Your dad’s Theory of Everything (TOE), part 3 – inequality

August 21, 2026

Dear Leland and Everett,

Today I want to talk about inequality.

My mental model is that global income inequality shrunk over the course of my lifetime, while American income inequality rose. I think these phenomena are interconnected. But I seem to be the only one who sees things this way.

In terms of why I think global income inequality has shrunk…well, it just seems obviously true from my perspective. Just this century more Chinese have moved into the middle class than there are people in the United States: depending on how you define middle class, China has seen somewhere between 300-700 million people join the ranks. Globally, the middle class grew by something on the order of 1.5-3 billion people since the year 2000. Think about that: somewhere between a quarter and a third of the world population joined the middle class in about a quarter century. More than half the world population is now middle class or wealthier (vs roughly a quarter of the global population in 2000); in fact, some estimates suggest more than half the global population is middle class today, without accounting for wealthier classes.

In even better news: the global share of people living in extreme poverty shrunk from nearly half in 1980 to a little over a quarter at the turn of the century to somewhere below 10% today.

Given those astronomical improvements in poverty and middle class status, how could global income inequality not have shrunk? A quick Google search tells me that global Gini coefficients (a measure of income inequality) have indeed shrunk (albeit modestly), thus corroborating my mental model. Taken together, these are not ironclad arguments, but the data seem sufficiently compelling to convince me global inequality shrunk over the course of my lifetime.

And yet, income inequality in America increased over these same time horizons. Some measures show that the bottom earning half of Americans saw their wages stagnate over a 30-40 year time horizon. Those bottom 50% of earners have seen their wages grow faster than the top half over the last decade or so, but not enough to put a meaningful dent in American inequality. In fact, American income inequality matches all time highs. Previous eras – namely the Roaring 20s and the 1870s (the early part of the Gilded Era) – matched current Gini coefficients, but these are hardly eras most Americans want to emulate.

This increase in inequality upended American politics, almost certainly leading to the election of Donald Trump and the populist-leaning MAGA movement taking over the Republican party. On the Democratic side, we’ve seen the party lurch left overall, and seen a surge in openly socialist and Marxist candidates, activists, and voters. It’s important to understand not just the policy solutions both sides are proposing, but the motivation behind those proposed policy solutions.

At this point, I need to provide some personal background in order to explain how my understanding of the political landscape, at least when it comes to inequality, evolved.

I majored in Economics and during college came to identify as libertarian. Libertarians believe in minimizing government intervention, whether said intervention be directed toward free markets or the private lives of citizens. As a guiding principle, libertarians seek the least government intervention possible. In practical terms, being libertarian meant often aligning with Republicans on fiscal policy and Democrats on social policy, as well as trying to influence whichever party was in power.

Over the course of my life, the libertarian viewpoint influenced American politics a great deal. In 1980 the top marginal tax rate approached 70%; since 1990 top tax rates fluctuated between 30-40%. Globalization soared: in 1980 international trade accounted for a little over a third of global GDP; that number peaked above 60% in 2008 and mostly hovered between 55-60% since. Deregulation allowed a number of industries to innovate and flourish. Migration increased, both within the US and internationally. As a libertarian, I cheered all these developments.

Then Donald Trump upended American politics. Suddenly a Republican administration wasn’t particularly interested in the virtues of migration and free trade, and preferred to erect border walls and antagonize America’s largest trading partner (China) instead. Libertarians began to realize we didn’t have safe quarter in the Democratic party either: the Obama administration started out deferring to perceived economic experts, but the 2008 financial crisis – and particularly how those steering the economy handled things – appear to have led to instinctive distrust. Libertarians have been thus been politically homeless for the past decade.

For me, the experience led to some soul searching. For one thing, I was completely blindsided by the election of Donald Trump in 2016. I was far from alone in my shock: most Democrats, libertarians, and even a lot of traditional conservatives felt the same way. My personal response to that shock was to attempt understanding what happened and why. I don’t think attempting to understand what happened made me unique, as it was a natural response to the shock so many of us felt. In fact, I don’t know what part of my journey since election night 2016, if any, is unique. What I do know is that I seem to have arrived at a pretty different place than almost anyone I know.

For one thing, it was hard to escape the overarching conclusion that Trump’s election was an explicit repudiation of the libertarian message. Here was a candidate elected on a platform explicitly opposing trade agreements and immigration, two things I firmly supported. More sobering, Trump was elected as a Republican, representing the party that traditionally aligned with libertarians on fiscal policies. To me, Trump’s supporters seemed to be issuing a clear rebuke of the financial stewardship for which I had cheered for nearly two decades.

Personally, I found Democratic responses, and proposed solutions, uninspiring. Democrats argued that Republicans were racists and insisted what people really wanted were things like free healthcare and free college tuition, all while raging against corporations and billionaires. I didn’t sense that Democrats were really listening to what Trump voters were trying to tell us, which made coming to a clear understanding difficult.

My earliest interpretation (and I forget what I read that influenced my thinking) was the election of Donald Trump amounted to throwing a metaphorical brick through the window, an attempt to be heard by America’s decision makers, and an expressed preference to burn it all down – if that’s what it took – rather than continue the course. Eventually I became exposed to the work of David Shor. Shor (a data scientist, self-identified socialist, and former wunderkind forecaster for the Obama campaign) argues that left-leaning and right-leaning coalitions are shifting all over the world, with education serving as the primary differentiator in party split. In his telling, Republicans (and their right-leaning counterparts in other countries) are becoming the party representing folks without college degrees, while Democrats (and their counterparts) are becoming the party of college graduates. Personally, I found this reframing helpful, in part because it seemed both intuitively plausible and consistent with polling data I had seen. If Shor was right, I began to wonder, why would Americans without college degrees be coalescing into a party? What frustrations would cause them to, in many cases, switch party allegiance and vote for so polarizing and unconventional a candidate?

My conclusions were not comforting to my self image.

Over the course of my lifetime, globalization led America to shift millions of jobs from American workers to counterparts in other countries, particularly China. The lower wages paid to foreign workers allowed companies to lower prices while increasing profits, which allowed American consumers to save money, which allowed companies to expand the number of products built in China, which allowed those companies to further increase profits while consumers expanded the number of products they could afford to purchase. The American economy grew at steady, healthy clip and unemployment mostly stayed low, implying that the jobs lost to foreign competition were mostly offset by new, better jobs being created. I cheered all of these developments as they happened.

At the same time, America’s relaxed immigration enforcement allowed millions of people to enter the United States without documentation. I considered it an open secret that these immigrants worked in construction, on farms, in restaurants as cooks and busboys, as janitors and landscapers and housekeepers and warehouse staff across any number of industries. In each of these industries, I understood that the undocumented immigrants lowered the cost of producing these goods and services, thus benefitting consumers. With some reservation, I cheered these developments as they happened: I wished America would amend it’s immigration policy to allow more people to enter legally but, barring that, I was perfectly content continuing to allow people to enter the country illegally, believing they contributed more to American society than the costs they imposed.

What we now know is that Americans without college degrees are disproportionately those who have seen their wages stagnate over the course of my lifetime. My understanding its that whether or not someone has a college degree serves as the primary differentiator between those who have seen their wages stagnate and those who enjoyed substantial wage growth. To me, this makes intuitive sense: Americans without college degrees (I’ll use the term “uneducated” going forward; it’s impolite, but easier to type and read than “without college degrees”) have been competing with the Chinese (among others) on wages in industries like manufacturing that could be outsourced abroad, while competing with illegal immigrants on wages in industries like food preparation and construction that must be performed locally. Increasing labor supply, in the absence of offsetting increases in demand, inherently lowers prices. Uneducated American workers have thus been competing for jobs against workers from all over the world in a manner that just wasn’t true fifty years ago. Educated workers faced some of the same competitive pressure, but not nearly as much: educated folks generally don’t immigrate illegally, some number of white collar jobs need be done close to headquarters, American innovation continues to increase the number and size of those companies to be supported by educated American workers, and American universities attract talent from all over the world – which seems to both support American innovation (creating jobs) as well as prepare most graduates to compete on the job market commanding high salaries and wages. Yet while educated Americans seem to avoid the downsides of increased competition for jobs, we benefit from the lower costs of housekeeping and food and construction costs provided by wages suppressed due to a glut of illegal immigration, in addition to the lower cost of goods produced abroad.

Most sobering of all is the degree to which I directly participated in all of what I just outlined. I spent the bulk of my career working for an American company that once assembled products in the United States. By the time I joined, that manufacturing had all moved to China. I worked in the supply chain, and so saw the evolution relatively close up. The short version is that my company spent a huge amount of energy teaching folks in China how to build our products, imparting a tremendous amount of skill along the way. Thus, not only did I cheer globalization in principle and benefit from cheaper goods in practice, I earned outsized compensation in part by directly participating in making it all happen.

When I put it all together, I come to the conclusion that America’s uneducated workers decided they were tired of feeling left behind. They got frustrated watching wages rise seemingly all over the world except for within their own families and communities. They were mad a people like me for enabling it to happen. They were frustrated by the belief they have something to contribute, and they felt ignored, gaslit, or patronized by the dominant American narrative. So they decided to change the narrative.

American media, and the educated folks with which I interact, tend toward disgust when facing arguments put forth by the MAGA movement. I respond to MAGA differently, and in fact use the two of you as a proxy for how to think about things. For me, Democrats (and the educated folks with whom I interact more broadly) are more like Leland (and older siblings more broadly): more mature, more capable of clearly articulating wants and needs, and more capable of compiling a more logical and rational argument for why they are on the right side of an argument. MAGA Republicans (and the uneducated folks they represent) are more like Everett and younger siblings: less mature and skilled with prose, but with an intuitive understanding of fairness, and thus prone to arguments that don’t make intuitive sense but backed by clear emotional power. I treat MAGA arguments much like I treat Everett’s outbursts: requiring clear boundaries, but worthy of unpacking to understand what sits underneath. And with both MAGA and Everett, I find what sits underneath is worth understanding and addressing for a more complete, thorough, fair solution to a problem.

[I’m unintentionally being condescending toward MAGA, at least in its current form. Indeed, like Everett, MAGA matures rapidly. Today, MAGA is generally able to articulate itself pretty effectively, albeit often after an immature, attention-grabbing behavior. A decade ago, MAGA was less mature, less fully formed, and thus less articulate.]

And so now, how do we proceed? I certainly don’t have complete answers, but I’ll offer some proposals, along with some suggestions on where to look (and where not to look).

For one thing, I think America’s workers have a point that we should not allow immigration to go unchecked. In retrospect, our border policy prior to Trump reminds me of what happens when siblings play competitive games with each other: the older sibling manages to subtly shift the rules of the game to ensure they win; the younger sibling doesn’t necessarily know how, but they come to recognize they’ve been cheated somehow. Eventually (and especially if the younger sibling continues to lose due to shifting rules), the younger sibling responds with an emotional outburst. I just don’t think what we were doing pre-Trump is sustainable, for the same reason it’s not sustainable to let the older sibling continue to manipulate the rules of a game to ensure they always win; eventually the younger sibling will flip the table over. People seem to assume reforming our immigration laws is politically impossible, whereas I think it’s our only viable solution. To get there, I suspect we’ll have to 1) increase the number of people we allow in legally (because there really is strong demand for international labor above and beyond what Americans can supply, and also because America benefits from the renewal of perspectives and ideas immigrants bring); 2) develop and maintain tight controls over how many people are allowed in; 3) allow for some level of dynamism in terms of how many people are allowed to enter the country legally (as opposed to waiting for Congress to change the laws every time it makes sense to adjust immigration levels); and 4) have some hard conversations regarding what types of people we want, and in what numbers. There are those who believe we should sharply curtail all immigration, while there are others who believe all immigration is good. I tend to believe there are certain types of talent we clearly want to attract in maximal quantities: something like a fifth of the current Fortune 500 includes an immigrant cofounder, and we should want to allow the types of people who can create new jobs or new academic breakthroughs into the country at a mostly unfettered pace. At the other end of the spectrum, I think we want to continue to allow immigration amongst uneducated and unskilled immigrants, but I think this will need to be tightly managed and weighed against the potential impacts said immigration levels might have on existing workers.

Writing has helped me uncover something I previously couldn’t see: the people in that bottom 50% of earners who do in fact have college degrees. Interestingly, they have been something of a blind spot for me. Well, that is not entirely true: I am aware there are college graduates who do not earn a great deal. But I perhaps underestimate the degree to which they drive Democratic political discourse despite their relatively small numbers. From there, it occurs to me that I should likely treat this group much like I treated MAGA: like a tantrum-throwing child, worthy of hearing out while setting clear boundaries on acceptable behavior.

Looking this up, I see that something on the order of half (I see numbers ranging from ~40-50%) of recent college graduates work in jobs that do not require a college degree. The data show huge variation across majors, with some majors showing underemployment well above half, while other are substantially less than 25%. Given how much college tuition costs have soared, and that we no longer allow graduates to discharge education debt in bankruptcy (a policy I loathe), I can see how this would lead to a deeply frustrated cohort of Americans.

On one hand, I am deeply sympathetic: growing up I internalized a message that everyone should go to college, and I assume many recent graduates internalized a similar message. On some level, these kids did everything we told them to do: go to college, get a degree, and figure the rest out later. Unfortunately, while that message worked for prior generations, it no longer holds universally true today.

On the other hand, there is some evidence of recent graduates having made poor choices. The degrees with the highest rates of underemployment are in fields I did not pursue at least in part because I did not think they had viable job prospects. And while I went to a private (and modestly expensive) university, my family and I were pretty conscious of the costs involved, so I took a bunch of actions (applying for and securing scholarships, serving as an RA to pay for housing, etc) to ensure my college education was reasonably affordable. I think everyone should be allowed to discharge debt (including education debt) in bankruptcy, but I also think high school graduates need to be prepared to start taking ownership of their actions. I’m not putting this all on the young graduates: as a society, we need to do a better job of teaching our kids of the consequences of their actions; that includes guiding kids toward the right schools and the right degrees and the right financial decisions (i.e. how much aid to take on, how to secure other forms of financing, etc.) and, in some cases, means directing kids away from college entirely.

Regardless of my frustrations, the subset of low-earning college graduates is now too large to ignore. Even if I wanted to ignore them, that option is no longer politically viable. Even as I write, I am coming to realize how much this group is currently driving Democratic political discourse. Free healthcare really helps if you are underemployed and don’t have company-provided healthcare. Free college tuition sounds awfully attractive to those who struggling to pay off college debt. Punishing billionaires (perhaps a topic for another day) might sound more attractive than taking ownership of my perceived underachievement.

Part of the problem I have hearing from educated youth is that their messages are too often filtered through older generations still trying to fight old battles. Another part of the problem is that underemployed college graduates are a lot more like me than struggling blue collar folks. One of the ironies of the human condition is how our greatest enemies are often the folks who look most like us.

Complicating matters, I strongly suspect part of the reason underemployment (which I am using as shorthand for financial underperformance more broadly) flies under my radar is precisely to hide from some of the root causes. We don’t want to face the degree to which academia, and society more broadly, have failed swaths of our younger generations. For that matter, we don’t want to face how we ourselves – their parents, siblings, advisors, etc. – failed pockets of young adults. We really don’t want to do the hard work of cleaning up the mess we’ve created, and really want others to let us off the hook for allowing such a mess to take hold. The problem, of course, is that we will not be able to properly address the mess unless we deal with it at its source. But that is a topic for another day. For now, figuring out how to listen to, empathize with, and help underemployed young graduates is a task for me to take on going forward.

Thus far in the letter, the only concrete solutions I’ve offered are to reform American immigration policy and some vague handwaving about fixing higher education. Truth be told, I don’t have too many solutions to offer. In fact, I strongly suspect inequality will shrink regardless of any purposeful actions we might take. For one thing, some of the headwinds American workers have faced are likely to turn into tail winds. The Baby Boomer generation created a glut of workers that only now is retiring and leaving the workforce. Chinese wages have skyrocketed since manufacturing first moved there; companies are shifting production to countries with cheaper labor, but will never again find such a homogeneous source of cheap unskilled labor. Moreover, populations are shrinking around the world, such that young folks entering the job market are likely to face decreasing competition on the global job market.

The huge caveat to all of this is AI. AI is coming for jobs, of that there can be little doubt. Worse, AI appears to be coming for precisely the type of jobs – those currently performed by newly minted college graduates – we probably need most (from a political perspective anyway) right now. New technologies consistently come along and eliminate the need for certain jobs; these new technologies invariably cause consternation and small-scale panic. So far, new technologies seem to create more jobs than they eliminate, such that we’ve never faced an unemployment crisis created by technology.

The optimistic case for AI is that humanity will solve existing problems more efficiently, freeing up resources to tackle new problems. The pessimistic case is that AI will eat jobs faster than it creates them. Even for me – an eternal optimist – it is not at all hard to imagine AI creating even more extreme wealth inequality than we see today. AI is too big a topic to adequately cover in a discussion around inequality; I flag here only to acknowledge that, however we decide to address inequality, AI will almost certainly become either a material constraint or a material aid.

One final thought before I depart. For one, you will notice that I have not set any sort of target level of equality. That is on purpose, because I think the target sits unhelpfully somewhere between American levels today and perfect egalitarianism. Some might argue in favor of perfect egalitarianism; personally, I find that target foolish and naive. For one thing, I don’t think any society ever has maintained perfect egalitarianism. Communist countries might have seen suppressed Gini coefficients, but I submit the hidden perks enjoyed by party elites resulted in vast under-appreciated inequality (and that’s without considering the crushing burdens of poverty and authoritarianism communism placed on the common worker and society as a whole). Even chimpanzees live in hierarchical societies, where status confers benefits like more mating partners and priority access to nutrient-dense food; measuring chimpanzee inequality might be difficult, but the phenomenon is real enough.

Like with chimpanzees, I anticipate human inequality (whether measured or obscured) will persist for as long as humans themselves persist. Also like chimps, humans retain the capacity to depose ineffective leaders and install new social hierarchies. How chimps reorganize is complex, and so it is with humans.

One thing I can say with some confidence: we are undergoing a reorganization of social hierarchies within the US. There will be winners and losers. If we are lucky, America can navigate the changing landscape without total war, and ideally even with minimal violence. But the losers are unlikely to go down without a metaphorical fight, and so I anticipate political rancor and unrest may well continue for at least a few more years.

That’s not a happy note on which to end, but hopefully by the time you read this whatever acrimony you experienced in adolescence is well behind us, allowing you the opportunity to feel the joy and inspiration of building for a new era. May the current generations of adults start cleaning up the mess we’ve made before we hand the reigns over to your generation. Wish us luck.

I love you both.

Love,

Dad