Social Europe

  • EU Forward Project
  • YouTube
  • Podcast
  • Books
  • Newsletter
  • Membership

How the Billionaire Boom Is Fueling Inequality—and Threatening Democracy

Fernanda Balata and Sebastian Mang 12th May 2025

As wealth concentrates at the top, Europe must act now to defend democracy and economic stability for all.

u42198346fb0de2b847 0

Trickle-down economics is a myth. Instead of fostering prosperity, extreme wealth accumulation fuels inequality, destabilises economies, and undermines democracy. In 2024, the wealth of Europe’s 440 billionaires grew by nearly €400 million each day, with a new billionaire emerging almost weekly. This contrasts with the widespread concern of Europeans struggling to meet the cost of living. But this is a global issue: while the world may soon have five trillionaires, global poverty rates remain stagnant.

The recent turmoil in U.S. politics offers a warning of what can happen when extreme wealth goes unchecked. From the unelected Elon Musk being handed a seat in President Trump’s cabinet to the pervasive influence of billionaires and corporations over both major political parties and even the judiciary – the corrosive effects of extreme wealth on democracy are undeniable. Across Europe, the concentration of wealth and power in the hands of a few people distorts policymaking, resulting in worse economic outcomes, deepening inequalities, and eroding trust in institutions.

If Europe is to avoid further undermining democracy and fuelling social, economic and political stability in the continent, our politicians must take decisive action to address extreme wealth. The European Commission’s commitment to studying wealth taxation is a step in the right direction, but it must be backed up by concrete policies, including greater wealth taxation and exploring an extreme wealth line as a tool for democratic engagement and wider policy reform.

Extreme wealth undermines democracy

The unprecedented accumulation of wealth among a select few individuals has far-reaching implications for democratic processes. Billionaires such as Elon Musk, Jeff Bezos, and Bernard Arnault exemplify how extreme wealth can influence labour rights, tax policies, media narratives, and political landscapes – all to the detriment of broader societal interests.

Alongside his formal role in the US government under President Trump, Musk, the world’s richest man, recently used his social media platform X to spread misinformation, particularly in the lead-up to the German elections. German, French and EU authorities are now seeking access to X’s algorithms to investigate the extent to which Musk has been manipulating them.



Don't miss out on cutting-edge thinking.


Join tens of thousands of informed readers and stay ahead with our insightful content. It's free.



Amazon, the company founded by Bezos – the world’s second-richest man –, has faced scrutiny in Europe for anti-union practices, tax avoidance, and market dominance. In Germany, for example, Amazon workers have staged multiple strikes to demand fair wages and conditions. Bezos’s business empire also includes The Washington Post, where he has used his power to shape media narratives.

France’s Arnault, Europe’s richest man and CEO of LVMH, has been criticised for leveraging his wealth to try and shape policy and evade taxes. Meanwhile in Hungary, Prime Minister Viktor Orbán’s government enables oligarchs close to the ruling party to amass wealth through state contracts, eroding democratic institutions and entrenching economic disparities.

As billionaires gain disproportionate influence over policy, media, and public discourse, the gap between the powerful and the rest of society continues to widen. Research shows that a one-unit increase in the GINI coefficient, a standard measure of income inequality, results in a one-percentage-point rise in support for populist parties. This link between inequality and populism underscores how extreme wealth fuels political disillusionment and weakens the democratic fabric.

Extreme wealth fuels inequality and generates economic instability

According to economist Joseph Stiglitz, inequality weakens demand across the economy because lower-income families spend a larger fraction of their income than those at the top. This disparity not only hampers current economic activity but also threatens future growth by limiting work, education opportunities and quality of life for those lower in the income distribution. Moreover, Stiglitz argues, societies with greater inequality are less likely to invest in public goods that enhance productivity, such as transportation, infrastructure, technology, and education.

In contrast, tax cuts for the rich overwhelmingly benefit their own fortunes, with little to no impact on jobs or the broader economy, as a London School of Economics’ study found. Instead, research has shown that reduced wealth of the top 1 percent combined with greater wealth of the bottom 99 percent has a positive effect on investment, consumption, and employment.

The unchecked political and financial power of the super-rich skews policymaking and destabilises the everyday economy. Nowhere is this more evident than in housing markets, where extreme wealth fuels speculation, pricing out ordinary citizens. In Spain, real estate speculation by ultra-wealthy investors and hedge funds has exacerbated the housing crisis. Residents in cities like Barcelona and Madrid face skyrocketing rents while luxury developments cater to the super-rich. Attempts to introduce rent controls face resistance from influential property magnates.

Moreover, extreme wealth accelerates environmental breakdown, leading to rising prices of essentials, economic and social instability, and ultimately imposing significant costs on individuals and public finances. The super-wealthy’s disproportionate carbon footprint stems from investments in high-pollution industries and carbon-intensive lifestyles. Ultimately, Europeans face a choice: either continue enabling the excesses of the super-rich, leaving ordinary people to bear the costs of environmental breakdown and economic instability, or prioritise policies that ensure broad-based prosperity within ecological limits.

Taxing the wealth of the super-rich and the need for an extreme wealth line

When economic systems fail most people, trust erodes, paving the way for authoritarianism. As the U.S. struggles with oligarchic power, Europe must act before reaching a similar crisis.

The New Economics Foundation (NEF) has proposed that an extreme wealth line (EWL) – a metric or set of metrics which indicate the point at which extreme wealth concentration harms democracy, society, the economy, and the environment – is a critical tool to address the overlooked role of extreme wealth in the safety and stability of all our lives, redefining wealth norms, promoting economic fairness and supporting more effective policies such as wealth taxation. 

Taxing wealth effectively reduces inequality, strengthens tax systems, and generates revenue. The 2024 G20 summit, under Brazil’s presidency, placed extreme wealth taxation on the global agenda. According to Oxfam, a global annual wealth tax of up to 5 percent on the world’s multi-millionaires and billionaires could raise $1.7 trillion a year, enough to lift 2 billion people out of poverty. The EU Tax Observatory estimate a 2 percent minimum tax on European centi-millionaires would neutralise the regressivity of European tax systems and raise €67 billion; and a 3 percent minimum tax would make European tax systems slightly progressive and raise €121 billion.

And there’s support for these measures from the wealthiest in society. This year, more than 370 millionaires and billionaires from 22 countries – including over 50 EU-based – urged elected leaders to tax extreme wealth to protect democracy. Technological advances, public support, and increased tax transparency create an opportunity to implement effective wealth taxes. Recent proposals in France and Spain indicate growing momentum in Europe. The European Commission’s study on wealth distribution must build on this, placing extreme wealth firmly on the EU agenda.

Fernanda Balata
Fernanda Balata

Fernanda Balata is a senior political economist at the New Economics Foundation and author of the 2025 report Exploring an Extreme Wealth Line. She leads NEF’s international programme on extreme wealth and economic justice in collaboration with a network of partners in the global south and the global north.

Sebastian Mang
Sebastian Mang

Sebastian Mang is a political economist and leads the New Economics Foundation’s work on EU economic policy. He previously worked at Greenpeace on climate and energy issues and as a policy advisor for a Green MEP on legislation, including the European Climate Law and the Emissions Trading System.

Harvard University Press Advertisement

Social Europe Ad - Promoting European social policies

We need your help.

Support Social Europe for less than €5 per month and help keep our content freely accessible to everyone. Your support empowers independent publishing and drives the conversations that matter. Thank you very much!

Social Europe Membership

Click here to become a member

Most Recent Articles

u4219834676 bcba 6b2b3e733ce2 1 The End of an Era: What’s Next After Globalisation?Apostolos Thomadakis
u4219834674a bf1a 0f45ab446295 0 Germany’s Subcontracting Ban in the Meat IndustryŞerife Erol, Anneliese Kärcher, Thorsten Schulten and Manfred Walser
u4219834dafae1dc3 2 EU’s New Fiscal Rules: Balancing Budgets with Green and Digital AmbitionsPhilipp Heimberger
u42198346d1f0048 1 The Dangerous Metaphor of Unemployment “Scarring”Tom Boland and Ray Griffin
u4219834675 4ff1 998a 404323c89144 1 Why Progressive Governments Keep Failing — And How to Finally Win Back VotersMariana Mazzucato

Most Popular Articles

u4219834647f 0894ae7ca865 3 Europe’s Businesses Face a Quiet Takeover as US Investors CapitaliseTej Gonza and Timothée Duverger
u4219834674930082ba55 0 Portugal’s Political Earthquake: Centrist Grip Crumbles, Right AscendsEmanuel Ferreira
u421983467e58be8 81f2 4326 80f2 d452cfe9031e 1 “The Universities Are the Enemy”: Why Europe Must Act NowBartosz Rydliński
u42198346761805ea24 2 Trump’s ‘Golden Era’ Fades as European Allies Face Harsh New RealityFerenc Németh and Peter Kreko
startupsgovernment e1744799195663 Governments Are Not StartupsMariana Mazzucato
u421986cbef 2549 4e0c b6c4 b5bb01362b52 0 American SuicideJoschka Fischer
u42198346769d6584 1580 41fe 8c7d 3b9398aa5ec5 1 Why Trump Keeps Winning: The Truth No One AdmitsBo Rothstein
u421983467 a350a084 b098 4970 9834 739dc11b73a5 1 America Is About to Become the Next BrexitJ Bradford DeLong
u4219834676ba1b3a2 b4e1 4c79 960b 6770c60533fa 1 The End of the ‘West’ and Europe’s FutureGuillaume Duval
u421983462e c2ec 4dd2 90a4 b9cfb6856465 1 The Transatlantic Alliance Is Dying—What Comes Next for Europe?Frank Hoffer

Eurofound advertisement

Ageing workforce
The evolution of working conditions in Europe

This episode of Eurofound Talks examines the evolving landscape of European working conditions, situated at the nexus of profound technological transformation.

Mary McCaughey speaks with Barbara Gerstenberger, Eurofound's Head of Unit for Working Life, who leverages insights from the 35-year history of the European Working Conditions Survey (EWCS).

Listen to the episode for free. Also make sure to subscribe to Eurofound Talks so you don’t miss an episode!

LISTEN NOW

Foundation for European Progressive Studies Advertisement

Spring Issues

The Summer issue of The Progressive Post is out!


It is time to take action and to forge a path towards a Socialist renewal.


European Socialists struggle to balance their responsibilities with the need to take bold positions and actions in the face of many major crises, while far-right political parties are increasingly gaining ground. Against this background, we offer European progressive forces food for thought on projecting themselves into the future.


Among this issue’s highlights, we discuss the transformative power of European Social Democracy, examine the far right’s efforts to redesign education systems to serve its own political agenda and highlight the growing threat of anti-gender movements to LGBTIQ+ rights – among other pressing topics.

READ THE MAGAZINE

Hans Böckler Stiftung Advertisement

WSI Report

WSI Minimum Wage Report 2025

The trend towards significant nominal minimum wage increases is continuing this year. In view of falling inflation rates, this translates into a sizeable increase in purchasing power for minimum wage earners in most European countries. The background to this is the implementation of the European Minimum Wage Directive, which has led to a reorientation of minimum wage policy in many countries and is thus boosting the dynamics of minimum wages. Most EU countries are now following the reference values for adequate minimum wages enshrined in the directive, which are 60% of the median wage or 50 % of the average wage. However, for Germany, a structural increase is still necessary to make progress towards an adequate minimum wage.

DOWNLOAD HERE

S&D Group in the European Parliament advertisement

Cohesion Policy

S&D Position Paper on Cohesion Policy post-2027: a resilient future for European territorial equity

Cohesion Policy aims to promote harmonious development and reduce economic, social and territorial disparities between the regions of the Union, and the backwardness of the least favoured regions with a particular focus on rural areas, areas affected by industrial transition and regions suffering from severe and permanent natural or demographic handicaps, such as outermost regions, regions with very low population density, islands, cross-border and mountain regions.

READ THE FULL POSITION PAPER HERE

ETUI advertisement

HESA Magazine Cover

With a comprehensive set of relevant indicators, presented in 85 graphs and tables, the 2025 Benchmarking Working Europe report examines how EU policies can reconcile economic, social and environmental goals to ensure long-term competitiveness. Considered a key reference, this publication is an invaluable resource for supporting European social dialogue.

DOWNLOAD HERE

Social Europe

Our Mission

Team

Article Submission

Advertisements

Membership

Social Europe Archives

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Miscellaneous

RSS Feed

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

BlueskyXWhatsApp