Current economics: Robert C. Lieberman, “Why the Rich Are Getting Richer: American Politics and the Second Gilded Age”

What? You missed this, on February 20, 2011? Well, here it is again. Please pay attention this time.

The U.S. economy appears to be coming apart at the seams. Unemployment remains at nearly ten percent, the highest level in almost 30 years; foreclosures have forced millions of Americans out of their homes; and real incomes have fallen faster and further than at any time since the Great Depression. Many of those laid off fear that the jobs they have lost — the secure, often unionized, industrial jobs that provided wealth, security and opportunity — will never return. They are probably right.

Cover of Winner-Take-All Politics, by Jacob Hacker and Paul Pierson

Cover of Winner-Take-All Politics, by Jacob Hacker and Paul Pierson

And yet a curious thing has happened in the midst of all this misery. The wealthiest Americans, among them presumably the very titans of global finance whose misadventures brought about the financial meltdown, got richer. And not just a little bit richer; a lot richer. In 2009, the average income of the top five percent of earners went up, while on average everyone else’s income went down. This was not an anomaly but rather a continuation of a 40-year trend of ballooning incomes at the very top and stagnant incomes in the middle and at the bottom. The share of total income going to the top one percent has increased from roughly eight percent in the 1960s to more than 20 percent today.

This what the political scientists Jacob Hacker and Paul Pierson call the “winner-take-all economy.” It is not a picture of a healthy society. Such a level of economic inequality, not seen in the United States since the eve of the Great Depression, bespeaks a political economy in which the financial rewards are increasingly concentrated among a tiny elite and whose risks are borne by an increasingly exposed and unprotected middle class. Income inequality in the United States is higher than in any other advanced democracy and by conventional measures comparable to that in countries such as Ghana, Nicaragua, and Turkmenistan.

Robert C. Lieberman, reviewing the book Winner-Take-All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class, by Jacob S. Hacker and Paul Pierson, Simon and Schuster, 2010, 368 pages. $27.00.; review appears in Foreign Affairs, January/February 2011, pp. 154-158.


Two years later, even more:

This post is borrowed, with express permission, from Millard Fillmore’s Bathtub.

Lincoln on the relationship between labor and capital

Abraham Lincoln as working man, Charles Turzak woodcut - Abraham Lincoln Presidential Library & Museum

Abraham Lincoln as working man, woodcut by Charles Turzak circa 1933 - Abraham Lincoln Presidential Library & Museum; caption on this image at the Lincoln Library site notes that Turzak portrayed Lincoln as the working man Lincoln himself never aspired to be, though he well respected those who did labor.

Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed.

Labor is the superior of capital, and deserves much the higher consideration.

President Abraham Lincoln, Annual Message to Congress, December 3, 1861 (the “State of the Union”)

Abraham Lincoln took great inspiration from Americans and their striving to move up in the world. He admired inventions and inventors, he admired working people and their drive to become their own managers and proprietors of their own businesses. Lincoln had been there himself.

By the time he stopped at the Wisconsin State Fair in 1859 — a full year before his campaign for the presidency — Lincoln was a relatively wealthy lawyer, a good trial lawyer whose better-paying clients included the largest industrial companies of the day, railroads. Lincoln grew up on hard-scrabble farms, though, and he had been a shopkeeper and laborer before he studied law and opened his practice. Lincoln also owned a patent — a device to float cargo boats higher in the Sangamon River that served Sangamon County where he lived, the better to make the entire area a figurative river of free enterprise.

Lincoln was invited to comment on “labor,” at an exhibit showing new machines to mechanize America’s farms. At the Wisconsin fair Lincoln complimented farmers, inventors, inventions, and all laborers. Just over 24 months later, excerpts from that speech showed up at the close of his State of the Union declaration, his December 3 remarks delivered to Congress as the Constitution required. Lincoln probably did not deliver the remarks as as a speech, but they appear in the Congressional Record as a speech, and it is often cited that way. He spoke something like these words in Wisconsin, and they were his views at the end of the first year of the Civil War, expressing yet again his hope that the union would survive, and continue to prosper, for all working people.

Below is a more complete quoting of his remarks from the Message to Congress.

It continues to develop that the insurrection is largely, if not exclusively, a war upon the first principle of popular government– the rights of the people. Conclusive evidence of this is found in the most grave and maturely considered public documents, as well as in the general tone of the insurgents. In those documents we find the abridgment of the existing right of suffrage and the denial to the people of all right to participate in the selection of public officers except the legislative boldly advocated, with labored arguments to prove that large control of the people in government is the source of all political evil. Monarchy itself is sometimes hinted at as a possible refuge from the power of the people.

In my present position I could scarcely be justified were I to omit raising a warning voice against this approach of returning despotism. It is not needed nor fitting here that a general argument should be made in favor of popular institutions, but there is one point, with its connections, not so hackneyed as most others, to which I ask a brief attention. It is the effort to place capital on an equal footing with, if not above, labor in the structure of government. It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them and drive them to it without their consent. Having proceeded so far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life.

Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless.

Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed.

Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital producing mutual benefits. The error is in assuming that the whole labor of community exists within that relation. A few men own capital, and that few avoid labor themselves, and with their capital hire or buy another few to labor for them. A large majority belong to neither class–neither work for others nor have others working for them. In most of the Southern States a majority of the whole people of all colors are neither slaves nor masters, while in the Northern a large majority are neither hirers nor hired. Men, with their families–wives, sons, and daughters,–work for themselves on their farms, in their houses, and in their shops, taking the whole product to themselves, and asking no favors of capital on the one hand nor of hired laborers or slaves on the other. It is not forgotten that a considerable number of persons mingle their own labor with capital; that is, they labor with their own hands and also buy or hire others to labor for them; but this is only a mixed and not a distinct class. No principle stated is disturbed by the existence of this mixed class.

Again, as has already been said, there is not of necessity any such thing as the free hired laborer being fixed to that condition for life. Many independent men everywhere in these States a few years back in their lives were hired laborers. The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires another new beginner to help him. This is the just and generous and prosperous system which opens the way to all, gives hope to all, and consequent energy and progress and improvement of condition to all. No men living are more worthy to be trusted than those who toil up from poverty; none less inclined to take or touch aught which they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which if surrendered will surely be used to close the door of advancement against such as they and to fix new disabilities and burdens upon them till all of liberty shall be lost.

From the first taking of our national census to the last are seventy years, and we find our population at the end of the period eight times as great as it was at the beginning. The increase of those other things which men deem desirable has been even greater. We thus have at one view what the popular principle, applied to government through the machinery of the States and the Union, has produced in a given time, and also what if firmly maintained it promises for the future. There are already among us those who if the Union be preserved will live to see it contain 200,000,000. The struggle of to-day is not altogether for to-day; it is for a vast future also. With a reliance on Providence all the more firm and earnest, let us proceed in the great task which events have devolved upon us.

[Excerpted here from the online Classic Literature Library, Writings of Abraham Lincoln Vol. 5; the complete Message to Congress of December 3, 1861, begins here; the section quoted above can be found on pages 143 and 144.]

What do you think?  Especially after reading Richard Wightman’s explanation (linked below), where do you think Abraham Lincoln might be standing today with regard to the union movement, and the arguments about stimulating the economy by stimulating jobs, versus stimulating the economy by stimulating wealth?  Can you find other writings of Lincoln to support your reasoning?

I wonder whether Lincoln had ever read Adam Smith’s Wealth of Nations?

See Also:

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