A racket is an organized crime scheme to extort illegal profits. In a free market economy, the only way to get profit is to serve your fellow citizens (they, acting as your customers, pay all of your salary). Back in 1900 up to about 1930, there was no big government in the USA. Federal receipts came in at about 4% of GNP:
But free market critics and detractors state that having tiny government like that leads to a two-tiered system of haves-vs-have-nots, where an unfettered (free market) capitalism simultaneously makes the top 1% rich while making everyone else poor. They say that it is necessary to have bigger government, to prevent that inequality.
But in 1900, it can be argued that the USA was the “most-free” economy in the world, with the most unobtrusive government of the developed nations — as the graph above indicates. But when you examine the share of market income (income before tax) that went to the top 1% back in 1900, then you find that the USA was almost the very best:
Just under 16% of all national income back then went to the top 1%, beating all other developed nations with the sole exception of Canada. When the USA as a nation gets compared to world regions, each made up of two or more nations, then it wins, hands-down:
North America in 1900 had the least inequality in the entire world. But now that government has grown in the USA, making us more like the rest of the world, the inequality — measured by a pre-tax gini coefficient — is rising to heights never witnessed before in America:
This suggests that Big Government is a racket where elite insiders and cronies of government work with the government in order to fleece their fellow citizens. When asked whether you want to have a Great Reset, where government is given even more power and control, then say “No!”
If your local politicians want to implement ESG or DEI schemes in order to make globalist elites more happy, then say “No!”
If your national politicans want to cede power to the United Nations or to the World Health Organization for the stated purpose of “pandemic preparedness”, then say “No!” That “preparedness” is just a cover for elite insiders to broker a deal with governments to cash-in on crises by having the government pay for treatments, etc.
In other words, it is just more of the same “public-private partnerships” which have driven income inequality in the USA to heights not seen before. As history shows, the top 1% should be earning approximately 16% of all national income, because back when markets were allocating all of the resources of society, that’s what they earned.
When they earn over 20% — e.g., UK was at 31% in 1900 — it just means that they cut a deal with the government in order to extract wealth at a level that was beyond their productivity. History shows that the top 1% are about 16 times more productive than average, so, if they are paid what they are worth, they’ll earn about 16% of all income.
If they continue to earn over 20%, then it is prima facie evidence of cronyism, where the middle class is progressively destroyed. It’d be much better if government was downsized and allocations of resources were market-based, reducing the inequality. To help that happen, only vote for politicians who recognize government overreach.
Reference
U.S. Office of Management and Budget, Federal Receipts [FYFR], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/FYFR
National Bureau of Economic Research, Gross National Product in Current Prices for United States [A08165USA144NNBR], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/A08165USA144NNBR
World Inequality Database (WID.world) (2024) – with major processing by Our World in Data. “Income share of the richest 1% – Before tax” [dataset]. World Inequality Database (WID.world), “World Inequality Database (WID)” [original data].