Against Despair: How Our Misreading of History Harms Progressivism Today. By Michael Tomasky. Democracy: A Journal of Ideas, Summer 2010. Also find it here.
The Long Exception: Rethinking the Place of the New Deal in American History. By Jefferson Cowie and Nick Salvatore. International Labor and Working-Class History, Fall 2008.
For Richer: How the Permissive Capitalism of the Boom Destroyed American Equality. By Paul Krugman. New York Times, October 20, 2012. Also find it here.
Also see: The Rise of the New Global Plutocratic Elite and the Crisis of the Middle Class.
Tomasky:
I was
born three weeks before Kennedy was elected. To pick two other progressives in
positions of somewhat greater prominence, Rahm Emanuel was born a few months
before me, and Barack Obama, a few months after. People my age now run things;
whatever liberalism exists today is in no small part a creation of my
generation’s experience and imagination.
We grew
up with a set of assumptions. If you were born in the United States between,
say, 1945 and 1965, you were raised in a basically liberal political culture
when liberalism was the default position. You studied the New Deal, or were
instructed in it by your parents and grandparents, as I was (neither of my
grandmothers could even say “Hoover” without spitting the name out like a
mouthful of turpentine), and you thought: This is how it is. This is America.
We were once a conservative country. But that was then. We’ve put it away.
Progress–progressive progress, if you don’t mind the redundancy–was inevitable.
When
Reagan came, you thought: aberration. Maybe we did go a bit overboard here and
there, and, let’s face it, Jimmy Carter was not an effective president. So this
is a corrective. Temporary. Things will sort themselves out. That was how it
looked in August 1988, when Michael Dukakis was 17 points ahead of George H.W.
Bush, and when many hoped that President Dukakis’s tenure would be followed by
President Cuomo’s. In the America in which we were raised, that was how things
would have gone and were fated to go.
Thirty
years later–actually, about 27 years later, or three or so years ago–I started
to ask myself: What if all these presumptions I grew up with were wrong? What
if Reagan wasn’t an aberration? What if Roosevelt and Johnson were the
aberrations? True, we had Bill Clinton in the meantime. Poor Clinton never
plays a central role in these narratives, and I think today we’re gaining
enough historical distance that he is starting to deserve better: His
presidency may not have constituted a golden age of progressivism in the way
selected Roosevelt and Johnson years did, which remains the reason we focus
more on those two, but it was certainly a comparative golden age for the
country. Still, as we know, the right marched onward during the Clinton years.
And then of course came Bush. The idea we young people of the 1980s once
entertained–the idea that the Age of Reagan was somehow false, anomalous, a
torn page in an otherwise seamless development of plot–had now to be reexamined,
in light of the speed with which Bush and Dick Cheney and Karl Rove undid so
many (thankfully not all) of the ideas and policies we had been raised to
believe were inviolate.
The
historians Nick Salvatore and Jefferson Cowie of Cornell University published a
brilliant paper in 2008 in the journal International
Labor and Working-Class History called “The Long Exception: Rethinking the
Place of the New Deal in American History.” In their Abstract, they write:
The New
Deal was more of an historical aberration–a byproduct of the massive crisis of
the Great Depression–than the linear triumph of the welfare state. The depth of
the Depression undoubtedly forced the realignment of American politics and
class relations for decades, but, it is argued, there is more continuity in
American politics between the periods before the New Deal order and those after
its decline than there is between the postwar era and the rest of American
history. Indeed, by the early seventies the arc of American history had fallen
back upon itself. While liberals of the seventies and eighties waited for a
return to what they regarded as the normality of the New Deal order, they were
actually living in the final days of what Paul Krugman later called the
“interregnum between Gilded Ages.”
Salvatore
and Cowie argue that on three crucial fronts–labor, race, and religion–the New
Deal and the Great Society both represented abnormal (and extremely fleeting)
moments of commonality in an arc of American history that otherwise bent
strongly away from any notion of a common good and toward the primacy of the
individual. Of the Reagan era, they wrote that “it might be more accurate to
think of the ‘Reagan revolution’ as the ‘Reagan restoration,’ a return to a
more sharply conservative, individualistic reading of constitutional rights and
liberties prevalent before the New Deal.”
Cowie and Salvatore:
Given
the intense brevity of the “fragile juggernaut,” it might be more accurate to
think of the “Reagan revolution” as the “Reagan restoration,” a return to a more
sharply conservative, individualistic reading of constitutional rights and liberties
prevalent before the New Deal. That this restoration included a society more
sharply stratified by economic distinctions and racial divides, a significantly
less liberal interpretation of a host of social and cultural issues, an enhanced
fragmentation of working people’s political voice, and a reuniting of religious
and conservative activists in civic life is due to many factors. But prominent among
them in driving this return to a new Gilded Age was the profound fragility of
New Deal liberalism itself. Even so, this was not a restoration in the sense of
a return to small government as Reagan so forcefully advertised. As David
Stockman’s lament about the Reagan administration’s inability to truly roll
back government suggests, a Hamiltonian structure—contra Louis Hartz—was the
true vital center of twentieth century American politics. Akin to post-CivilWar
America, the political discourse of the Reagan Era celebrated the self-made man
while denigrating the encroaching powers of government—all the while enlarging
those federal powers to new heights. The issue was never really whether that
government was large or small as political rhetoric might have us believe, but
toward what ends and whose interest those massive institutions would be driven.
Krugman:
As the
story about Despont suggests, it’s not fair to say that the fact of widening
inequality in America has gone unreported. Yet glimpses of the lifestyles of
the rich and tasteless don’t necessarily add up in people’s minds to a clear
picture of the tectonic shifts that have taken place in the distribution of
income and wealth in this country. My sense is that few people are aware of
just how much the gap between the very rich and the rest has widened over a
relatively short period of time. In fact, even bringing up the subject exposes
you to charges of “class warfare,” the “'politics of envy” and so on. And very
few people indeed are willing to talk about the profound effects – economic,
social and political -- of that widening gap.
Yet you
can't understand what’s happening in America today without understanding the
extent, causes and consequences of the vast increase in inequality that has
taken place over the last three decades, and in particular the astonishing
concentration of income and wealth in just a few hands. To make sense of the
current wave of corporate scandal, you need to understand how the man in the
gray flannel suit has been replaced by the imperial C.E.O. The concentration of
income at the top is a key reason that the United States, for all its economic
achievements, has more poverty and lower life expectancy than any other major
advanced nation. Above all, the growing concentration of wealth has reshaped
our political system: it is at the root both of a general shift to the right
and of an extreme polarization of our politics.
. . . . . . . . . .
The
concerted effort to deny that inequality is increasing is itself a symptom of
the growing influence of our emerging plutocracy (more on this later). So is
the fierce defense of the backup position, that inequality doesn’t matter – or
maybe even that, to use Martha Stewart’s signature phrase, it’s a good thing.
Meanwhile, politically motivated smoke screens aside, the reality of increasing
inequality is not in doubt. In fact, the census data understate the case,
because for technical reasons those data tend to undercount very high incomes –
for example, it’s unlikely that they reflect the explosion in C.E.O.
compensation. And other evidence makes it clear not only that inequality is
increasing but that the action gets bigger the closer you get to the top. That
is, it’s not simply that the top 20 percent of families have had bigger
percentage gains than families near the middle: the top 5 percent have done
better than the next 15, the top 1 percent better than the next 4, and so on up
to Bill Gates.
Studies
that try to do a better job of tracking high incomes have found startling
results. For example, a recent study by the nonpartisan Congressional Budget
Office used income tax data and other sources to improve on the census
estimates. The C.B.O. study found that between 1979 and 1997, the after-tax
incomes of the top 1 percent of families rose 157 percent, compared with only a
10 percent gain for families near the middle of the income distribution. Even
more startling results come from a new study by Thomas Piketty, at the French
research institute Cepremap, and Emmanuel Saez, who is now at the University of
California at Berkeley. Using income tax data, Piketty and Saez have produced
estimates of the incomes of the well-to-do, the rich and the very rich back to
1913.
The
first point you learn from these new estimates is that the middle-class America
of my youth is best thought of not as the normal state of our society, but as
an interregnum between Gilded Ages. America before 1930 was a society in which
a small number of very rich people controlled a large share of the nation's
wealth. We became a middle-class society only after the concentration of income
at the top dropped sharply during the New Deal, and especially during World War
II. The economic historians Claudia Goldin and Robert Margo have dubbed the
narrowing of income gaps during those years the Great Compression. Incomes then
stayed fairly equally distributed until the 1970’s: the rapid rise in incomes
during the first postwar generation was very evenly spread across the
population.
Since
the 1970’s, however, income gaps have been rapidly widening. Piketty and Saez
confirm what I suspected: by most measures we are, in fact, back to the days of
“The Great Gatsby.” After 30 years in which the income shares of the top 10
percent of taxpayers, the top 1 percent and so on were far below their levels
in the 1920's, all are very nearly back where they were.
And the
big winners are the very, very rich. One ploy often used to play down growing
inequality is to rely on rather coarse statistical breakdowns – dividing the
population into five “quintiles,” each containing 20 percent of families, or at
most 10 “deciles.” Indeed, Greenspan’s speech at Jackson Hole relied mainly on
decile data. From there it’s a short step to denying that we’re really talking
about the rich at all. For example, a conservative commentator might concede,
grudgingly, that there has been some increase in the share of national income
going to the top 10 percent of taxpayers, but then point out that anyone with
an income over $81,000 is in that top 10 percent. So we’re just talking about
shifts within the middle class, right?
Wrong:
the top 10 percent contains a lot of people whom we would still consider middle
class, but they weren’t the big winners. Most of the gains in the share of the
top 10 percent of taxpayers over the past 30 years were actually gains to the
top 1 percent, rather than the next 9 percent. In 1998 the top 1 percent
started at $230,000. In turn, 60 percent of the gains of that top 1 percent went
to the top 0.1 percent, those with incomes of more than $790,000. And almost
half of those gains went to a mere 13,000 taxpayers, the top 0.01 percent, who
had an income of at least $3.6 million and an average income of $17 million.
A
stickler for detail might point out that the Piketty-Saez estimates end in 1998
and that the C.B.O. numbers end a year earlier. Have the trends shown in the
data reversed? Almost surely not. In fact, all indications are that the
explosion of incomes at the top continued through 2000. Since then the plunge
in stock prices must have put some crimp in high incomes – but census data show
inequality continuing to increase in 2001, mainly because of the severe effects
of the recession on the working poor and near poor. When the recession ends, we
can be sure that we will find ourselves a society in which income inequality is
even higher than it was in the late 90’s.
So
claims that we've entered a second Gilded Age aren’t exaggerated. In America’s
middle-class era, the mansion-building, yacht-owning classes had pretty much
disappeared. According to Piketty and Saez, in 1970 the top 0.01 percent of
taxpayers had 0.7 percent of total income – that is, they earned “only” 70
times as much as the average, not enough to buy or maintain a mega-residence.
But in 1998 the top 0.01 percent received more than 3 percent of all income.
That meant that the 13,000 richest families in America had almost as much
income as the 20 million poorest households; those 13,000 families had incomes
300 times that of average families.
And let
me repeat: this transformation has happened very quickly, and it is still going
on. You might think that 1987, the year Tom Wolfe published his novel “The
Bonfire of the Vanities” and Oliver Stone released his movie ''Wall Street,''
marked the high tide of America's new money culture. But in 1987 the top 0.01
percent earned only about 40 percent of what they do today, and top executives
less than a fifth as much. The America of “Wall Street” and “The Bonfire of the
Vanities” was positively egalitarian compared with the country we live in
today.
