The New Gilded Age

by Nancy Goldstein, January 5, 2006


In the summer of 1863, Lincoln's enactment of the draft--the first federal conscription in America--set off widespread rioting in the streets of New York City. The mandate's most reviled feature was a "commutation" rule that allowed sons of privilege to buy their way out of enlistment for the 21st century equivalent of $6,000. For the northern European immigrants who comprised over half of the city's population, starving cheek-to-jowl in the corroding tenements of the Lower East Side, the rule proved that Lincoln's "rich man's war" against the South had become a fight for poor, and thereby expendable, men to resolve.

Nearly a century and a half later, the wealthy don't even have to pay for the privilege of sending less well connected sons and daughters off to war to die in their stead. The draft has been rendered unnecessary by the tens of thousands of young men and women--disproportionately low income or working-class, over a third of them people of color--who "choose" to enlist while the children of better-off folk, who have other viable options for educational and professional advancement, are able to choose lines of work where they're less likely to be killed.

Welcome to the new Gilded Age. Once more, a small number of individuals have exploited the latest technology and their powerful personal connections to amass incredible wealth at the expense of an exploited majority.

Like its earlier incarnation at the end of the 19th century, the new Gilded Age is marked by huge discrepancies in income between a minority of very rich people and the majority of the rest of us (even Alan Greenspan says so), a tendency to make underprivileged people do all the dirty work, widespread abuse of corporate and political power, and profligate spending in the face of increasing national poverty. The same mass media that used to naively assert that every man could become an Andrew Carnegie now makes the same implicit claim through "The Apprentice."

Yet the excesses of this latest iteration, made possible by the take-from-the-poor-and-give-to-the-rich policies of the Bush administration, have not led to any of the upheavals that marked the end of the first Gilded Age--strikes, riots, the creation of labor unions, legislation to rein in the excesses of big business--or any of the attempts to protect the rights of consumers, workers, immigrants, or the poor that followed, during the Progressive era.

For this new Gilded Age is made palatable by the illusion that people "choose" to be either rich or poor. That they "choose" to be either captains of Wall Street or foot soldiers in Iraq. That they "choose" to be safe and sound in Crawford or shivering awaiting rescue on their rooftops in New Orleans.

In the new Gilded Age, no powerful government ever fails its citizenry and there are no catastrophes in the lives of low-income people--only lucky loafers enjoying the benefits of noblesse oblige. Or, as Barbara Bush said of the thousands of evacuees huddled in the Astrodome: "This is working very well for them."

The tranquility of this new Gilded Age is secured by the substitution of consumer choice for genuine political choice, and abetted by a lazy, corporate-run media. John Berger, the brilliant British Marxist art historian of the 60s, was right: give the people enough kinds of ketchup to choose from and they'll be too busy wandering the supermarket aisles to ever stop and contemplate whether they enjoy the same degree of variety or agency regarding their government.

The less privileged are lulled into fantasies of choice, power, and control by cheap, "personalized" consumer goods secured by easy credit. But lose your job and blow your "interest only" mortgage, and neither your special ring tone nor your personally programmed iPod will protect you from the brutal realities of this time.

Because despite all the talk about "personal responsibility" and an "ownership society," the golden insignia of the new Gilded Age is a double standard that allows the wealthy and powerful to network, plea bargain, or buy their way out of their obligations while holding the feet of less privileged people to the fire at every turn.

Consider the difference in accountability between individuals unable to pay their debts and corporations that default on their pension plans.

Under the new bankruptcy law enacted last year by a Congress eager to reward their campaign contributors in the credit industry, the vast majority of common folk saddled by unmanageable debt--usually because of severe misfortune, such as medical emergencies, job loss, or divorce - will be deemed to be in possession of "excess income" and will no longer be permitted to wipe the slate clean. Instead, they'll be put on an accelerated payment schedule for a 3-5 year period at a much higher rate of interest and forced to pay for "fiscal management" classes in addition to lawyers' fees.

How poor will you have to be to avoid this fate? Let's put it this way. A couple each earning measly minimum wage for a total of $21,840 per year with no dependents? According to the new "means test," that couple is $9,720 over the so-called poverty threshold, or stated similarly, earning 80.2% "excess" annual income. Those sluggards will just have to pay up.

But it's an entirely different story when corporations fail to meet their financial obligations to their workers--which is increasingly the case. As Roger Lowenstein notes in a recent article on the end of pensions, "Corporations were happy to offer rich retirement plans to their workers as long as accounting tricks and federal insurance made it easy to delay the day of reckoning."

And why not? When the day of reckoning comes, the firm won't sell off its assets to pay for the failed plan or garnish the wages of the CEO (who, on average, earned $9.84 million, or 358 times the average worker's pay last year). Debt from the failed plan becomes the responsibility of the government's pension insurer, the Pension Benefit Guaranty Corporation (PBGC)--currently in the red to the tune of $23 billion (and estimated to bloom to $100 billion within two decades). Which means that average taxpayers like you and me will pay the corporation's debts while it goes merrily on its way.

Because that's what "personal responsibility" really means to this administration. When it comes to covering bad debt from corporations that underestimate how much they need to put away to keep their commitments, it's on us. Ditto for when businesses game the system by exploiting lax rules that allow them to get away with inadequately funding their pension plans. Or promise the world to their workers, knowing that there's a safety net if they ever get in too deep. And when it comes to shouldering debt from bad individual luck, that's on us too.

Welcome to the new Gilded Age. It's back and it's better than ever - if you're one of the gilded.


Nancy Goldstein can be reached at Her next column will appear on Thursday, January 19th.

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