Owen Zidar is a Professor of Economics and Public Affairs at Princeton University.
Eric Zwick is the Joel F. Gemunder Professor of Economics and Finance at the University of Chicago Booth School of Business.
In this week’s conversation, Yascha Mounk, Owen Zidar, and Eric Zwick discuss why the real concentration of American wealth lies with small business owners rather than tech billionaires, and whether entrepreneurship remains a viable path to upward mobility.
This transcript has been condensed and lightly edited for clarity.
Yascha Mounk: When we talk about the rich people in America, we think about Elon Musk, and you know, Sam Altman perhaps nowadays, and Mark Zuckerberg, and perhaps the Waltons and so on and so forth. But that is not where the real wealth lies in America, you argue. How is that the case?
Eric Zwick: We open the book with a very glamorous wedding. It’s a sixty million dollar wedding where the father of the bride and the parents of the bride flew all their guests by private jet to Paris. They rented out Versailles. They had Adam Levine sing the first dance. It was called the wedding of the century, and it was more expensive than Jeff Bezos’s recent wedding to Lauren Sanchez, at least per estimates from social media.
So you might have thought the road to wealth, how they got the money to have that wedding, was through Silicon Valley or through Wall Street—basically tech or finance, because that’s the typical path to prosperity that I think people have in their minds when you ask who’s really rich in America. Turns out that wealth came from a third generation car dealership. So the story of our book is a microcosmic version of that story, which is that there’s a tremendous amount of wealth that’s both more abundant than these Forbes 400 stories of tech and finance that we hear so much about, and also closer to home for many Americans than they think. Those are the everywhere millionaires that we write and talk about in the book.
Mounk: Give us some numbers on that. In your book, you take people with a net wealth of more than about five million dollars—how many of those are there in the United States? And when you put all of their wealth together, how does that compare to the wealth of, you know, the Forbes 400, the Forbes list of the wealthiest billionaires and trillionaires?
Owen Zidar: There are three million everywhere millionaires in the United States. Those are private business owners who have at least five million dollars in net worth. And if you add up their collective net worth, it’s thirteen times the total wealth of the richest four hundred people in the most recent year that we can measure, which is 2022.
Mounk: Help me understand that. You’re saying it’s business owners who have more than five million. What about a whole other category of people who are partners in law firms, on Wall Street? I was really struck—you’re political scientists, I’m a political scientist for my sins. At some point I tried to escape and did an internship at McKinsey, which obviously I didn’t tell anybody about at the time. The project that I was on that summer, for part of it, was for a pretty shitty software company that was basically fading. But the top salesperson each year would make more than a million dollars in commissions. This is not Google. This was not a software company you’ve heard of. It was not a software company that was thriving. And the top salesperson made a million a year. So presumably, do you exclude those kinds of people from that statistic? What role do they play?
Zwick: In the wealth data, when you think about how many people have more than five million in net worth—from the Survey of Consumer Finances we can get a good estimate of that—there are about five million households with that figure. Of that group, three million are private business owners, so the majority are. If you move further up the threshold, from five million to twenty-five million, then you see those working professionals who have accumulated substantial savings but maybe don’t own a stake in a company—they disappear. So private business ownership becomes more and more important the further up you go. At the $25 million, the $50 million, the $100 million threshold, you get to a point where pretty much they’re all private business owners.
There is a class of private business owner that we call a skilled service business owner, which your law firm partner would fall into. That’s an important element of the story of the rise of these everywhere millionaires—the skilled services companies where they own a stake in the upside. If it’s a boutique law firm, maybe there’s something more entrepreneurial about that than being a partner at Kirkland & Ellis. So we could have a nuanced conversation about how to interpret the behavior of those people. It’s relevant for some of the other arguments we make in the book about whether it’s labor versus financial capital that’s driving the rise of income inequality, but it is important to distinguish them for some of the conversation.
Mounk: Tell us a little bit more about where these people make the money and how they make the money. The lead example you give is an intergenerational car dealership. In a way you can say that seems like it’s inherited wealth—presumably the car dealership may have continued to expand over the generations, and in order to be able to pay for such an expensive wedding, the person running it at the moment must be doing a pretty good job. What share of these businesses are relatively new businesses? And by and large, are these people with fancy degrees from Ivy League universities? Are these people who studied marketing at the local community college? Are these working class people who started off as plumbers and then decided to take a risk and do their own plumbing company? What kind of composition does this group have, and how does that reinforce or complicate our picture of what kind of person rises to this quite remarkable wealth in America today?
Zidar: That’s a great question. In terms of inheritance, we estimate about a quarter of people in this group inherited their business. So the typical person either founded it or acquired it. And it’s a broad swath of people. The example you gave of a plumber working for ten years and then running a plumbing company is much more common. There are a lot of mundane businesses—ranging from a guy who started as a repo man repossessing cars to running one of the largest repossession companies in the country. There are some pretty large industries, like auto dealers, beverage distribution, realtors, contractors. There’s a guy who sold his business for two billion dollars in Phoenix for servicing garage doors. So it can be pretty mundane. Not all of them went to college, and especially not to advanced degrees. I think the typical one did go to college, has a college degree, but it’s often not a fancy school, because that’s just a smaller number of people. And most of them do not have advanced MBAs or other things, but the skilled services—the lawyers and that group—that subset do have advanced degrees.
Mounk: How should we think about this? I mean, one response to this is America is awesome, right? It’s a country with enormous opportunities. Even though we talk a lot about the downsides of a meritocracy, and you have to make it to Harvard in order to enter the most prestigious institutions in the country—much of which is true for a certain set of institutions and a certain set of career aspirations—here are these millions of people. You start out as plumbers, or servicing car garage doors, or saving up a little bit of money, investing in some business, being very good at running it, who are able to become richer than 99.99% of humans in the history of the world. What’s not to love? And hopefully some of these businesses actually do good jobs, right?
On the other hand, you might think that this amount of concentration of wealth, even if it’s not the Forbes 400 but the everyday millionaires, can have negative downstream social consequences. Perhaps sometimes they’re able to make money because they’re exploiting relationships with governments, closing off business opportunities to other people. Are you two cheers, one cheer, fifty-fifty, glass half full, glass half empty? How do we think about this?
Zwick: We were told, when we were having an earlier pitch about this book, that this is a unique time in history where being optimistic is also provocative.
Mounk: People hate nothing more than optimism. It provokes people to the bone.
Zwick: It’s amazing, right? So we’re having a little bit of fun with that, because we’re not trying to shy away from the part of the story that is kind of optimistic. There’s a part of the story where you think about the American dream—we’ll define that as people who start out with their parents in the bottom quintile of income and rise to the top quintile, achieving that kind of upward economic mobility. Going that way through an Ivy League school is a very, very rare outcome. It’s just a really small number of people who go that way, and it’s not a huge force multiplier in terms of the relative rate at which people achieve the American dream versus the base rate.
If you look at starting a business or being an entrepreneur, it’s almost an order of magnitude more common, because it’s much more accessible as a path, and it seems to be a force multiplier in the sense that if you’re up there, you’re much more likely to have been an entrepreneur than the base rate in the population. So this kind of risk-taking—starting out with relatively little, and not necessarily taking the credentialed labor market approach, the 1600 on the SAT path—seems to be a pretty important way to achieve upward mobility. And that’s something we should celebrate when people get there in ways that aren’t doing damage to society. But we should ask what are the precise ways in which they got there. That’s where there’s more nuance in the story, too.
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There are certain industries where folks at the top get really rich through maybe getting there but then erecting barriers behind them to entry or competition, so they achieve some local monopoly power. Some examples of industries we try to profile in the book would be that car dealer example, would be beer distributors. We talked about doctors and dentists, and the guilds that try to restrict what nurse practitioners and oral hygienists can do, which makes it harder to get those services and makes them more expensive. And then we get into tax policy, where we see the fingerprints of these “everywhere millionaires” littered across the tax code in ways that we find counterproductive and important for our fiscal position. So the optimism shades into realism, and it reveals problems that I think people are trying to solve, but maybe not understanding the problem as well as they should.
Mounk: One of my proudest achievements is that I was denounced in a public press release or letter or whatever by the president of the American Optometric Association for saying that you should not have to have a doctor’s prescription to get contacts, which you don’t have to in most European countries. I think some everyday millionaires took that as a threat to their ability to throw lavish weddings for their children, so they got quite upset.
But your book is very interesting to a lay reader, but it’s also a scholarly book. Tell me a little bit about the numbers here. When I’m thinking of this group of people who have over five million dollars of net worth, most of whom are business owners—how many of them grew up with a silver spoon in their mouth? How many of them worked their way up from the bottom of society in some kind of meaningful way? How many of them fall into the large middle category?
Zidar: There are different categories of how they did it. We have the set of people who started businesses, and the set of people who inherited. And it’s easier to track the people who founded a business. We have, underlying the book, the best data that anyone’s put together on entrepreneurship in America in the twenty-first century, where we have ten million entrepreneurs and can link many of them to where they came from to answer your question. The typical one did not come from a rich family—they’re often poor and middle class. Now, that’s not to say that richer kids don’t have many advantages for starting businesses—they start successful businesses at a much higher rate. But the key point is that there are so many more middle class and poor kids that even though rich kids have an advantage, once you have a large population of people, you get more numerous outcomes, even though their rate of starting one is lower than a rich kid’s.
Mounk: To make this plastic for the audience—let’s imagine that, well, by definition, 10% of people are in the top 10%. Let’s say they have twice the chance of the average to start a successful business. That’s an unfair advantage, right? We might think that’s a waste of talent and potential. We wish that everybody had the same opportunity to start a business. But even if that’s the case, then 20% of successful businesses are going to have been started by people in the top 10%. So they don’t end up taking up the majority of those successful businesses, even if they’re disproportionately likely to have done so, even if they got a leg up from having grown up in affluence.
Zwick: I can offer some specific numbers on that. That top 10% group, we think, accounts for about a third of star entrepreneurs, which we define as being in the top decile of firm performance after a few years—which is a good predictor of where you’re going to be in a decade, as a measure of star performance. And then we call the middle class, which is from the 33rd percentile of parent income up to the 90th percentile—I don’t know what your preferred definition of middle class is, but I think that’s a decently acceptable one—that’s about half, or a little bit more than half, of those star founders, coming from a group that’s about sixty percent of the population.
That gives you a sense that the relative odds from that top 10% group, compared to the bottom third group, are about six times the rate at which they become star founders. So there’s quite a lot of inequality in terms of the rate of success, which suggests that rich families are providing something to their kids. Is it financial resources? Is it occupational networks? Is it education? These are some of the questions we try to tackle and engage with, because they are founding successful companies at much higher rates than we think the underlying distribution of talent looks like.
Mounk: What about the middle group relative to the bottom group? The sort of stereotypical image of the American dream from—I was going to say the last century, but perhaps the previous century—is you start off washing dishes in a restaurant and you become a millionaire. Are people who are born in the bottom third just without a chance of making it into that group, or do they actually do pretty well too?
Zwick: About less than twenty percent of people from that bottom third become star founders. But there’s still a lot of them in that population.
Mounk: Well, obviously a lot less than twenty percent become star founders in general, presumably, but I take it you mean of the total population of star founders.
That’s a lot less depressing than you’d think, which is to say that their batting average is still more than fifty percent of the batting average of the population as a whole, if the bottom thirty-three percent end up representing twenty percent of star founders.
I have a reaction sometimes to Raj Chetty’s data where, obviously, the social origin of your parents influences your social origin, and some of his stats I’m like, yeah, that looks really bad, and some of his stats I’m like, that looks pretty good—that’s better than I’d expect. Now, obviously, we’d love to have equality totally, et cetera, I’m not saying normatively this is great, but I would bet that if I gave a multiple choice test to my very smart students and said, do you think that the bottom thirty-three percent of the income distribution has children that represent fifty, twenty, ten, five, or one percent of star founders, they would end up choosing something below twenty percent.
Zidar: I agree with you. One of the fun things about the book is that we could talk to some of these people and we include their stories. One is Dick Portillo, who grew up in the housing projects in Chicago and ended up not going to college and selling a hot dog business for a billion dollars. And then there’s another one named Saad Khan who, almost exactly like the situation you described, is an immigrant—was washing dishes, had five hundred dollars in his pocket when he came to the country to go to UIUC, ended up working at a car bumper company and becoming an owner of such a company. Toyota was an early client, and that really helped his business, and he ended up buying the Jacksonville Jaguars.
Mounk: Once you’ve talked about the social origins in all these different groups—what do they do with their money? We’ve talked about lavish weddings and so on, but what actually is the social impact of having this very large group of very affluent people? Here again, I could imagine telling a positive story where they become the sponsors of a local Little League team, very civically minded, engaged in their communities, the kind of pillars of why smaller towns—that aren’t where Wall Street is, that aren’t where the Hollywood studios are, that aren’t where Anthropic and OpenAI are located—still are able to provide amenities and have a society that holds together.
On the other hand, you could also imagine a very negative story where they use that money, first of all, to entrench their economic interests, to make sure that nobody can get contact lenses if they haven’t been to an eye doctor in the last two years. But even beyond that, to try and give their children a leg up in turn. I think there’s an interesting echo between your book and a book by Richard Reeves called Dream Hoarders—both some similarities and some differences of emphasis. Richard Reeves looks at a slightly broader group, the top 20 percent of society, and says, yes, if you’re Mark Zuckerberg, you can probably buy your kids’ way into Harvard, and that’s unfair. But when you look at why it is that the average social origin of people at Harvard is very high, that’s not Mark Zuckerberg—there aren’t that many billionaires, they don’t take up that many spots.
It is people growing up in super zip codes around Manhattan, around Washington, D.C., who have relatively ordinary jobs, make a good income, send their kids to very good schools, invest hugely in creating those opportunities for them. That’s the hoarding of opportunities—that’s actually what makes American society less mobile than it would be. So how does your argument relate to that argument?
Zwick: On your last point, I think we are suggesting that this credentialed path up through the Ivy League, those very scarce seats at those top schools, is way overweighted by this top twenty percent group when they’re thinking about how to make sure that their children have opportunities to at least become economically prosperous. That’s almost a status good more than it is a guarantee of economic success. That obsession is probably a little bit counterproductive, but it generates all kinds of weird, perverse behaviors that we see in the Varsity Blues scandal, or in some of Richard Reeves’s descriptions of that group.
Mounk: I don’t know how much of a sense you have of this, you probably don’t have statistics on it—but some of the members of this group may have aspirations of educational climbing, where they feel like if my kid goes to Harvard, that really is a feather in my cap. A lot of them may feel like, no, I want them to stay in state and get a sensible education, I want them to go and study business at the close-by campus of a state university or something like that.
Zwick: We say that they’re everywhere because, especially off the coasts, you really do find them in most cities and towns across the country. And in these places, you don’t see the same emphasis on a small number of elite schools as the goal for their kids—it’s not “Yale or die” or whatever. I think that’s an interesting observation, just thinking about what these kids end up doing. They do kind of aspire for their kids to take over the business, which is itself a challenge, because it’s hard to get your kids to be as excited about distributing garbage trucks as you maybe were. But they often stay closer to home, the kids of a lot of these everywhere millionaires, which is a different picture, but maybe not one that a lot of your listeners or folks who live in coastal markets have as much exposure to. Maybe you have some thoughts on the consumption habits, especially the first generation, this life cycle—we do spend a lot of time on that.
Zidar: It’s hard to systematically measure how people are spending their money, because one fact about the wealthy is that wealthy people don’t answer surveys. So we’ve pieced together things from real estate data, private jet data, super yacht data. And one thing that’s kind of striking is that you see inherited family firms—second and third generation folks—much more readily in this kind of high consumption, private jet and super yacht data. For some of the first generation people we talk to, often they’re rolling up their sleeves and working pretty hard initially, reinvesting a lot of their money in the business, and then as they get older you start to see more consumption. So it’s, as Eric was saying, a life cycle question of when this consumption is happening. But there are several decades when it does not look like they’re flying around on private jets.
Mounk: That’s interesting. You talked about the aspiration for the children to take over. I’m thinking about one of my favorite businesses in the United States, Absolute Bagels, up on Morningside Heights in New York. I’d thought about it previously in the context of cultural appropriation, because it was founded by Jewish refugees or immigrants to the United States, and became a very popular business. I assume it was quite financially successful—I don’t know how much money you rake in selling boatloads of bagels to people on a Sunday morning, I don’t know whether they would make the five million dollar net worth mark or not. But at some point their children decided that they didn’t want to take over the business and became, I believe, a lawyer or a doctor—or perhaps that’s just a cliché I made up in my mind. And instead the mostly Thai employees of this bagel shop decided to buy out the owners and have been running the company since. So that’s an interesting trajectory.
By and large, do the owners of these businesses aspire for their children to take them over? And by and large, do the children of these businesses take them over? Or do they say, I stand to inherit a good amount of money from mommy and daddy, and there’s no need for me to go around making sure that my crews are repairing garage doors in the right way?
Zidar: Eric likes to say private equity is the child that many of these founders never had, because if they don’t want to have their kids checking on garage doors, they can sell it to private equity. I do think there’s a lot of complexity, and we explore that in part of the book—for these family-run firms, it can sometimes tear families apart if some people want to treat it like a serious business and other people want to treat it like a bank account. That creates enormous tension, and some founders want to avoid that. So it’s not always the case that they want this to stay in the family, and there’s a huge appetite among private equity firms, and also people graduating top business schools, to buy profitable businesses and take the reins rather than starting something from scratch.
Mounk: Tell us a little bit about this private equity part of it, because I think that’s something that has really developed over the course of the last few years, or at least decades. I think most listeners, when they think private equity, imagine billion dollar deals in which a company, maybe a household name, is being taken over by private equity, and in the worst version of it, sold for scraps, has a bunch of debt loaded onto it, and the PE firm somehow makes money off it and nobody else does. I think that’s often a kind of unfair caricature. But it is true that historically, when you go back thirty, forty years, the average private equity deal was quite sizable. And what you’re alluding to is that we increasingly have had private equity firms entering into these comparatively much smaller businesses—partially with PE firms that specialize in this, and partially, as you’ve pointed out, some people who’ve gone to business school think, I know how to run a business, I don’t want to build one up from scratch, that’s a risky proposition, I don’t want to go and work for Procter & Gamble as the deputy head of strategy. Why don’t I get together some money and buy out one of those businesses, professionalize it, especially if the owner is a little bit older and hasn’t kept up over the years, hasn’t brought the business fully online, hasn’t used the latest technology, and then I can make a killing that way. So tell us about that trend, that transformation, and how it’s changing the nature of these kinds of businesses.
Zwick: We think one way of understanding the ubiquity of the everywhere millionaire phenomenon is to think about how it’s changed different institutions in society. In this chapter, we go through this transformation of private equity, which initially started, like you said, targeting large public companies where the private equity investors perceived inefficiency—your listeners might interpret that correctly as there being high-cost workers there that they want to replace with low-cost offshore workers, and doing some other things to cut costs, but without growing the business very much. That was the first generation, with a lot of debt that made it very costly, maybe for those businesses to even survive.
As that became very competitive, the returns came down in private equity in that very large part of the market, and the private equity firms looked around: where is there lots of profit, where is there a lot of growth, where are there ways to apply some of our strategies elsewhere? There are tens, if not hundreds of thousands, of mid-market businesses that are private, often first generation founders, that have grown into very successful operating businesses, but where they don’t have natural successors—the kids don’t want to take over, or aren’t there, the workers don’t want to buy it out, or maybe aren’t willing to pay anything close to what the private equity firm will, like a kid who wants to take over but also pay you for the right to do so.
So private equity has emerged in the middle market. It’s still maybe 10 to 15 percent of all employment that’s in private equity-owned companies, or something like that—it’s not the dominant ownership structure in the American economy, but it’s much more common here than in a lot of other countries, as a sort of escape valve for these businesses which might otherwise shut down if there’s nobody to take over. In these middle market cases, there’s more opportunity, maybe, to grow the business regionally or product-wise, or to professionalize aspects of it that the family hadn’t professionalized, where it’s a little bit less ugly in terms of implementation.
Although sometimes you might find the inputs are being cut on in ways that you can’t really tell—buying the cheaper salt instead of the nice Morton salt, or something like that. So you do worry sometimes that when private equity takes over, the quality of the product degrades. I think of that as a double-edged sword that creates an opportunity for a new entrant to come in and make better bagels. I was very excited to see H&H Bagels in my neighborhood, and less excited when I learned that it was because of some financial exit that maybe made it less likely that the bagels were going to be as good as the original H&H back in New York.
Mounk: How should we think about the influence of private equity here in general? I think one of the interesting things about your book is that it cross-cuts ideologically in interesting ways. You’re a social scientist just presenting this information, but in each aspect of it I find myself a little bit torn. Again, the temptation is to say this used to be honest local businesses started up by some hopefully charismatic and perhaps even charming person who worked their way up or whatever—they took a risk, they started these businesses, and now they’re being sold off to these faceless PE guys coming in from Manhattan, and they don’t care about the local community, they don’t care about the quality of a product, they just want to turn a quick buck.
On the other hand, you could say, well, actually, a lot of the time these companies are going to get bought because people see a real opportunity to grow it in some kind of way. In certain cases, that may be financed in a way that actually is free riding on various weird aspects of a regulatory framework. But a lot of the time it may be that, hey, you’re serving this area, but actually this other area would love your services. If you’re really good at providing the services, if the company has something really to offer, the company’s going to make more money and the customers in that new area are going to be happy, right? If it’s professionalizing the service—somebody set up the shop in a particular kind of way, and perhaps they have a website now, but all of a sudden you’d have a phone app and so on—well, perhaps that just makes a business better and makes customers more satisfied and so on. I assume it’s a double-edged sword. How do you puzzle through the positive and the negative ramifications of the PE revolution?
Zidar: One of the things we try to do in the book is just describe the economy as it actually is. You see many of these aspects, both of which are true. There are many cases—we’re talking about three million everywhere millionaires, and there are many industries, and there’s nuance. We’re not trying to sell a particular agenda. We’re trying to describe the wealth in America, and you see cases of both of these things. I think that’s part of the difficulty some people have digesting news, because if it doesn’t fit in a three word slogan, some political party might not run with it. But both of those features are true features of American life and private equity today.
Zwick: We have the Outback Steakhouse case, which I think is a very salient example of private equity coming in, buying a business that people kind of love the brand. I don’t know if you’ve ever been to an Outback Steakhouse, it’s probably not quite your vibe.
Mounk: I have not. At some point I need to go on a tour of fast casual restaurants, I guess. Outback Steakhouse is like at the upper end of fast casual or something like that. At some point I need to do a five-day tour where every day I eat at Chili’s, Outback Steakhouse. I’ve never been to an Olive Garden. I really can’t call myself an American until I’ve done that.
Zwick: I like to think of myself as sort of—what is the best thing on the menu at this place? And you might actually enjoy that. There are things at each of these places where you can kind of enjoy it, but it is slumming a bit. I sort of grew up in that world and kind of quite enjoyed it, and I still get back to it and have a bit of childhood memories tied to it. In that case, when the private equity company took the firm, they brought in some consultants because it was actually Bain Capital, and they brought in Bain consultants to value-engineer the menu. Instead of Swiss cheese from Switzerland, we’re going to have generic cheese. Instead of having the salad dressing made in-house so it’s fresh, we’re going to ship it in jugs. They did those kinds of hard-to-observe cost cutting things at the margin that might improve the profit margin of the business, but maybe at the expense of customers, not just at the expense of workers. We tell that story and talk about it, so people understand here’s what private equity is doing.
Then we tell the story of a different company where it was sort of a salumi manufacturer, a multi-generational business, but the next generation wasn’t really sure what to do with it or wasn’t sure about carrying it on. In this case, there was an opportunity to go national and to put it on shelves through distribution networks in places like Costco or other types of big stores that this family, which was sort of a regional business, wasn’t able to do. They didn’t necessarily sacrifice the product in that case, because the product was actually about a high quality salumi—a whole muscle salumi, not the chunks from the meatpacking kind of salumi that you’d associate with Upton Sinclair. I think they tried to preserve that aspect of it and just grow it. That’s a more positive angle. What is private equity doing there? They’re bringing a lot of capital externally. It might have taken the family fifty years to grow the business in the way that private equity is going to try and do in five to ten. Both can be true.
Mounk: Well, obviously there’s going to be enormous heterogeneity here, both in terms of individuals involved and in terms of the communities involved, but is there a way to describe the relationship between the everyday millionaire and the community in which they sit? One of the interesting things about the billionaires we imagine is they’ve kind of deracinated—they might sit in Silicon Valley or whatever, they fly around with a private jet, they probably grew up somewhere, went to college somewhere else, did the business somewhere else. There’s this idea of a homeless, elite overclass, and I think that’s actually not even true of the very richest people in the world, but it is somewhat true of the very richest people in the world.
Presumably for the most part here, we’re talking about people who have pretty strong local roots, many of whom I imagine still live in the communities they grew up in, certainly have been living in that same community for decades. By and large, we’re not talking about them living in Manhattan, despite my example of Absolute Bagels, or living in LA—they’re living all over the country. So they’re really deeply anchored in those communities, they’re in a position to do a lot of good for those communities. They also might be sort of local notables in ways that might be negative—they might lord it over those local communities in all kinds of ways. What can we say about what that looks like in day-to-day social practice?
Zidar: I think that’s exactly right. If you look at auto dealers, for example, auto dealers bring in about twenty percent of state sales taxes. They are very much rooted in place—it’s not like you’re moving an auto dealership from this place to that place. They are in town, they’re often sponsoring Little League teams, and they also have, along with other small business owners, a large amount of trust. Small business is one of the most trusted institutions in America, way higher than Congress and other institutions. That’s a very powerful force, and I think some of that reflects some of the good aspects you were talking about. But one of the things that we try to highlight in the third part of the book is that, like all successful people, many of them try to bend the rules to their own benefit. There are tremendous advantages that auto dealers have enjoyed, and I think some of those things are things that we can shine a light on.
Mounk: The most important of which—I believe you’ll know the details much better than I do—is that in most states you cannot sell a car directly to a customer. You have to have a physical dealership. I can’t just set up a website in which I sell cars. Tesla, for example, can’t set up a website where it sells cars directly in many states. You have to have these physical dealerships.
Zidar: Yes, that’s right. There are also other things like servicing a car. If you have a dealership and say you have a Jeep, and Jeep has some recall on some part of the car, it’s very much in the dealer’s interest to bring those back, service them there, and they’re paid quite handsomely for those warranties. It can be the type of thing where they’re charging a thousand dollars, or they get a thousand dollars for every repair, but it only costs them five hundred bucks. So it’s in their incentive to just bring in as many as they can. That proprietary relationship means other competitors can’t bid down the price, and it’s quite expensive. Similarly you see that for financing—it’s often pretty hard for people, and they end up signing up for all sorts of things when they try to buy a car. Car prices are quite high in America right now, and we’re in an era of people struggling with the cost of living, and I think this is the type of stuff that actually would help address affordability in America.
Zwick: One of the things we’re wanting to do is paint this picture of the political influence of this group of people, and to put them on the map. There’s never one millionaire—there’s several in every congressional district. They’re not geographically concentrated in the same way that tech and finance as an industry, through agglomeration, are concentrated, or these billionaires who are stateless, as you say. They don’t have the same local power as this group of people who are so rooted in their communities, both in terms of employment and in terms of where their businesses are. They have natural fundraising advantages when they’re running for office.
One of the things we were so struck by was their overrepresentation in public office relative to the general population. In Congress, we estimated that about a quarter of members are private business owners. If you add law firm partners, you could get closer to 40 to 50 percent, depending on how you want to characterize some of those law firm partners. The representation at the state and local level is maybe even a bit higher in terms of its skew towards business owners. It cuts across political parties, though they tend to be more Republican. We think recognizing the natural advantages they have in running for office, what their worldviews are, what they bring to office in terms of choosing policy priorities, implementing policies that directly benefit them, or that just reflect their worldview—I think that is something that really is eye-opening for people when they think about political power in the country, because we’re so indexed on the oligarchs right now as a national conversation on political power, especially on the left, I would say. We call these people the middle-garchs, because it’s like the oligarchs in the middle market, or the Mittelstand, I guess, is your German example of that, although I think that’s a different category of people with different historical relevance. But I think that’s an important part of the book that we want to talk about.
Mounk: One kind of provocative way to put that, to sharpen the point, is that we think of the Gilded Age as the era in which the Rockefellers and the railway barons and so on dominated American life. A lot of people on the left want to say that we’re now in a second Gilded Age—that the people who are really dominating the country are the tech billionaires and perhaps a few others: Elon Musk and Mark Zuckerberg and all of those kinds of people. I take it that you’re saying that is really the wrong way of thinking about this moment—that, yes, they have a lot of wealth and they’re politically influential, and I don’t think you would argue we shouldn’t be thinking about them, but a much higher share of the wealth is dominated by these other people.
How does that change our characterization of this political moment? What follows if we think that this is the second Gilded Age? In what way does that misdescribe the world? In what way do we understand the world in a more helpful way if we follow your characterization?
Zidar: One concrete way to take this on is to think about the main legislative accomplishment of the Trump administration, the One Big Beautiful Bill. If you look at what it did, Elon Musk was a bit of a loser in that bill—clean energy was gutted, electric vehicle credits were not favored—and the more mundane private business owners got a twenty percent deduction preserved that made their tax rate seven percentage points lower than everybody else’s. Auto dealers got a new deduction for no reason, kind of like the mortgage interest deduction. These things added up, this plus some estate tax relief, to about a trillion dollars of tax cuts that no one talks about. The legislative action is very much a broader thing, and we want to broaden the aperture.
I totally agree that if you look at the news as of just yesterday, or even I think it was this morning, you had every AI executive at a press conference with the Speaker of the House and Donald Trump. But one of the points that we want to make is that even the Speaker of the House, funnily enough, lives in the house of an auto dealer, and there’s this broader influence if you take a step back and think about wealth and power in America. I think that helps point to some solutions that you might not get if you think it’s only a handful of people. For example, if you want to think about broadening opportunities or increasing the tax base, the tax base is much bigger when you think about fifty trillion dollars of this group rather than five trillion dollars of a small handful of billionaires.
In the rest of this conversation, Yascha, Owen, and Eric discuss the policy implications of everywhere millionaires, how artificial intelligence may affect these businesses, and whether Owen and Eric were ever tempted to pack in academia to become millionaires. This part of the conversation is reserved for paying subscribers…
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