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5 min readThe Quiet Power of America's "Middlegarchs"
Billionaires like Elon Musk and Jeff Bezos dominate headlines, but economist Eric Swick at the University of Chicago Booth School of Business argues we've been looking at the wrong wealthy people. "The oligarchs, we're giving them too much credit for controlling things," he says. "And we're not giving enough credit to the middlegarchs." Swick has spent over a decade studying a group he calls the "stealthy wealthy" or "everywhere millionaires"—roughly three million multi-millionaires across America who collectively hold more than 13 times the wealth of the Forbes 400 richest billionaires. Unlike the superstar billionaires concentrated in tech and finance hubs, these millionaires are scattered on main streets everywhere, running businesses that look nothing like Silicon Valley.
The Tax Ninjas and Their Discovery
In 2014, Swick and two fellow economists—Owen Zidar and Danny Yagan—were fresh out of their PhDs, working in the basement of the U.S. Treasury on a massive data project. They called themselves "the tax ninjas." Their assignment: figure out what private business owners were paying in taxes. The IRS data was a labyrinth of disconnected databases, but the ninjas painstakingly linked millions of private businesses to their owners. What they found upended the prevailing narrative about wealth in America.
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What you'll learn
- 1 (00:00) **Introducing the Stealthy Wealthy** - The hosts set up the episode's central idea: billionaires get all the attention, but there's a much bigger, more powerful group of multi-millionaires who fly under the radar.
- 2 (02:58) **The Quiet Revolution: Pass-Through Businesses** - The rise of the middlegarchs is tied to a specific type of private business called a "pass-through," which now generates more income than all traditional corporations.
- 3 (05:16) **The Big Blind Spot: Who Are the 1%?** - Before the "tax ninjas," economists had no data on which industries or people were driving the rise of the top 1%.
- 4 (07:36) **The Tax Ninjas' Discovery** - The economists (calling themselves the "tax ninjas") painstakingly linked messy IRS data and found that over half of the growth in the top 1% came from pass-through business owners.
- 5 (11:24) **The Faces of the Everywhere Millionaire** - The hosts profile real people from the data, starting with Nancy Mueller, who made her fortune selling frozen mini quiches, and Karen Bellavich, who became a millionaire from indoor tanning.
- 6 (14:03) **The 1986 Tax Reform: The Birth of Pass-Through America** - The explosion of pass-throughs is traced back to the 1986 tax reform, which set the top individual tax rate lower than the corporate rate for the first time.
- 7 (16:25) **Inspiring Stories, Systemic Advantage** - Eric and Owen found that 75% of these millionaires created their businesses, not inherited them, and they are often critical to a company's success.
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Show Notes
Look beyond Silicon Valley. Look beyond Wall Street. Look beyond the “oligarchs”. There's a much larger class of wealthy Americans hiding in plain sight. And, often, they got rich in mundane ways. They own car dealerships. They sell hot dogs and frozen mini-quiches. They run waxing salons. They supply fabricated metal and urinal cakes. They are dentists.
Collectively, these "Main Street millionaires" control much more wealth than the billionaire lightning rods who launch rockets into space, appear on manosphere podcasts, and have Hollywood movies made about them. Many of these millionaires have also grown rich enough to afford superyachts, 10,000-square-foot homes, and pet tigers.
At the center of their story is a quiet revolution in the American economy: the rise of a particular kind of private business. On today’s show, how did the power of the “stealthy wealthy” millionaires come to rival that of the billionaire oligarchs? And, how are they shaping policies that lower their taxes and raise your prices?
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This episode was hosted by Greg Rosalsky and Sarah Gonzalez. It was produced by Emma Peaslee. It was edited by Marianne McCune with fact checking help from Sierra Juarez. It was engineered by Kwesi Lee. Alex Goldmark is Planet Money’s executive producer.
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