America Has A Serious, Cancer-Like Disease:

But We Have Cures, If Only We'll Use Them

As a survivor of two different types of cancer, I am deeply familiar with incessant worry about what the future will bring.

Diagnosed at the same time, one of my cancers was treated with surgery, and the other through targeted chemotherapy. Today, eight years later, I am in remission from both, but I’m still tested every six months, and I still feel an almost constant undercurrent of anxiety that one day, testing will indicate cancer cells have re-emerged. As any cancer patient will tell you, one of the most difficult aspects of contending with cancer is the feeling of helplessness that seizes you. My body had been invaded by aggressive living cells committed to my demise. Doctors’ reassuring words never landed in the early phase of the treatment, and even after years with no indication of resurgence, I was gripped by paralyzing fear before each set of blood tests. The mental anguish was more difficult than the physical pain of treatment, and much more debilitating, sapping me of energy and of a determined optimism that has guided me in life. Even now. I find my mind getting the better of me, at any moment suddenly overtaken with dread, haunted by the question, will it come back?

I think many Americans today are suffering from their own unremitting anxiety; caused by the economic strain they are under. That strain is due not to any natural processes of our capitalist system, but to the unnatural disease of the ever-widening gap in the country between the rising fortunes of the more prosperous and the stagnating, or declining, fortunes of the vast majority.

So many Americans cannot go to sleep at night feeling confident that they and their loved ones will be okay. That they’ll be able to put good food on the table, to send their children to a safe, high-quality day care; that they will be able to keep paying their rent or mortgage, and to afford medical insurance, or pay atrociously high deductibles if they do have insurance. They’re haunted by the worry that they’ll be among the legions suddenly, unceremoniously cast out from their jobs, or for the latest college graduates, that they won’t be able to find anything like the kind of job they’ve aspired to. Inflation relentlessly eats away at their buying power, even as their wages fail to keep up, or actually decrease in real dollar value. This is true not only for those in at the low end of the earnings spectrum, but even for most of those in the middle and upper-middle tiers. In fact, for some 70% of our fellow Americans.

Yet, despite the glaring reality of the pain they are suffering, they are fed self-serving boosterism by our political leaders, touting an American economy that’s supposedly never been stronger. We heard this in 2024, when Joe Biden declared the U.S. economy was the envy of the world. What was he talking about, so many Americans wondered. He has no clue what our lives are like. So when Donald Trump intoned, “I feel your pain, I know how badly you suffer. I can and will fix your problem,” so many voters who disliked much else that Trump said, and how he behaved, hoped for the best and returned him to the White House, sweeping in Republican majorities in both houses of Congress as well. This is what a sense of helplessness can lead to; the hope for miracles. Just as so many spend money for lottery tickets they can’t really afford, so too do so many cast their votes for politicians whose promises they want to believe.

And so here we are, once again being told by our president that the American economy is booming, when, in fact, it couldn’t be clearer that this administration has utterly failed in its promises to improve the economic plight of most Americans. Slapping tariffs on long-standing allies with abandon turns out to inflict a hefty tax on the American people through higher prices. Meanwhile, manufacturing jobs those tariffs were supposed to bring home have in fact further dwindled. Tyrannically threatening to seize control of Greenland and going to war with Iran will not alleviate the crushing weight of rising rents and medical costs. Sending brutalizing, masked agents into our cities, directing the Department of Justice to launch revenge investigations into political opponents, and constantly reiterating utterly bogus claims of massive voter fraud are only further despoiling our democracy. They in no way address the true root cause of our national malady of ever-increasing inequality.

Analyses definitively show that the administration’s policies have, in fact, further widened the wealth gap. In the year just passed, the concentration of wealth at the top reached a new record, with the top 1% of households accounting for 31.7% of all wealth, the highest proportion since the Federal Reserve began measuring household wealth in 1989. Analysis by the New York Fed found that contrary to President Trump’s claims that the bulk of the tariffs have been paid by foreign countries, 94% of the tariffs in the first eight months of 2025 were paid by American consumers. The bi-partisan Joint Economic Committee of Congress found that the cost came to an average per family of over $1,700 from February 2025 to January 2026. Tax cuts in the Big So-Called Beautiful Bill will send $1 trillion to the wealthiest 10% even as the bill cuts $1.1 trillion from the SNAP food assistance program, Medicaid, and other social support programs. We are going in precisely the wrong direction.

Pundits have recently been spotlighting the problem of what’s being called the K-shaped economy, with the upper arm of the K moving ever higher and the lower arm steadily descending. I have referred to this same problem as that of the Two Americas; the 70% for whom living conditions have been steadily eroding, and the 30% who have enjoyed improved prosperity. While I applaud the attention to the growing divide, I am also frustrated by the lack of coverage of the causes of the disease.

ROBBING THE PEOPLE TO PAY SHAREHOLDERS

One major oversight is failing to highlight to the American public the shocking recent finding by researchers at the Rand Corporation, which I previously wrote about, that since 1980, over $79 trillion has been transferred from working Americans in the bottom 90% of income and wealth to Americans in the top 10% of earnings and wealth. More specifically, the $79 trillion is the amount of money that would have been paid to those workers in the 90% if companies had continued to increase their pay in the same way they had in the 40-year period from the end of World War II up to 1980.

In those years, average worker pay increased in step with the steady increase in productivity, and percentage of increase was about the same across the board, from lower to higher earners. This model of capitalism, in which the rewards of business growth are broadly distributed – known as multi-stakeholder capitalism -- produced the greatest growth in prosperity in the country’s history, truly transforming the U.S. into the envy of the world economy. This version of capitalism optimized the interests of four groups of stakeholders of companies: customers, shareholders, workers, and communities. After 1980, a new version of capitalism arose, in which the interests of shareholders are considered primary, and the sole purpose of a public company is to maximize to shareholders. As a result, pay for the vast majority of workers no longer rose in step with productivity, and in fact declined in real terms in some years, while earnings for the upper tier increased at a higher rate, and for CEOs, positively skyrocketed, by a staggering 1,085%. The failure of so much coverage of the K-shaped economy is not digging into why this came to pass. Here I will dive a little more deeply than I have before into how the transfer was orchestrated.

The vital question is whether the shift from the brilliantly successful era from 1945 to 1980 to the era of worker income stagnation was the inevitable consequence of capitalism or was due to the deliberate actions of business leadership and government officials, which involved planned policy changes. The facts point to a clear, deliberate campaign to deflate worker compensation, while increasing CEOs’ compensation, and vastly driving up shareholder returns.

To a large degree this campaign was a backlash to Franklin Roosevelt’s New Deal of the 1930’s. Many business leaders objected to what they saw as excessive government involvement in economic and business matters, and especially in support of workers’ rights and economic empowerment. They didn’t appreciate the wisdom behind the 40-year bonanza that produced enormous gains for shareholders as well as for workers, and for society overall. Many considered labor as a huge cost, failing to understand that workers are the key factor in a company’s productivity. Productivity was then, and is now, the ultimate driver of business success, and paying workers in keeping with their contributions to productivity, as was done in the 40 years of greatest prosperity, motivates powerful productivity gains.

The travesty was that an ideological, far right-wing coalition of politicians, academic economists and business leaders prevailed during the Reagan Administration in justifying policies and business practices that drove down the largest cost on most companies’ P&L —the cost of labor –- in order to enrich shareholders and executives.

Providing the argumentation for the wealth transfer was University of Chicago economist Milton Friedman, who promoted the contention, which came to be known as the doctrine of shareholder primacy, that the only appropriate role of business is to maximize shareholder returns. He drew on no economic analysis and no legal foundation in making the claim; it was purely an assertion, initially put forth in an opinion piece published in the New York Times. As powerful business leaders, and lawyers serving their interests, seized on the argument, the mantra of business became “maximize short-term shareholder value.”

The foundational premise of Friedman’s argument was, in fact, utterly spurious. He asserted that shareholders are the owners of a public company, and for this reason the overriding duty of a company executive is “serving as an agent of the stockholders.” Given that the interest of stockholders is that executives work to increase the value of their shares, the argument goes, this must be the core mission of executives. But shareholders are not the owners of a public company. They own shares of the profits of a company, but they do not own the company’s assets. They expressly give up ownership in exchange for indemnity from any liability a company may incur in the course of operations.

Fundamentally flawed as the argument was, it provided cover for a concerted, and successful, effort to diminish worker bargaining power. In this, the Reagan administration struck a pivotal blow when it broke a strike of the Air Traffic Controller’s union in 1981, in which workers were demanding higher wages and better working conditions. Thereafter, business leaders, with support from the Reagan administration, proceeded to break more strikes, eroding the power of unions and enabling businesses to forgo wage increases, keeping them at or below the level of inflation, and to funnel proceeds to shareholders that would otherwise have been paid to workers.

One way in which funds were transferred to shareholders was through excessive dividends, which also provided shelter from taxation with a lower tax rate than for earned income. Another means of transfer, which was also a tax avoidance scheme, was share buybacks. They had been made illegal by the Securities and Exchange Commission in 1933, because they were deemed a form of market manipulation, artificially driving up the price of shares by reducing their supply. But in 1982, with the backing of Reagan and his coalition of ultra-conservative business leaders, the SEC reversed the 1933 decision, making buybacks legal again, and they boomed. The volume of buybacks has risen dramatically since, and has surged in just the last few years.

WHERE DO WE GO FROM HERE?

As I’ve written previously, I have been exploring solutions to this seemingly intractable state of affairs. It is not intractable. We can fix the problem. We do have solutions and plenty of proof with which to make the case for them. I will write further about solutions in future posts. Here I will focus on two.

First, fundamental to building momentum for all solutions, is the realization that the disease of inequality has these specific causes I’ve pointed to, which can be targeted. We can correct these injustices with the same kind of strategic push that led to the adoption of the policies and practices that must be overturned. The shareholder primacy doctrine can, and must, be soundly repudiated. Absolutely vital in doing so is turning the tide back toward the embrace by the majority of business leaders of the multistakeholder model of the post-war boom. That may seem a quixotic quest. But strong evidence has been produced with which to persuade business leaders that it’s in their best interest, and crucially, in the best interest of their shareholders as well.

For example, work by MIT economist Zeynep Ton, founder of the Good Jobs Institute, has demonstrated staggering costs to companies due to paying low wages, including extremely high turnover rates. She writes, “In low-wage settings including senior living, call centers, warehouses, retail stores, and restaurants, we have seen some companies replacing their entire frontline workforce annually, with more than 100% employee turnover.” Yet she reports that when she interviewed many of the executives of those companies they were unaware of that stunning cost to their bottom line.

Zeynep has also studied a group of companies that have boosted their performance by raising wages and implementing what she calls a high-productivity system. “Rather than seeing employees as a cost to be minimized,” she writes, “companies like Costco and H-E-B view them as human beings who can drive profitability and growth.” They not only pay their people well over market rates, she reports, “they design a system that increases productivity…a system of excellence where workers are treated with dignity and respect, customers enjoy lower prices and better service, and shareholders are rewarded with strong returns.” Let me say to any business leaders reading this: How much superior is increasing your share price by boosting the well-being of your employees than by engaging in financial machinations that cheat them?

A good number of other leading corporations in the world today have succeeded in remarkable fashion by adopting a multistakeholder business model. They’ve done so with little fanfare, as their goal has not been acclaim, but rather, strong results. They have understood that highly motivated workers drive increases in productivity and they have rewarded employees with a significant share of the profits from productivity improvement, not only through higher wages, but with rewards of restricted stock. Delta, JP Morgan Chase, Microsoft, Home Depot, and Google are among them. Even some private equity firms practice versions of enlightened multistakeholder capitalism, most prominently among them, the powerhouses of Kohlberg Kravis and Roberts and Hellman and Friedman.

Second, to prevail in the effort, government and business must partner. Government administrations cannot win the fight against inequality on their own. While government support programs are vital lifelines, they cannot treat the root of the problem. Only business leadership working together with government can get to the heart of the problem. Working together, they can craft solutions that will both fuel business growth—real growth, achieved through increased productivity—while also boosting the wellbeing of the 70% of Americans who have been shafted, and handsomely rewarding shareholders as well. Business must acknowledge the great power, and latitude, it has to institute constructive solutions.

CONCLUSION

I will close with the words of a giant among corporate lawyers, Marty Lipton, who is one of the nation’s preeminent specialists on, and critics of, the shareholder primacy doctrine. “No corporation can function unless government is providing infrastructure, rule of law, a currency, and safety net that solves the problem of dislocations in the economy. And because corporations exist as part of and are dependent on society, they must take into account all of the interests of society in order to thrive. They can’t succeed only on the basis of maximizing profits for one set of stakeholders.”