The defining economic institution of twenty-first-century America may not be the stock market, the labor union, or even the retirement account. It may be the GoFundMe page.
We hear a great deal about an economy that increasingly benefits the wealthiest one percent while leaving everyone else to struggle. There is considerable truth in that observation. But the divisions emerging in American society may prove more complicated, and in some respects more troubling, than a simple contest between the very rich and everyone else.
Consider the forces now at work. The administration’s aggressive immigration enforcement threatens to disrupt industries dependent upon lower-wage workers. Tariffs raise costs for businesses and consumers. The war with Iran threatens energy supplies and prices. Taken together, these pressures could sustain inflation and make it difficult for interest rates to fall significantly.
For millions of Americans, the consequences could be painful. But not everyone will experience them in the same way. Some who are nowhere near the top one percent may remain relatively comfortable, or even find opportunities, while their neighbors struggle.
Consider a household with substantial savings, little debt, and a paid-off home.
Higher interest rates are an obstacle for a family trying to purchase its first house, but they can become a source of income for someone with substantial cash reserves. The homeowner without a mortgage need not worry about refinancing. The person able to purchase property without borrowing may find opportunities in a market where financing costs have discouraged other buyers.
Even the humble credit card illustrates the distinction. One family carries a balance at an interest rate approaching 25 percent, struggling to pay down a debt that grows faster than its income. Another charges nearly everything, pays the balance in full each month, and collects cash back, airline miles, or other rewards.
The same financial instrument becomes a source of income for one household and a source of impoverishment for another. In a small irony of modern capitalism, the merchants who fund those rewards often recover the cost through prices paid by everyone.
Neither household need be especially wealthy. But one has the resources to make the financial system work for it, while the other pays dearly for the privilege of participating.
Family circumstances introduce another source of economic insulation.
A prosperous couple with no children, or with children whose education is already paid for, may be largely insulated from the rising costs of child care, college tuition, and supporting young adults who cannot afford to establish independent households.
The obligations do not necessarily end with one’s immediate family.
As economic pressures intensify, many Americans will find themselves helping parents, siblings, cousins, nieces, nephews, and adult children. A person earning a comfortable salary may nevertheless experience considerable strain when surrounded by relatives who are struggling.
Another person earning precisely the same salary, but belonging to a prosperous extended family, may face no such demands. Indeed, that family may provide assistance rather than require it.
We generally measure economic well-being by individual or household income. But two households with identical incomes may inhabit entirely different financial worlds, depending upon the needs and resources of the families surrounding them.
Risk, after all, can be absorbed or transmitted. Some families act as shock absorbers. Others become additional sources of financial vulnerability.
There is a further complication, one Americans have spent generations attempting to address.
If civil rights enforcement, affirmative action, and diversity initiatives have helped reduce longstanding barriers to opportunity, then dismantling those measures is unlikely to affect everyone equally. The benefits of inherited advantage do not disappear merely because the government announces that it will no longer take account of them.
White Americans and men may find themselves better positioned in institutions where existing networks, informal sponsorship, and traditional assumptions about leadership continue to shape advancement. That does not mean every white man will prosper or that women and minorities cannot succeed. It means that removing efforts to counter historical inequities does not necessarily produce a neutral playing field.
Indeed, it may simply allow older advantages to operate with less scrutiny.
And then there is the question of political power.
In every society, relationships matter. Access to influential people can open doors that remain closed to others. But as governments become more authoritarian, the distinction between economic success and political favor can become increasingly blurred.
Russia offers a particularly instructive example. Wealth and power are not merely adjacent; they are often dependent upon one another. The businessman who enjoys the confidence of the government may prosper spectacularly. The businessman who falls out of favor may discover how quickly his property, influence, and personal security can evaporate.
America has never been free of favoritism, political connections, or the advantages of knowing the right people. But a government increasingly willing to reward friends and punish adversaries threatens to make those relationships more consequential than they ought to be.
In such an environment, proximity to power becomes another form of wealth and another form of protection against risk.
None of these divisions fits neatly into the familiar distinction between the top one percent and everyone else.
Some have assets, others debts. Some inherit financial security, others inherit obligations. Some belong to families capable of absorbing hardship, while others shoulder the burdens of struggling relatives. Some enjoy advantages that society has become less interested in examining. And some discover that proximity to political power provides protection unavailable to everyone else.
We are accustomed to discussing economic inequality as though Americans were arranged along a single ladder, with the wealthiest at the top and everyone else occupying the rungs below.
But the emerging picture may be less orderly than that. Americans are increasingly divided not only by income, but by assets and debts, family resources and family obligations, inherited advantages and political connections. The degree to which people are insulated from risk may prove every bit as important as the size of their paycheck.
The result may be a society in which a surprisingly large number of Americans continue to live quite comfortably even as the economic security of others deteriorates.
Perhaps the greatest economic privilege is not the ability to purchase whatever one wants, but the freedom to decline whatever one no longer wishes to do.
That is one reason the familiar language of the one percent may prove inadequate. The beneficiaries of this arrangement will not all be billionaires, and its victims will not all be poor.
For those with sufficient insulation, the economy may remain perfectly tolerable. For everyone else, an unexpected illness, a lost job, a struggling relative, or an unaffordable home may become a financial emergency.
We may be entering the GoFundMe generation.
And the most fortunate Americans will be those who never have to start one.