What a trillion dollars costs democracy

Can democracy survive the existence of trillionaires?

French economist Gabriel Zucman, one of the world's foremost experts on wealth taxation, raised that question last week.

He said anyone celebrating Elon Musk's US$1 trillion fortune needed to understand the fundamental tension between extreme wealth and the very possibility of democracy.

"The explosion of billionaire wealth has been one of the defining features of our time," he wrote.

"It is impossible to understand today's world if one ignores this upheaval.

"For with the explosion of the wealth of the super-rich has come an explosion of their power. The power to tilt markets, to shape public discourse, to influence policymaking, to stall social progress."

In a series of tweets, he explained how the world had seen nothing like what it was seeing today.

He said that at the peak of the Gilded Age in the United States in the late 19th century, the four wealthiest families in the US could have bought 4 per cent of all of the goods and services produced in the US in a single year.

"This is a Senate of the monopolists, by the monopolists, and for the monopolists!" ( Source: 'The Bosses of the Senate', by Joseph Keppler (1889), wikicommons )

But today, he said, that same tiny fraction of the US population, the top 0.00001 per cent (which now includes 19 households), could buy 14 per cent of everything produced in the US in a single year.

He published the graph below to show what that looks like.

The concentration of wealth among the top 1 per cent in the US has become extreme. ( Source: Gabriel Zucman )

We have to understand what this level of extreme wealth can buy, he said.

"That's how Musk could buy Twitter on a whim for US$44 billion in 2022. That's how [Larry] Ellison can buy TikTok, CBS, and CNN today. That's how billionaires could account for 20 per cent of all political donations in the 2024 election cycle," he said.

"As the AI boom is minting billionaires by the day and the first trillionaires are now coming into view, one thing is becoming clearer and clearer.

"The battle between democracy and oligarchy will be the defining battle of the 21st century," he said.

The mind-boggling number

The human brain can't comprehend how large $1 trillion is. The Verge tried to explain it this way:

"If you were to count out a million seconds, it would take you 11 and a half days," it wrote.

"A billion seconds would take you 31.7 years.

"But a trillion seconds would take 31,700 years — to reach that point today, you would have needed to start counting around the time that Neanderthals went extinct."

Zucman said after World War II it had looked, for a time, as though extreme wealth belonged to the past, but it was now "coming back in full force".

In the 1980s, billionaires used to own wealth equivalent to 3 per cent of the world's gross domestic product (GDP). Today, it's 17 per cent.

"And the upsurge is accelerating," he said.

The world's wealthiest people are becoming comparatively wealthier. ( Source: Gabriel Zucman )

In the 1980s, the 0.001 per cent wealthiest families living in the UK (roughly 200 families) owned wealth equivalent to 5 per cent of UK GDP. Today, it's 20 per cent.

"In the 1980s, when this movement started, poverty skyrocketed in the United Kingdom," Zucman said.

"Under Tony Blair's government, it remained at a very high level. And since then the UK has even seen child poverty rise: more than 30 per cent of children now live in poverty," he said.

He didn't mention Australia, but Australia is not immune to these global trends either.

And regarding what's happening in Australian politics right now with the rise of One Nation and the flexing of billionaire wealth and its links with global influence networks, recent analysis from Alex Fein, the research and intelligence principal at RedBridge Group, is worth reading.

"What Australia is experiencing is a foreign infiltration of our democracy," she writes .

"[Pauline] Hanson's November address at Trump's Mar-a-Lago resort, where she declared Australia an 'economic and social tinderbox' to a room of American conservative powerbrokers, was almost certainly more than a mere 'legitimising' event.

"The surge since looks less like the natural afterglow that comes from hanging with kindred spirits and more like a blinding flash after a local franchise is formally plugged into a near-infinitely funded global apparatus ."

The threat to the social contract

Mr Zucman is promoting his new book, We Need to Tax Billionaires. It advocates for a minimum tax on ultra-high-net-worth individuals.

It explains how billionaires in France have become so good at using sophisticated tax arrangements to dramatically reduce their income tax bills that if they all packed up and moved to the nearest tax haven tomorrow, the impact on their individual tax bills would be negligible.

"The fact is, they already pay practically nothing," he writes.

We Need to Tax Billionaires (2026), by Gabriel Zucman.

He says the way in which…