Our Major Depressive Disorder and The New Gilded Age

Contributed by Jason T. Eastman Assistant Professor of Sociology at Coastal Carolina University
March 20, 2012
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Today, it is an incredibly common practice for politicians, political pundits, reporters, and even ‘everyday’ folks to compare the economic challenges we confront with ‘The Great Depression.’  This comparison is so commonplace that many even refer to the economic downfall that followed the 2008 financial crisis ‘The Great Recession.’[1]  On the surface, the comparison seems accurate because both economic downturns were initially sparked by a crisis on Wall Street that overflowed into the banking system, both of which led to years of stagnant economic growth and all the problems that accompany downturns including high unemployment and heightened levels of poverty.[2],[3],[4]Yet a closer inspection reveals our current socio-economic climate is not only more comparable to another ugly historical era known as ‘The Gilded Age,’ but thinking today’s economy is similar to ‘The Great Depression’ is problematic because it guises the actual problem we face: inequality.[5],[6]  We do not suffer from the general lack of economic production that characterized ‘The Great Depression;’ rather the United States has an economy that fails to produce to its potential because, much like ‘The Gilded Age,’ our economic system is designed to shift wealth and resources from The 99% and to The 1%.[7]   Yet, because there is a narrative our economic problems are similar to ‘The Great Depression,’ we not only overlook the actual problem we confront;[8]we also allow those responsible to avoid culpability as we let politicians and business leaders misdirect our social responses to the wrong problems.[9]

The Gilded Age and Great Depression

The Gilded Age’ that followed The Civil War was characterized by westward expansion combined with a massive industrial extension made possible by new technologies like the gasoline engine and the increased mechanization of industries such as steel, textiles, farming and mining.  During ‘The Gilded Age,’ names that Americans still celebrate as folk heroes such as Carnegie, Mellon, Morgan, Rockefeller and Vanderbilt amassed fortunes on a scale never thought possible by taking advantage of these new economic opportunities.  However, there is a controversial side to many of these men mostly forgotten to history.  When Americans celebrate Gilded Age elites as exemplars of American Individualism, we often forget in their own time they were called robber barons.  This derogatory phrase refers to the ways many industrialists maintained an aristocratic-like status in society through amoral and often illegal business practices that allowed their fortunes to grow at the expense of the greater social good.  In fact, Mark Twain named this period ‘The Gilded Age’ to metaphorically describe how these few, immensely successful individuals and their opulent lifestyle as gilding our society, or as putting a thin layer of gold over an object to conceal the ugliness beneath.  Just beneath the golden surface of ‘The Gilded Age,’ most workers suffered in poverty despite working inordinate numbers of hours at difficult and often dangerous industrial or agricultural jobs.  In fact, exploitation of these workers is a larger reason why robber barons were able to amass vast fortunes. 

The inequalities beneath the surface of ‘The Gilded Age’ façade resulted in economic and political practices that concentrated not just wealth but also power in the hands of robber barons.  Political corruption was widespread during ‘The Gilded Age,’ which enabled robber barons to both rig economic rules to their favor or avoid culpability for their behaviors that went beyond moral and crossed legal lines.  A famous and fitting example considering Twain’s gilding metaphor occurred when the railroad baron Jay Gould used his political connections to create inflation by manipulating the availability of gold, which then forced commodity traders to import goods like wheat from western markets to increase supply—commodities that had to be moved at inordinate rates on Gould’s trains.  While the Grant administration ultimately foiled the plan, Gould’s manipulations were the root cause of the Black Friday stock market crash of 1869.  Because of his political connections, Gould was never charged with any crime.[10]  Practices like this were quite common as robber barons drew upon their power and oligopolistic control over the economy to maximize their gains in ways that often came at the expense of less powerful others and the economy as a whole. 

Although there was some progressive pushback in the early 1900s, and we generally ignored inequalities during ‘The First Great War’ and ‘The Roaring 20s,’ ‘The Gilded Age’ not only lasted until the late 1920s, but the inequalities and corrosive economic practices of the age largely caused ‘The Great Depression.’  Following World War I, an increasing amount of capital flooded the investment market from small investors, many of whom bought “on margin” or borrowed the money to invest in the market in the hopes that return rates would outpace interest payments.  Financiers then used others’ borrowed capital to enhance their own investments by taking advantage of the inflated prices that came from over demand.  But on Black Thursday in 1929, it was suddenly apparent the inflated value of stocks could no longer be maintained and the stock market crashed.  The subsequent run on the banks meant even those who did not gamble on Wall Street lost their savings alongside the investors when their many banks shut their doors.  Businesses large and small collapsed from a lack of consumer demand, and overall lack of both capital and credit for investment meant stagnation persisted.  The effects of the subsequent depression were widespread, which meant loss and suffering were distributed across the social classes, as often those who had the most at the end of ‘The Gilded Age’ lost the most. 

The New Gilded Age and Great Recession

Starting in the 1980s, the ‘Trickle-Down’ economics of the Reagan administration began to make America look more and more like ‘The Gilded Age.’[11] The bull markets of the 1990s and the policies of both Bush administrations shifted capital from the working and middle class to the capitalist class.[12],[13]  Half way into the first decade of this century, economists, including Nobel Prize winner Paul Krugman, pointed out how America was in the midst of a ‘New Gilded Age’ because income, wealth and power were increasingly concentrated in the hands of a small group of elites at levels not seen since the days of the robber barons.[14]  But so long as the façade of shared prosperity was maintained with over-valued stocks, rising equity in real estate, and enhanced lifestyles made possible by both low cost goods and easily available,[15]a highly regulated discourse meant any talk of inequality and the consolidation of political power in the capitalist class was considered un-American.[16]

There were a great many historical parallels between the dawn of the 21st century and ‘The Gilded Age’ we ignored much to our peril.  Both gilded ages followed protracted periods of war which, when ended, opened up new markets.  The end of The Civil War was followed by massive westward expansion that stalled even before the outbreak of fighting because of political stagnation.  Similarly, the fall of the Soviet Union in 1992 had the same effect of the fall of the U.S. Confederacy as the end of open hostilities opened up markets all across the globe.  Furthermore, just like the technologies developed during the Civil War propelled production across many peacetime industries, the computer technologies developed during the Cold War were unleashed by the fall of Communism and made globalization happen at both an astonishing rate and on a scale never thought possible.  Similar to the first Gilded Age, expanding markets and new technologies provided increasing opportunities for entrepreneurs to introduce new products and amass great fortunes.   The financial industry was quick to capitalize both on technology to improve communications and trade so they could take full advantage of these entrepreneurs’ innovations.  Also like the first Gilded Age elites used their wealth and power to both game the system, many in the financial sector compelled politicians to undo regulations put in place after the 1929 Wall Street crash and to avoid punishment for their amoral and sometimes illegal market practices.  Furthermore, just as in 1929, an inflated and over-leveraged market quickly and abruptly corrected itself and there was a massive drop in the markets that began on September 29th of 2008. 

However, at this point the historical trajectory diverges and the times become distinct from one another.  In 1929, the very same laissez-faire policies of the Hoover administration that allowed problematic trading practices and an expansion of inequalities meant the state allowed the invisible hand of the market to correct itself with detrimental costs.  This is not what happened in 2008, as free-marketers pressured the federal government to institute their actual economic belief; profits should be privatized, while losses should be socialized.  In 2008, the new robber barons or ‘The 1%’ used their power and forced the passage of the Emergency Economic Stabilization Act that saved large banks and the companies that insured them; although it should be noted these “banks” are better described as investment houses because they do little to safeguard money for individuals in their pursuit of profit through the markets.  However, calling them banks reinforces the narrative that what we faced as a nation was another great depression, thus ‘the banks’ were saved because history taught us The Hoover administration’s failure to act quickly in 1929 further entrenched economic stagnation. 

Thus, even though both market crashes in our history were followed by periods of economic recession and stagnation, “The (Investment) Bank Bailout” as it is now called is one of many economic policies that vastly altered the unfolding of supposedly free market practices.  In his 2010 State of the Union Address, President Obama proudly declared…

One year ago, I took office amid two wars, an economy rocked by a severe recession, a financial system on the verge of collapse, and a government deeply in debt.  Experts from across the political spectrum warned that if we did not act, we might face a second depression.  So we acted -– immediately and aggressively.  And one year later, the worst of the storm has passed.[17]

Technically, this statement is likely correct as ‘The (Investment) Bank Bailout’ did likely stave off further economic turmoil that could have stagnated economic growth for decades that characterized ‘The Great Depression.’   Yet, what is left unsaid in these remarks is that in staving off depression, this and other policies like ‘The Stimulus Plan’ that primarily consisted of tax breaks for corporations; the federal government continued ‘The New Gilded Age.’  By essentially allowing the new robber barons to embezzle tax dollars with no strings attached, the federal government perpetuated Gilded Age economic practices and made the different social classes experience the downturn in vastly different ways.[18]  The 99% lost a large proportion of their investments and continues to suffer from the economic downturn.  While there was very brief talk of the super-rich’s demise with the start of the downturn, since then ‘The 1%’ has fared quite well through ‘The Great Recession.’[19],[20] While technically most individuals (e.g. upwards of 99%) are suffering as they did during ‘The Great Depression,’ in terms of inequality we have never put ‘The New Gilded Age’ behind us because an elite few continue to prosper in ways that are historically unprecedented.[21]  However, so long as a vast majority of citizens presume there is widespread economic hardship as there was in during ‘The Great Depression,’ the prosperity of ‘The 1%’ that is occurring at the expense of ‘The 99%’ goes mostly unnoticed. 

Resuming the New Gilded Age

The United States never really moved away from ‘The New Gilded Age’ as inequality persists despite the great deal of turmoil in the investment markets right before the elections of 2008.  Yet, the turmoil itself did instill a narrative that our own economic time is similar to ‘The Great Depression’ given the memories of the 1929 stock market crash that affected everyone.  Yet in 1929, the crash often meant those who had the most were the ones who lost the most while, in our own time, policies like ‘The (Investment) Bank Bailout’ redirected history and, despite popular misconceptions about widespread suffering at the top of the class hierarchy, those who had and have the least are now suffering the most.[22]   

At the risk of morbidity, a simple example illustrates the divergence between these two periods.   We likely heard stories about Wall Street bankers throwing themselves from buildings during the 1929 crash and subsequent depression; this type of death was even used as the just end to the villain in the movie Titanic, one of the highest grossing films of all time.  While perhaps more folklore than fact, there are not even rumors of this happening in the 2008 crash and subsequent recession; and why would stories like this emerge given that Wall Street investors are doing better than ever?[23]  Instead we read about Chinese workers at an Apple electronic factory installing nets to catch suicide jumpers while we posthumously celebrate Steve Jobs as the quintessential industrialist or technologist of our own Gilded Age.[24],[25]

Recent examples of how ‘The 1%’ uses their power to ensure prosperity at the expense of ‘The 99%’ are both plentiful and reinforce how our contemporary economy is more comparable to ‘The Gilded Age’ than ‘The Great Recession.’  Furthermore, many of these examples also highlight how ‘The 1%’ avoid civil and legal liability for their amoral, if not illegal practices while ensuring ‘The 99%’ are not only shamed, but also held legally responsible for their mistakes.[26]  While many of ‘The 99%’ who unknowingly bought over-valued homes with the promise of pursuing the American Dream are now under-water and fighting to stay off homelessness, the biggest mortgage defaulters are on ‘The 1%’s’ second homes.  While the Justice Department is willing to give banks and mortgage services immunity for illegally foreclosing upon homeowners in the robo-signing scandal so long as they pay a minor fine, we also see the return of debtors’ prisons for ‘The 99%.’  The one supposedly populist aspect of the Troubled Asset Relief Program designed to help homeowners in financial trouble avoid foreclosure was so abused by mortgage providers and services the program was discontinued; no one was ever held accountable for abusing this program while individuals who trusted the system lost everything they invested in their homes.[27]  While taxpayers bailed out ‘The 1%’ with no strings attached by the federal government, they adamantly fight proposals to reduce either principle or interest rates for homeowners and student debtors because such a program would result in a short-term loss in the value of their securities—even though it might save money in the long-term by avoiding future defaults and foreclosures.[28]  This in no way resembles ‘The Great Depression’ when those with the most lost the most and ultimately everyone suffered somewhat equally.  Rather, it is reminiscent of ‘The Gilded Age’ when robber barons would easily fend off antitrust suits for decades on end while they continuously and constantly hauled their less powerful competitors, journalists willing to write the truth, and union leaders in front of bought judges under trumped up charges.

Thus, much like the first gilded age where robber barons felt confident to do as they please without consequences, today ‘The 1%’ can both metaphorically and literally consider themselves above the law.  The arrogance of ‘The 1%’ as indicated by things like their disregard of public opinion as they write themselves record high bonuses while they lay off workers is indicative of their confidence they can continue to block investigations into their wrongdoings.[29] Instead, they watch the police arrest occupiers in nighttime commando raids from opulent offices and apartments in their ivory towers above.  And of course evicting people from these public spaces, many of whom turned to occupy camps because they had no place left to go, in no way resemble the ‘Hooverville’ shanty-towns that became the symbols of ‘The Great Depression.’  Rather, these raids remind us of ‘The Gilded Age’ when robber barons, safe in their Victorian Mansions, would pay state and private militias like the Pinkertons to throw workers out of company-owned houses and violently break up peaceful strikes with egregious over-uses of force. 

Consequences of Seeing the New Gilded Age as the Great Recession 

We tend to live in reality as we see it, not as it actually is,[30]and thus there are important consequences when we misconstrue our contemporary economic reality with ‘The Great Depression.’  One peculiar aspect about our retrospective assessment of ‘The Great Depression’ is how the period is now often looked at with a certain degree of nostalgia, or as one of the great triumphs of our society.[31]  For example, there is a framing how prior to winning ‘The Second Great War,’ ‘The Greatest Generation’ used their tenacity, ingenuity and fortitude to first survive and then overcome ‘The Great Depression.’[32]  Thus, we tend to overlook the widespread suffering and political turmoil of this time and instead focus on how a country first survived and then overcame ‘The Great Depression’ by first sacrificing and then pulling ourselves up by our bootstraps. 

When we compare our own time to ‘The Great Depression,’ it makes us think there is a great deal of suffering amongst all the social classes, while also reinforcing arguments the way to overcome our economic challenges is to work harder than we ever have before while sacrificing everything we can do without.  Of course, suffering is not evenly distributed across the classes as ‘The 99%’ bear the brunt of our hardships while ‘The 1%’ continues to prosper.  Furthermore, ‘The 1%’ are doing so well in large part because ‘The 99%’ devote themselves to working harder and harder for the greater social good.  Many Americans are now more educated (often at great financial cost to ourselves) and productive than ever; yet wages have been stagnant for a generation and are now actually starting to decline, especially when we factor in inflation and increased costs of living.[33]  Thus, under a guise of shared struggle, ‘The 1%’ uses the promise of better times ahead to convince ‘The 99%’ what is needed now is for us to sacrifice everything we do not need and to work harder and harder for less income that increasingly provides a lower and lower standard of living.[34],[35],[36]  Of course, these practices are much more akin to ‘The Gilded Age’ where workers were all but forced by gunpoint to toil for low wages than ‘The Great Depression’ where economic stagnation existed because individuals could not find jobs and could not contribute to the greater social good. 

It is also important to recognize that, similar to ‘The Great Depression,’ blame for the economic crisis is falsely spread away from Gilded Age economic elites and toward victims of circumstance.  History textbooks emphasize how ‘small investors buying on margin’ were a major cause of the 1929 stock market crash.  While widespread borrowing to invest was a problem, it occurred primarily because those in the financial industry knew they could make money without risking their own capital.  This created a situation where financiers could gamble in a game with only two outcomes; “tails they win, heads we lose.”  Today, ‘The 1%’ is already rewriting recent history to read in a similar way.[37]  Turn on any business cable news channel or pick up the Wall Street Journal and inevitably you will find arguments that ignore the reckless investments of elites and instead blames 99%ers for taking on the very same levels of debt they encouraged for the better part of a generation. [38]  For example, ‘The 1%’ blames ‘The 99%’ for over-using their credit cards to buy frivolous lifestyle items, although investigations show a significant portion of the debts owed come from fees and inordinate interest rates charged by lenders.{39]  Since the 2008 crisis was primarily a result of the mortgage morass, it is also common for The 1% to argue homeowners irresponsibly bought homes they could not afford, thus essentially calling The 99% too stupid to understand the risks they undertook despite overwhelming evidence realtors steered their customers towards homes they could not afford to heighten their commission while mortgage providers carelessly, if not intentionally, overlooked mistakes in applications—likely because they knew the mortgage would be sold to investors who would take the loss if the loans defaulted.[40]  Defying logic, ‘The 1%’ still hold fast to these arguments while continuing to oppose the Consumer Protection Bureau[41] even though it might help stop the supposedly ‘consumer stupidity’ they argue caused the 2008 crash. 

It seems ‘The 1%’ have a vested interest in convincing the country we are fighting off another great depression rather than recognizing we are living in a second gilded age.  While it would be impossible to ever establish this framing of our socio-economic conditions is a concerted effort by ‘The 1%,’ there are obviously benefits when the majority of ‘The 99%’are unaware how similar our time is to one of the most egregiously exploitative periods in our history.  This is because there would be a great deal more resistance to the status quo and a desire for change when we properly recognize the economic organization and problems we confront are much more similar to ‘The Gilded Age’ than ‘The Great Depression.’ 

Fighting the Wrong Battles

Part of living in the reality we see as opposed to recognizing reality as it actually exists means our efforts are often directed at the issues we see as problematic as opposed to seeking solutions to the troubles that actually ail us.  In short, because we do not recognize the problems we face today are more akin to what the United States confronted during The Gilded Age, our efforts to combat economic recession and stagnation are doomed to fail because the actual problems we face as a nation stem from inequality.  Specifically, the primary issues confronting the United States are the concentration of wealth of ‘The 1%,’ which according to zero-sum economic theories is only possible during slow economic growth when it comes at the expense of ‘The 99%.’   Thus, because we incorrectly perceive the socio-economic organization of today akin to ‘The Great Depression,’ we tend to draw upon a select subset of New Deal policies and programs FDR used to overcome the first great economic stagnation our country faced that had inherently different root causes.  

There was brief talk of action on inequality immediately after the 2008 presidential election, but this was more fiction than fact as Obama’s first two signature pieces of legislation did more for ‘The 1%’ than ‘The 99%.’  The stimulus package consisted primarily of tax cuts to benefit businesses.[42]  While Obama’s health care reform bill does include rules that make patients less vulnerable to their insurance companies, it mostly funnels capital into for-profit, publically traded corporations because it does not contain the public option he campaigned on.  Furthermore, inequality was quickly abandoned as a rationale for these efforts, as even the health care legislation was supported with arguments that it would be good for the economy—a framing that served to further reinforce perceptions we are stuck in another great depression as oppose to a second gilded age.

The election of a Republican congress in 2010 meant even talk of inequalities were dismissed as ‘class warfare.’  The 112th congress focused the political discussion almost exclusively on government spending, often by comparing our own time to ‘The Great Depression’ to instill a sense that sacrifices needed to be made.  By insisting the government had a “spending” problem as opposed to a “revenue” problem, a crusade was launched against  New Deal and Great Society programs like Medicare, Medicaid, Social Security and Food Stamps that alleviate inequality.  Forms of corporate welfare and military spending that benefit primarily ‘The1%’ were not a part of the discussion.  Furthermore, arguments about a more progressive tax code were quickly shut down as ‘The 1%’ argued taking anything away from the ‘job creators’ would stall the very recovery ‘The 1%’ argue was not happening because of government spending.  Thus, by perceiving the economic climate as similar to ‘The Great Depression’ rather than coming to understand it more closely resembling ‘The Gilded Age,’ we largely overlooked how The 1% continued to prosper at historically unprecedented levels while we asked the poorest in the nation to give up their food and medicine. 

Often, discussions about “reigning in government spending” were framed as necessary because of the country’s growing debt that would hinder economic recovery and indebt future generations.   This is one instance where comparisons back to ‘The Great Depression’ were not useful, as history tells us the Depression was severely hindered when New Deal programs were cut back in 1933.[43]   Still, these arguments were only plausible because while we did not compare our time back to ‘The Great Recession,’ in argument about government spending, we still failed to recognize that, much like ‘The Gilded Age,’ government debt was perpetuating inequality.  While wars and increasing health care costs played a role in putting the United States deep into the red, the single biggest reasons for our debts are tax cuts that began with the ‘Trickle-Down’ economic policies of Reagan and then exponentially increased during the administration of George W. Bush—although the latter president framed tax cuts as ‘across the board’ even though they benefitted primarily ‘The 1%.’  However, by framing the cuts as if they benefit everyone, it is much less likely the tax reform would be recognized for what it is: a policy essentially straight from ‘The Gilded Age’ given that an elite few manipulated the state for their elite interests.  Furthermore, if we would somehow recognize that right now the economic climate is more comparable to ‘The Gilded Age’ than ‘The Great Depression,’ all discussion of government debt would likely cease as we would also likely recognize household debt is much more problematic because too many households are paying off old bills rather than making the new purchases that drive a consumer-based economy like ours.[44]

More recently, both candidates and office holders focus their attention on public statements on unemployment, and they often make these proposals by noting unemployment is, and has been, at sustained heights not seen since the Great Depression.  While this is likely in some part due to upcoming elections, and running on jobs is a platform few voters could ever disagree with, it is also likely due in large part because we think of our time as akin to ‘The Great Recession.’ This leads to the conclusion the biggest issue our country faces is unemployment.  Of course, even with comparisons of the contemporary jobs crisis to ‘The Great Depression,’ this has not compelled any politician to seriously consider action on the scale of FDRs massive job programs even though our infrastructure is outdated and even crumbling.[45]

Thus, while the talk of fixing unemployment is mostly just that, it does reinforce the misconstruing of own gilded age with ‘The Great Depression.’  While unemployment is both high, and we should never underestimate the personal consequences of not working for any period of time,[46],[47]we should also accept that the historically low wages of our ‘Gilded Age’ means lower unemployment is not going to fix the actual problem we face in the United States: inequality (which is of course at historically high levels in large part because wages are historically so low).[48]  Under these ‘New Gilded Age’ conditions, we could miraculously achieve full employment; yet if those jobs do not pay a living wage, a vast majority of ‘The 99%’ will still have a lifestyle as if they were living during a second great depression.[49],[50]

Comparing Today’s Economy to the Gilded Age Era

An example is useful to highlight how today’s economy is much more comparable to ‘The Gilded Age’ than ‘The Great Depression.’  Growing up in the remnants of an Appalachian coal mining town, even our elementary school teachers lectured us about the gruesome lessons of ‘The Gilded Age.’   Classes often focused not only on strikes and deadly accidents, but I also learned about the regular business practices at the mines which ensured companies maintained almost total control over labor in order to exploit workers any and every which way they could.  In addition to keeping wages low by busting unions and reducing solidarity by exploiting racial and ethnic divides between workers, companies also controlled workers by paying them in currency only redeemable at company owned outlets. I spent the early years of my life in a company-owned house that was once owned by a mine and rented out by miners.  My grandfather would send me to get the mail at the post office right next to the old company store that once overcharged workers so they would be perpetually indebted.  If workers did somehow garner a wage increase, rent and food prices would simply rise proportionally so owners could maintain the profits and thereby continue to expand their fortunes.  Their power over the political process at all levels ensured either the system was unlikely to change in ways that would undermine their profits or benefit the workers.  The power of these robber barons also ensured elites were never held accountable when they crossed legal lines.

Today’s labor and compensation practices seem much more akin to ‘The Gilded Age’ described above than ‘The Great Depression’ as the entire economic system is designed so the few can benefit from the hard work of the many regardless of how the economy performs. Consider a typical person’s career and lifestyle.  Most now begin careers by pursuing a college degree, which is often accomplished by securing student loans from large banks subsided by tax dollars.  Increasingly, those tax dollars are redirected away from colleges and universities themselves, which increase the costs of education to the benefit of the large banks who increasingly provide larger and larger loans.  At the same time, universities and colleges are pressured to reduce costs which often come at the expense of the educations they can provide because of larger classes, outdated technology, and instructors who are less available because they teach more sections of larger classes with outdated technology.  Thus, students are increasingly borrowing more and more for educations that are of a lesser quality, and this occurs because the system is designed not to educate but to direct resources towards large banks and the financial sector under the guise of providing educations.[51]  Many students even now pay to work for free through unpaid internships.[52]

Hopefully these indebted students will graduate and secure employment, although statistics show that jobs will be at historically low wages even though that new employee will likely produce at historically high levels—in large part because of the educational investments they made in themselves.  Those low wages will be justified with arguments that the global labor market is competitive, and those arguments might be partially true for ‘The 99%’ of workers in a corporation; ‘The 1%s are of course in a position to benefit from the global race to the bottom.  For global corporations that are increasingly employing a larger and larger proportion of the workforce as they force smaller operations to go out of business, corporate officers are positioned to take advantage of historically low wages by padding their own salary with profits gained because of increasingly exploited labor across the globe.  Of course, ‘The 99%’ are told to ignore corporate profits and instead focus on how lower production costs benefits consumers with lower prices.[53]

Furthermore, with the decline of small businesses, it is increasingly likely that worker will be employed by a publically traded company.  The employee is thus likely to work harder and harder not for bonuses or raises but under the threat of unemployment.[54]  This means they are essentially working against themselves, as their increased productivity will benefit primarily the financial sector that hedges their bets that workers will work harder and harder for less and less—all the while they seek out workers in the far reaches of the world who are willing to work for less and less.  That employee is also likely to pay more and more for their health care, while insurance companies and their investors earn more and more by reducing the quantity and quality of care that the worker receives.   With pensions pretty much relegated to history, that employee is also likely to invest in a individual retirement plan like a 401k, which provides capital for the financial industry invest for their own gain while providing a legitimate outlet to direct losses.  This worker may also choose to take on a mortgage, which is increasingly likely to come from a large bank, thus ensuring even more of their capital is redirected to financial sector.  In fact, the mortgage itself may be securitized and sold back to the worker through their retirement account.  Thus, many workers are actually paying on their mortgage twice, which means the financial industry will benefit from the payments while the worker loses investment capital with falling home prices.[55]

However, the worker is technically paying their mortgage in triplicate, because their tax dollars are also likely going to subsidize the same financial sector that exploits the worker through their consumption.  This is likely the case unless the worker makes so little they become part of ‘The 47%’ who do not make enough to pay federal taxes, as the costs of student loan interest, mortgage interest, medical bills, and the deductions for any children this worker might have negate their federal liability.  Thus, whereas Wall Street financiers are not only taxed at a lower rate because they make money from investments, they will also get to write-out the full costs of their second mortgages while the regular worker may not make enough to take full advantage of the deductions and write-offs the tax system instituted in days gone by to promote the economic development of ‘The 99%.’ 

All these practices that essentially shift capital away from ‘The 99%’ and toward ‘The 1%’ are much more similar to what we witnessed during ‘The Gilded Age’ than ‘The Great Depression.’  While the processes are inherently more complex and illusive than the more straightforward 19th century practices where you worked for an employer only to hand back your paycheck in the form of rent and company store credit, the end result of redirecting capital upward through exploitative practices is exactly the same.  However, the illusive operation of our larger economic system is concealed as we compare current economic conditions to ‘The Great Depression’ instead of recognizing that much like ‘The New Gilded Age’ economy work exactly as elites designed it to do; or it is only working for ‘The 1%’ who have the power to manipulate every, if not all aspects of the economy for their gain that comes at the expense of ‘The 99%’. 


We study history because knowing where we have been is often an excellent way to understand where we are, and where we are likely to go—or in some cases, to avoid where we are heading.  Yet, the power of retrospection can also be used to guise our reality; or to make us think we are somewhere quite apart from our actual existence.  This is the case of contemporary socio-economic context as we tend to think of ourselves either immersed in or during the early stages of recovery from a second ‘Great Depression.’  While there are a few historic parallels between today and the early 1930s, evidence suggests comparisons to ‘The Gilded Age’ would be much more appropriate because the political and economic systems operate in ways that benefit a small group who sit atop the socio-economic at the expense of the vast majority.  Thus, if we are to use history to guide us toward a better time that benefits everyone as opposed to a select few, we need to recognize our reality for what it is:‘The New Gilded Age.’ 

[1]Wessel, David.  (2010).  Did ‘Great Recession’ live up to the name?  Wall Street Journal (April 8). 

[2]Medina, Jennifer.  (2010).  Across the country, looking for the recoveryThe New York Times (February 11). 

[3]Tavernise, Sabrina.  Soaring poverty casts spotlight on ‘Lost Decade.’  The New York Times (September 13). 

[4]Leonhardt, David.  (2009).   Job losses show breadth of recession.  The New York Times (March 3). 

[5]Stiglitz, Joseph E.  (2011).  Of the 1%, by the 1%, for the 1%.  Vanity Fair (May). 

[6]Fresh Air.  (2010). Reich blames economy's woes on income disparity.  National Public Radio (September 29). 

[7]Whoriskey, Peter.  (2011).  With executive pay, rich pull away from rest of America.  The Washington Post (June 18). 

[8]Morning Edition. (2012).  Americans Underestimate U.S. Wealth Inequality.  National Public Radio (October 7). 

[9]Noah, Timothy.  (2010).  The great divergence: The United States of inequality.  Slate (September 14). 

[10]Ackerman, Kenneth D. (1988). The Gold Ring: Jim Fisk, Gould, and Black Friday, 1869. New York: Dodd, Mead & Co.

[11]Uchitelle, Louis and Amanda Cox.  (2007).  Age of riches; The richest of the rich, proud of a new gilded age.  The New York Times (July 15). 

[12]Johnston, David Cay.  (2005).  Richest are leaving even the rich far behind.  The New York Times (June 5).   

[13]Haskins, Ron.   Isaacs, Julia B. and Isabel V. Sawhill.  (2008).  Getting ahead or losing ground; Economic mobility in America.  The Brookings Institution (February). 

[14]Krugman, Paul.  (2007).  Gilded once more.  The New York Times (April 27). 

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