The \’booming \’20s\’ period has long been considered a golden era of American society; the standard of living was rising, morality was being re-defined, innovation and business was soaring, and the general public perceived that times were good.
Perception must indeed be reality, because what working people (the middle class) perceived as \’good times\’ were not, in fact, good times. At least not for them.
The 1920\’s was a decade that exemplifies America\’s state-capitalist system, where the rich get doses of socialism while the poor get \’the market\’. Within this system in which the state often provides factors of production for the private sector (grants, projects, funding, labor, etc.), corporate power thrives and the work force suffers because the rich and powerful won\’t allow free markets to function. As Adam Smith noted in Wealth of Nations, real free markets can and should only exist under the condition that perfect liberty exists.
People at the high end, people like myself, should be paying a lot more in taxes. We have it better than we\’ve ever had it. – Warren Buffet to Christiane Amanpour
In reality, those with economic power do not allow perfect liberty to exist because it doesn\’t suit their interests and needs. Otherwise, society wouldn\’t have to deal with debates about welfare, taxation, regulation and equality of opportunity.
The biggest element of this flawed system that thrived in the \’20s was inequality. Not necessarily inequality of outcomes, because striving to equalize outcomes would be irresponsible, but inequality of incomes and wealth. In the 1920\’s, the income gap between the rich and the poor was stunningly massive. Of course, this gap wouldn\’t really matter as long as the universal standard of living and marginal propensity to consume were growing at reasonably steady rates. However, that is not, and never has been the case. Whenever the income gap has steadily grown, the bottom classes were net losers (incomes, standards of living, the MPC – everything fell).
Historically, whenever the middle class, the labor force, and the poor have been suppressed, the era would end with a period of economic turmoil. The most obvious case would be the Great Depression occurring after a decade of the rich getting wealthier and the poor getting poorer, but there are several cases. The supply side theories enacted by the Reagan administration in the \’80s ended with a recession that was coupled with high deficits. Most recently, the \’Great Recession\’ of 2008-2009 followed a 19 year period in which middle class incomes declined and unemployment rose.
To put the dangers of rising inequality in perspective, the U.S could be in even worse shape now (in that respect) than it was in 1929. Of course, all the evidence is in the numbers. IRS data shows that income for the median earner fell 2 percent between 2000 and 2005 to $30,881. Earnings for the top 1 percent grew to $364,657 — a 3 percent uptick. Taxation, across the board, is at record low levels (a parallel to 1922-1930). Scholarly research suggests that top earners did not have such a large share of total income since the 1920s.
I have the sense that a lot of people don\’t understand how rich the rich are…look back at 35 years of technological progress, rising productivity, and at best arguable gains for the median family, then you can really see it. And the forces at the top are so large that, in a way, they\’re unimaginable, it\’s hard to get people focused on it. – Paul Krugman
In 2007, the top 1 percent of all income earners in the United States made 23.5 percent of all income — more than the bottom 50 percent. The percentage of income going to the top 1 percent has nearly tripled since the mid-1970s. Eighty percent of all new income earned from 1980 to 2005 has gone to the top 1 percent. The most daunting statistic? The top 1 percent now owns more wealth than the bottom 90 percent.
Senator Bernie Sanders wrote in his Huffington Post column on November 29th, \”The billionaires and their supporters in Congress are hell-bent on taking us back to the 1920s, and eliminating all traces of social legislation designed to protect working families, the elderly, children and the disabled. No \”social contract\” for them. They want it all.\”
So almost a century later, is America staring a mirror image of the \’booming \’20s\’ in the face? Probably, but most Americans have no idea what that means for them. If there\’s one thing that\’s become symptomatic of U.S state-subsidized capitalism, it\’s the mind control agenda that results in normal people (the middle class) perceiving the rich to be the \’victims\’ of government and social justice (progressive taxation, social demonization, etc.), and the poor to be society\’s biggest hindrance to maximizing its potential.
That\’s a tough sell to make for structures of power, but they do it well and seemingly without an ounce of guilt. Basically, they want you to hate government when its doing anything good for you, but love government when it\’s doing something good for them. The media is their biggest tool for achieving this, and it\’s incredibly effective. It\’s not exactly a secret that the television and radio broadcasting stations have a profound conflict of interest. Their profits take precedence over our democratic process.
To most Americans, this would be unacceptable in a free society, but there\’s always the possibility that it\’s an inevitable component of democracy. Therefore, it\’s our responsibility to understand what\’s left of the political system and the state of inequality in our economy. It\’s also our responsibility to create the awareness that if we are, in fact, approaching a new \’booming \’20s\’-style decade of socialism for the rich, the stakes are higher now than ever.