“There are two things that are important in politics. The first is money. I can’t remember what the second is” (Mark Hanna 1898).
“The term Gilded Aged was coined by Mark Twain in a novel of that title in 1873…. It was meant to describe an American society with a glittering surface of gold that concealed a corrupt core” (Joseph P. Ellis, “American Dialogue”). According to Ellis, we are now living in America’s Second Gilded Age, where income inequality is at a higher level than during the first Gilded Age.
In our time, as in the Gilded Age of the late 19th and early 20th centuries, we are living in an era where most of the wealth of the nation goes into the pockets of the super wealthy. According to Ellis, 60 percent of the nation’s wealth goes to the richest 10 percent. If you divide that 60 percent, the top 10 percent controls 30 percent of that wealth, and the top 0.1 percent owns 10 percent.
This imbalance is a threat to our democracy. Democracy depends on a strong and stable middle class. The middle class has sustained our nation since its beginnings. Without hope of moving up the social ladder, we develop a permanent and stagnant underclass open to the promises of demagogues.
According to the Gini index, there was a period between 1930 and 1980 that economists have called “The Great Compression.” Income taxes were raised to an average of 75 percent of the wealthy’s income and wages for the poor rose. FDR brought stability with his New Deal programs such as Social Security and government regulation of industry.
Most senior citizens today remember that era as “The Golden Age” where companies gave pensions which, combined with Social Security, allowed people to retire. For the lower classes, those pensions have disappeared, being replaced by the more historically common reality of having to work until you die.
Part of the reason for the shift is a population that is living well past the age of 65. Another explanation is globalization, where working class jobs flow to low-wage regions of the world. Automation has only sped up the loss of jobs.
President Ronald Reagan, a hero to the right, brought an end to that period of relative income equality with his libertarian view that government was the problem instead of the solution.
According to Ellis, 70 percent of the nation trusted government in the early 1960s. The Vietnam War, the Civil Rights era and Watergate eroded that trust. Reagan pushed for tax cuts and the end of the New Deal, something neither of his Republican predecessors, Dwight Eisenhower and Richard Nixon, had done. Reagan cut taxes, mostly for the super rich. The highest tax brackets were reduced from 75 percent to 39 percent. The minimum wage level stayed at 1970s levels for decades and multiple tax loopholes were added to protect upper class wealth.
The Glass-Steagall Act of 1933 was voided by Democratic President Bill Clinton’s signature in 1999. The end of Glass-Steagall eliminated most of federal checks on investment banking and helped pave the way for the “Great Recession” beginning in 2007-08.
The Citizens United Supreme Court decision of 2010 opened the floodgates of “dark money,” where wealthy donors could give as much money to the political process as they desired without having to reveal their identities. Individuals like Charles and David Koch, along with their super wealthy allies, helped to bring this about by pouring money into universities and elections beginning in the 1980s. They have worked tenaciously and systematically to demonize the federal government.
Mark Hanna’s quote has seemed to become truer with the passage of time.
Chronicling and documentation of this concerted effort by the super wealthy can be read in Jane Mayer’s book, “Dark Money.”
According to Ellis, the super wealthy have succeeded in returning America to another Gilded Age, negating much of the laws that protected the middle class.
In my lifetime I have witnessed the end of The Golden Era, at least for those with only high school educations. As Ellis concluded, “The emergence of a permanently stratified American society represented a welcome return to the natural order where the Captains of Industry ruled the earth.”
I am concerned for the fate of my children and grandchildren in this Second Gilded Age. You should be, too.