FROM GILDED TO GLOBALIZED

A time of whirlwind economic growth, of unparalleled technological innovation, of social upheaval, of great prosperity overshadowed by an explosion of wealth in the upper echelons of society: such a description could fit America of 2007, or 1871. As the Union recovered from the Civil War, a confluence of technological genius, entrepreneurial vision, widespread immigration, and lenient fiscal policy set a Second Industrial Revolution in motion, rocketing America to be the richest nation on Earth, yet also breeding a system of corruption and exploitation. In 1873, Mark Twain compared America to Shakespeare’s “gilded lily,” rich, yet luxurious beyond reason. Today, Americans can learn valuable lessons in confronting income equality from the Gilded Age, with its strange relationship between income inequality, corruption, and governmental intervention.
Historians often view the last quarter of the 1900’s in stark terms, either lauding the achievements of industry in creating wealth, or castigating the viciousness of “robber barons” and their cronies in oppressing the masses. The reality requires meshing both pictures. In 1901, the median American income was $227 per capita (factory workers earned $484), compared with $181 in Britain. During those thirty years, a wave of 11 million immigrants swept across the Atlantic and Pacific, each finding hoping to benefit from the astonishing economic growth driven by some 500,000 American patents registered during that time. Edison founded GE, Rockefeller brought kerosene to the homes of every American, Carnegie brought the Bessemer process to America, Morgan let his capital congeal into transcontinental railways, and new drills allowed coal mining to expand twenty-five-fold in ten years.
However much innovation led to prosperity, inequality and corruption also defined America during this period. The Union Pacific Railroad sold Congressmen stock in exchange land rights, as their workers (Chinese and Irish immigrants, paid $2 per day) died by the hundreds from heat and cold exposure. The immigrant laborers often starved; the factory workers grew fat with their wealth; but, Andrew Carnegie, with his yearly income of $40 million, and J.P. Morgan, sitting on the boards of 48 separate corporations, defied the imagination. Thomas Edison offered New Jersey representatives $1000 each for beneficial legislation; President Cleveland used federal troops to rout a national railroad workers’ strike; and Congress soon passed anti-trust bills to break the monopolies that their subsidies and favoritism had created.
Today, America faces a similar situation. Global broadband networks, a superabundance of information (e.g. the Internet), new software, and breakthroughs in high technology have created a world in which anyone—whether Albanian, Brazilian, or Chinese—with access to a laptop and an Ethernet can compete with the whole world for any job. This innovation and global supply of cheap labor have combined to bless the technologically proficient, and to curse those whose low-skill service and manufacturing professions have fled for cheaper markets overseas. Over the past thirty years, this trend of increasing rewards to education (along with the social splintering caused by divorce) has led to greater income disparity: while the real wages for the bottom 5% of households have largely remained unchanged since 1967, the wages of the top 5% have grown by 20% every eight years. Even as America has experienced this general trend of growth, with some residual stagnation, a stratosphere of super-rich has emerged, populated by billionaire CEO’s such as Bill Gates, corporate scandals in the spirit of Enron, and the growing pains of a fledgling global economy (i.e. the recalls of hazardous, Chinese-made toys).
The Gilded Age emphatically does not instruct us that big business and corporate innovation are somehow evil, and require firm government restraint for men to survive them. On the contrary, the most egregious sins of the epoch were carried out through government collusion, often with the government’s money, land, and troops. On the contrary, the legacy of the Gilded Age is that, when the government enforces the few simple rules of the free market (NO GUNS, NO LYING, NO STEALING), and allows men of ability to trade value for value (e.g. labor for innovation), America has shown a startling ability to remake its economic life in very little time. Globalization represents an entirely new vision of how men produce and exchange, and many Americans now find themselves in a state of flux, with no firm ground to stand on, finding it necessary to run harder and harder to stay in one place.
These factory workers, service professionals, and programmers do not need protectionist barriers to crush the business that, having once fed them, now feeds ambitious Indians. They do not need the government to subsidize their anemic professions, or to steal (redistribute?) the wages of competitive, talented entrepreneurs. The government will most benefit these workers when it empowers them, through primary, secondary, and continuing education, to acquire the skills that will make them competitive in a global marketplace. It will ensure that the benefits of growth spread themselves evenly when it stops trying to hold business’ hand, and creates a global environment where men must trade value for value in order to survive: this will require international collaboration on a scale heretofore unanticipated. When the government seeks to legislate equality, it can only succeed in creating a society uniform in its dysfunction and poverty. When it allows men a plot in which to work and produce freely, it will find that prosperity, and a great deal of equality, flower in the space it created.