The Gilded Age 2.0 PDF

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The Gilded Age 2.0 Lexie Grose A few months ago, I decided to dedicate a column series to the exploration of wealth inequality. My research began at the Gilded Age; an era at the end of the 19th century defined by massive economic growth, industrialization, an absence of business regulation, and most importantly — a mind-boggling accumulation of wealth accompanied by an enormous divide between the rich and poor. You’ve likely heard of some of the industry titans of this time. Oil tycoon John D. Rockefeller and steel magnate Andrew Carnegie amassed so much wealth, they remain household names to this day. I ultimately shifted my focus to more current issues like the education gap and money in politics, but the same question kept emerging in the back of my mind: are we entering a second Gilded Age? It was Mark Twain who reputedly remarked, “history doesn’t repeat itself, but it often rhymes.” That perhaps illustrates why the generation he baptized as the Gilded Age seems rather familiar to us. The economical and social conditions of that time reflect many of the circumstances being faced in the 21st century: technological innovation, vast consolidation, and swelling wealth inequality. Of course, not all Gilded Ages are equal. Today’s safety net of social services, however torn, was a pipedream during that time. The rights and protections for the average worker in 19th century America were essentially nonexistent. The concentration of wealth was also considerably different than it is today. The obscene affluence accumulated by barons like Rockefeller and Carnegie are undoubtedly in a class of their own; both men died with fortunes of over 300 billion. This is roughly three times as much as Jeff Bezos, who is often labeled as the richest man in the world. However, to simply compare policies and the worth of the most wellheeled industrialists from these two eras misses the bigger picture: the richest Americans in history primarily come from periods of enormous wealth inequality. Since the 1970’s, studies from the PEW Research Center have found wealth inequality in the U.S. to be steadily increasing - and they have reached levels not seen since 1928 (not a great year, according to historians). According to the New York Times, the top 1% of the U.S., those with a net-worth of 2 million or more, now owns as much wealth as the poorest 90%. In comparing Forbes 400 lists from 1987 and 2019, the number of billionaires in the U.S. have jumped from 49 to 705. The reasons for this accelerating disparity of wealth are plentiful: stagnant wages, the decline of labor unions, ineffective tax rates, deregulation, and the rise of globalization are just a few. A report published by the Census Bureau this year disclosed that wealth inequality in the U.S. is at the highest its been since they began tracking it more than fifty years ago, with no signs of slowing down. In 1892, Andrew Carnegie made an offhand comment while gloating about his wealth to a newspaper reporter: “It isn’t the man who does the work that makes the money. It’s the man

who gets other men to do it.” This sentiment still holds true today, as money shifts from labor and towards capital. In other words, ownership is what creates wealth. The richer you are, the less of your income comes from labor, and the more of it comes from your existing wealth. Jeff Bezos and Amazon are an extraordinary exemplar of this phenomenon. On average, Bezos makes around $149,000 a minute - this is over five times more than what the average Amazon employee makes in an entire year. The case of Amazon captures a snapshot of a larger trend among CEOs and employees that has been taking place in America over the last few decades. In 2017, the Institute for Policy Studies found the CEO-worker pay gap was nearly nine times larger than in 1980. According to the AFL-CIO (The American Federation of Labor and Congress of Industrial Organizations), S&P 500 firm CEOs were paid 361 times as much as average U.S. workers in 2017. CEO pay averaged $13.94 million, compared to average worker pay of $38,613. Just as the Gilded Age was marked by the Second Industrial Revolution that brought rapid advancement of mass production and transportation, the last few decades have been defined by a digital revolution that has reshaped every facet of society. Both have been marked by a ruthless process of consolidation, dominance, and power. However, corporate consolidation has progressed from railroads and mining industries to virtually every sector of the economy. According to the Federal Reserve, almost half of all assets in the American financial system are controlled by five banks. Over the past decade, six of the largest U.S. airlines merged into three. Yet, nowhere has seen as much consolidation as Silicon Valley and the tech industry. A report by PBS found that 90% of everything we read, watch or listen to is controlled by only six media corporations. Four companies now control 98% of the American wireless market, that number falling to three once T-Mobile and Sprint officially merge. As of this year, 92% of all internet searches are taking place through Google. And in 2018, five tech companies — Facebook, Apple, Amazon, Netflix and Google’s parent, Alphabet — delivered roughly half of the gains achieved by the Standard & Poor’s 500-stock index. The ongoing list of blatant oligopolies in the marketplace is so exhaustive, it could easily satisfy the word-count of this column. The polarization of American wealth is progressing at a dizzying pace and becoming the defining economic condition of our time. Over a century after the Gilded Age came to a close, we are witnessing the age of “robber baron” industrialists, almost unfettered consolidation, and cutthroat capitalism reemerge. The inequality, along with the potential of this high-speed era of technical innovation, reflect the circumstances of 125 years ago — so what can the digital age learn from the industrial age? The lesson may lie in the process that formed the New Deal. That subsequent period of progressive reform was not the result of politicians having abrupt moral awakenings, but the outcome of grassroots movements, massive organizing, and direct actions from the people. The policies America needs differ from the solutions of over a century ago, but the demand for extensive political action is the same. And in contrast to Carnegie, we don’t have the luxury of getting others to do the work.

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The new gilded age: Income inequality in the U.S. by state, metropolitan area, and county. (2019, January 1). Retrieved from Economic Policy Institute website: https://www.epi.org/publication/the-new-gilded-age-income-inequality-in-the-u-s-by-statemetropolitan-area-and-county/ Apple’s $1 trillion milestone reflects rise of powerful megacompanies. (2018, August 2). The New York Times. Retrieved from https://www.nytimes.com/2018/08/02/business/apple-trillion.html Wheeler, T. (2018, December 12). Who makes the rules in the new Gilded Age? Retrieved February 5, 2019, from Brookings website: https://www.brookings.edu/research/who-makesthe-rules-in-the-new-gilded-age/ Income Inequality - Inequality.org. (2019). Retrieved from Inequality.org website: https://inequality.org/facts/income-inequality/ Zeisel, G. K. D. F. K. S. (2014, August 1). The consolidation curve. Retrieved from https://hbr.org/2002/12/the-consolidation-curve. Nunn, J. S. R. (2017, October 24). Why wages aren't growing in America. Retrieved from https://hbr.org/2017/10/why-wages-arent-growing-in-america....