Capitalism’s TikTok Threat

Because of economic angst and geopolitical fury, a new wave of TikTok socialism wants to freeze your bills and tax the billionaire class; but its seductive populism is a highway to economic ruin.

Imagine you’re the heir to an expansive Philippine conglomerate, tossing up residential towers across Metro Manila like Lego bricks. How might you arrange your financial affairs? Surely you wouldn’t hold your share directly: that triggers immediate income tax on your dividends. Instead, your accountant tucks them into a holding company. The dividends pile up tax-free. You borrow against these shares to fund your extravagant lifestyle, postpone income taxes indefinitely, and ultimately pass the whole empire to your heirs through a tidy “stepped-up basis” loophole.

It’s a beautiful arrangement for your imaginary billionaire self. But for your real self, an unmarried 30 year old that just paid almost ₱8,000 for their electric bill and watched their grocery bill double while hearing the news of the world’s first trillionaire? It’s the sort of arrangement that starts revolutions.

Something potent and entirely new is stirring on the political left. Supercharged by a feeling that the modern economy is a scam designed exclusively for those on the Forbes list, a fresh crop of radicals is sweeping the democratic world. Forget the weighty, collectivist ideals of seizing the means of production. Say goodbye to the “woke” preoccupations of the “Millennial Socialism” like structural racism, DEI, or even the climate crisis.

Welcome to the era of TikTok Socialism: a crude, highly effective, “me-first” doctrine made perfectly for the new and young generation. And unless free-market liberals (like myself) stop apologising and start acting, this brand of retail populism is going to rewrite the global economy.

How did a foreign conflict spark a domestic economic revolution?

To understand how we arrived here, we must look at the catalyst. While economic angst set the stage, the Israel-Hamas war in Gaza lit the match, acting as a gateway drug to left-populism.

In Britain, the Labour Party’s initially clumsy defence of Israel’s response to the October 7^th attacks, spearheaded by the hand-wringing centrist Sir Keir Starmer, alienated swathes of voters. Independent pro-Gaza MPs seized four formerly safe Labour seats with large Muslim populations. The Green Party, led by the opportunistic and sharp-elbowed Zack Polanski, yeeted in popularity, capturing 30% of the Muslim vote compared to Labour’s 44%.

The Gaza effect is both about foreign policy and domestic radicalisation. While Google searches for the conflict have plummeted and fewer than 0.5% of Brits name it their top issue today, the advocacy around Gaza permanently shifted a cohorts of young voters leftward. British Election Study data suggests that votes highly sympathetic to Palestine became distinctly more favourable towards redistribution, environmental protection, and the Green Party. Once users go down the social media rabbit hole of gut-wrenching geopolitical conflict, a populist offering them rent caps an free buses is only a few taps away.

What happens when socialism ditches collectivism for self-interest?

Different eras breed different socialisms. Post-WW2 socialists wanted to manage capitalism through nationalised heavy industry. The “millennial socialists” of the 2010s, fronted by wrinkly baby-boomers like Jeremy Corbyn and Bernie Sanders, wanted workers on company boards and heavily subsidised green technology. The voters flatly rejected them.

TikTok socialists, on the other hand, demand a 21^st-century “square deal” that appeals directly to their narrow self-interest. Their demands are intoxicatingly simple: Lower my rent! Cut my bills! Give me free buses! Protect my job from AI!

These politicians are surging everywhere. In New York, Mayor Zohran Mamdani wants to freeze rents and open municipally owned grocery stores. In Canada, Avi Lewis, leader of the New Democratic Party (and husband to radical-left author Naomi Klein), pitches public grocery stores as “Costco, but run as a public service.” France’s septuagenarian Jean-Luc Mélenchon is eyeing the Elysée on the backs of 20-somethings, while Alexandria Ocasio-Cortez is tipped in betting markets as a top contender for the 2028 Democratic presidential nomination, trailing only Gavin Newsom.

They are backed by a new wave of intellectual ballast. Anthropologist Jason Hickel and philosopher Kohei Saito are pushing “degrowth” to massive audiences (Saito’s manifesto sold half a million copies in Japan), arguing that GDP growth is socially destructive. Meanwhile, economist Isabella Weber provides the academic cover for price controls, arguing that recent inflation is driven not by wage increases, as most mainstream economists point out, but by corporate “price gouging.”

And if the TikTok socialists think today’s economy is a grift, they view the impending AI revolution as an existential threat. To them, artificial intelligence is merely a tool for tech barons to consolidate power. They want moratoriums on data centres and government jobs guarantees. It is no wonder Eric Schmidt, the former Google chief, was recently booed by university students just for uttering the letters “AI.”

Can we fund the future by looting the plutocrats?

So, who pays for the free child care, the public Costco, and the frozen rent? Under millennial socialism, the answer was broad-based tax hikes (Sanders once proposed a surcharge on anyone making over $29,000). The TikTok socialists are far more calculating: they want the billionaires to foot the entire bill.

This brings us back to our imaginary billionaire self. The intellectual darling of this wealth tax-movement is Gabriel Zucman of the Paris School of Economics. Zucman calculates that through holding companies, French billionaires pay an effective tax rate of just 25%, compared to the average Frenchman’s 51%. In America, he claims the wealthiest 400 families pay 24% against the average citizen’s 30%. His proposed solution? A flat 2% annual minimum tax on the net worth of the ultra-rich.

Of course, the data is hotly contested. David Splinter of the US Joint Committee on Taxation argues Zucman’s numbers are fundamentally flawed, asserting that American billionaires actually pay 38% while middle-income earners pay just 18%.

Regardless of who wins the spreadsheet war, the danger of the wealth tax is twofold. First, how do you value a volatile tech startup without bankrupting its founder? Second, the rate never stays at 2%. Zucman’s erstwhile co-author, Thomas Piketty, is already supporting for global wealth taxes rising to 20%, having previously flirted with a confiscatory 90%. As William Nordhaus of Yale points out, innovators capture a mere 2% of the value they provide to society. Seizing the assets of a nation’s most productive citizens is a recipe for economic ruin.

How can free-market liberals defeat TikTok socialism?

The truly frightening thing about Gen-Z socialism is not that it exists (politics has always had barmy fringes), but that its ideas are creeping into the mainstream. Desperate to compete, centrist Democrats are proposing tax cuts for anyone outside the top tier, MAGA Republicans are pausing data-centre construction, and the UK Labour Party is flirting with price caps on groceries.

We must be absolutely clear: TikTok socialism is a threat to prosperity. Rent controls crush the incentive to build, worsening housing shortages. The profit margins of supermarkets are already wafer-thin, a miracle of modern capitalist logistics. Wealth taxes deter the very innovation required to transition our economies. If you want to see the long-term effects of statist, low-growth over-regulation, look to Europe’s current economic funk or Argentina’s century of relative decline.

The time for free-market liberals to apologise for capitalism is over. Yes, inequality matters. Yes, free trade creates losers. But thanks to private enterprise, this remains the absolute best time in human history to be born, boasting record real incomes and historically low rates of extreme poverty.

But a punch defence of capitalism isn’t enough; centrists must actually solve the problems animating this disgruntlement. We must build cheap, plentiful housing. We must stop saddling the young with excessive pension burdens. We must reform the tax system so that meritocracy prevails over “inheritocracy,” which means fixing loopholes like the stepped-basis and expanding inheritance taxes, rather than shaking down entrepreneurs. Finally, we need imaginative policies (distributed capital ownership and robust worker support) to ensure the spoils of the AI revolution are widely shared.

The TikTok socialists have diagnosed a real disease, but they are prescribing poison. It’s time for the political centre to offer the cure, before the voters decide to simply burn the hospital down.