From the Robber Barons to Elon Musk: Will History Repeat Itself?

Preparing for the Trump Regime, Part 1.

Robert Reich Jan 3

Friends,

Ultra-wealthy elites. Political corruption. Corporate monopolies. Anti-immigrant nativism. Vast inequality.

These problems aren’t new. In the late 1800s, they dominated the country during America’s first Gilded Age. We overcame these abuses then, and we can do so again.

Mark Twain coined the moniker “The Gilded Age” in his 1873 novel to describe the era in American history characterized by corruption and inequality that was masked by a thin layer of prosperity for a select few.

The end of the 19th century and start of the 20th marked a time of great invention — bustling railroads, telephones, motion pictures, electricity, automobiles — that changed American life forever.

But it was also an era of giant monopolies — oil, railroad, steel, finance — run by a small group of men who had grown rich beyond anything America had ever seen.

They were known as “robber barons” because they ran competitors out of business, exploited workers, charged customers exorbitant prices, and lived like royalty as a result.

Money consumed politics. Robber barons and their lackeys donated bundles of cash to any lawmaker willing to do bidding on their behalf. When lobbying wasn’t enough, the powerful moneyed interests turned to bribery — resulting in some of the most infamous political scandals in American history.

The gap between rich and poor in America reached record levels. Large numbers of Americans lived in squalor.

Anti-immigrant sentiment raged, leading to the enactment of racist laws to restrict immigration. It was also a time of voter suppression, largely aimed at Black men who had recently won the right to vote.

The era was also marked by dangerous working conditions. Children often as young as 10, but sometimes younger, worked brutal hours in sweatshops. Workers trying to organize labor unions were attacked and killed.

It seemed as if American capitalism was out of control, and American democracy couldn’t do anything about it because it was bought and paid for by the rich.

But America reached a tipping point. The nation was fed up. The public demanded reform. Many took to the streets in protest. Investigative journalists, often called “muckrakers” then, helped amplify their cries by exposing what was occurring throughout the country.

A new generation of political leaders rose to end the abuses.

Teddy Roosevelt warned that “a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power,” could destroy American democracy.

After becoming president in 1901, Roosevelt used the Sherman Antitrust Act to break up dozens of powerful corporations, including the giant Northern Securities Company, which had come to dominate railroad transportation through a series of mergers.

Seeking to limit the vast fortunes that were creating a new American aristocracy, Congress enacted a progressive income tax through the 16th Amendment, as well as two wealth taxes.

The first wealth tax, in 1916, was the estate tax — on the wealth someone accumulated during their lifetime, paid by the heirs who inherited it. The second tax on wealth, enacted in 1922, was a capital gains tax — on the increased value of assets, paid when those assets were sold.

The reformers of the Gilded Age also stopped corporations from giving money directly to politicians or political candidates.

Then Teddy Roosevelt’s fifth cousin (you may have heard of him) continued the work through his New Deal programs, creating Social Security, unemployment insurance, and a 40-hour workweek and requiring that employers bargain in good faith with labor unions.

But following the death of FDR and the end of World War II, and after America had built the largest middle class the world had ever seen, we seemed to forget about the abuses of the Gilded Age.

The reforms that followed the first Gilded Age withered.

Starting with Reagan, taxes on the wealthy were lowered. Campaign finance laws were weakened. Social safety nets became frayed. Corporations stopped bargaining in good faith with labor unions.

Now, more than a century later, America has entered a second Gilded Age.

Monopolies are once again taking over vast swaths of the economy. So we must strengthen antitrust enforcement to bust up powerful companies.

Now another generation of robber barons, exemplified by Elon Musk, is accumulating unprecedented money and power. So, once again, we must tax these exorbitant fortunes.

Wealthy individuals and big corporations are once again paying off lawmakers, sending them billions to conduct their political campaigns, even giving luxurious gifts to Supreme Court justices. So we must protect our democracy from Big Money, just as we did before.

As it was during the first Gilded Age, voter suppression is too often making it harder for people of color to participate in our democracy. So it’s once again critical to defend and expand voting rights.

Working people are once again being exploited and abused, child labor is returning, unions are being busted, the poor are again living in unhealthy conditions, homelessness is on the rise, and the gap between the ultra-rich and everyone else is nearly as large as in the first Gilded Age.

So once again we need to protect the rights of workers to organize, invest in social safety nets, and revive guardrails to protect against the abuses of great wealth and power.

Seeking these goals may seem quixotic right now, just weeks before Trump and his regime take power with a bilious bunch of billionaires.

But if history is any guide, they will mark the last gasp of America’s second Gilded Age. We will reach the tipping point where Americans demand restraints on robber-baron greed.

The challenge is the same as it was at the start of the 20th century: To fight for an economy and a democracy that works for all rather than the few.

I realize how frightening and depressing the future may look right now. But we have succeeded before, when we fought against the abuses of the first Gilded Age. We can — and must — do so again now, in America’s second Gilded Age.