Sunday, July 18, 2010

The New Gilded Age

It's not a new observation that we seem as a country to be reliving the days of the Robber Barons when wealthy corporations and super wealthy individuals ruled the nation, when corrupt politicians were servile tools of the rich, and when all politicians were corrupt.
The 1870's to the 1900's, basically from the Grant to Teddy Roosevelt presidencies, saw a time when governments solely existed for the benefit of business. Politicians and judges were bought and sold as casually as Chippendale chairs. High unemployment was considered good for business because it lowered the price of labor and the more the unemployed suffered the cheaper wages became.

While the unemployed were bettered by suffering, the wealthy were deserving of every subsidy that could be imagined. Taxes and tariffs that burdened the wealthy were evils to be expunged from the body politic. Laws that regulated corporate activities to prevent unfair or dangerous practices were an abomination.

Which is worse, coalminers dying in the tunnels or the owner being forced to spend money to prevent those deaths? Obviously the latter. Regulations impinge on the owner's rights. As for dead miners, with high unemployment there will always be plenty of men available to take their places.

Look at the picture above. How like those Robber Barons are the bankers at Goldman Sachs requiring public tribute in the form of TARP and the AIG bailouts? Now look at the chart below.
It has been more than a century since the disparity between the rich and the rest of us has been this large. The times of great disparity have always marked great economic decline. The times of least disparity always marked the times of greatest prosperity. That is not a coincidence. Prosperity comes when most people have money to spend. When an economy is geared only to support a handful of the very richest the nation as a whole suffers.

It is fair to compare Presidents Obama and Clinton to Grover Cleveland, the only Democrat to hold the presidency during the original Gilded Age. All three were good, intelligent, and honorable men. All three were elected to redress Republican excesses. All three failed that assignment and found themselves going, perhaps unwillingly, with the tide of crony capitalism. (Also, two of the three had sex scandals in their day.)

Cleveland used the Army to crush union strikes at the behest of wealthy bosses. Clinton helped set up the current financial crisis by agreeing with Republicans to deregulate banks. Obama's Treasury Secretary believes the universe revolves around his investment banker friends and isolates himself from competing opinions.

The first Gilded Age was not a happy time for most Americans. Yes, the Rockefellers, Morgans, and other in the elite did great.
They build massive castles to their even more massive wealth. Above is Frederick William Vanderbilt's summer house. The rest of the country suffered economic disaster. The Long Depression (1873 to 1896) spanned 23 years, encompassing most of the Gilded Age.
Homelessness is not something new in America. During the Gilded Age thousands of children slept on the streets. Source: Jacob Riis, How the Other Half Lives (1890).

Current economic policies, cutting spending to the bone to pay for tax relief for the very wealthy, promises one to two additional decades of high unemployment. Republican policies to end unemployment insurance, certain to be implemented eventually if not soon, will drive millions of small children into the streets.

Remember, this is all to the benefit of the richest of the rich who will see labor costs drop to starvation levels while their smaller taxes will be more than repaid through government largess to corporations.

Additional Reading: Wall Street's Ownership of Government (Salon, 2009)
Political Corruption in the 19th Century (NBC News)
Republicans: Don't Tax the Wealthy or Feed the Hungry (Jonathan Kantrowitz)
Republicans and the Gilded Age (David Offutt)
Santa Clara v. Southern Pacific Railroad (1886) where one Supreme Court justice (actually just a clerk) rewrote the Constitution to declare corporations are people by misrepresenting the actual ruling of the court through a single sentence in the summary.
Supreme Court Delivers the Goods for Corporations (the Citizens United case, 2010)
The Wealthiest Americans Ever (New York Times, 2007) - spoiler: It's J.D. Rockerfeller.
Gilded Once More (Paul Krugman, 2007)

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