On Redistribution
Symbolic Capitalists love to take from the rich. We're less reliable about giving to others. It's a significant social problem.
To the consternation of some, We Have Never Been Woke doesn’t culminate with any personal advice, policy suggestions, or other guidance. As explained previously, I fought to end the book this way in part because it seemed to me to be non-sequitur to produce a century-spanning exploration of the political economy of the symbolic professions that culminates in… a set of tips for effective social justice advocacy. I have no desire to become an inverse-Kendi style guru. In the book itself and associated tour events, I’ve had to consistently push back against others’ impulses to slot me into that role. Happily, I recognized early that a good way to avoid evolving into a guru is to simply decline to offer advice.
But, if I’m being fully honest, another reason I refrained from offering exhortations is that, by the time I finished researching and writing the book, my own thinking on many social issues had been severely shaken. I no longer had a clear sense of what the right path might be.
I think this is healthy. As James Baldwin famously argued, “The truth is a two- edged sword— and if one is not willing to be pierced by the sword, even to the extreme of dying on it, then all of one’s intellectual activity is a masturbatory delusion and a wicked and dangerous fraud.” I allowed myself to be fully pierced by the sword… although I do hope not to end up mutilated by it.
We Have Never Been Woke highlights many “cultural contradictions” of symbolic capitalists. However, the core tension that most of the others are tied to is that symbolic capitalists have two sets of sincere but incompatible drives.
On the one hand, the symbolic professions tend to define themselves in terms of altruism and the common good. We’re the Americans most likely to self-identify as feminists, antiracists, environmentalists, or allies to LGBTQ people. Ideologically, we overwhelmingly self-identify as liberal, left or progressive. Politically, we’re tightly aligned with the Democratic Party. We’re the slice of society that most intensely focuses on disparities and inequality. When we say that we want the poor to be uplifted and the marginalized to live lives of dignity and inclusion, we’re not lying – this is a sincere set of commitments we have. But they’re not our only set of commitments.
Most of us also sincerely desire to be elites. We think our preferences and priorities should count for more – should carry more weight, should be deferred to – over the folks checking us out at the grocery store. We think we should have a much higher standard of living than the folks who deliver our packages every day. And we want our children to reproduce our social position or to do even better than us. This set of commitments is also quite sincere. As We Have Never Been Woke illustrates at length, the symbolic professions and the folks who are folded into them tend to be brutally competitive, to the point where social justice advocacy itself becomes another front in aggressive struggles over status, resources and opportunities.
These two drives, both sincere, are in fundamental tension: you can’t actually be an egalitarian social climber.
When these aspirations come into conflict, as they often do, it’s the drive to flex, preserve or enhance our elite status that tends to win out, transforming how symbolic capitalists pursue their social justice goals – leading us down avenues that don’t cost anything from us, risk anything for us, require us to change anything about our own lifestyles and aspirations, or our plans for our children.
Our longstanding fantasy is that if we just tax people like Elon Musk hard enough we can solve most of the world’s problems without any kind of imposition on people like “us”… perhaps even while enhancing the position of people like “us.” I subscribed to a version of this fantasy in the past. However, the process of researching and writing We Have Never Been Woke shook up a lot of my assumptions about redistribution.
The issue is not, as right-aligned folks often argue, that if you tax the wealthy and powerful too much, it’ll ruin their ability to create jobs and opportunities for others, leaving everyone worse off. The “trickle down” approach to broad-based flourishing, mobility and growth simply doesn’t work, as even the IMF has come to concede. Nonetheless, redistribution rarely works as ostensibly intended in the United States. Symbolic capitalists are a big part of the reason why.
Widening the Lens
Compared to most other workers, symbolic capitalists have extraordinarily good pay, autonomy, status and working conditions. Even “exploited” symbolic capitalists are not exploited the way other workers are. It’s not even close. However, symbolic capitalists rarely compare themselves to normie workers – the folks who serve them food, cut their nails, pick up their trash, watch their kids and drive them around. Instead, we look to symbolic capitalists with even larger salaries and better working conditions than we have and feel like we aren’t getting our due. We look to the clout of superelites like Jeff Bezos and come to see and describe ourselves as underpaid and helpless cogs.
This is how consultants and tenured professors with healthy six figure salaries and a million dollars in assets define themselves as being in the same boat as a high school graduate who works at Waffle House – they’re all just part of the “99 percent,” with the same stake in the system, facing the same limitations, precarity and constraints, with neither benefiting from the prevailing order more than the other. This type of mystification is how one third of Americans who make a quarter-million or more describe themselves as “living paycheck to paycheck” (largely because they decline to live within their ample means). It’s how most millionaires in the United States understand and describe themselves as “middle class.”
In truth, most households in America bring in less than $100,000 per year. The income gap between the top quintile and everyone else is dramatic and growing wider every day.
With respect to wealth, households in the middle three income quintiles tend to have significantly less than a million dollars in assets. If your household (all earners combined) possesses a million or more in assets (vehicles, real estate, retirement accounts, savings accounts, stocks, bonds), you are not an “ordinary Joe.”
However, folks in the top 20 percent generally have little idea how normal people live. Instead, they look at how much more people in the top 1 percent have, and come to view themselves, falsely, as poor by comparison – or else view their lives and life prospects, incorrectly, as typical of most other Americans.1
Looking at a chart like the one above, the typical top quintile household (with “merely” 3 million in assets) seems to be clearly closer to the middle class than to the top 1 percent. But, of course, painting folks with 12x the typical wealth of working class (2nd quintile) households, 6x the wealth of “true” middle class (3rd quintile) households, and 4x the wealth of upper middle class (4th quintile) households as typical Americans just because top 1 percent households have 10x their wealth – this seems like a bad way of understanding society.
As I’ve detailed previously, one major problem with focusing on superelites at the expense of attending to symbolic capitalists is that almost everything done by the rich and the powerful, by corporations, governments, non-profits and other entities – it happens with “us “and through “us” and literally could not happen without “us.”
Second, while it’s true that, say, the top 1 percent controls a radical share of America’s wealth, they don’t control most of America’s wealth, or anywhere near a majority. If we only focus on superelites, we miss the vast majority of wealth and power in the United States:2 who has them, how they’re exercised, and in the service of what ends. We end up telling stories that feel good to “us” (because we’re absolved of scrutiny or responsibility) but that don’t do a great job of explaining how or why stuff happens the way it does.
For instance, looking purely at superelites, it’s hard to understand why redistribution in America chronically fails to lift people out of poverty.
America is Very Rich Yet Struggles to Translate Societal Wealth Into Broad-Based Flourishing
A new bipartisan report, State of the Nation, finds that although America beats almost every other country in terms of economic output and productivity, we rank extraordinarily low in terms of:
Managing income inequality
Eliminating or minimizing poverty
Ensuring high and consistent labor force participation
Preventing and addressing crime
Citizen happiness and mental health
Civic participation and faith in democracy
Trust in institutions
A popular refrain is that the reason America fares so poorly on these measures despite our wealth is because the wealth generated here goes straight to the top: the millionaires, the billionaires, multinational corporation. The wealthy and powerful, it is argued, pay extremely low taxes. As a result, the state lacks the resources and capacity to deliver for ordinary people.
On this model, the solution to America’s underperformance would be to tax the rich far more aggressively, allowing the government to provide a range of social services to the public.
The problem with this approach is that, in fact, America is not particularly bad at taxing the rich. What we’re terrible at is leveraging raised funds to help working people (and demanding public investment from the middle class).
The U.S. is Quite Progressive
As of 2025, the top 1 percent of earners in the U.S. bring in roughly 22 percent of all income, control roughly 25 percent of America’s wealth, and pay roughly 40 percent of all federal income taxes (and income taxes account for roughly half of all federal government revenues).
The share of all federal income taxes that the top 1 percent pays has increased steadily over time, even as everyone else’s tax bills have remained static or shrank.
Indeed, as the income of the top 1 percent has grown relative to other workers, their taxes have increased even faster, such that their post-tax income has remained roughly flat for the last quarter century even as their pre-tax income has skyrocketed.
Of course, these graphs don’t tell the full picture because superelites do not collect all (or in many cases, most) of their money through traditional wages or salaries. By taking advantage of tax loopholes and unconventional compensation structures, some have estimated that the richest 400 households in America (the top 0.0002%) tend to pay lower effective tax rate than the typical U.S. family. But even here, the authors of the much-circulated study presenting that finding note that, “interestingly, the top-end effective rates we obtain in the United States are higher than in Europe” (p. 3). That is, even the very top of the superelites in the U.S., for all their clever schemes to avoid tax liability, are nonetheless taxed more aggressively here than many peer countries.
Likewise, although corporate tax rates in the U.S. have declined in recent decades, they are today comparable to Canada and higher than most of Europe, to include the Nordic countries.
The U.S. collects less in taxes relative to GDP than most other OECD countries, but this is not because superelites and corporations pay a lot less here than they do elsewhere (in fact, they pay more than typical) -- it’s because everyone else contributes much less in income and payroll taxes in the U.S. than elsewhere.
What sets America apart isn’t how little the wealthy and corporations pay; it’s how little the rest of society contributes to funding the state.3 As Matthew Yglesias aptly put it:
If you compare the United States to the famously high-tax Nordic countries, the major difference is not in the top statutory income tax rates. The top American combined state and local tax rate is generally a little higher than it is in Norway and a little lower than in Denmark and Sweden. New York and California, where a large share of our billionaires live, have unusually high top income tax rates, so the richest people are paying Nordic-level marginal rates.
The big difference is that the Nordic top rates kick in at between 110 percent (Sweden) and 180 percent (Norway) of average income versus 880 percent of average income in the United States. Obviously if we lowered the threshold for the top income tax bracket down to the Norwegian level, that would generate a ton of extra revenue… and that could pay for all kinds of things.
But nobody in the United States wants to ask the middle class to pay more, so we keep seeing efforts to kind of redefine the billionaire situation to make it seem like they’re paying unusually low tax rates when they actually aren’t.
I find this whole situation pretty annoying.
Indeed.
The Problem with Robin Hood
America is far wealthier than any European nation (or, indeed, the EU as a whole). Our tax system is more progressive than virtually any other industrialized nation. Public spending as a share of (our extraordinary) GDP is lower than many other OECD nations, but is comparable to Canada, the Netherlands and Australia. Nonetheless, the U.S. has a significantly higher poverty rate than other Western European countries.
Many analyses find primary drivers of this discrepancy are that
Europeans rely more on predistribution (ensuring strong worker pay, protections and benefits, job guarantees, etc. so workers don’t have to rely on handouts),
Other countries tend to have more simplified and broad-based taxation (instead of relying so narrowly on corporations and those at the top of the income and wealth distribution), providing those states a larger tax base and more revenue relative to GDP, and
Peer nations tend to provide more universalized benefits and services (rather than a patchwork of programs targeting particular populations, communities or behaviors while excluding everyone else).
This approach helps ensure that all citizens contribute to state coffers and also enjoy a decent standard of living. Because all citizens receive universalized benefits, it’s also easier for the public in these countries to see how state expenditures contribute to their own well-being and the common good. Middle and working class citizens are taxed more, but they can also clearly see those taxes being put to good use in their own lives and communities.
American policy, meanwhile, has been consistently oriented around taking more narrowly from the rich and giving more narrowly to the poor. The main problem with this approach is that it’s actually tough to take resources from the rich and give them directly to the poor. Instead, what ends up happening in the U.S. is that money gets taken from the rich and funneled into institutions and programs that symbolic capitalists control, and we eat the vast majority of the income that passes through our hands, and then sprinkle the remainder upon the disadvantaged once we’ve had our fill.
This has been a longstanding problem.
As I detail in We Have Never Been Woke (pp. 57-66), the birth of the symbolic professions in their recognizably modern form occurred contemporaneously with two major (and interrelated) changes to America’s socioeconomic order.
The U.S. passed an amendment allowing the federal government to tax incomes, and the subsequent imposition of these taxes was successfully defended in the Supreme Court. This allowed the government to tax the Gilded Age elites in a manner that was hitherto impossible.
“Big philanthropy” took off: there was the creation of major foundations in their recognizably modern form (later accelerated via a 1917 income tax deduction for charitable donations).
As a result of these two developments, there was a massive transfer of wealth from the Gilded Age elites downward. So far, so good. But where did the money end up?
As the sociologist Randall Collins detailed in his landmark book, The Credential Society, the main wealth transfer that ended up occurring during this period was from the rich to the upper middle class. Symbolic capitalists took from the rich and we gave to ourselves.
There were some ways that ordinary Americans ended up benefiting, and there were programs created to help the genuinely marginalized in society – but the gains that others saw were marginal compared to the gains realized by professionals and managers. Given the sheer amounts of wealth that were transferred during this period, a distressingly small share ended up in the hands of those who truly needed it.
Similar patterns hold true today.
As I detail in WHNBW (pp. 183-188), only a small share of charitable giving in America is oriented towards alleviating poverty and human suffering. Instead, charitable donations are primarily geared towards funding educational institutions, scientific research, the arts, museums and other knowledge and culture enterprises – that is, it goes straight into the pockets of symbolic capitalists. But, critically, even funds that are earmarked for the poor rarely actually get to them.
As Matthew Desmond demonstrates in Poverty, By America, for every dollar in tax funds and charitable giving ostensibly geared towards addressing poverty, less than 25 cents actually ends up in the hands of the needy.
Today, as in the past, symbolic capitalists eat the vast majority of money collected in the name of the marginalized and disadvantaged and disburse what’s left to the intended beneficiaries only after our own coffers are full.
Granted, the poor may be better off getting 25 cents to every dollar than nothing at all. But it is incredibly inefficient to have symbolic capitalists (and aligned stakeholders) eat 75 cents out of every redistributed dollar. At that rate, we could literally tax the billionaires out of existence, and while that would be gangbusters for us, it would likely change shockingly little in the lives of most other Americans and likely even less for working class and poor people.
Put simply: the main problem we have in the U.S. is not that we don’t collect much money from superelites and corporations. Both in terms of absolute dollars collected and the share of all collected federal tax revenues that come from each income bracket, we collect the same or more money from the top compared to peer nations. What sets America apart isn’t how much money we pull in, it’s what we do with that money: rather than underwriting predistribution and/or universalized redistribution, we funnel the cash to various interest groups instead (facilitating symbolic capitalists skimming a lot off the top for ourselves).
As a result, America is comparatively bad at translating tax collection and expenditures into greater socioeconomic equality.
In fact, due to the distortionary effects of America’s idiosyncratic approach to redistribution, it is precisely the areas that have received the most government subsidies (e.g. medicine, higher education, housing and, increasingly, childcare)— in the name of increasing access — that have grown increasingly unattainable for regular people… even goods and services that have not received subsidies have broadly grown cheaper (adjusted for inflation and relative to increases in average hourly wages).
Generally, the longer and more intense the state investments, the less affordable these core goods and services have become. This is the antithesis of the explicit intent of these policies and it’s the opposite of how things work in most peer countries, where government attempts to enhance ease of living actually do make it easier to live. It’s American exceptionalism at its worst.
Missing the Target
Symbolic capitalists tend to think in identitarian terms. We commonly assume that declining to center, for instance, race, gender or sexuality in discussions about social problems is a failure to be “real.” Downstream from how we like to conceptualize and talk about social problems, we tend to formulate policy responses that are likewise oriented towards elevating or undermining particular identity groups.
This set of tendencies holds just as strongly for right-leaning symbolic capitalists as their mainstream peers. For instance, the Trump Administration has intensely focused on images, rhetoric and representation because the symbolic capitalists that surround the Orange Man (and the Orange Man himself) take symbols very seriously. And they engage in symbolic struggles in much the same way as the “woke” crowd they define themselves against: a similar cocktail of institutionally-enforced propaganda mixed with suppression of opposing views, the same types of grievance and victimhood narratives, the same types of DEI initiatives – albeit now focused on constituents favored by the political right instead (men, whites, Christians, Jews, conservatives).
Both factions are very far from how most non-symbolic capitalists tend to approach social issues.
Instead of foregrounding differences and divisions, normie Americans prefer messaging that emphasizes shared goals, common values, superordinate identities and overlapping interests. They prefer policies that are universalized rather than applying selectively to certain groups to the exclusion of others. There is deep wisdom in these leanings.
For one thing, as I detail in We Have Never Been Woke (Chapters 5 and 6), group-based redistributive policies, although often passed in the name of the genuinely marginalized and disadvantaged, tend to primarily benefit the most advantaged members of the target groups. Even class-based policies are deeply prone to elite capture, because
Symbolic capitalists and superelites are both excellent at disguising their revenue streams to appear less affluent than they actually are (not just to save on taxes, but often to take advantage of programs intended for the poor -- see pp. 252-253 or pp. 258-260 of WHNBW for examples) and,
As discussed above, elites often “identify” with income groups that are different from (lower than) the brackets they actually belong to.
All said, whether we’re talking about race, gender, sexuality, disability, class, or any other axis, the primary spokespeople and beneficiaries of group-targeted assistance programs tend to be the most advantaged members of the target population (and, often, advantaged folks who are not actually members of the target group but nonetheless portray themselves as such). In practice, these programs are great at helping well-off members of historically marginalized and disadvantaged groups reproduce or enhance their antecedent elite position, but they tend to do a poor job at providing pathways of mobility for those who are (genuinely) poor or working class.
Any system that relies on carveouts for particular groups will be prone to this dynamic. The more generous the program is, the more it will incentivize capture and fraud. The more institutions try to prevent fraud or abuse through narrow and arcane eligibility requirements or onerous administrative burdens, the less likely it becomes that the intended beneficiaries will actually benefit (because they are less likely to have the know-how, connections or bandwidth to navigate these obstacles). Instead, highly complex rules and regulations make it easier for powerful actors to game the system while freezing out less advantaged stakeholders and undermining state capacity.
Worse, even when the intended beneficiaries actually receive the allocated resources, rules micromanaging which funds, and how much money, can be dedicated to particular bills (this much money for food, but only certain types of food, and not all stores accept it; this pot of money for rent, but specific types of dwellings; this much for other expenses, but only certain expenses qualify, and so on) make it difficult for families to address their actual needs while granting administrators a ton of arbitrary power over other people’s lives and life prospects.
Means testing, meanwhile, often creates “poverty traps” wherein people decline opportunities to earn more money through work, because the money they’d stand to gain in the short-to-medium term from a raise, promotion or increased hours would be more than offset by losses in government benefits they’d face for clearing certain income thresholds – forcing them to forgo social mobility over the longer term in order to be able to pay their bills here and now.
Group-based targeting creates all sorts of other negative externalities too. For instance, state benefits narrowly targeting single parents have made it difficult for many poor or working class women to marry or even cohabitate with the father of their children (because the income the man may bring to the table is often less than the benefits women are currently receiving from the state and would stand to lose with a man in the home). The lack of two-parent households among the less educated and affluent is an important driver of contemporary inequality and exerts lots of other costs on children, including and especially for boys and young men.
Welfare work requirements, meanwhile, pushed lots of lower-income into the workforce, to provide services for elite women at great cost to their own households. As lower-income women were coerced into the workforce, there was a massive spike of neglect and abuse for less affluent children, and a major uptick of poorer kids dumped into “the system.” But at least professionals got easier access to low-cost service labor, am I right?
Normie Americans seem to have an intuitive understanding of how the targeted schemes “we” gravitate towards tend to go awry. Most prefer predistributive approaches that help workers flourish without going on “the dole.” Symbolic capitalists, by comparison, are much fonder of redistribution. It’s easy to understand why.
First, the lack of predistribution pushes less advantaged people to accept pay, working conditions and employment arrangements they might otherwise refuse. As Chapter 3 of We Have Never Been Woke illustrates at length, symbolic capitalists uniquely exploit the resultant desperation and precarity to subsidize our idiosyncratic lifestyles.
However, redistribution helps us avoid feeling too bad, because we can just have the government take money from Elon Musk and Jeff Bezos to ensure workers don’t starve to death when we decline to pay livable wages for the services we consume.
And on top of this, for every dollar that gets transferred downwards, we manage to skim off nearly 75 cents (regularly under the auspices of researching problems, designing, rolling out, administering, and/or communicating about aid policies) – so we get richer in the name of helping the downtrodden.
And, as an added bonus, we get to exert lots of power over others in virtue of deciding who is worthy and unworthy (and on which basis) of receiving what’s left of redistributed funds after we’ve taken our cut.
This is how our system functions in practice, irrespective of whether or not most symbolic capitalists are aware of these realities or consciously try to reinforce these dynamics. America’s idiosyncratic approach to taxing and spending system is a great deal for “us.” It’s a comparably poor arrangement for almost everyone else.
Streamlining Redistribution
State capacity is important. The government investments can build and maintain critical infrastructure, promote public safety and public order, and help solve coordination and incentive problems. Citizens need protection against “private tyrannies” and multinational corporations (who are increasingly adopting the rights and powers of states themselves but with much less loyalty or accountability to the governed).
Even with strong predistributive policies, some form of direct income or wealth redistribution is probably necessary too, as even free-market champions like Hayek have recognized.4 However, the U.S. is in desperate need of an approach to redistribution that doesn’t entail shoveling huge amounts of money into pockets of symbolic capitalists under the auspices of helping the marginalized and disadvantaged. We need to move away from a system that is too complicated for ordinary people to understand or take full advantage of but has lots of loopholes and carveouts for those who are especially savvy, well-connected and/or wealthy. We need to reduce the impositions, waste, iatrogenesis and failures that define the status quo.
One promising alternative is to eliminate many of these targeted programs and just give citizens unrestricted cash in the form of a universal basic income or some other approach to direct transfers (such as a negative income tax or child allowances). The main reason we don’t do this already is because stakeholders across the U.S. political spectrum are convinced that if the state just gave people money to use as they see fit, they’d spend the resources in all sorts of ways elites might not approve of. As political theorist Matt Zwolinski put it, America’s unusual system of carveouts and constraints is the product of “conservative judgement and progressive condescension.” It derives from a widespread lack of basic trust or respect for working class and poor people.
But, in fact, working people know their needs and aspirations in a much more fine-grained way than bureaucrats or aid organizations ever could. They have a greater sake in their own flourishing – more “skin in the game” – than the administrators, activists and intellectuals who want to control their choices. The empirical evidence is large and growing that direct cash transfers work at least as well (and often better) than targeted assistance programs at reducing poverty or fostering social mobility.5
These programs also tend to be a lot more efficient (because there is no need for an army of people overseeing implementation, means-testing, etc.).6
An analysis by AEI found that a “budget neutral” approach to UBI – one that radically streamlined the tax code and replaced almost all government benefits with cash distributed equally to all Americans – would benefit almost everyone except millionaires and senior citizens.
No one will shed tears for the poor millionaires. But as it relates to the benefits senior citizens enjoy, it should be noted that the hoarding of wealth and power in America by those 65 and up is a major problem. In the U.S. and many other democracies, beneficiaries take out far more than they put into programs like Medicare over the life course, and paying for this “total boomer luxury communism” is increasingly coming at the expense of other social spending – saddling future generations with diminished prospects and increased debt.
And to make matters worse, many of these programs are incredibly regressive. As a recent column in Washington Post noted, “Social Security sends only 7 percent of its benefits to the poorest 20 percent of senior citizens. The richest 20 percent receive 29 percent… the skewed benefit structure means that even though Social Security paid out $1.6 trillion last year, around 6 percent of seniors still live in poverty… if everyone older than 65 were given a flat annual benefit worth 150 percent of the poverty line… the program would no longer be insolvent and senior poverty would be abolished.”
That is, a revenue neutral UBI would definitely lead to wealthier seniors receiving less government benefits than they are currently getting, but it would also eliminate poverty among senior citizens, which remains inexcusably common under the current paradigm despite lavish state spending on Americans 65+ (disproportionately on people who have already accumulated lots of wealth and are often still bringing in employment income as well – a tendency that is especially pronounced among elderly symbolic capitalists).7
Across the board, the salutary effects of direct transfers could be enhanced even further if paired with universalized healthcare and other benefits.
Viking Governance
Many in the contemporary left celebrate the so-called “Nordic model” – often under the assumption that it’s a souped-up version of what’s currently being done in the States. It is not. Scandinavian countries distinguished themselves by abandoning the American-style welfare state altogether – with all of its restrictions and carveouts – in favor of a more streamlined approach to generating and distributing state revenue.
Contemporary Nordic countries tax citizens at a much higher level (as a share of GDP) than in the U.S. However, they have a simplified tax system that is less dependent on collection from superelites and multinational corporations than the American model is. Again, as noted above, they tax corporations and the wealthy slightly less than Americans do while collecting significantly more taxes from everyone else.
For instance, in direct rejection of the “We Are the 99 Percent” or “Tax the Billionaires Out of Existence” logics, Scandinavian countries consider someone affluent enough to impose the top marginal tax rate if they make anywhere from 1.1 to 1.8 times the median income (depending on the country).
To translate this to American terms: in the U.S., the median income for full-time workers (Q4 2025) is $63,180. If we did taxation like the Scandinavians do, anyone making between $69.5k (Denmark model) and $113.7k (Norway model) would have to pay the same top marginal tax rate as the very richest Americans. On the current U.S. model, one has to make more than half-a-million dollars per year to count as sufficiently affluent to hit the top rate.
Comparing the U.S. and Denmark specifically: America taxes those in the richest decile at significantly higher rates than the Danes. The next decile down is basically even between the two countries. Direct taxes in Denmark aren’t higher on the rich than they are in the U.S. They’re lower. It’s heightened taxes on the rest of society — the bottom 80 percent — that fund their state (and this skew is even more pronounced with indirect taxes than direct taxes).
The same basic pattern would hold for direct comparisons between the U.S. and any other Nordic country too. They tax superelites and corporations a bit less than Americans do but tax everyone else nontrivially more. Put another way: the tax burden is more evenly shared in Nordic societies than in the U.S. Rates fluctuate much less up and down the income ladder.
Through this flatter tax structure, the Nordic countries fund a wide array of universal — i.e. non means-tested or group-targeted — benefits across the entire life course: childcare, education (K-12 through college), healthcare, retirement.
Citizens are equal under the law (Nordic states have low levels of discrimination, corruption and nepotism), but Nordic governments don’t strive to even things out financially. The state ensures everyone has a decent minimal standard of living, but how things shake out beyond that is not their concern. It’s a mix that seems to work well.8
On the one hand, Nordic economies have some of the highest concentrations of millionaires and billionaires per capita on planet earth.
Forbes ranks these countries as among the best in the world to do business — with each of the Nordic countries except Iceland rated higher than the United States (click to expand).
However, despite the pro-business environment and high concentrations of wealth (and modest social mobility), these countries also have exceptionally low poverty rates. Moreover, thanks to predistributive policies, if you look at countries where the bottom 95% of income earners bring in more per capita income while working less hours than U.S. peers, Nordic countries are quite prominent.
Scandinavian nations rank exceptionally high in measures of life satisfaction. The World Happiness Report finds that five of the top six happiest countries are Nordic.
The Nordic countries also lead the world in democratic participation, civil rights and civil liberties.
Geopolitically, the Nordic states rank among the most peaceful societies in the world — leaning heavily on consensus, cooperation and negotiation over militarization, threats and coercion.
All said, these are countries are able to deliver exceptionally high, consistent and broad-based peace, prosperity, freedom and flourishing to their citizens. On the domestic front, they achieved their extraordinary successes by moving away from a system full of carveouts, restrictions, eligibility requirements, administrator discretion, and differential obligations or benefits in favor of a more streamlined and universalized approach to taxation and social services.9
Getting Out of the Way
Trust in government is lower in the U.S. than most other OECD nations — for good reasons. Despite more progressive taxation and much higher wealth, America delivers less and worse support for its people… in no small part thanks to “us” (symbolic capitalists).10
Social scientists often talk about a “government-citizen disconnect”: the folks who receive the most redistribution are often the stakeholders with the lowest opinions of redistributive programs.
They also speak of a “principle-policy gap” where Americans support taxing the rich more in the abstract, but oppose most proposed tax increases.
Scholars consistently find that working class people resent professionals, administrators, bureaucrats and managers more than billionaires (whom they often respect and admire).
Symbolic capitalists like to explain these tendencies gap by appeals to ignorance or irrationality: beneficiaries must not understand their own interests. Or, perhaps, they have been actively misled about their interests: the Koch brothers, Fox News, Trump and other right-wing actors must have cooked their inferior brains, leading them into a “false consciousness.”
For either condescending account, the upshot is the same: “we” understand working class and poor people’s interests better than they understand their own interests. The best way to make progress on social problems is to give “us” sufficient authority and resources to disregard the inconvenient views of the people we claim to be serving and implement “what’s good for them” over their own objections as needed (this is a long-running tendency).
In fact, the main barrier standing between working Americans and the huge amounts of money extracted from superelites is us. We’re the ones diverting most of the funds from nonprofits and the state intended to address poverty and human suffering towards interest groups and our own pockets while attaching a bunch of strings to the relatively little that “trickles down.”
To the extent that less affluent, less educated, less urban, less secular and less liberal Americans believe that institutions symbolic capitalists control do not well represent or serve people like them – they think we look down on them, we don’t exert much effort to understand what they want or how they think, they don’t have much voice or a stake in the symbolic economy as it currently operates, many policies that may be good for “us” are not good for the industries and communities they are part of – this is not “misinformation.” It’s true. Others mistrust and resent us, in part, because they correctly perceive some bleak realities about the prevailing social order that most of “us” decline to reckon with.
U.S. symbolic capitalists are excellent at extracting resources from the wealthy and corporations in the name of helping working people – we do it here better than almost anywhere else. However, we tend to be much less effective at actually giving the captured assets to the people we’re ostensibly trying to help or listening to the stakeholders we’re supposed to be representing.
Left to our own devices, our impulse is to pursue our own interests in the name of the common good and the least among us. We cannot bootstrap our way out of these tendencies — it’s a structural issue demanding a structural solution. Perhaps the best way to save us from our own worst impulses would be to take a page from peer countries and emphasize universalist policies, predistribution, direct cash assistance, and other strategies that empower ordinary people to make their own decisions and to use allocated resources as they see fit.
Indeed, a kind of rhetoric I hear a lot from people when I talk about this stuff is something like, “the difference between a low-income worker and an affluent professional is much smaller than between that professional and Jeff Bezos.”
I think this is the kind of thing that people only say if they’ve never really experienced the other side of things. As someone who has experienced significant social mobility in my life, I’d say the jump between working full-time at freight jobs making $35k per year v. pulling in $80k per year doing symbolic work while attending my PhD — this was a much bigger leap, and a much bigger transformation in my life, than going from $80k to $180k in household income (between my wife and I). The first was a difference of $45k. The second, an increase of $100k. Yet the $45k jump was much, much bigger.
Once you reach a certain threshold, additional money is good, but it has diminishing impacts on your life. Once you reach Bezos level, you have more money than you’ll literally ever be able to spend, so the additional wealth you' build is, practically speaking, inconsequential to your life and lifestyle.
I’ve been in the homes of multiple billionaires, I’ve seen how they live. It isn’t, in fact, much different from how someone who makes $500k lives. And that isn’t very much different from how a family that makes $250k lives. But all of them are very different — incommensurately different — from how someone who makes $35k lives.
Another sense in which the top 20 percent misunderstand their actual position: if your household falls into the top quintile of U.S. income earners, you are in at least the top 5 percent of all households on planet earth.
Despite how lopsided American tax collection already is, Democrats are floating plans that would ensure that most American households pay literally zero federal income taxes (while taxing the wealthy at even higher rates). This would make America an even more extreme outlier in terms of income tax progressivity, but would do little to address the extraordinary failures and distortions in service delivery that set America apart from other industrialized nations.
In Law, Legislation and Liberty Vol. 2, Hayek stressed that markets don’t ensure that the hardest working or the most talented, qualified, innovative, bold, ethical, or socially-beneficial end up winning out. Markets are good at solving information and coordination problems – nothing more, nothing less. In a free market system, it will often be the case that those who are talented, ambitious, ingenious, industrious and/ or moral nonetheless fail – while others who lack these virtues succeed – due to circumstances that are arbitrary or beyond the ability of any individual to predict or control.
In Hayek’s view, the value of market systems isn’t that they are more “just” (however conceived) than other arrangements, but that they tend to be more dynamic, are less prone to catastrophic failure, and require less direct surveillance and repression to survive.
But markets, as well, are sometimes prone to crashes. And “private tyrannies,” cartels and exploitation can emerge when workers have insufficient leverage to resist them. To insure against these risks, and give people the freedom to move and renegotiate (so they aren’t trapped in bad jobs or other labor relationships on penalty of destitution), Hayek proposed a universal basic income.
One form of means tested program shown to enhance the mobility effects of direct transfers for the least advantaged members of society is to pair guaranteed income with training, apprenticeship, internship and mentorship programs (to help recipients establish rudimentary connections, experience and marketable skills to build on) alongside basic education and training on financial literacy and wealth building. This “cash plus” approach has proven highly effective in the U.S. and around the world (here, here, here, here) and is less prone to capture or abuse than other targeted programs.
A UBI also provides more dignity for beneficiaries. With the administrators streamlined away, the poor would no longer need to submit to being surveilled, micromanaged or saddled with administrative burdens in order to receive funding. The programs also eliminate stigma because poor people would no longer be uniquely “on the dole.” Instead, everyone would enjoy a dividend of their society’s prosperity, sufficient to meet common needs.
In a similar fashion, America has higher government spending as a share of GDP on health care than other peer countries but gets worse health results along most dimensions. Indeed, despite spending much more, we have lower basic coverage than other countries, with growing numbers uninsured or underinsured. As Matt Yglesias put it, “America’s system of rationing health care based on the ability to pay leads to overtreatment of some even while access is denied to others.“
The American system is also highly regressive, with the least advantaged Americans saddled with the highest levels of medical debt, even to the point of bankruptcy.
Eliminating America’s patchwork coverage and delivery system in favor of Medicare For All or some other form of universal basic insurance would likely deliver better results for a wider share of Americans at a lower cost.
Some have argued that the Nordic model might not scale to a country that is as populous, diverse or “open” as the United States. In fairness to that position, it should be stressed the Nordic countries are outliers in many respects. They are a fairly homogenous population with secure borders and much more restrictive immigration and nationalization processes.
This is not the only sense in which they are more “closed” than the U.S. The Nordic countries also have higher levels of citizen surveillance in order to prevent, detect and respond to crime (their approach is far more invasive but much less punitive). Compared to the U.S., they have many more restrictions on speech (with more rules about, and more expansive notions of what counts as, hate speech, defamation, incitement and misinformation). Likely as a result of their elevated homogeneity, restrictions and surveillance, they have much lower levels of conflict, crime and public disorder than the United States does.
In my own view, it’s likely impossible and perhaps undesirable for America to emulate many aspects of Nordic society. However, moving away from our idiosyncratic approach to taxes and benefits in in favor of a more streamlined and universalized approach is definitely something we can do, and it would likely be a significant improvement over the status quo.
Another country that tends to be a peer of the Nordic states on most of these measures is Switzerland, which has an importantly different economic model.
The Swiss impose much lower taxes and regulations than the Nordic countries. They have a generous and largely universalized safety nets - but they’re much more market oriented. For instance, everyone has access to health care because the government mandates everyone purchase basic health insurance from private providers — alongside disability, old age, survivor benefit and unemployment insurance (the latter being partially subsidized by employers). As a result, all Swiss citizens have access to a broad social safety net — but one provided by private companies and where each individual (and their employers) underwrite their own coverage. Insurance companies, meanwhile, are obliged to accept everyone, cover most things, provide payouts efficiently, and cannot price gouge.
The state provides limited/ temporary welfare for folks who find themselves in a tough financial place and have already taken affirmative steps to get out of it. However, beneficiaries are expected to pay the funds back to the state once their financial situation improves (interest-free with flexible payment options) and are expected to be working actively and consistently to improve their situation (in order to minimize the public’s burden in supporting them and to keep the amount they must pay back as small as possible).
Like the Nordic states, the government operates effectively and is highly professionalized, with little apparent discrimination or corruption. However, the Swiss government is also much smaller. The state largely facilitates individuals purchasing key benefits from private actors on the open market rather than having civil servants or government contractors directly provide those services. For instance, rather than directly providing childcare or issuing credits in a system like WIC or TANF (that are restricted to certain types of food items and can’t be used for other expenses), the government provides stipends for all children under 16. These benefits are not means tested. Cash is provided directly to any family to use however they wish — an approach that requires much less staffing or overhead than programs with tight eligibility requirements that try to micromanage poor people’s choices.
The Swiss model is another example of how it’s possible to have a dynamic economy — with more benefits and less waste and iatrogenesis — by moving a lot of discretion and resources out of the hands of symbolic capitalists.
It should be noted, perhaps, that like the Nordic countries, Switzerland also has a fairly small and homogenous population with restrictive immigration and nationalization requirements, and so on. So, like the Nordic model, it is an open question about whether and to what extent this model could be scaled and adapted to work for a population as large, diverse, and dynamic — and a society as “open” — as the United States.
When pollsters ask Americans about the reasons for their lack of faith in the government, a common set of themes emerge:
The government is not perceived to care about, or be attentive to, the needs of people like them. Their communities do not seem to have a seat at the table.
There are concerns about fairness: rather than universal rules and benefits or broad-based investment, there are different standards and levels of support depending on proximity to power.
Respondents express frustration with how complex and bureaucratic the state is – how difficult it is for people like them to understand policies and navigate institutions (as a result of all the carveouts, exclusions and qualifiers).
There is broad frustration with perceived waste, corruption and incompetence: resources to benefit the public don’t get to intended beneficiaries at the levels they should – and even when they arrive, they don’t benefit the lives and life prospects of recipients as much as one might hope.
That is, the very problems described here – driven largely by the behaviors and preferences of symbolic capitalists – seem to be key drivers behind Americans’ lack of faith in government and institutions.
this is a great piece and I wish that my friends on the left would read it. You've influenced my thinking a great deal, as a long time card carrying symbolic capitalist, and the analysis that sees at least 60% of the American population and perhaps closer to 80%, essentially pitted against a party that seeks to inoculate itself from self-examination by talking about oligarchs exclusively, seems essential to me in thinking about what the Democrats need to do in 2028 to be viable for more than a single term.
I live in Brazil now and it is interesting to see how the countries vast inequality is layered over a comprehensive system of Rights, that include healthcare, education, and a basic income. The system is sketchy and imperfect, but the access to free healthcare is a reality and the nature of poverty in the nation has changed fundamental ways since 1988 when these policies were adopted. If indeed we're at a historical moment when the economy could be as severely challenged as it was in the Great Depression, then it seems like time would be right to change the system of Charity and piecemeal government support that currently exists.
I admire you so much for your intellectual integrity Professor Al Gharbi! You always do your best to talk the talk and walk the walk and it is not easy! Will always trust you bc unlike our fellow symbolic capitalists, you and your wife actually sent your kids to NYC public schools.