Nobel prize-winning economist reveals why he thinks 'US democracy may not survive'
He spoke about the 5% wealth tax proposed in California as a starting point.
Feb. 23 2026, Published 9:39 a.m. ET
America might be one of the world’s biggest democracies, but under Donald Trump’s second term as President, a lot of people believe that American democracy is in danger. According to Nobel prize-winning economist Daron Acemoglu, Trump is the result of a problem that has been eating away at American democracy for several years now. He believes that the rising inequality over several years has the potential to deal a fatal blow to the country’s democratic structure.
Recently, inequality has been boosted thanks to artificial intelligence, leaving thousands of people without jobs each year. As far as Acemoglu is concerned, if this is allowed to continue, democracy will die. “If we go down this path of destroying jobs [and] creating more inequality, U.S. democracy is not going to survive,” he said, as per a report in Fortune. AI-driven job cuts have left several Americans struggling to make ends meet as costs keep rising.
Acemoglu believes that closing the wealth gap is key to protecting democracy in this country. The way to do that is by taxing the rich. Income taxes would not work as billionaires do not make their money from wages, but from assets. Hence, wealth taxes would be apt if we go down this road. “We may need wealth taxes because anything else we do today is still going to lead to this huge wealth gap that exists in this country,” he explained.
The Nobel laureate spoke about California’s proposed billionaire tax, which would levy a one-time 5% wealth tax on all individuals in the state with a net worth of $1 billion or more. New York City's mayor, Zohran Mamdani, had also promised to levy income tax on the wealthy in his campaign, but so far, he has not been successful in implementing the same. As a result, there is a threat of property taxes going up to make up for the funding scarcity. However, Acemoglu believes that there is a lot more to be done to close the wealth gap. “It’s not enough to tax the rich,” he said. “You really need ways in which workers of all sorts of skills can take part in the growth process.”
The report also states that American companies recorded 1.2 million layoffs in 2025, up by 58% from last year, with more than 50,000 directly related to AI. Acemoglu believes that the need for AI to have similar or better cognitive skills than humans would lead to an adverse aftermath. “I think there are ways in which this is a misguided agenda. It would have huge social consequences that are quite adverse,” he explained.
There are some who disagree with Acemoglu’s theory, including Adam Thierer, senior fellow at the think tank R Street Institute. He believes that new jobs cannot be created without technological advancements. “The way we get new and better jobs and opportunities is through technological improvements in society and our economy,” he said. However, the millions of layoffs tell a different story.
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