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July 27, 2026

The Fire This Time

For all my interviews and more, <a target="_blank" href="https://www.youtube.com/@PKrugman">subscribe on YouTube</a>.TranscriptSome say the world will end in fire. Some say in ice. Robert Frost wrote that in 1920. With more than a century gone by, we have a verdict. It’s fire for the win. Hi, I’m Paul Krugman. I thought I’d talk today about a story that should be getting even more play than it is. I mean, there’s so much going on, but, you know, Europe is on fire. There are massive wildfires in France and Spain that have forced the evacuation of hundreds of thousands of people, are menacing Bordeaux and not too far from Madrid. This, of course, follows on the enormous Canadian wildfires that for a while gave Toronto the worst air quality on the planet and turned the skies orange and the air foul across a large part of the eastern United States. And that, in turn, followed on that deadly heat dome in Europe that killed thousands of people. Okay. It’s pretty awful. It’s also something that was predictable and predicted. If you go back — I’ve been looking at a 2012 report from the UN, their climate project, that very clearly forecast growing incidents of extreme weather, extreme heatwaves, storms, flooding, and by implication, at least, wildfires. This was clearly in the cards. In fact, the story that somehow has not become standard is that climate scientists pulled off something that was extraordinary in intellectual terms. They got the basic outlines of what was coming and in many ways even the numbers on what was coming right decades in advance. In any kind of rational world we would be hailing them as heroes and very much listening to them about what we should be doing now. Of course where we are is that climate scientists are reviled. Climate change is almost crowded out of the political discussion and there’s a fair bit of actual personal persecution of people like Michael Mann and so on who are being punished for the sin of being right. Okay, of course, it’s more than just that. Now, there are sort of multiple levels to the climate story. At one level, it’s, you know, there are powerful vested interests that don’t want you to take global warming seriously. Fossil fuel interests are dying as an industry, but they’re dying slowly and they’re doing their best to take us all with them. And they have enormous influence in this administration. That feeds into something else, which is very true of the people now running the federal government, which is they hate science. So this is across the board. There’s almost always some financial interest, but it’s not just follow the money. It’s just a real hatred of the whole scientific enterprise. And so in an obvious sense, the climate denial is of a piece with the determination of RFK Jr’s health department to find a link between vaccines and autism. There have been many studies saying, no, it’s not there, but that’s not the answer they want. And they just kind of hate the idea of scientists, they hate the idea of objective research of any kind. And so that feeds right into the climate denial.And then, actually, it’s even broader and deeper than that. I don’t think you can really understand what’s going on in this administration without saying that there’s a kind of hatred of the intellect, not just science, but really any kind of hard thinking. I mean, at some, not very deep level, it’s an obvious correlation between Trump saying that the reason that we had fires in Canada is because the Canadians didn’t rake their forests, — all, by the way, two million square miles of boreal forest in Canada. You know, there’s just this absurdity, this kind of evil absurdity of the whole situation. And Pete Hegseth, having presided over the humiliation of the U.S. military because we were not ready for 21st century warfare and the Iranians were. So he’s busy suffering casualties and of course trying to hide them, suffering enormous damage and complete failure of war aims in the face of drones and missiles and basically this new world in which the Ukrainians are showing the way. This is warfare, which still requires some people, still requires enormous personal courage. But the decisive arms of battle are machines, fairly advanced machines, although cheap compared with the expensive hardware we have. And so here you have Pete Hegseth, faced with all of that, and he thinks that what the U.S. military needs is more testosterone. And that’s not a metaphor. Literally, he wants to give testosterone shots. The truth is that even the ancient Spartans didn’t win battles just by flexing their biceps. Intellect was an important part of war, even in the 5th century B.C. But now, above all, consider the craziness of thinking that it’s all about brawn and muscles and good grooming. Oh my god. But this is all hatred of basically anything that involves hard thinking. Again, the deep point is it’s not even exactly, I think, that people in this government are lying about climate, that they’re lying about military stuff. I mean, yes, of course there’s a lot of lying, but I’m not sure they even really have the concept that there is objective reality. And they certainly hate anybody who tries to argue that what they’re saying is objectively, empirically not true. How did we get here? I’ve been writing about oligarchy, and it’s certainly true that the big money — and the big money has never been bigger — that the big money has thrown its weight behind these deeply anti-intellect, anti-science people. This is in the long term, and not very long term, really against their own interests, but the short term lure of tax cuts and a corruptible government — because they’ve got the money to do the corruption — I guess outweighs that. And also, of course, quite a few of the mega-billionaires are themselves caught up in this. If we all get through this, Elon Musk and the general awfulness of the people who somehow end up with hundreds of billions of dollars is going to be a cautionary tale for generations to come. Anyway, that’s where we are. What can I say? I’d really like to not talk about depressing stuff, and I will now and then, but boy, we are in quite a state. And the sky is blue right now, so I guess I should go out and spend some time outdoors while we still can. Take care. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

July 25, 2026

Talking Again With Gabriel Zucman

For all my interviews and more, <a target="_blank" href="https://www.youtube.com/@PKrugman">subscribe on YouTube</a>.In my writing about wealth concentration and oligarchy, I steal a lot from lean heavily on the truly work of Gabriel Zucman, who is a hugely important researcher (winner of the 2023 <a target="_blank" href="https://www.aeaweb.org/about-aea/honors-awards/bates-clark/gabriel-zucman">Clark Medal</a>) who is also starting to play a major role in policy. I’ve talked to him before, but this seemed like a good time to bring him back.. . .TRANSCRIPT: Paul Krugman in Conversation with Gabriel Zucman(recorded 7/23/26)Paul Krugman: So, hi everyone. Paul Krugman here, bringing back <a target="_blank" href="https://gabriel-zucman.eu/">Gabriel Zucman</a>, probably the best guy for thinking about inequality, especially wealth issues. And since I’ve been writing about that and stealing a lot of Gabriel’s research, I thought we should talk again. So, hi Gabriel.Gabriel Zucman: Hi Paul, thanks for having me on.Krugman: Yeah. So, you have been writing—and now I’ve been, you know, cannibalizing it—a lot about wealth concentration. Why don’t you tell us about your reasons for focusing on wealth.Zucman: Basically, because there’s a fundamental tension in democratic societies between extreme wealth and the very possibility of a well-functioning democracy. And it’s not a new idea—don’t get me wrong. All the thinkers of democracy have written about this, all the way back to Aristotle, more than two thousand years ago.Krugman: Right.Zucman: But there was a period of time after World War II when many people thought that this issue belonged to the past. And it corresponded to a very particular moment in history when extreme wealth had largely disappeared after World War II, after the shocks of the first half of the twentieth century.But now, of course, it’s making a dramatic comeback. And so we are back to this discussion of: how do we deal with this tension? How do we organize the economy and our society to prevent the forms of capture of the political process, in particular, that are associated with extreme wealth?Krugman: Now, there’s a question. I mean, I’ve been on the inequality beat for an alarmingly long time—since you were a small child, actually. But in the early nineties, let’s say, it was all income rather than wealth. And a lot of it was top quintile, and maybe top one percent. And now you’re telling us that we need to focus on the wealth rather than the income of the top 0.0002 percent. Why that shift? Why wealth rather than income?Zucman: Well, it’s for two reasons. Number one is a macroeconomic reason, which is that wealth as a whole has been growing much faster than income. So if you look at the ratio of total household wealth to GDP in the US in 1980, it was around 200–250%, and today we are past 500%. This means that the total wealth of the country is equivalent to more than five years of annual production, five years of annual GDP. The second reason is that wealth itself has become much more concentrated, and the rise of wealth inequality, especially at the top of the distribution—at the very top—has been massive and has been even faster and stronger than the rise of income inequality.So we all know about the rise of the top one percent; the top one percent’s share of total income has increased from about ten percent of income in the US in 1980 to about 20% today. But at the top of the wealth distribution, the increase has been even much more dramatic than that.Krugman: At the risk of derailing it slightly, one thing that I myself have gone back and forth on—and certainly I get from comments on things I write—is a question comparing the wealth of the top 0.001%, or whatever: should we be comparing it to total wealth or to total income? And I know you’ve used wealth to GDP, and I have some thoughts, but you’ve done it both ways. Which do you use, and why would you use it? I don’t know which is right, but what are your thoughts?Zucman: I think both statistics are interesting and capture different aspects of reality. So if you’re interested in wealth inequality, in the concentration of wealth, the most meaningful statistic is to divide the wealth of the super-rich by total wealth in the economy. So, for instance, if you look at billionaires—roughly the top 0.1 percent of the population—they own about seven percent of total US wealth today. In 1980, they used to own about one percent of total US wealth. So it gives you a sense of the rise in wealth concentration. If you look at the super-top, you know, the oligarchs, the twenty wealthiest families—a very, very small fraction of the population—their total wealth is 2.0 to 2.2% of total household wealth in the economy. So I think that if you care about wealth inequality, these are the relevant numbers.Now, it’s also interesting to compute another statistic, which is the wealth of those top groups, and in particular the oligarchs, relative to total income or total output in the economy, because it gives you a sense of their influence on the economy and also because it gives you a sense of how much revenue there is at stake from taxing their wealth. So let me illustrate. If you get back to the 20 wealthiest people in the country, they have about 2 to 2.2% of total US wealth, and that’s equivalent to about 12–13% of total US GDP.Okay, so now you’re dividing a stock—their wealth—by a flow. And what it means is that if they spend their wealth—of course, they’re not going to do that in a given year, but imagine that they spent all their wealth in a given year—then they could buy 13% of all the goods and services produced in a given year in the US. So it really gives you a sense of just how big they are relative to the economy as a whole. And also it gives you a sense of what’s at stake with taxing billionaires. Because, of course, the way we think about tax revenue and about government budgets, is often in relation to GDP.And so here, what you have with billionaire wealth is that there’s a potential tax base; we are not taxing billionaire wealth today, which has been skyrocketing. That’s the flip side of the rise of wealth concentration. The positive aspect in all of that is that now there’s a lot of tax revenue at stake from potentially taxing the wealth of billionaires.Krugman: Yeah. I mean, my version is, I mean, most people have very little wealth, right? Wealth is highly concentrated, and what most people have is income. But the very top has wealth, and in some sense, the wealth-to-income ratio is telling you how many minions they can buy, how much influence they can buy in the economy and in politics. Is that kind of what you’re saying, or is there something else?Zucman: No, exactly. When I say that expressing their wealth relative to total income gives a sense of the influence they have, precisely it gives you a sense of how much they can spend on buying media companies, on funding electoral campaigns. Billionaires accounted for nineteen percent of total political spending during the 2024 federal election cycle.Krugman: Right.Zucman: They can fund think tanks and foundations, and influence the prevailing ideology like that. So it’s in that sense that it’s really useful, I think, to express their wealth relative to the value of the total income of people in the country.Krugman: So again, what’s your take on why total wealth has grown faster than income?Zucman: There are different stories, and I think the one that makes most sense to me and that seems most consistent with the data is that there’s been a number of policy changes since the 1980s that have favored wealth and capital, broadly speaking. So, for instance, you used to have rent controls for housing in many countries; when you lift rent controls, the value of housing wealth tends to go up. Many countries used to have pretty high corporate income tax rates, of almost fifty percent on average at the world level in the 1980s. Well, when the government takes half of the profits of companies, it capitalizes into stock prices; it reduces the market value of companies. But then when governments slash the corporate tax—and it has declined from about 45–50% to about 20–25% today at the global level—well, that again capitalizes into stock prices, and now it boosts the market value of companies, of equities.And you’ve had deregulation in many sectors that has boosted the profitability of corporations. You’ve had a significant change in the division of value added between labor and capital—the rise of the capital share, the decline in the labor share. That means more profits, more income for shareholders; again, it boosts the value of corporate equity. So all of these changes, they don’t happen like that out of nowhere. They are, of course, heavily influenced by policy.So, for instance, changes in factor shares—labor and capital shares—have been partly affected by the decline in union power. When unions are stronger, you tend to get a bigger labor share. When unions are weaker, you get a bigger capital share. Also in the way that we organize international economic relations, globalization. When we organize things without any kind of international tax coordination, or to put it differently, if we organize global economic integration by allowing total tax competition—no minimum taxes, no minimum tax rates—then capital owners can threaten to outsource production or to shift profits to low-tax places, and again, it reinforces the power of capital, hence the value of wealth.Krugman: Okay, But going back maybe twenty-five, thirty years ago—and again, I’ve been in the decrying-inequality business for a long time—we were saying, “You know, there’s a huge rise in income inequality, but it hasn’t really shown up in wealth.” And that really started to change. It’s not just that wealth has increased, but as you say, a huge increase in concentration in a few hands. So, what’s your story? I think I know what your story is about what drives this increasing concentration of wealth, but what is the mechanism? What’s it all about?Zucman: I think there have been different factors at play, so it’s not just a one-issue story. The thing that seems important to emphasize from my perspective is the dramatic changes that have happened with taxation, particularly in the US. Many people have forgotten, but the US used to have a sharply progressive tax system where capital was heavily taxed, where high incomes were heavily taxed, where large inheritances were heavily taxed. In fact, it probably used to have the most progressive tax system in the world between the 1930s, the New Deal, and the late 1970s. And then during the 1980s, it went all the way in the opposite direction.And perhaps what’s most striking is what has happened with the income tax. So when Reagan enters the White House in 1981, the top marginal income tax rate in the US is 70%. At the time, it’s the highest top marginal tax rate of all industrialized countries in the world. And then in 1986, you have the big tax reform, the Reagan tax reform, that slashes this top rate to 28%, which at the time was the lowest tax rate among industrialized countries. So it’s a really big change in just five years. And you’ve had that for the income tax, but also for the estate tax. The corporate tax rate used to be 50% after World War II; after the 2018 Trump Tax Cuts and Jobs Act, it’s been reduced to 21%.And so all of these really big changes, all going in the same direction, have had a massive effect on two things. So, first of all, on the incentives for very wealthy people to try to earn super high incomes. When the top marginal income tax rate was close to 100%—more than 90% in the 1940s and 1950s—there was just no incentive to try to earn a ton of money, because you knew that past some point, almost any extra dollar would go to the IRS. So why bother? Why try to bargain a super high compensation as a CEO? It was just pointless. Now when the top marginal income tax rate is 28%, it becomes really profitable to try to earn super high incomes, right? Because you get to keep most of the money for yourself. So there is this incentive effect.And there’s of course the pure mechanical effect, which is that with lower tax rates, you have more disposable income when you’re very rich, that you can save and use to grow your wealth. And that’s why I think those changes to taxation, which have been particularly powerful in the US, have played a very important role in the particularly fast rise of US inequality.Krugman: Now when you talk about incentives, if I were a right-winger, I’d say, “Well, the old system discouraged people from innovating, being job creators, and all that.” And I think that’s not what you mean, right?Zucman: Well, then it becomes an empirical question, right? In principle, it could be true. You could say, “Well, when people face those super high top marginal income tax rates, it discouraged people from innovating, from launching businesses.” But then you look at the data and you realize that in those decades after World War II, GDP growth was higher, in fact, than it’s been since the 1980s. Investment rates were no lower; in fact, they were higher. US capitalism, broadly speaking, seemed to work okay in that period of time. So of course you don’t know the counterfactual. You don’t know what would have happened if the tax rates had been much lower at the top in those decades. But what you can know as a fact is that these quasi-confiscatory rates on high incomes—and we’re talking about rates that apply to only super high incomes of several millions of today’s dollars—just didn’t kill innovation and growth and capitalism. And you have to think about who you are discouraging, what type of behavior you’re discouraging when you tax very high incomes at very high rates.Krugman: Right.Zucman: You could say, okay, perhaps it’s going to discourage innovation, but you know, are scientists or innovators really motivated by the extra income they’re going to be able to make above five million dollars in income? You know, perhaps, perhaps not. You’re also discouraging people who want just to capture rents, who want to create private universities that sell fake diplomas, for instance, or want to exploit patents and squeeze as much money as possible from consumers or patients or sick people, and so on.So there’s always in the economy people who are motivated by innovating, creating knowledge, and broadly speaking undertaking activities that are positive-sum for the economy as a whole. But there’s also people who are motivated by rent extraction, by different activities that are inherently zero-sum or even negative-sum. And suddenly, when you have 90% top marginal income tax rates, you’re discouraging this type of zero-sum rent extraction, which is the plausible reason why this policy was so effective, at least relatively effective, in the postwar decades.Krugman: The classic example from my angle has been that corporate CEOs have always basically set their own salaries. But in 1959, extracting a salary that was 500 times that of your average worker just made everybody mad at you, and you didn’t get to keep much of it anyway. And nowadays you do. So…It looks as if—and certainly from your work and those of us who pick up on it—we have had this process since the late seventies of this concentration, this oligarchy rising in our society, and that taxes have a lot to do with it. So the question is: what are the remedies? I know that we’ll get to wealth taxes in a minute, but we had a workable recipe, which was high corporate taxes, high estate taxes, high top marginal rates. Is there a reason why we can’t just reconstitute that regime, or why we shouldn’t—either as a possibility or desirability?Zucman: I think we could do it and it would make sense, but also, probably, it wouldn’t be enough. First of all, one of the outcomes of the first Gilded Age at the beginning of the twentieth century was the creation of the progressive income tax in 1913 and the progressive estate tax in 1916. So we instituted taxes to prevent or to curb the rise of concentration that was observed at the time and that many people were worried about.Krugman: Right.Zucman: It made a big difference, but also there was, and there’s always been, a kind of fundamental limitation, I think, with this historical experiment, which is that when you’re extremely wealthy—and think about billionaires—it’s, in fact, very easy to own a lot of wealth without having to report any or any significant amount of income. And so it’s, in fact, relatively easy to avoid the income tax. And we kind of knew about that from various anecdotes and case studies.For instance, a few years ago you had revelations by ProPublica on the taxes paid by US billionaires, and you saw people like Jeff Bezos and Elon Musk in some years reporting very little income, paying very little income tax. There’s even one year when Bezos says, “Look, I’m so poor that I’m going to claim the child tax credit,” and he receives the child tax credit! So we kind of knew about these limitations of the income tax, but it’s only relatively recently that we’ve come to understand that this is a structural feature of income taxation in the US and globally—a structural feature that the super-rich have not yet entered into the system. The income tax is just not the right instrument to tax them.And so that’s why, in addition to the income tax, you need some kind of tax based on wealth. Because for the very rich, it’s easy to manipulate income to pretend they have no income. So, for instance, Bezos, as CEO of Amazon, didn’t pay himself a wage, he instructed Amazon not to distribute dividends, he didn’t sell shares, and so he didn’t realize capital gains, and so his taxable income was really low. There’s no tax evasion there; it’s all perfectly legal. But, of course, his ability to pay taxes as one of the world’s richest men is, of course, extremely high. And so that’s why, for people like him, the right tax is based not on income, but on wealth, which is much harder to manipulate than income. And that was partly one of the reasons for having an estate tax, which is a tax on wealth, but it’s not enough because the estate tax is just a one-time tax at the time of death. And so you can be in a situation where the wealthiest people in the country, year after year, pay no or almost no income tax. And it’s only when they die—when the estate tax was still functional—that we tried to make them pay a little bit of tax.That’s the limitation of the US experiment with progressive taxation, which is that it never really tried to make the ultra-wealthy pay personally on an annual basis. And I think that it is this limitation that we need to overcome in the 21st century. And basically, that has to involve some kind of annual taxation based on wealth.Krugman: Let’s talk about corporate taxes first. We used to collect a substantial amount of corporate taxes. There’s a lot of dispute about exactly who pays them, but your position, as I understand it, is that basically they fall on stockholders. Why did we retreat so much on corporate taxes, and could that be reconstituted or should it be?Zucman: So first of all, yes, you’re right that the corporate tax used to be a big source of tax revenue for the US. It peaked in the early 1950s at something like six to seven percent of US GDP in tax revenue, just from the corporate tax. That was with a nominal tax rate for the federal corporate tax that was slightly above 50 percent, but the effective rate was also 50 percent. It meant that out of any dollar of profit made, 50 cents went to the government.Krugman: Right.Zucman: And today we are down to about 1.5% or so of GDP in tax revenue—1.5 to 2%—from the corporate tax. So it’s a big decline. The standard story is that it’s going to reduce corporate investment, which is going to translate into a decline in the capital stock, and then workers are going to be less productive because capital is good, it complements labor, and so eventually it reduces wages, and so it’s bad for ordinary workers. That’s the standard story, which, frankly, doesn’t have a lot of empirical support for it. But why not? As an intellectual story, it makes some sense in principle.The other reason, which has been even more powerful in practice, is international tax competition. It’s the idea that we cannot tax corporations at higher rates because otherwise they move to other countries, and that there is this kind of law of nature: the race to the bottom with corporate taxation is something we just have to accept as a law of nature, like gravity. And that also is wrong, because, of course, it’s not a law of nature. It’s a choice that we make collectively to accept international tax competition, or to fight it and to curb it. So I think what this all means is that, of course, we could revert to higher corporate tax rates. That’s definitely something that the US, or in fact any country, can do.But what I want to say is that, also, it wouldn’t be enough, because the corporate tax is just a flat tax on corporate profits. So someone who owns just one share in Amazon, indirectly is going to pay the same tax rate through the corporate tax as Jeff Bezos, who owns ten percent of Amazon. It’s not progressive, and so that’s why it’s structurally limited.Krugman: Okay. In the abstract, if our concern is great wealth and we’re looking for some way to limit that and also raise some revenue—though I think in many ways the social and political implications are even more central than the revenue—the history shows remarkably little experience with wealth taxes, right? I mean, we don’t have a lot of evidence, and a lot of people say that they’re unworkable, citing what they claim to have been the history of France. So why don’t you talk to me about the history of wealth taxation?Zucman: Yeah, I mean, the US never had an annual progressive wealth tax, at least at the federal level. There’s, in fact, a pretty long history of wealth taxation at the state level in the 19th century, with so-called generalized property taxes that were taxes not just on real estate and land, but also on financial assets, typically at flat rates, so not rising with wealth. There’s a long tradition in the US that’s been largely forgotten.The more relevant history is the European experience with progressive wealth taxation. Many European countries used to have progressive wealth taxes. And I agree that the track record is not good. By and large, they were not big successes. But, of course, there are two ways to look at that experience. You can say, “Well, some countries tried wealth taxes, it didn’t work very well, hence it will never work.” End of story. Or you can try to study this experience and try to understand what were the problems and what lessons can be drawn, and whether the issues can be overcome.And this is what I’ve been doing with many others in my work, and the conclusion I’ve reached is that, yes, they had issues, these European wealth taxes, but the issues can be fixed.The biggest issue is that those wealth taxes didn’t even attempt to try to tax billionaires. Look at France, for instance. France is really a striking illustration. The French wealth tax was created in 1981 when a Socialist president comes into power and he has an absolute majority in parliament, and so he creates a wealth tax. But immediately he says, “Okay, we are going to exempt from the wealth tax people who own more than 25% of the shares of a company.” Okay? So if you’re a big shareholder in a company, no matter whether it’s listed on the stock market or not, if you own a ton of stock, that’s going to be removed from the base of the wealth tax. This will be tax-free. But, you know, the wealth of billionaires is precisely that: it’s owning a lot of shares in a company. So what France did in 1981 was like if the US today created a wealth tax and said, “We’re going to exempt Warren Buffett from the wealth tax, or we’re going to exempt Elon Musk from the wealth tax because they have so many shares in their businesses.”You know, it really makes little sense. And the consequence is that the effective wealth tax rate for French billionaires in 2016, on the eve of the abolition of the wealth tax, was just 0.005% of wealth. They didn’t pay it. And it’s not because they illegally hid assets. No, no, it’s because they were legally exempted from the wealth tax.Krugman: Why did Mitterrand do that? Do you know?Zucman: The way the story is often told is that some of the top billionaires complained and went to see him, and they said, “We’re going to move to Switzerland if you do that.” And so that’s how they got that exemption.But the deeper explanation, I think, is that there was no real commitment on the part of Mitterrand or the Socialist Party to having a tax on billionaire wealth, partly because they thought it would be impossible, that we had to accept international tax competition as a kind of given, that France would be powerless to do anything about that; partly because it was never a big priority for them. They bet on other policies to transform society that didn’t involve progressive taxation, but that involved things like the nationalization of some companies or labor market regulations. But progressive taxation was not part of their ideology, so to speak. They were not very committed to that.And also, I think in the 1980s, you could make the case that the government revenue at stake was just not very important. So it was not worth fighting for this. I think that was their view. And perhaps you could make that argument in the 1980s or 1990s, but today, it’s impossible. Look at what has happened to the curve—the wealth of billionaires has skyrocketed. So now it becomes really important to include them in the base. So that was the main problem: billionaires were legally exempt.The other big problem—and it’s related, of course, to the first one—is that those European countries never tried to do anything to fight the risk of out-migration by the super-rich. They just thought that, “Okay, we are powerless. If they want to leave, what can we do?” And that’s just not true. For instance, in the US, there is citizenship-based taxation, meaning if you are a US national, you have to pay taxes in the US no matter where you live. So you can move to Monaco or Switzerland if you want, but you still have to pay federal taxes.Krugman: Right.Zucman: France or Germany could have done that; they could have done a variation on that idea. But the big blind spot of the social democratic experiment in Western Europe has been, in my view, this inability to confront the forces of international competition, and international tax competition in particular.Krugman: So that’s it. Do you want to enlarge on that? Because I think that’s an interesting point.Zucman: Yeah, these social democratic governments never invested intellectually in trying to organize international economic relations and make those consistent with their ambitions for democratic transformation. Or, to put it differently, the social democratic project was always thought of as a purely domestic endeavor. And when they realized that there was competition from other countries—tax competition in particular—their reaction was not, “What can we do about that? How can we rewrite the rules of global commerce? How can we forge international agreements, or how can we design unilateral policies to protect ourselves from those forces?” Their reaction was not that. Their reaction was, “There’s international competition. We cannot do anything about that. We just have to adapt.” And so we have to embrace the race to the bottom with capital taxation.And that’s how, in fact, it’s socialist governments, or Labour governments in the UK, or the SPD in Germany, that have slashed the corporate tax rate. Scandinavia, too, moved from a comprehensive income tax where capital and labor are taxed the same, to so-called dual income tax systems where capital income is taxed at lower, flat rates than labor income. Always for the same reason: they never tried to think about how to make social democracy compatible with a globally integrated economy.Krugman: That makes sense. Although I think that the EU has a kind of minimum VAT rule, right? So the tax that falls on working people, you cannot make it too low, but the tax that falls on billionaires...Zucman: Yeah, that’s a very good point. The only form of tax harmonization that you have in the EU is on VAT. So when it comes to taxing consumers, the middle class, the poor, all of a sudden we can craft common rules. But when it comes to taxing companies or the rich, what can we do? You know, nothing.Krugman: So if Ireland goes and poaches corporations—although I think it’s mostly US corporations there, but anyway—Ireland can do that, but they can’t offer shoppers bargains. It’s pretty wild.Zucman: Yeah, exactly. That’s a very particular worldview, but that’s been central, in fact, in how European construction has proceeded so far. And I think if you want to rationalize this view, deep down there is the idea that it’s not just that international tax competition is a law of nature, but also that it’s a good thing, frankly. That it’s something we should embrace because those welfare states in Western Europe are too big and they need some kind of external outside pressure to force governments to be more efficient—to starve the beast a little bit. And I think many people, even left-of-center people at one point embraced this idea that we should welcome it—it’s going to make us more efficient. We should welcome international tax competition.And why not? You can make that case, but I think it has two problems. One is that it’s a pretty undemocratic way to decide things. It assumes that voters are going to structurally choose policies that overtax capital or the rich, and hence the need for constitutional constraints or external forces. And, of course, the other problem is that international tax competition, the way that it has unfolded, has fueled the rise of inequality, because the main winners from this are multinational companies and their owners, or people who derive most of their income from capital income, the wealthy, and so on.Krugman: Right. Sort of Reaganite ideas may have actually had a lot of impact even in Europe.Zucman: They did. Even though it was never formulated that explicitly, I think this ideology was very influential, in fact.Krugman: So you’ve been pushing for, in fact, some kind of global accord that basically makes it possible to do more wealth taxation. I’ve been re-reading your G20 paper on all of this. I don’t think this is anything likely to happen anytime soon, but what’s the state of the idea?Zucman: It will happen, but patience.Krugman: Yeah, patience. Well...Zucman: The beginning of all of this was in 2021: there was an agreement among 130 countries for having a minimum tax of 15% on the profits of big multinational companies. And, frankly, very few people had seen that coming, because the prevailing view was, “You know, it’s impossible to get an agreement like that. Small countries like Ireland benefit so much from international tax competition. It’s just utopian.” But it happened in 2021.And then, in 2024, Brazil had the presidency of the G20, and they wanted to put new ideas on the agenda, and they asked me what I thought. And what I told them is: “Look, I think we should do for billionaires what we’ve been able to do for multinational firms. So let’s try to have an agreement on a minimum annual amount of tax owed by billionaires.” They commissioned a report from me, and some progress was made at the G20, but then, of course, Trump was reelected, so nothing can happen at the moment at the G20 level.But what’s really interesting is what is happening at the national and, in fact, subnational level these days. Because right after the Brazilian G20 in 2024, the French National Assembly adopted the minimum tax on billionaire wealth that I had proposed. So it’s a tax of 2% on the wealth of people with more than 100 million dollars or euros in net wealth. And it’s a minimum tax, which means that if you already pay an income tax the equivalent of two percent of your wealth or more, you have nothing more to pay. But if you pay less than that, you have to pay the difference to reach the two percent minimum. So it’s the fairest and the most targeted tax that you can imagine, because it’s just on the ultra-wealthy, but not only that, on those among the ultra-wealthy that avoid taxation today.So France voted for that; it was then blocked by the very conservative Senate. But there is the beginning of an international movement in that direction. You’ve had a bill crafted under French legislation that’s been introduced in Belgium, perhaps soon in the Netherlands, and in Spain. At the moment in the UK, they’re talking a lot about that with the new Prime Minister, Andy Burnham.And then, of course, most important in my view, is what is happening in California with Prop 40, the California billionaire tax, which is going to be on the ballot in November. This would be a one-time tax of five percent on the wealth of California’s billionaires. Frankly, it’s very important for California, for funding healthcare, Medicaid in particular. But it’s even more important for the US and, in fact, for the world as a whole. Because if California passes the California billionaire tax in November, I think this will really be the beginning of the US and international movement to tax the wealth of the super-rich.Paul Krugman: Okay. And this is a one-time tax, and it’s retroactive, right? It’s based on your wealth last year.Zucman: Yeah, exactly. So it has several characteristics. It’s one-time and not annual. And it’s only for billionaires, not for you and me. It’s on billionaires, and it’s on those billionaires who were residents of California as of January 1st of 2026. So it’s too late to avoid the tax, meaning if you were living in California at the beginning of this year, you would still have to pay the tax. So in that sense, there’s a small retroactivity here. And these two characteristics combined—the fact that it’s one-time and based on being a resident as of January 1st of 2026—mean that it’s nearly impossible for any billionaire to avoid the tax by moving to another state. So it also means that if it passes, it’s bound to generate a lot of tax revenue.The arithmetic is quite simple. The billionaires of California have about two trillion dollars in wealth. So if you tax them at five percent, you get a hundred billion in tax revenue. Another kind of illustration of how big the billionaire wealth tax base has become, which I think is quite striking, is the following: if you look at all the income of Californian people as reported in their tax returns—you know, AGI, adjusted gross income for California as a whole—it is the same number as the wealth of California’s billionaires, 250 people. So, their wealth is 100% of California’s AGI. Meaning, if you have a five percent tax on the wealth of billionaires, it generates as much revenue as a five percent tax on the income of all people in California. So that’s just a very striking illustration of what we were discussing earlier, which is just how massive the wealth of the billionaires has become and hence its implications for public finance.Krugman: Yeah, one of the things in California is it does have high personal income and high personal wealth, but that’s a few hundred people. They really skew the numbers. And so, how’s it going? I mean, it’s a little bit disappointing to see all of the “don’t be evil” guys from Google and all of that scrambling to protect themselves from taxes. But how are you feeling about the proposition?Zucman: Well, I’m not surprised by that, right? They have good reasons to hate this, because this is the one tax that they would have to pay. You have to realize that they pay very little today. The billionaires in California pay in income tax the equivalent of just 0.2% of their wealth. So, you know, moving from 0.2% to 5%, even if it’s one-time, it’s a big difference for them, even though their wealth has increased like 200% over the last two years. So from that perspective, it’s a drop in the ocean.But I think the polling is good. It’s going to be a battle just because the billionaires are spending tens of millions, hundreds of millions already, to stoke fears and try to defeat the proposition on the ballot. But I think the logic, frankly, is so compelling, and also billionaires are not very popular at the moment in California, like everywhere else, so I think it has a good chance to pass.But what I want to say is that, first of all, it’s important for California because there’s a big shortfall of federal funding for healthcare as a result of the One Big Beautiful Bill Act. And so California needs to find broadly a hundred billion in revenues to just preserve Medicaid. So that was the main reason for having this on the ballot in the first place. And so if it doesn’t pass, you’re going to see the number of uninsured people rise a lot in California. Under business as usual, it’s going to increase from six percent to ten percent. So that’s why it’s important.But more fundamentally, in my view, it’s important because it’s the one concrete measure that can begin to make a difference to oligarchic wealth and power.And don’t get me wrong, five percent one-time is not enough, but this is what’s going to pave the way, I think, for eventually some kind of federal wealth tax and federal annual wealth tax. And the reason why there’s good reason to view it like that is because this is what happened for the income tax at the beginning of the 20th century, which was first implemented by a number of states, like Wisconsin in 1911, before becoming federal policy in 1913. So that’s why it’s really important. And I can tell you that the whole world is watching California. I think people in France are like, “This is amazing! Go California, tax the billionaires!” And this is going to be a blueprint for what we’ll do in France, in the rest of Europe, and frankly, globally.Krugman: States as laboratories of anti-oligarchy. Let’s hope for the best. Thanks a lot, and onward with the project. Take care.Zucman: Thank you so much, Paul. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

July 22, 2026

Oligarchy and the Media

TranscriptGood news. The second richest man in America might be prevented from taking over CNN. That's the good news. The bad news is, aside from thefact that he probably will manage to pull it off anyway, the bad news is that that would be only a small piece of the ongoing takeover of U.S. media by oligarchs. And in turn, the media takeover is just part of the extraordinary exercise of power by the extraordinarily wealthy small number of men who have been wreaking so much havoc with America as we know it. Hi, I'm Paul Krugman. Doing a video today, because I didn't feel like doing a usual chart-heavy, analytics-heavy post, but very much on a topic I have been writing about and will continue to write about, which is the rise of oligarchy in America. Now, I know some people balk at that. But we're not talking about some kind of hidden conspiracy. We're not talking about the Protocols of the Elders of PayPal. We are talking instead about stuff that's largely out in the open, though not fully understood, which is the way that an incredibly wealthy small group of men, mostly men, is able to commandeer a lot of the political life of a country that is still nominally a democracy. And that's a fundamental story for our time, maybe the fundamental story. How does that takeover work? Well, there is what I think of as the middle level, which is the place where it's most easily quantified, tends to get most of the attention, which is campaign finance. American campaigns are very money intensive and have become more money intensive because we've opened the floodgates with Citizens United. And a lot of that money comes from a very small number of incredibly wealthy people. According to the New York Times analysis, about 20% of all campaign contributions in 2024 came from 300 billionaires and their families. That's a pretty big impact. A country of more than 300 million people, and 300 billionaires are a fifth of campaign finance, and surely more strategic, more targeted than the average donor. So that's really a very, very large role just in that direct sense of who pays for campaigns. But that's not the only level. There is a lower level, lower in the sense of morally lower, I guess, which is just plain buying politicians, buying policies, paying for the policies you want with cash or crypto on the barrel. There has always been some of that in our system, but it was normally discreet, indirect, deniable, the revolving door. It was the case even more than 20 years ago that when the Bush administration pushed through a Medicare bill that was very favorable to pharmaceutical interests, that the then chairman of the House Ways and Means Committee, who basically engineered and steered the bill through Congress, then promptly retired and became the chief lobbyist for the pharma lobby. So this kind of thing has been going on for a very long time. But now it's just blatant, out in the open, and the sums are massive. We just have literally billions of dollars thrown at the president and his family. No doubt large sums to other government officials, large sums to at least some members of Congress. So just plain buying the policies you want — and it’s not just that a large share of wealth is held by a small number of people, but that those are the people who are best positioned to really deploy their wealth to corrupt the system. There's also something, I guess you can call it a higher level, which is what military strategists call shaping the information space, which occurs at a couple of levels. One of them is the promotion of ideas and ideology that serve the interests of the very wealthy. You see that on many issues. You certainly see it very much on economic policy. If you ask, why do people still go out there saying that tax cuts pay for themselves and that tax cuts on the rich are an enormously powerful tool for stimulating economic growth? That's been tested to destruction, and it just ain't so. But it's a zombie idea. It keeps shambling along, eating people's brains, even though it should be dead. And the reason is, well, there's a lot of money in it. If you Google something I've written on, more often than not, when I do that, the top sponsored post at the top of the search page is an attack on me sponsored by some right-wing organization. And if you ask who supports those right-wing organizations, well, guess who. And it’s equally or worse the case in climate science. Scientific journals have been pretty good at not publishing climate disinformation. But when they do publish things that are somehow skeptical, or usually not outright denial, but attempting to sow discord about climate change, what percentage of those studies have received financial backing from fossil fuel interests? The answer is 100. It's all about the money. So this is, again, this is not new. Upton Sinclair: “It's difficult to get a man to understand something when his salary depends on his not understanding it.” So that has always been the case. But now we have something which is really, really important and is another level of this, which is the takeover of the media. So, okay. Ellison, or the Ellison family —because nominally this is Ellison's son in charge of Paramount — has already acquired CBS and has hired Bari Weiss to basically corrupt and destroy that network. If the deal for takeover of Warner proceeds, then CNN will get the same treatment. I'm finding CNN a very good news source, just braver at taking on what's really happening than my old employer, the New York Times, which is a great news organization and may be more necessary than ever, but tends to be cautious — and CNN is a little bit less cautious. But anyway, if he gets away with it, then CNN as we know it will almost disappear. It will almost turn into Fox News. Now, that won't be a profitable venture. There's already a Fox News, and so creating another one is not going to actually produce a lot of profits, if any, but that's not the objective. This is buying influence. Elon Musk, of course, took over the app formerly known as Twitter. Which was already becoming a more difficult place even before its takeover. I used to have, I guess, I think I had 4 million followers there. But it was impossible. I had to shut off comments because of the cesspool that Twitter had become. But now it is really by design. It is heavily tilted. That can be quantified. The algorithm really tilts it towards right-wing stuff, promotes really rabid racist views. And unfortunately, the network effects, the centrality that Twitter used to have, still keeps a lot of people on X, where they are influenced: people's views change. And also something that I don't know how to quantify, but it's very obvious if you follow and pay attention to people's positions, is that people who spend a lot of time on Twitter, elites who spend a lot of time on Twitter, start to think that the views they hear there are representative of where the country is — which they are not. But it does, in fact, tilt policy, tilt understanding to the right. The third richest man in America is Mark Zuckerberg, who made his billions from Facebook. Facebook is old-fashioned: I don't know anybody who uses Facebook. But I know that lots of people do. And it's still a very important information source and has, again, been tilted. On most of these media things, it's not as blatant as what Musk is doing at X. But it still has a big influence in changing the tone of the discussion and biasing the discussion towards positions that favor the interests of billionaires as well as favoring their prejudices if they happen to be, like Musk, authoritarian white supremacists. Okay. And the fourth richest man in America is Jeff Bezos, who purchased the WashingtonPost. I think he purchased the Post initially out of a belief that he was going to enhance his prestige. It certainly looked in his initial tenure as if this was actually more of a vanity purchase than a political purchase. But a billionaire is going to billionaire. And so he eventually shifted the Washington Post's editorial policy hard right, eviscerated the news division. There are still some brave, plucky reporters doing good reporting there, but it's a shadow of what it used to be. And of course, it's not at all the institution of Katherine Graham and Ben Bradlee, not anymore. So that's another challenge. What do you do about this? Obviously, one does what one can to try to limit this takeover of the information environment. And so we have the suit brought against the attempted purchase of Warner, hence CNN, by Paramount, hence Ellison. And that might succeed. You might think, well, if it's delayed, then what are the chances of actually ruling it out? Except that apparently there's a bit of a financial clock ticking for Ellison, who really has extended himself pretty far. So that's possibly going to block it, and that's good. It would have been great if someone had found a way to keep Musk from destroying Twitter. So you can look for solutions to immediate threats. But you're not going to hit all of these balls. And so the constant pressure towards a takeover of the news media, constant pressure towards a takeover of the general information environment by a handful of billionaires, is not going to go away. The constant threat or reality of corruption of the government by billionaires is not going to go away. Maybe once Trump is gone, it'll become less blatant, but it won't go away just because someone more discreet takes office. Even if we have an honest president, which in the current environment, I'm sorry, does mean a Democrat, but even if we have an honorable president, the corruption of the system will still be a continual threat because of all the money flowing around. So in the end, the only way out of this, the only reasonably durable solution is to not have so much wealth at the top. If you don't like what's happening to our institutions, if you don't like what's happening to the media, if you don't like the corruption of government, if you don't like the overwhelming of campaigns by big money with nefarious ends, the only lasting solution is to reduce the amount of wealth at the top. Woodrow Wilson: “If there are men big enough to own the government, they're going to own the government.” If we're going to have that much money in the hands of a few hundred people, and in the case of the real top of it, just 15 or 20 people, then you're not going to be able to maintain a truly democratic system of government. Oligarchy is not the only thing wrong with America. It's not the root of all evil. But it's the root of a lot of evil. And until we bring that concentration of wealth at the top down, we're going to be fighting a constant rearguard action trying to save some of what America is supposed to be about. Have a nice day. Get full access to Paul Krugman at <a href="https://paulkrugman.substack.com/subscribe?utm_medium=podcast&utm_campaign=CTA_4">paulkrugman.substack.com/subscribe</a>

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