hourly pay for most production workers rose by 91%, closely following the 97% growth in overall productivity. That meant that when the economy expanded, so did the middle class: purchasing power became more widely distributed, fuelling demand and, in turn, more growth. Between 1944 and 1947 alone, median family income rose by about 20% because economic gains reached the people who helped generate them.
During this time, the gap between workers and the wealthy narrowed, not widened.
That didn’t happen by accident. Success was built on institutions that counterbalanced the tendency of wealth to concentrate. One pillar was organised labour. In the mid-1940s, unions represented more than a third of the American workforce and that stayed above 30% until the early 1960s. Unions didn’t just negotiate wages but also pensions and health coverage, letting workers claim a share of the economic pie they helped create.
The other pillar was a steep, progressive tax system. The highest marginal income tax rate hit 94% in 1944 and stayed above 90% until 1964. It did not drop below 70% until 1981. These high rates didn’t just bring tax revenues but – more importantly – changed corporate behaviour. If executives took astronomical salaries, most would be taxed away. So, instead of pouring the profits into the pockets of a few, businesses had a strong reason to reinvest: in research, expansion, equipment – and workers.
As a result, the income distribution compressed like never before. In 1945, the top 10% of earners received 32.6% of total U.S. income. For the next 35 years, their share stayed between 31% and 34%. Economic growth in this period didn’t erase inequality, but it did mute extremes and allowed prosperity to spread.
But that balance wasn’t permanent. When the guardrails weakened, the old patterns returned.
The Unravelling
The undoing of the postwar system started with two direct attacks: one on progressive taxation, the other on organised labour. When Ronald Reagan took office, the top marginal tax rate was 70%. By 1982, it had been cut to 50%, and by 1991 it was down to just 31% (though that later rose slightly again). That change wiped out the biggest restraint on runaway executive pay. Almost overnight, it became economically rational for CEOs to demand sums that would have been unthinkable a generation earlier.
At the same time, unions came under sustained political and corporate assault. In the late 1970s, about 23.4% of private-sector workers were still union members. That number has plunged ever since; today it’s only about 6%. As labour power collapsed, the link between rising productivity and rising wages was severed as well.
Just as these protections were being stripped away, automation and globalisation hit the American middle class. New technologies could automate countless routine jobs in manufacturing and office work that once provided stable middle-class lives. But this wasn’t just the march of technology. Policy made automation the cheaper, more attractive option.
As capital gains and corporate taxes were reduced, and firms were allowed to rapidly write off investment in equipment, it became financially smarter to buy machines than to employ people. Labour came with payroll taxes and legal obligations that capital did not. Technology didn’t simply outcompete labour; policymakers tilted the playing field, and businesses responded exactly as the incentives encouraged. The upside was political: replacing people with capital boosted the productivity and GDP figures the government loves to point to.
Without strong unions or safety nets to cushion the blow, people who lost their jobs were left to navigate a labour market that increasingly rewarded college degrees and punished those without. The overall result was “job polarisation”: work increasingly clustered at the extremes – high-paying professional and technical jobs on one end, low-wage service jobs on the other. The middle began to disappear.
And so began the “Great Divergence.” The numbers tracking this shift are hard to ignore. According to the Congressional Budget Office, the average real after-tax income of the top 1% shot up by 275% between 1979 and 2007. For the middle 60% of Americans, income grew by just under 40%. And for the poorest fifth of households, that growth was only 18%.
The gap didn’t just widen. It blew open.
In 1975, a household in the top 20% earned about 10.3 times what a household in the bottom 20% did. By 2019, that ratio had grown to 16.6. The top 1% more than doubled its share of total market income from about 10% in 1979 to over 20% by 2007.
The Doom Loop
Once inequality sets in, it doesn’t stop at money. The enormous fortunes amassed during this period also reshaped politics. As wealth concentrated at the top, it was then converted into political influence, creating a self-reinforcing loop. The richest Americans used their resources to push for policies – tax cuts and deregulation – that helped them accumulate even more. Each political win translated into further economic gains, which fueled more political power. This is precisely the dynamic the Founding Fathers warned about: the rise of a faction so dominant it can bend the system in its own favour.
The scale of today’s wealth concentration is staggering. Recent Federal Reserve data shows the richest 10% of households now own roughly 67.2% of the country’s household wealth. Meanwhile, the bottom half of Americans – about 165 million people – hold just 2.5%.
And for that bottom half, wealth hasn’t meaningfully increased since 1989. Their share has stayed flat while the top just pulled farther and farther away.
Once economic power is this concentrated, it inevitably bleeds into politics. And in the United States, the Supreme Court helped open the floodgates. In 2010, the 5-4 ruling in Citizens United v. FEC held corporations and unions could spend unlimited sums on political expenditures. Super PACs and dark money became vehicles for billionaire influence. In the 2024 election cycle alone, super PACs spent a record of at least $2.7 billion. Dark money groups, which can spend without disclosing donors, added over $1 billion more. The doom loop is obvious: wealth buys power, power protects wealth.
Yet these patterns are nothing new. Ancient political thinkers described this spiral long before America even existed. The Greek historian Polybius, writing over two thousand years ago, argued that political systems move in cycles – a process called anacyclosis. Monarchies decay into tyrannies, which are replaced by aristocracies that eventually become oligarchies. The people overthrow them to create democracies, which, over time, descend into mob rule (ochlocracy) until a strongman restores order and the cycle begins again.
Anacyclosis in America
Polybius and later thinkers like Aristotle believed a democracy can only stay stable if it has a strong middle class. When a society has a large, secure middle, it acts as a ballast. People in the middle have enough to lose that they want stability – they’re not easily swayed by the whims of a wealthy few or the desperation of many.
But when that middle disappears, the balance breaks. And that’s when democracies become fragile. People feel the system no longer works for them and lose faith in its rules and turn to loud charismatic figures who promise to upend it. That’s the opening scene mob rule.
The consequences show up not just in elections but in trust. The numbers on public confidence paint a bleak, bipartisan picture. Trust in America’s major institutions has fallen to an average of just 28% – near historic lows. Only 31% of Americans believe the federal government acts in the public interest. The Supreme Court is now viewed with less trust than at any point in modern history. Congress sits at the bottom with just 8 to 10% expressing confidence in it. The presidency, big business, and television news are all viewed with deep suspicion.
What Comes Next?
At this point, the question isn’t what’s happening – it’s whether it can still be rebalanced. The country can continue down this path or try to rebuild the guardrails that once kept economic and political power from becoming one and the same. The trajectory of the Polybian cycle is alarming but it isn’t law. History, after all, is the product of our choices.
The most direct response to extreme wealth concentration is to tax it. The Ultra-Millionaire Tax Act, backed by Senator Elizabeth Warren among others, does exactly that. It would put a 2% annual tax on the net worth of households and trusts worth between $50 million and $1 billion, and 3% on billionaires. Fewer than one in two thousand households (about 0.05%) would have to pay it, yet raising an estimated $3 trillion-plus over a decade.
The goal is bigger than tax revenues, it’s curbing the kind of massive capital accumulation that destabilises political systems. In that sense, the idea echoes the role high income and estate taxes played after WWII.
But there are practical and constitutional hurdles. To enforce the tax act, the IRS would need to assess many hard-to-value assets, like fine art, privately-held companies, and trusts. And as it counts as a ‘direct tax,’ according to the Constitution, it must be apportioned across states by population. That’s a nearly impossible requirement. Any version of the act that passes would almost certainly wind up before the Supreme Court.
An alternative strategy is aggressive antitrust enforcement. For much of the late 20th century, antitrust law asked only one question: Are prices going up? If not, regulators mostly allowed mergers and consolidations, helping giant corporations grow ever larger and more dominant across sectors. A newer generation of thinkers, however, argue monopolies do far more harm than just raising prices: they suppress wages, stifle innovation, and concentrate power in ways that threaten democracy itself.
The Department of Justice and the Federal Trade Commission are now bringing cases against corporate giants like Google and Apple, aiming to break up the concentrations of power that feed inequality and reinforce the political feedback loop described earlier.
A third push, perhaps the most important, aims to break the link between wealth and political power. Since the Citizens United ruling, the campaign finance system has become the main mechanism that turns economic inequality directly into political inequality. Reforms like the Freedom to Vote Act, which would expose dark money donors, and expanding public campaign financing, matching small donations from regular voters with public funds, aim to build a political system where ideas matter more than money. Fairness isn’t the only point – it’s about whether the system can hold together.
A Republic, If You Want It
The Founding Fathers were well aware of the dangers Polybius described. James Madison was especially clear-eyed, believing the greatest threat to the republic would come from the “unequal distribution of property.” The only way for a republic to last, he felt, was to control the effects of the factions that would inevitably form around economic divides.
The United States is now at a decision point. Ideas like taxing extreme wealth, enforcing antitrust laws, and overhauling campaign finances are more than policy menu options. Together, they are an attempt to rebuild a system where the many can once again check the few. The goal is to break out of the historical cycle of decay.
The obstacles are enormous. The very concentration of wealth that makes change necessary also fuels opposition to it – in Congress, in the courts, and in public debates. But choosing not to act is still a choice. It means accepting that the republic can no longer correct itself. It means resigning ourselves to democracy in name only, a gilded shell while real power rests with a few billionaires. It means waiting for the presidency to evolve into a monarchy – or a tyranny.
What happens next won’t be decided by fate, but by political will. The real question is whether Americans still have the collective resolve to defend the public good – and to prove, once again, that the republic is worth keeping.
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