Those are two of the more well-known nicknames to describe decades in our nation’s history (specifically, the 1890s and the 1920s, respectively). Perhaps not-so-coincidentally, both decades bear a striking resemblance to our current decade in at least one crucial respect, which I’ll explain in a moment. That being the case, I’ve been thinking: how about the Gilded GooseEggs, or perhaps the Robber-Baron ‘Aughts, to describe the 2000s? Why? What am I talking about – and what are the similarities between now and then? From UC Berkeley economy professor Emmanuel Saez, via Paul Krugman’s blog at the New York Times, comes this absolutely disgusting graph:
What you’re looking at is the share of our nation’s total wealth historically held by the richest people in America. Often, statistics like these focus on the top 5%, or the top 1%, or even the top 0.1% of wealthy. Saez’s graph, above, looks at only the top 0.01% of the nation’s wealthiest. And, while you’d expect the people in this rarified category to possess more wealth (percentage-wise) than their numbers (that’s what being above-average means), it’s pretty astonishing to note that the richest 1/100th of 1 percent of America control a higher overall percentage of America’s wealth than at any time in the last hundred years, including the period now known as the “Roaring ’20s,” the period immediately prior to the Wall Street crash of 1929 which was perhaps the signature event of the Great Depression. The decade earned that title – Roaring ’20s – largely because it was an age which featured a blossoming of cultural and social events and awareness which had been both financially and socially inhibited during the oppressive years of World War I. It was sometimes also – with good reason – called “The Jazz Age.”
But another often-overlooked reason for the moniker “Roaring Twenties” to describe the decade of 1920-1929 had to do with the loosening of fiscal regulations and the first real rise of modern-day, unfettered (and largely unregulated) capitalism in the United States. This was the first great modern era of Wall Street, of the kind of fantastic wealth that had for most of human existence in most of the world been previously available only to royalty and a very few selected other nobility – and even less frequently, merchants and businesspeople. Most “common folk” never even had a chance to glimpse such ostentatious wealth, let alone get a taste of it. But this was the age in which F. Scott and Zelda Fitzgerald drank their way across Europe and he wrote and published “The Great Gatsby” (among other works), a novel describing unimaginable wealth and privilege among the very rich. Yet have another look at that graph: in 1929, just prior to the great stock market crash, the wealthiest 1/100th of 1 percent of America’s richest controlled approximately five percent of the nation’s wealth. Today (well, 2007, the most-recent year for which data have been complied), the figure stands at SIX percent, a full 20% higher than in 1929.
That figure is no accident. It is the culmination of decades of conscious, focused attempts by the heirs to the robber barons of the 1890s and the tycoons of the 1920s and their allies in government, to deregulate business and change tax and other laws to effect a wealth-shift UPwards, away from not only the poorest, but the folks who consider themselves working and middle-class – even upper middle class – the the very richest. Arthur Laffer’s now-infamous “Laffer Curve” helped beget the economic philosophy popularized by Reagan and the Chicago School economists which became famous as “trickle-down” or “supply-side” economics. It flat-out states that the traditional demand-based economic model of helping assure (among other things) that income rises for all income groups will in turn be the best way to assure prosperity for all, is simply wrong. Instead, the supply-side model insists, the best way to assure prosperity is to give as much money, through various methods, to the people who already have the most – the investors and the titans of industry – because it is they who are truly the engines not only of innovation, but of productivity and therefore, the best guarantors of prosperity. Give money to the already-rich, and there’s no telling what amazing things they’ll do/build/think/invest in.
Not to go all Dr. Phil on everyone, but how’s that been workin’ for ya?
I don’t think I need to enumerate the ways in which that model – while it is not without nuggets of wisdom – has so categorically and catastrophically failed over the past, say, thirty-five years. The slow but systematic dismantling of Depression-era regulations and laws, set in place during the early days of the Roosevelt administration, have resulted (predictably enough) in a downward trend that looks remarkably like the Great Depression, even to untutored-in-economics shlubs like myself — and many a TV commentator. The “smartest guys in the room” – the Enron market-gamers, the Goldman deal-finaglers – these have failed us, almost completely. But it has not been even a failure of a group which tried their hardest to do right by their countrymen (or often, even their shareholders and employees). It’s the failure of, to put a face on it which is intentionally too extreme for some cases, because using this face makes the point vividly, guys like Bernie Madoff. It is the failure of a class of already-wealthy men and women who I’m betting mostly already knew that they were simply gaming the system for their own advantage; using semi-plausible-sounding economic theories like supply-side economics and the Laffer curve to explain or excuse a transparently-obvious redistribution of wealth.
Normally, when that phrase gets used – “redistribution of wealth” – it’s used by some of these same plutocrats or their enablers and apologists in the media, government or (occasionally) academia. It’s said with a disdain reserved for pedophiles and people who torture animals: “those who want to redistribute wealth” – followed often by outright use of the phrase “socialism” or “socialists.” Big, scary words. Implicit in them are the idea that redistribution of wealth is always done by the poorer elements of society (or the “thieving” government), to “take from those who earned it” and give to…well, whomever: someone who did NOT earn it, is the accusation. But it’s nowhere near true that “redistribution of wealth” only goes one way, or is only attempted by the poor against the rich. In extreme examples, the words you’ll hear are “class warfare,” with their attendant overtones of “oooh – scary MARXISTS!” Well, time to realize that “class warfare” is not only brought by the poor against the rich, it’s an ongoing, never-ending struggle (at least so far, and probably into the foreseeable future, unless prevented by sensible laws). In short, “class warfare” is what we already HAVE, and have had for quite some time, in this country – and most of it has been a slow, conscious, well-funded effort by these same very wealthy interests who’ve – as the chart shows – been largely successful in their efforts.
I submit that although wingnuts and those who feed them their talking points are not wrong to call things like progressive taxation and universal health care “class warfare” or “redistribution of wealth,” looked at in one strict sense, that in the most accurate reading of events both current and historical, while it may be those things, it was also class warfare and redistribution of wealth to repeal laws which regulated banking. It has been class warfare to oppose every major social program of the twentieth century, from Social Security to Medicare right up to today (which the GOP has consistently done). It has been redistribution of wealth to lower the top marginal tax rates (and thereby, the effective tax rates) on the wealthiest from somewhere in the high 80% range to the high 20% range.
And it is hypocrisy, rank hypocrisy (or, in some cases, a simple ignorance of history and the facts), for the wealthiest Americans who have – as this graph shows quite devastatingly – benefitted very handsomely from such measures, to attempt to label attempts to return things to at least part of their former status, as “class warfare” or “redistribution of wealth,” as if the current insanely-slanted-to-the-rich setup of the financial laws in this country are the unquestionable, God-given “norm,” and any attempts to deviate are thereby – by definition – bad. I don’t want to start a class war. I just want to take the one that’s already been going on for some time now, and call it what it is…and then turn it around a bit, so that my countrymen and women don’t have to live in constant fear of losing a job or a major illness. Where they can be free, free not only to do what they wish but also free from fear, to “pursue happiness.” Isn’t that what everyone here – including conservatives and bankers – believe is among the truths which we hold to be self-evident?