DRAFT: Bringing Our Unfortunate Second Gilded Age to an End?

A draft of my next column for Project Syndicate...

Bringing Our Unfortunate Second Gilded Age to an End?

Some of us are relatively more optimistic about the future of humanity. We are so because we are optimistic about humanity's possibility of escape from the traps in which our current Second Gilded Age of extremely high income and wealth inequality has caught us.

A Gilded Age is one in which a distressingly high proportion of humanity's productive capabilities are directed away from providing people with many of the necessities and conveniences we can afford, and instead diverted into spiteful engines of luxurious display that are of great expense and little genuine worth. A Gilded Age is one in which the rich spend a substantial chunk of their large relative resources creating cleavages of distrust and fear and promoting status-based hierarchies of domination. Why? To diminish the political salience of issues of economic distribution. Plus a Gilded Age is one in which inherited wealth has a great deal of social power. Inherited wealth is always threatened by the Schumpeterian creative destruction that will accompany the next wave of technology-enabled growth. So inherited wealth will use its ample social power to try to block and delay economic growth and transformation.

We see all of these at work in the here-and-now:

• Global warming now threatens to neutralize much of the technological dividend we would otherwise over the next two generations. Global warming has become such a crisis precisely because coal and oil interests had enough Gilded Age-provided social power to delay the transition to post-carbon energy.

• Ethno- and culture-based neofascism threatens democracy, in large part because the Second Gilded Age's upper class finds democracy a threat because of its elective affinity with growth, transformation, and concern about income distribution. Neofascism and “illiberal democracy” have, historically, proven very good ways of diverting attention away from issues of economic, distribution and growth.

• Plus a market economy responds to effective demand determined by the distribution of wealth and the levels of market prices. In a Gilded Age the gap between effective demand and the needs of humanity grows very large.

Optimists and pessimists alike think that nearly all of the problems hobbling human progress would be much much easier to deal with if we could escape our Second Gilded Age. Escape would greatly lesson the social power of those who seek to pollute our world and to damage our democracy. And with less of an wealth inequality-created gap between human values and market prices, the market economy's magnificent powers to crowd source solutions to our problems of production and utilization would be much better applied.

Why are at least some of us optimistic? We are optimistic because we did emerge from the First Gilded Age. The United States escaped from the last Gilded Age by virtue of immigration, intelligence, and interest, and that escape was then spread because it was then the American Century.

But how did escape work?

First, immigration. Back in the first decades of the 1900s the share of Americans who were foreign born was as large and as feared as it is now. But that fear showed itself not just in demand for "closing the border" but also in a very strong demand for policies to make immigrants and their children Americans: real pathways for upward mobility, and acculturation to the dominant myth that we Americans are a people who share the single thing of coming to a New World to avoid the mistakes of the old one, so that we could live free and prosperously.

Second, intelligence—even Republican worthies saw that First Gilded Age society was not producing a good-enough society. Theodore Roosevelt was far-sighted enough to see that a Republican Party that was the natural home of the richneeded to take the lead in curbing, the misdeeds of "malefactors of great wealth". Andrew Carnegie was far-sighted enough to see that private wealth was a public trust and declare to all and sundry that "he who dies rich day is disgraced ". Herbert Hoover was far-sighted enough see that the American government could spread engineering, managerial, and organizational knowledge the economy. And all were far-sighted enough to see that American's self-interest needed to be, in Alexis de Tocqueville's term, "rightly understood", for independent and prosperous neighbors are a much greater potential source of prosperity and wealth for you than are poor neighbors who you could dominate and explicit.

Third, interest. The Great Depression taught every middle class American, who thought they could manage to be prosperous on their own no matter what happened to the working class that they were wrong. The totalitarian challenges taught everyone that good societies were very fragile, so that nobody had any interest in pushing things so far as to break the American system in the hope that they could pick up bigger pieces afterwards.

All of these factors together—the need to welcome new Americans, to constrain and use properly the social power of of the private and public sectors, and the need to hang together lest we all hang separately—powered the conclusion that not even the rich in America were benefitted by the extremely high income and wealth inequality of the First Gilded Age, and so policy corrections happened.

Pessimists say that history is unlikely to rhyme. They point to the fact that we have a very differently minded set of Republican Worthies today than we had a century ago. Even a Mitt Romney will say of his fellow Americans: "47 percent... believe they are victims... believe the government has a responsibility... that they are entitled to health care, to food, to housing, to you-name-it.... My job is not to worry about those people. I'll never convince them they should take personal responsibility and care for their lives..." And Mitt Romney is one of my favorite Republican senators. His colleagues go further, denouncing "woke mobs", "Big Tech... corporations that have sold us out to China", "vaccine mandates... insane medical apartheid", and those who fail to teach "that America is a great nation and not a racist nation".

But a good deal of this may be just talk, for public consumption by those who fear their own base and volunteer cadres. And so it may not matter in the end. When it was given a secret ballot in 2021, the Republican House caucus vote to retain Liz Cheney as conference chair was 145-61. 17 out of 49 Republican senators did publicly vote for Biden's CHIPS Act in 2022. Republican House members did just vote 149-71 for the 2023 Biden-McCarthy budget framework.