The New Gilded Age?

One of my favorite offbeat stories to come out of the Beltway in the past month involved George W. Bush’s former assistant secretary of commerce, Bruce Mehlman, declaring this period the New Gilded Age. Mehlman produces quarterly reports for his clients at Mehlman Castagnetti Rosen & Thomas on the current climate, and this quarter, he created this PowerPoint. Let’s try to move past the fact that this report comes to us as a PowerPoint (a format that I loathe but accept as a necessary evil for presentations, but as something that just gets emailed around? Yeesh). Instead, let’s see how plausible his assertion is, and what it might mean for us.

Defining Mehlman’s New Gilded Age

From the presentation, we can see that Mehlman believes we’re in a transition period from a manufacturing economy to a service economy. His new “Robber Barons” include Jeff Bezos of Amazon (Atlantans take note…), Mark Zuckerberg of Facebook, and Larry Page and Sergey Brin of Google. Mehlman also points out that the American electorate was intensely divided during the original Gilded Age between North and South, whereas now the divide can be seen on the map he provides between the coasts and the heartland. He notes that two presidents during the Gilded Age lost the popular vote but won the Electoral College, much like Bush 43 in 2000 and Trump in 2016.

Mehlman then divides the “fear and frustration” of voters into four categories for both the Gilded Age and now — immigrants, trade, globalism, and the political parties. He asserts that geography and education have a lot of say in one’s ability to succeed in the current economy. He also notes that a tiny number of companies are amassing a great wealth while many of the laws that currently govern us are woefully out of date.

All in all, Mehlman makes some interesting points, but they’re vague and leave questions. For example, when and how does he believe the New Gilded Age started? Does anyone else see this as a New Gilded Age? How close are we to the next Panic of 1893? Finally, realizing it’s probably an unanswerable question, why does Mehlman want to lump the Progressive Era into his dates for the Gilded Age?

Review of News Articles

I had not come across the descriptor “New Gilded Age” in any other recent news articles I had read when I found the Washington Post‘s article (the genesis for this project), but wondered what would happen if I checked the search term at Fox News, the New York Times, CNN, the Washington Post, USA Today, NPR, the Wall Street Journal, and MSNBC — excluding references to Mehlman’s presentation?

Here are the results:

News Outlet Times Term Appears
Fox News 0
New York Times 188
CNN 4
Washington Post 25
USA Today 0
NPR 7
Wall Street Journal 2
MSNBC 21

Some notes on those numbers:

  • The New York Times is going to naturally be higher because I included historic newspapers, which they include in their basic search feature. No other outlet reviewed provides a search of their entire archive through the basic search function.
  • Some articles from the Times, NPR, and the Post are book reviews. The same is not true for MSNBC.
  • I used more than one search term to find articles that fit my criteria, all involving the words “new,” “gilded,” and “age” with some combination of quotation marks. If you only use one search term to try to duplicate my results, you will get a different number for most sites.

The first mention of a new gilded age in my Times search results came from an August 24, 1930, article on horse racing. Though Saratoga’s horse community continued to turn a good profit on that day, it drew no parallels in the article between what it perceived to be the new and the old, other than horses were going for a lot of money. So, onto the next one.

There were three articles in the 1970s, all referencing Nixon and Watergate. In 1988, an article called “The Best Candidates Money can Buy” used the term to discuss how money from corporations was influencing races at the state and federal levels:

Congressmen who ran for office in 1976, he reports, spent an average of $87,000. Two years later, their re-election campaign costs rose by 46 percent, to nearly $128,000. And that was 10 years ago.

(Imagine being able to run a congressional campaign on less than $100,000!)

The New Gilded Age is used to describe the presidencies of Reagan, Clinton, Bush 43, and Obama in at least oneTimes editorial piece during their respective terms. Paul Krugman really got into this topic around 2005, so several of his editorials have focused on it over the past twelve years. Moving into 2017, news pieces on the New Gilded Age have focused on philanthropy due to a book by David Callahan, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age.

The only news outlet in the list I reviewed for this project that reported on Mehlman’s presentation was the Post. The one other outlet I could find that wrote about it was the National Journal.

From this quick analysis, it seems unlikely that many Americans would be familiar with the term “New Gilded Age,” or that news outlets have specifically drawn a distinctive parallel in their reporting the way Mehlman has in his report. As for op-ed writers, Krugman is the exception.

In Scholarly Literature

Still looking for a concrete definition of the New Gilded Age, I turned to the academic community. When excluding book reviews, a search of some academic databases provided a little under 3,000 hits for “new gilded age.” This included some repeats, but it gave a good indication that folks who study this stuff do see a parallel between the Gilded Age and now, much like Mehlman.

In his book Capital in the Twenty-First Century, Thomas Pinketty of the Paris School of Economics pioneered statistical techniques to follow the income distribution in several economies over long periods of time, including the extremely wealthy, who sometimes in past studies were removed due to the belief they skewed results. When looking at the United States, our economy has followed an arc pattern since World War I, with income inequality being reduced by half by the 1950s. Beginning in 1980, however, we began to diverge again, and by 2010, incomes in the United States were as unequal as they were in World War I.

Pinketty commented that this has happened for a variety of reasons, including “for the most part to rising inequality of labor earnings, which can itself be explained by a mixture of two groups of factors: rising inequality in access to skills and to higher education over this time period in the United States, an evolution which might have been exacerbated by rising tuition fees and insufficient public investment; and exploding top managerial compensation, itself probably stimulated by changing incentives and norms, and by large cuts in top tax rates.”

In a report titled “Top Income Inequality in the 21st Century: Some Cautionary Notes,” out this month in the Quarterly Review (link is to a pre-pub), authors Faith Guvenen and Greg Kaplan commented, “the top 1 percent and top 0.1 percent shares of total income (excluding capital gains) have been rising steadily for the last 40 years… That top income inequality is increasing in the United States has become almost gospel in academic and policy debate on the topic of income distribution.”

We can then likely pin the beginnings of the New Gilded Age to the early 1980s. However, Mehlman covers a lot of topics, not just economics. The top 100 hits on my search for the “new gilded age” were good indicators of what other concerns might stem from academics’ recognition that we are in a new Gilded Age. Most of those results came from the fields of social science and political science, but there were also books, articles, reports, and presentations from law, economics, education, health, and theology.

A breakdown of relevant subject terms follows:

Subject Term Times Term Appears
Inequality 16
Income distribution 11
Social classes 10
Technological innovation 10
Political culture 8
Democracy 8
Poverty 6
Constitutional law 5
Capitalism 5
Racial discrimination 5
Education levels 4
Wages 4
Collective bargaining 4
Neoliberalism 3
Economic anxiety 3
Labor law 3
Taxation 3
Financial services 3
Civil rights 3
Political movements 3
Health promotion 3
Downsizing 2
Human rights 2
Civics 2
Philanthropy 2
Biopolitics 2
Executive compensation 2
Violence 2
Monopolies 2
Social mobility 2
Oligarchy 2
Deregulation 1
Protectionism 1
Suffrage 1
Social change 1

(Notes: I combined similar terms. Not all entries include subjects. I excluded terms concerning fashion and construction for this analysis.)

When looking through these search terms, some, but very few, would be classified as “happy” or “positive” terms. The original gilded age was similar — high on innovation, yet also high on human suffering, particularly among the working class and the poor. However, it’s easy to see subjects touched on often here at GeorgiaPol.com: rural stagnation, HOPE, access to health care, preparing Georgians for jobs in the next decade, outsourcing, Black Lives Matter, Occupy, the Tea Party, the Confederate monument debate, coarseness in political debate, the (real? fake?) border wall with Mexico… and so on.

When comparing Mehlman’s presentation to the subject headings list above and recent and current topics, I think it’s probable he’s right, and this is the New Gilded Age. I do have one quibble, though: Mehlman’s map should show the divide as between urban and rural as opposed to coast and heartland, because that’s the real divide, even if the media and the political class have steered us toward the idea that the “coastal elites” are the issue at hand.

To answer my earlier question about the likelihood of a second financial crisis, no scholars seemed to be on board with that at the moment. Whew!

Okay, We Have a New Gilded Age. So What?

If we’re not headed toward another Panic of 1893, where are we going?

Mehlman has some ideas. First, he’s upfront with the fact that we have an unmotivated Congress. These folks are not going to be solving the big problems of the day, y’all. In fact, people have the same complaints today that they had in the 1960s, sometimes with the exact phrasing. We can’t even get them to reauthorize the things they agree on in a timely manner, and Isakson’s veterans bill seems more and more like a freak of nature in that it was passed and signed with little hemming and hawing.

Secondly, Mehlman points out that there are just as many unknowns as knowns when it comes to the president. The only thing I’d put money on is continued Twitter fights. His base eats it up, so why do anything substantial that may risk some support? Mehlman seems to believe Trump needs to build a wall to keep the base happy. I don’t agree. I think as long as Trump has a “devil” to fight (Bob Corker, Mitch McConnell, both senators from Arizona, Megyn Kelly, Colin Kaepernick, the cast of Hamilton, the cast of Saturday Night Live, James Comey, nonwhite Gold Star families, and of course, Hillary Clinton), many/most/enough of them will continue to think he’s obstructed by these forces from enacting change.

Mehlman also points out that in order for Democrats to take Congress out of Republican hands, they’ve got to develop a wider enthusiasm gap. On Mehlman’s slides, it’s 10 points. There is no guarantee that’s going to be enough for Ralph Northam’s gubernatorial ambitions in Virginia, though the most recent polling suggests momentum is shifting his way. Closer to home, there are local elections where early voting turnout is abysmal (hello, Milledgeville!) and where the mood of the electorate seems to change hourly (hello, Atlanta!), neither of which supports the idea of a genuinely motivated Democratic electorate.

I want to end with a return to a question I earlier suggested was unanswerable. Mehlman’s dates on his presentation are odd because he rolls the Progressive Era into his Gilded Age. He’s not ignoring the Progressive Era by any means, because he includes child labor laws, women’s suffrage, the Tillman Act (though that by itself was pretty toothless), and the Sherman Antitrust Act.

Many folks feel as though we’re in a time that is more divisive than they’ve ever known. Depending on one’s age, that’s probably true. Mehlman is right to note the “two-front war” (culture war vs. class war) that makes us feel like we’re in constant combat with our friends and family ( mostly on social media; darn those new Robber Barons!). Right now, we have a president who is “outside” and “right,” though Mehlman is wrong that Trump wants to tax the rich and fight Wall Street. He wants people to believe that from his words, maybe, but his actions don’t follow them. Mehlman further wonders if Trump can expand his base. My gut says no, and I also don’t see the pivot that Mehlman believes is happening, either. I think Trump has found his bread and butter, and I don’t see him wanting to change it. Right now, if the electorate’s mood doesn’t change before 2018, this could work in Trump’s favor.

Where this goes badly for him is if a coalition can form between left insiders and outsiders that involves more than their collective disdain/intolerance for Trump. The other problem for Trump would come from a truly splintered Republican Party, particularly if history repeats itself from the past iteration of the Gilded Age/Progressive Era. Back then, reformers broke away to create the Liberal Republican Party, the Greenback Party, the Populist Party, and later the Progressive Bull Moose Party. Many members of the Progressive Party stayed “politically homeless” for a few decades before they folded into the Democratic Party during the 1930s.

There has been little discussion of a formal third party today. Those who have so far left the Republican Party during Trump’s time as its leader have mostly declared themselves as independents or seem to want to fade into retirement (better known as political nothingness), like Jeff Flake, Bob Corker, and possibly now Orrin Hatch. No one has formalized a platform or sold a set of cohesive ideas to any dissenters as a new place to belong. The Never Trumpers could (and I’d argue should) do this. Until then, they wander aimlessly alone, ostracized by their former fellow Republicans and held at arms length by Democrats, while Trump remains in the driver’s seat.

7
Leave a Reply

Please Login to comment
5 Comment threads
2 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
4 Comment authors
greencrackerBenevolusDave BearseScottNAtlanta Recent comment authors
  Subscribe  
newest oldest most voted
Notify of
ScottNAtlanta
ScottNAtlanta

Very nice piece of writing there. You obviously spent a lot of time thinking about it. I will throw out a couple of other things to think about. 1. Monetary/Fiscal Policy In the first Gilded Age you had the establishment of The Fed to protect against panics like the one of 1893. Problem was that the Fed Chairman of the time had monetary policy completely backwards (tightening when he should have been easing) and a Congress and President who were deeply invested in Laissez-Faire economic philosophy. One would argue that The Fed understands this quite a bit more now than… Read more »

ScottNAtlanta
ScottNAtlanta

One more thing (ran out of time to edit) People with extreme amounts of wealth are extremely fearful of inflation. Inflation reduces the buying power of your currency. Billionaires then would stand to lose substantial wealth in an inflationary cycle. They in turn will push for policies that fight inflation all the time (even when not warranted). That had a lot to do with why The Fed kept raising rates at the onset of the GD in the First Gilded Age. Thats also why you have billionaires like Pete Peterson funding billions in Astro-turf “think thanks” scolding about Federal Debt… Read more »

Dave Bearse
Dave Bearse

Here, here on Scott’s first two sentences.

And some of his other stuff too. Those that predicted enormous inflation in 2010 are still predicting enormous inflation.

And I agree with the last sentence of the first comment. It’s only a matter of time.

Benevolus
Benevolus

I wish I had more time to read this. Looks interesting. Maybe this weekend.
But my perception is that a lot of good music comes during hard times. How does that fit in?

Dave Bearse
Dave Bearse

There’ll be some good tunes, but it’s hard to know when.

Dave Bearse
Dave Bearse

PS – make time. I’d suggest you view the linked to Power Point before reading the post.

greencracker
greencracker

This was a nice long nerdy article. Thanks for posting!