The U.S.' new 'Gilded Age' is dusting off plutocracy

The Argument

A sweep of current books supports the argument that today's concentrations of wealth are increasingly unfair

Books

March 09, 2003|By Jill Jonnes | By Jill Jonnes,Special to the Sun

More than a hundred years ago, when the first really gargantuan American fortunes in steel, oil and railroads began to pile up, outraged citizens protested that the United States was fast becoming like some European plutocracy, where the corporate elite rigged the rules to further swell their wealth and power. Sound familiar? By 1912 the top 1 percent of Americans owned 56 percent of the nation's wealth. The top 10 percent owned 90 percent.

Now, a century later, the word plutocracy has been dusted off and is back in play. We're in the midst of a new Gilded Age of unprecedented wealth, corporate villainy and the rich politically pressing for more, more, more (for themselves).

Much seems the same, but, ah! the differences. Back then, Republican President Teddy Roosevelt denounced the "malefactors of great wealth" and championed numerous measures to rein them in, including an estate tax on "fortunes swollen beyond all healthy limits." Roosevelt, himself very much of the privileged classes, believed that the "man of great wealth owes a particular obligation to the State because he derives special advantages from the mere existence of government." Kathleen Dalton's Theodore Roosevelt: A Strenuous Life (Knopf, 736 pages, $35) reacquaints us with a rich Republican politician who was a real compassionate conservative, a man who fought hard so all Americans could share in the nation's astonishing wealth.

Contrast Teddy Roosevelt's old-fashioned belief in noblesse oblige and equality with our current Republican President George W. Bush, who strives with messianic zeal to make the richest Americans even richer. First he wants to eliminate forever the very estate tax Teddy Roosevelt felt was so important, and now Bush the Second has proposed various fiscally reckless tax cuts that he asserts (in that sincere and winning way he has) will benefit all, a claim the Financial Times immediately analyzed and dismissed as "obviously bogus."

Bloomberg Financial News calculated that the president would get as much as $44,500 from his own proposed tax cuts, while Dick Cheney's tax break would be $327,000, more than what 98 percent of Americans earn each year. Is it any surprise that the word plutocracy has returned?

Kevin Phillips has even taken to using this term -- plutocracy -- to describe our current and alarming state of social and economic affairs. His Wealth and Democracy: A Political History of the American Rich (Broadway Books, 496 pages, $29.95) lays out in detail the historical ups and downs of wealth, and how the wealthy under President Reagan and both Bushes have used their ever-greater political clout to get richer. "The cost to the ordinary American has been substantial," laments Phillips, "in reduced median family income, in stagnant wages, in a diminished sense of community and commonweal, in fewer private and governmental services."

To put into context George W. Bush's bizarre and cruel crusade to make the super-rich still richer (even as 40 million Americans have no health insurance), it helps to know the following. In 1976 the top 1 percent of Americans owned less than 20 percent of the nation's wealth, compared with 56 percent in Teddy Roosevelt's era. Why? Because the U.S. government in the decades after World War II was actively committed to greater economic equality.

That was then. Now, after two decades of an economic boom coupled with Republican policies and tax cuts, the top 1 percent of Americans have once again almost doubled their share of national wealth, to 38 percent. To truly appreciate the recent vast roll-ups in wealth for those in the topmost economic sliver, consider that in 1982, when Forbes Magazine first began listing the four hundred richest Americans, the entry threshold was $91 million and average net worth was $400 million. By 2001 you needed $725 million to make the list, and the average net worth was $2.4 billion.

In these same decades, the bottom 60 percent of Americans saw little meaningful change in their (often meager) pay checks. And yet it is not these average struggling Americans that concern our compassionate president. No, he yearns only to funnel more money to the already ultra-rich. Talk about gall.

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