From bitcoin to big banks, why America’s concentration of wealth is getting worse

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In 1996, women made up just 0.2 percent of Fortune 500 CEOs, compared to a record 8.1 percent in 2021. Unlike in 1996, or any time before, today the U.S. treasury secretary, speaker of the House and vice president are all women. A lot of progress has been made when it comes to power and influence in business and politics over the past 25 years. Or has it?

When it comes to the concentration of power and wealth, things actually seem to be getting worse, not better.

CEOs of the largest U.S. companies in 1996 made 154 times what their workers made on average. In 2020, the CEO-to-worker pay ratio ballooned to as high as 830 for some of the worst offenders. We’ve put on conferences, led campaigns and certainly done a lot of talking. But when it comes to the concentration of power and wealth, things actually seem to be getting worse, not better. The big guy has continued to win big time.

This in turn has driven the economic and cultural divide wider as we’ve become a country that we often say is divided by red and blue. But it’s also divided by green.

I started my career on Wall Street just shy of 25 years ago, at a time when so-called “locker room talk” was the status quo. It was also the early days of the internet, which would lead to the frenzied dot-com boom, meaning anything related to the internet was pure investing gold.

Between then and now, the dot-com bubble burst. The housing crisis devastated millions of homeowners, wiped out banks, crushed markets and sparked regulation aimed at protecting consumers. The government came to the rescue.

That rescue stabilized our financial system, and the continued support from the Federal Reserve and central banks around the world provided a safety net for markets. Investors were incentivized to take on bigger risks and got significantly richer. Individuals didn’t always fare so well. Those who didn’t have money in the markets didn’t benefit from the Great Recession’s Great Recovery. Meanwhile, things like the cost of college and deficit spending exploded, leaving younger generations less capable of pursuing the American dream than their parents.

In other words, as rich people have gotten richer, poor people have gotten poorer … and angrier.

A lot of this anger stems from the fact that many of the perpetrators of the financial crisis didn’t get the severe punishment lawmakers on both sides of the aisle demanded. E-commerce behemoths have steadily squeezed out brick-and-mortar small businesses, and professional investors bought up massive swaths of distressed real estate, outbidding families.

Somewhat ironically, anti-corporate America sentiment helped elect Donald Trump, the richest president in U.S. history, who flanked himself with senior staff and Cabinet members from Goldman Sachs and the hedge fund industry after attacking Wall Street on the campaign trail. (On his first international trip as president to Saudi Arabia, Trump was joined by Steve Schwarzman, CEO of private equity giant Blackstone.)

During Trump’s presidency, the economy generally improved and the pro-business policies supercharged markets. But those overall gains were exponentially better for wealthy people.

During Trump’s presidency, the economy generally improved and the pro-business policies supercharged markets. But those overall gains were exponentially better for wealthy people. The inequality divide deepened, and even though some business leaders have worked to transform corporate culture and promote “stakeholder capitalism,” these efforts, too, have faced much criticism, with critics labeling the changes “woke economics.”

In the markets, we’ve seen anti-establishment sentiment fuel the explosion of cryptocurrencies and meme stocks. Cryptocurrencies were born out of the desire to decentralize power and control in our financial systems. Meme stocks are part of a phenomenon where young people who mostly congregate and communicate online get together and buy up stocks of nearly bankrupt companies like AMC Theatres and GameStop, artificially driving up prices. Many of those same investors have redeployed their meme stock gains, buying cryptocurrencies and furthering their meteoric rise in value.

It’s been extraordinary to witness from both financial and cultural perspectives — a rebuke of the current “establishment.” But the establishment is buying in, too. We’ve also seen more legacy, established businesses dive into crypto and meme stocks. These moves are less about politics and cultural movements and more about new ways the biggest players already in the game can gamble and win (which they have).

Those who truly understand the complexities of markets and the potential of decentralized digital currencies have already made tremendous amounts of money in these lanes. But as with so much about our financial system, the future for the little guy might not be quite as bright.

This has a lot to do with new Securities and Exchange Commission Chair Gary Gensler, who has remained mostly quiet on crypto but has deep knowledge of the tricks of the trade — and is on a mission to kick many of those tricks to the curb. Gensler spent close to 20 years on Wall Street. It’s like someone who grew up in a crime family becoming the chief of police: He knows where the bodies are buried and he’s not afraid to dig.

We have no idea what’s in store for this new wave of investing or the crypto craze. But when the SEC does step in, and I think it will, it’s the first-time investors who will be in the most trouble. The people who will make it out fine — again — will be the big, sophisticated investors who were already big and rich to begin with.

When the SEC does step in, and I think it will, it’s the first-time investors who will be in the most trouble.

Rich people will continue to get richer and poor people poorer, and inevitably attention will return (as it should) to Washington. Lawmakers will point fingers, call for hearings and excoriate business leaders. But if history is our guide, little will change.

Despite public outrage, for the richest Americans and our most powerful businesses, enjoying and exploiting loopholes is the law of the land in the United States of America. Regulation and tax policy seem to always find a way to favor the ones with the deepest pockets.

The future may be different. There may be a whole new set of winners and losers, new technologies and new visionaries. Or maybe the names will change but the story will stay the same.