America Made Me Very Rich. There's a Pro-Market Way to Give Back. -- WSJ

By Nick Hanauer

In 2014, I admonished my fellow filthy rich that if we didn't do something to fix our nation's crisis of inequality, the pitchforks would come for us. "You show me a highly unequal society, and I will show you a police state. Or an uprising," I warned at the time. "It's not if, it's when."

Two years later, a populist uprising came from the right, sweeping Donald Trump and his program of state capitalism with MAGA characteristics into the White House. With the Democratic Socialists of America recently winning impressive victories at the polls, the pitchforks are now coming from the left, provoking pundits to frantically sound the alarm that centrist Democrats are on a road to ruin.

And yet, as critics from both ends of the political spectrum catalog the perils of either socialism or MAGA, there is one glaring omission from all the anti-pitchfork jeremiads.

A compelling pro-market alternative.

Mere scare talk is not enough. If you want to beat back the pitchforks, you should consider arming yourself with a new economics that acknowledges the failures of the past half-century while actually delivering the kind of economy the American people desperately want and deserve.

Neither socialism nor MAGA is the answer. But neither is a retread of the neoliberal orthodoxy responsible for the largest upward redistribution of wealth and income in American history. According to a study from the nonpartisan Rand corporation, rising inequality has cost the bottom 90% of American households more than $79 trillion since 1975-$3.9 trillion in 2023 alone-mostly due to the increased share of national income captured by the top 1%. So it should be no mystery why voters want change.

Of course, the free-market economics of the past 50 years didn't fail everybody. Broadly measured by income, net worth and living standards, the upper middle class have never had it better. But however well off you may think you are, it's nothing compared with the outsize winnings of those of us at the tippy top.

I am one of those top .01%ers. I have founded, co-founded and funded more than 40 companies across a range of industries and was the first nonfamily investor in Amazon. I founded an internet advertising firm that was purchased by Microsoft for $6.4 billion-in cash.

I tell you all this not to brag, but to vouch for my perspective on the obscene rewards heaped upon successful capitalists like me. It's not just the multiple homes, the private jets, the luxury yachts; it's a life of power and privilege the other 99.99% of Americans can't even begin to imagine. With great wealth comes great access-to the media, the courts, the academy and policymakers.

A core tenet of the old paradigm is that the wealthy drive economic growth as job creators, and anything that interferes with capital accumulation and the free market's allocation of it-taxes or regulations, say, or public provisions for affordable healthcare-ultimately reduces growth and prosperity for everyone. The alleged trade-off between fairness and growth has framed our politics for a half-century, with those on the left seeking to maximize fairness, those on the right seeking to maximize growth, and those in the center seeking to balance the two.

However, a growing body of empirical and theoretical research suggests that this trade-off doesn't exist-that in a market economy, fairness and growth have always gone hand in hand. When workers have more money, businesses have more customers and hire more workers. And as Daron Acemoglu, James Robinson and Simon Johnson-the co-recipients of a 2024 Nobel Prize in economic sciences-have noted, inclusive institutions (such as a functional democracy) that distribute power and opportunity more broadly produce more prosperous economies.

Building on this new economic thinking, Oxford economist Eric Beinhocker and I propose a very different model of how market economies work, one we call "Market Humanism." Market Humanism is an economics built on 21st-century thinking, in which markets are servants, not masters-engines of prosperity for the many, not just the few. A core belief is that the real genius of markets is less their efficiency in allocation and more their effectiveness at innovation.

Innovation experiments with new products and services to make life better for people; demand is the mechanism through which markets inform, reward and select for adaptive innovations. Prosperity evolves through a virtuous cycle between the two. The golden rule of this new economics is inclusion. The more we include a broad swath of Americans as innovators, entrepreneurs, well-paid workers and robust consumers, the faster the loop spins and the more the economy grows.

The old paradigm bleakly defines economics as "the study of how society manages its scarce resources," a mindset that we believe has constrained economic thinking for the past 150 years. But market economies aren't zero-sum games. They don't just allocate resources; they create them. I especially believe this from my personal experience with running businesses.

There's no such thing as equilibrium in a market economy. Nor should there be. Costs rise, regulations change, consumer tastes prove fickle, competitors come and go. The challenge for owners and workers alike is to innovate or die. We can see this evolutionary process not just in individual companies but in the economy as a whole.

Progress is the story of raising the standards we hold markets to. When child labor was banned in 1938, mines and factories didn't shutter. Children got a better life, more education and became more productive adults. The economy adapted. The same holds true for every other so-called "job killer": the 40-hour workweek, the Pure Food and Drug Act, the banning of lead from gasoline and paint, to name just a few. It's also arguably true of the canonical alleged job killer-the minimum wage.

When in 2014 Seattle began to raise its minimum wage from $9.47 an hour to its current $21.30, the restaurant industry didn't collapse as predicted by many economists. Instead, restaurants capable of adapting to a higher-wage business model thrived, while those that failed, in many cases, were replaced by new restaurants that could. Tens of thousands of people got a raise, creating new customers for restaurants and other local businesses.

We've already had a massive nationwide natural experiment validating the positive correlation between fairness and growth. From 1945 to 1975, wages grew lockstep with GDP and productivity growth across all income levels. In fact, wages grew slightly faster for those at the bottom than for those at the top.

Back then, when top marginal tax rates were at their highest and labor unions at their peak, a rising tide lifted all boats, creating the largest and most prosperous middle class the world had ever seen. But starting around 1975, we enacted policies that decoupled wage growth from economic growth. As the rich grew staggeringly richer, the incomes of the bottom 90% stagnated. So did GDP, falling from 3.8% annual growth in the postwar period, to 3.3% in the 1970s, then down to 2.6% in the neoliberal era from which we are now just emerging.

Much of the critique from populists both on the left and the right isn't wrong. The economy is built to allow rich people like me to get richer. Our taxes are too low, our wealth and our political power are too concentrated. This is why a compelling and charismatic 34-year-old Democratic Socialist is the mayor of America's financial capital. But any scolding or hysteria misses the point: Mamdani didn't create the conditions that helped get him elected. We did.

It's true that no social technology has done more to create prosperity and raise living standards than the economic system known as market capitalism. It is undeniable that on average, human beings are now leading substantially longer, healthier, more comfortable, more fulfilling lives than at any other time in history. But market economies only deliver higher standards of living when we hold them to higher standards.

If you believe that market capitalism cannot deliver what Americans say they want-rising wages, economic security, affordable housing, healthcare, education and a better life for their children-then you're not the right person to defend market capitalism. Because the alternative version-the scarcity-constrained, big-tradeoff version of market capitalism-isn't a system today's voters seem willing to support.

In the 1930s, America also faced domestic threats from socialists on the left and fascists on the right. Franklin D. Roosevelt's New Deal combined new economic thinking with a broad and bold set of policies. While many conservatives didn't like it (and still don't) and many socialists felt it didn't go far enough (and still don't), FDR's New Deal saved America as both a market economy and functional democracy.

America needs new economic thinking and an equally bold program of reform to save it again. Because if you truly believe in doing more of the same-if you stubbornly insist that markets magically solve problems on their own-don't be surprised if the invisible hand comes wielding a pitchfork instead of a wand.

Nick Hanauer is the co-author, with Oxford economist Eric Beinhocker, of "Markets Built for Humans."

(END) Dow Jones Newswires

September 17, 2026 11:31 ET (15:31 GMT)