Superyachts, Row Boats, and Rising Tides
Why relative economic inequality absolutely matters.
You pull the oars into your chest, and lean back, feeling your rowboat glide across the surface of the bay. Never have you seen the tide this high before. Gone are the days when you would have to trudge through the muck to pull your little boat into the currents. Now there are so many boats and ships of all sizes that you must row far away from shore to find this quiet spot, a place to recline back and enjoy the waves, maybe even doze off for an afternoon nap. But today the water is choppy and only growing choppier. You turn your head and look out to the open sea. In the distance, something that almost looks like a tall building splits the skyline. You try to settle back down into a reclined position, but the waves nearly knock you off your seat. You look over your shoulder again and the hulking structure is much closer. It’s a superyacht, headed for shore, and you are directly in its path. You grip your oars tightly, desperately trying to escape. But the wake of the yacht is too powerful. It knocks you off your seat, sending splashes of sea water up over the sides and into the inner hull of the boat. You hear wood creaking and cracking. Your boat is useless, disintegrating. The horn of the superyacht blares - it’s getting closer and closer. You now have no choice. You throw yourself overboard, swim as fast as you can, looking back just in time to see the bow of the superyacht shatter your rowboat. Tossed about in the wake, you clutch tightly to your life vest, grasping for broken planks, praying someone on the superyacht will have seen you, taken pity on you, and report your coordinates to the coast guard.
A rising tide lifts all boats! This handy aphorism is a favorite of economists and policy experts who advocate prioritizing economic growth over addressing economic inequality. If the economy is growing and the tide is rising, all boats are better off, whether it is a tiny rowboat or a superyacht that costs over half a billion dollars to construct. While the phrase gained popularity when John F. Kennedy used it during the unveiling of a dam in Arkansas, “a rising tide lifts all boats” was soon co-opted by free market fundamentalists who promoted economic growth as a panacea for society’s problems, even if growth resulted in an ever widening wealth gap between rich and poor. It became a favorite expression of both Ronald Reagan and Bill Clinton’s Treasury Secretary Robert Rubin. For decades both Republicans and Democrats kept their eyes on the tide with little concern for the divergence in size and opulence of the boats owned by the average American compared to the ultra rich.
While the political and academic elites may be reassured by their belief that “a rising tide lifts all boats” the average American does not find the platitude so comforting. An enduring puzzle for economists is explaining the nagging reality that relative inequality creates dissatisfaction in the average citizen, even if they have seen material improvements in their own financial position. For conservative Republicans, like Foundation for Economic Education founder Henry Hazlitt, dissatisfaction with relative wealth inequality and the impulse for redistribution is nothing more than the political manifestation of the deadly sin of envy. Yet over the past four years, centrist Democrats have increasingly voiced their frustration about wealth inequality darkening the public’s view of an otherwise strong economy. While Republican conservatives attributed this dissatisfaction to a moral failing, for liberal policy wonks the inability to appreciate the Biden economy was a symptom of intellectual failing. Commentators like Kay Scanlon, Noah Smith, and Will Stancil all to certain degrees attributed dissatisfaction with the Biden economy to a “vibecession,” an irrational lack of appreciation for a post-Covid economic miracle, an unthinking negativity driven supposedly by vibes created by both social and traditional media. Surveying the economic wreckage inflicted by less than two months of Donald Trump being in office, it is tempting for the educated liberal class to curse the average American for their ungratefulness. True, billionaires may have doubled their wealth in five years while real median household income has barely recovered to its 2019 level, but real wages were on the rise, the stock market was booming and inflation was under control before Trump waltzed back into the Oval Office and lit a match to our economy. The easy and most self-satisfying route for an intellectual to explain this dissatisfaction is to write off the average American as stupid rather than grapple with the fact that relative economic inequality may have been a specter haunting the Biden economy even when other measurables painted a rosy picture.
The “rising tide” crowd who would have us disregard economic inequality and focus on growth neglect an even more basic cliche: money is power. For the average American this is the power to acquire things to improve our material lives: the power to purchase a new car, replace a furnace, help out the kids with college tuition. According to the Federal Reserve, over the past 40 years, real income adjusted for inflation has increased from roughly $60,000 to $80,000. The median household in 2025 has more power to buy things than the median household in 1985. Whether the Fed’s inflation adjustments adequately account for even more dramatic increases in the cost of housing, healthcare, and higher education over the same period is a more technical question that we cannot address here. But for the sake of argument let’s just assume that the median American family has an extra $20,000 a year to spend on the things they want compared to 1985. That’s a 33% boost in the median family’s economic standing over 40 years. Why should they care if the richest man in America during Trump’s 2025 inauguration was 50 times wealthier (even adjusted for inflation) than the richest man in America during Reagan’s 1981 inauguration? Why should it matter that the ultra rich saw a 5000% gain if the average American’s economic circumstances improved by a humble but not insignificant 33%? Isn’t it just envy or vibecession delusion causing these disgruntled Americans to look past their gains in absolute personal wealth out of dissatisfaction with falling even further behind the ultra rich in terms of relative wealth?
While money is power for average Americans to buy a nice gift, go out to dinner or pay down rent, for the ultra rich money is power in a much more pure and literal sense. Past a certain threshold (well short of $1 billion) the ultra rich have bought all the posh gifts, all the fancy dinners, and all the nice houses money can buy. Every extra incremental dollar they earn shifts from giving them power over things to power over people. They buy politicians through campaign donations, Super PACs, and lobbying campaigns. They buy immunity from the law by hiring armies of lawyers to bury their enemies in litigation fees. They buy influence over the public by purchasing newspapers, dominating social media platforms, creating think tanks, funding nonprofits, and endowing universities. They buy adulation and insulation from the common folk by hiring legions of sycophants and assistants, the flunkies and goons that David Graeber describes in his book Bullshit Jobs. Buying people rather than things, for the Billionaire Class the power of money comes to resemble the power wielded by monarchs and heads of state more than the average person’s use of money to buy a new lawnmower or dinner at Chili’s.
Bearing in mind that money can be power in a very real sense, relative inequality looks to the average American like relative impotence against an increasingly untouchable elite. An extra $20,000 a year means little if you are vulnerable to the whims of a masterclass who have bought unprecedented control over the courts, Congress, and the White House. That $20,000 will be of little help if your newborn twins need care and your insurance denies payment of a $1,000,000 bill for a month long stay in the NICU. An extra $20,000 will barely dent the impact of a developer trying to charge an additional $200,000 on your dream house that they have delayed constructing for two years. Will an extra $20,000 make up for your entire town’s water supply being contaminated by fracking when the industry has bought off both the Democrats and Republicans to look the other way? Rather than envy or vibecession self-deception, average Americans understand what the economists and policy wonks cannot see from their ivory towers: extreme wealth inequality creates extreme vulnerability to predation by the corporate elite, which creates a profound sense of economic instability for all but the most affluent.
On a macro level, this extreme instability and vulnerability is made vividly clear by the economic damage unleashed by two billionaires, Elon Musk and Donald Trump, over the past two months. Trillions of dollars in shareholder value have vaporized from stock and crypto markets since Trump started enacting erratic tariff policies and Musk began hacking into the payment systems of the federal government. Trump and Musk have inflicted so much damage that now even Republicans have come around to the idea that the stock market is not the real economy. To the true believer, these losses can be read as a sign that Musk and Trump are MAGA martyrs, willing to see their own fortunes tumble to fight the scourge of the administrative state. But for Trump, any personal loss from a falling stock market is dwarfed by the benefit of being able to stay out of jail as a convicted felon and exact revenge against his political adversaries. For Musk, even though Tesla stock has crashed over 50% since Inauguration Day, he knows these temporary paper losses mean little compared to the unprecedented opportunity to inflict permanent damage against the taxing and regulatory power of our federal government. Unlike a 64 year-old worker watching their 401(k) dive just before retirement or the recently fired federal employee who has to liquidate her stock positions to pay the bills, Musk will still have more money than he could ever possibly spend even if the Dow Jones and Nasdaq collapse into bear territory.
This kind of reckless abandon toward economic consequences is only possible for those whose wealth has reached such stratospheric heights that they are completely out of touch with the financial concerns of the average citizen. Extreme wealth inequality often precedes extreme wealth destruction. The last time wealth was so concentrated at the top was in the early 20th century, just before the nobility and industrialists of the Old World let their petty rivalries and egotism lead to world war, unleashing three decades of the greatest human losses and financial destruction ever witnessed in history. In their effort to dismantle the post-World War II state and usher in a new Gilded Age, Trump and Musk are giving America a crash course in the dangers posed to all citizens by an economy where too much wealth is concentrated in too few hands.
Like the humble boatman whose vessel was destroyed by the superyacht at the beginning of this essay, many Americans are already finding their financial lifeboats shattered, leaving them with no better option than to cling to the wreckage in hope of rescue. If the negative GDP predictions by the Fed are correct, we may soon have to deal with the tide receding rather than rising, leaving millions more run aground by financial ruin. Considering wealth inequality only increased more rapidly after the 2008 Financial Crisis, the superyachts will likely be fine even if the tide recedes, setting sail for calmer waters until the tide rises again. But for the rest of us, we should affirm that there are valid reasons for Americans to feel uneasy about relative wealth inequality. Those who attribute dissatisfaction with an unequal economy to envy or vibecession delusion have little understanding of how hard it is to stay afloat even when the tide is rising, especially if you find yourself directly in the path of a superyacht. If and when we recover from the economic damage wrought by Trump and Musk, we cannot let our nostalgia for the Biden economy deceive us into thinking that extreme economic inequality is a reality we must accept in exchange for prosperity. Instead we should rebuild our society based on the bitter lessons learned by those who survived both world wars: extreme economic inequality is a mortal threat to prosperity itself.
Powerful and poignant, as always. Great essay, Jon.