The second Gilded Age

The Washington Post takes a look at the lives of our plutocratic masters.

The Washington Post takes a look at the fundamental trend driving American political, social, and economic life: the growing wealth, power, and social isolation of a tiny slice of the population. The whole right-wing shtick about “elites” is designed as a distraction from the fact that a plutocratic elite is chewing up more and more of the nation’s resources and has become more and more able to shape the political process to its selfish, stupid, short-sighted ends.

Update Matt Yglesias is right that I’d rather have my job and my income than a CEO’s job and a CEO’s income: unless, as he’s also right to add, I could do the job and have the income for a year and then go back to my real life. I don’t envy the CEOs: I’m merely dismayed at the social costs of their wealth and power, and the things they do to maintain their wealth and power.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

24 thoughts on “The second Gilded Age”

  1. I don’t disagree with the article, but I do think it is missing two key points.

    1) Income and wealth aren’t the same; the richest families in America, 1920’s to 1990’s, stayed pretty constant. Super-high INCOMES are inevitable if anyone else is going to catch up. (Sam’s question for all “inequality” discussions: would this help keep the Rockefellers ahead of the Waltons? If so, assume that the Rockefellers support it.)

    2) Increasing centralization of decision-making within the government increases inequality of power, which accentuates the “disempowering the smaller guy” effects of the income and wealth shifts.

  2. “Increasing centralization of decision-making within the government increases inequality of power”

    . . . Uh, like the Supreme Court centralizing decision-making on race policy with Brown v. Board?

  3. I only read the first page, as I cannot bear the agonizing slowness of the Post website.

    But, I look forward to the “best and brightest” doing absolutely nothing about this trend. And I agree with Sam’s 1).

  5. Ebenezer Scrooge says:

    “. . . Uh, like the Supreme Court centralizing decision-making on race policy with Brown v. Board?”

    Thanks for playing. Your hood and robe are in the closet to the left as you exit.

  6. Barry, read the thread again. Ebenezer was responding to Sam Chevre’s claim with an example where the government’s assumption of more central authority functioned to increase justice and empower the little guy. He was emphatically not endorsing segregation, as you appear to impute.

  7. SamChevre - I don’t quite understand your first point. Yes, income and wealth are different, but wealth inequality has grown as well (E.g., “While aggregate household net wealth grew from $25.9 trillion in 1995 to $50.1 trillion in 2004 (both in 2004 dollars), nearly 90 percent of the net gains occurred only among the top quartile of households in the wealth distribution.” - http://www.jchs.harvard.edu/publications/markets/w07-1.pdf ).

    And I don’t have a data series to support it, but I always thought that there’s lots of churning at the top. E.g., “Over the first 25 years of the Forbes 400 list, 1,302 different people made the list.” (http://en.wikipedia.org/wiki/Forbes_400)

  8. 1. Thank you, Warren. Barry, Warren’s interpretation corresponds to my intent, although I was probably too terse to be clear enough.

    2. In response to Sam’s first point, wealth doesn’t really grow that well intergenerationally. We don’t have primogeniture, and we still have the estate tax. The Rockefellers are not that awesomely rich anymore, and the Kennedy money is mostly tapped out. So I don’t think you need super-high incomes to crowd out the old rich; very high incomes will do, nicely. This being said, I do prefer parvenus to old money, for the same reason I prefer a class system to a caste system. (This assumes that “none of the above” is not on the menu.)

  9. An aristocracy of inherited wealth has eventually proven to be a bad idea in every society in which it has arisen — which is all of them.

  10. Why there is no higher tax bracket for millionaires (or even folks making, say, more than $400k a year) is just maddening. If the brackets were 40% at $400k, 50% at $1 million, and 55% at $2.5 million, will the CEO of Dean just quit? Of course not.
    Maybe he’ll drop a country club membership (going down to 3 instead of 4). That would probably be it. So what?
    As for income v wealth, the same sort of brackets should be out there for investment income too (i.e. ‘wealth’ rents vs ‘work’ income).
    We manage to have the worst of both worlds, where wealth income is privileged and work income at $150,000 (solidly upper middle class) is treated almost identical to work income at $10 million (plutocratic elite).

  12. Ebenezer: “In response to Sam’s first point, wealth doesn’t really grow that well intergenerationally. We don’t have primogeniture, and we still have the estate tax. ”

    Last I heard, we don’t have the estate tax.

    “The Rockefellers are not that awesomely rich anymore, and the Kennedy money is mostly tapped out. ”

    The Rockefeller fortune was accumulated around the start of the 20th century. The Kennedys are still rich, and their money was made in the 20’s. IMHO, it’s not that either fortune has so much declined, and has been dispersed. I saw a chart showing the dispersal of Standard Oil control and wealth distribution over the generations; the number of people sharing that wealth grew exponential, as several children each had several children, etc.

    “So I don’t think you need super-high incomes to crowd out the old rich; very high incomes will do, nicely. This being said, I do prefer parvenus to old money, for the same reason I prefer a class system to a caste system. (This assumes that “none of the above” is not on the menu.)”

  14. Joel,

    An aristocracy of inherited wealth has eventually proven to be a bad idea in every society in which it has arisen — which is all of them.

    IMO not nearly enough attention has been paid to the fact that GOP tax proposals do a lot do establish such an aristocracy in the US, and a largely tax-exempt one at that.

    Eliminate the estate tax. Then eliminate taxes on capital income - interest, dividends, capital gains - and you’ve taken giant steps in that direction.

  16. (Joel): “An aristocracy of inherited wealth has eventually proven to be a bad idea in every society in which it has arisen — which is all of them.”
    “Bad idea” relative to what, then, if “all” societies feature inherited wealth?
    And what’s the alternative? Do you suppose that political power (including media influence and academic position) is not inherited?
    (Bernard): “Eliminate the estate tax. Then eliminate taxes on capital income – interest, dividends, capital gains – and you’ve taken giant steps in that direction.”
    I wonder what international comparisons of tax regimes and various measures of social well-being would find. Milton Friedman once wrote that, within broad limits, the details of the tax structure are less important than the government’s aggregate share of the GDP. I would not mind reliance on a flat-rate income tax above some level $X (say, $20,000) or a national sales tax. Maybe it’s just the appeal of simplicity. As I understand it, some countries don’t have capital gains taxes or corporate income taxes.
    The difference between your life expectancy and that of a non-human mammal of your weight is largely inherited. Every living thing is your cousin. Do you feel guilty about living longer than a pronghorn?

  17. Barry,

    Last I heard, we don’t have the estate tax.

    Actually, we do. As aprt of its comprehensive drive for maximal fiscal dishonesty, the Bush administration crafted a set of tax cuts that would, on paper, expire and revert to their former levels; the most significant of these was the estate tax, which was set to completely disappear in 2010, and then return to 1999 levels from 2011. This isn’t precisely what happened - the level exempted from the tax was greatly increased - but the tax is back. Incidentally, this is why Krugman referred to the plan as the “Throw Momma From The Train Act Of 2010”; if Daddy Warbucks was ailing in late 2009, you had a sound financial motive to prolong their suffering into 2010, and if they appeared to be in rude health in late 2010 you had a motive to bump them off before the ball dropped in Times Square.

    Malcolm, your attempts to dehumanize the less ofrtunate have reached their logical conclusion. We aren’t antelope, and don’t need to be. More to the point, and despite the fiscal dreams of the Republicans, we aren’t yet domesticated livestock, placidly compliant as we are milked dry by our betters before being chivvied into the abbatoir.

  18. Malcolm,

    Milton Friedman once wrote that, within broad limits, the details of the tax structure are less important than the government’s aggregate share of the GDP.

    Less important for what?

    The difference between your life expectancy and that of a non-human mammal of your weight is largely inherited. Every living thing is your cousin. Do you feel guilty about living longer than a pronghorn?

    I do not understand your point. Still, echoing Warren, I do not think the relationship between humans and other species is a good model for the relationship between wealthy humans and those not so well-off, or even poor.

  19. Warren pretends to read minds:…
    (Warren): “Malcolm, your attempts to dehumanize the less ofrtunate have reached their logical conclusion. We aren’t antelope, and don’t need to be. More to the point, and despite the fiscal dreams of the Republicans, we aren’t yet domesticated livestock, placidly compliant as we are milked dry by our betters before being chivvied into the abbatoir.”
    1. I’m not attempting to demonize the less fortunate. If anything, the demons in a free marketeer’s universe are presumptious rulers and their shills.
    2. I’m not a vegetarian. Biological evolution is not over. Read Dawkins’ __The Ancestor’s Tale__. A character in Solzhenitsyn’s __The First Circle__ says “the wolfhound is right and the cannibal is wrong”. We may not be domesticated livestock yet, but some of our remots descendants will treat others as such. Satyagraha.

  20. I actually prefer an aristocracy of inherited wealth, to an aristocracy of political power. At least, if the former want to order you around, they have to pay you for the privilege. The latter simply threatens you with jail if you don’t comply, or, if they’re feeling like it, tax you into poverty, and offer to give you some of it back if you dance to their tune.

    Alas, they are not alternatives: An aristocracy of political power likes having an aristocracy of inherited wealth around: The more concentrated wealth gets, the fewer control points are needed for society. Two or three big firms are easier to order about than two or three thousand smaller ones. While the two or three big firms find that, with concentrated political power, they can out-lobby their insurgent competition, instead of having to out-compete it.

    Concentration of political power and wealth thus feed off each other, they aren’t opposed.

  21. (Bernard): “Less important for what?”
    If I recall correctly, Professor Friedman did not say. However, the context was clear. “Important” to the abstract welfare-economic consideration of aggregate social welfare. That was my inference, anyway.
    (Bernard): “I do not understand your point. Still, echoing Warren, I do not think the relationship between humans and other species is a good model for the relationship between wealthy humans and those not so well-off, or even poor.”
    “The poor you will have with you always.” There will always be a bottom 10%. The human and canine IQ curves overlap. I hold these truths to be self-evident: that no humans other than monozygotic twins are created equal, that even these diverge as their environments affect them differently, that chance will generate difference (inequality) analogous to that generated by genetic drift, and that individual differences beyond remediation affect individual differences in productivity. Further (not so self-evident), that political inequality sufficient to address material inequality will generate greater, rather than less, material inequality. Consider Professors of Public Policy who earn $80,000 for six hours of work per week, for a 32 week work-year.

  22. Y’know, if I were the sort, and cared enough, I would absolutely archive this thread to have handy whenever I wanted to prove how morally bankrupt Malcolm’s perspective is. Not to mention his blinkered and superficial grasp of both theory and reality.

  23. (Warren): “…this thread…prove(s) how morally bankrupt Malcolm’s perspective is. Not to mention his blinkered and superficial grasp of both theory and reality.”
    Morally bankrupt? Readers may consider who’s constructing arguments out of personal attacks and who’s making general arguments from assertions as to fact and causal relations.
    “Blinkered and superficial grasp of theory and reality”, huh? It should be easy, then, for Warren to cite a false statement as to fact, of a unconventional interpretation of theory in this thread.
    Put up or shut up,

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