Shared Prosperity Denied – 1880s to the early 1930s

The 50 years from the 1880s to the early 1930s saw extraordinary changes in American life.  Rapid urbanization, massive immigration and the decades-long “Great Migration” of millions of African-Americans from the South to northern cities created teeming cities.  Rapid industrialization coupled with the world’s largest railroad network made us the leading industrial power in the world.  Technological innovations such as the telephone, motion pictures, electrification of factories, cities and homes, automobiles, and the radio revolutionized how many people lived and their views of the future.

Amidst the great changes, the country seethed with discontent as powerful corporations and spectacularly wealthy people amassed unimagined wealth.  At the same time, millions of workers and farmers performed grueling work and lived in chronic fear of hard times.  Peoples’ standards of living were rising and yet massive poverty remained.  Multiple financial panics, depressions and recessions periodically threw millions into abject poverty, insecurity and misery amidst the greatest wealth the world had ever seen.

Throughout these decades, the people struggled mightily to limit the power of corporations, the wealthy and their political allies in the Republican and Democratic Parties.  They wanted a more just system that shared the wealth fairly, provided greater security in hard economic times, expanded our democratic rights at work and in the larger community, created greater opportunity for education, and reduced work hours to allow more time for family and community life.

In very human terms, people wanted an adequate income when they were unemployed, unable to work or too old to work.  We wanted their families were adequately fed, clothed and housed.  They wanted an end of abusive child labor and free compulsory quality education for their children.  They wanted a more secure, just and hopeful future free from fear of want and deprivation in the land of plenty.  They wanted the right to organize unions, rights and dignity on the job, and safe and healthy workplaces.  They wanted a greater voice in political and economic life.

The demands for economic justice were largely thwarted for decades as Corporate America dominated economic and political life throughout most of the period.  Frustrated by the two major political parties’ unwillingness to address their great grievances, many people turned to new third parties – Greenbacks, Populists, Socialists, Progressives, and Communists and other organizations advocated broad changes.  They were looking for broad alternatives needed to change a system that simultaneously produced enormous wealth and perpetuated needless misery, exploitation and hardshipploitation and hardship.

At the same time, millions of workers struggled to organized unions and create a more democratic workplace in which they earned a fair wage in safe conditions.  Lacking legal rights to form unions and massive repression from governments supporting corporations, organized labor remained weak despite widespread demands for worker justice.

The growing people’s demands for expanded economic and political justice and rights were severely undercut by deep divisions among the people.  First and foremost, widespread racism and anti-immigrant hostility harmed millions and served the “divide and conquer” strategy of corporate America.  Culture wars against women’s rights including the right to vote, prohibition, evolution and religious bigotry against Catholics and Jews deepened the splits among working people.  Last but not least, government repression of radical organizations, and unions deepened these divisions.  All of these divisions served the interests of corporate America and not the people.

Despite corporate domination and deep divisions among the people, significant people’s victories were achieved.  Federal constitutional amendments for direct election of senators, a progressive personal income tax, and women’s right to vote were won.  Banning corporate campaign contributions was a first step in weakening the corporate stranglehold on national elections.  Many state worker compensation and child labor laws were won and free compulsory education spread across many states although racism denied millions of black children equal quality education.

At the end of the 1920s, corporate America and their political allies seemed firmly in control.  Their world view that largely unregulated free enterprise without interference from government, unions or other political movements was best for the people was deeply entrenched in American life.  The people were told that an economic and social safety net was not needed.  The future was bright.  To quote President Herbert Hoover in early 1929:  “We in America today are nearer to the final triumph over poverty than ever before in the history of any land.”

Six months later, the stock market collapsed and the Great Depression began.  The people would suffer immensely and would reap the whirlwind of their inability to overcome their deep differences and win their demands for economic and political justice.  It was a truly dark period yet the seeds of fifty years of fighting for justice were growing in harsh soil and conditions.

Mid-1930s to late 1970s: Moving toward shared prosperity

Part 2 of a four-part series – Making the American Dream Real for Everyone

At the outset of the 1930s, working people were enduring records levels of unemployment, widespread homelessness, hunger and loss of farms and homes. Millions lost their life savings in the collapse of the banking system. In the midst of an unparalleled economic crisis, working people had neither an economic or social safety net, nor the right to organize unions.

Yet by the late 1930s, our grandparents’ generation had won Social Security, unemployment insurance, public assistance for poor families, the minimum wage, overtime pay, the right to organize unions in the private sector, child labor and welfare protections, housing assistance programs, bank deposit security, strong controls over the financial industries, and assistance for struggling farmers. Although people of color and women were denied many of these rights and benefits, for millions it was a dream beginning to come true.

After 50 years of bitter defeats, how did we the people achieve these historic victories in the face of the worst depression in our national history? They were the fruit of mass organizing in workplaces and communities across the country, and growing unity among working people and the unemployed. Millions began to understand that, to win a better life for working people, employed and unemployed alike, racism, religious bigotry, sexism and anti-immigrant hostility had to be overcome. The newly-won right to form unions and the militant tactic of the sitdown strike — workers occupying their workplace — in effect the “Occupy Movement” of the 1930s – were instrumental in the building of a powerful labor movement.

These worker occupations of factories and other workplaces coupled with massive community support across much of the country doubled the size of the labor movement in less than five years. Newly won power in the workplace and widespread political organizing laid the foundation for our greatest period of shared prosperity over the next 40 years.

The end of World War II ushered in more than 30 years of strong economic growth that was shared more fairly than at any time in American history. By the end of she 1970s, poor, working class and middle class families saw their incomes double after inflation. Income growth for the wealthy grew more slowly thereby narrowing income inequality. People of color and women saw their incomes continue to lag behind whites and men but the gaps were narrowing.

After World War II Corporate America counterattacked,. The Taft-Hartley Act slowed and reversed the growth of the labor movement. At the same time, the corporations and their political allies launched the Red Scare (McCarthyism) to weaken the unions, intimidate people into political passivity and stop any new initiatives to expand the reforms of the 1930s. They were largely successful. One of the first major casualties was the defeat of President Truman’s National Health Care program. The 1960s saw another wave of widespread organizing for greater economic and social justice,: Civil rights, women’s rights, ending the Viet Nam war, environmental protections, and expanded rights for people with disabilities and for gays and lesbians. A major difference between the 1930s and the 1960s was that the labor movement was no longer leading these struggles and was deeply divided.

Yet there were new people’s victories — the passage of landmark legislation for civil rights, voting rights, equal pay, clean water, clean air, environmental protection, pension protections, affordable housing and anti-poverty programs. In less than 15 years, poverty was cut in half. On the other hand, badly needed labor law reform was defeated despite a Democratic president and strong majorities in Congress.

Substantial progress was coming to end. The social upheavals of the 1960s were marked by increased racial tensions, the Viet Nam war, clashes on the issue of abortion, and the new strengths of the women’s and gay and lesbian movements. These developments, coupled with three recessions during the 1970s, sowed deep divisions among working people and their historic allies. An increasingly aggressive corporate America supporting a resurgent right wing was poised to launch a decades-long counterattack to fundamentally shift the direction of the country. By the end of the 1970s, the counterattack was taking its toll, as both labor law reform and the Equal Rights Amendment for women were defeated.

What was the corporate strategy and how was it implemented? This is the subject of Part 3 of this series.

Corporate America Stole Our Broadly Shared Prosperity 1980 to Today

The election of Ronald Reagan in 1980 set the stage for Corporate America’s all-out offensive to reassert their domination of our country and economy. Armed with a comprehensive political and economic strategy, a well-oiled propaganda machine, vast financial resources, a clearly articulated vision and values for America, and a resurgent right wing, the offensive began in earnest.

Relentless attacks against working people and unions, major cutbacks in critical social programs, extensive deregulation of financial industries and other key industries, large tax cuts for corporations and the wealthy, and aggressive promotion of free trade and the export of manufacturing jobs were the centerpiece of the big promises to restore widespread prosperity. At the same time, major increases in military spending were coupled with a more aggressive foreign policy. To quote a famous 1984 Reagan re-election ad: “It is morning in America again.” Unfortunately, for millions of hard-working and poor Americans, it was “Mourning in America again.”

What happened under the new corporate dominated regime? Good-bye shared prosperity. Hello stolen prosperity. No longer would Americans, poor, working class, or middle class share fairly in the growing wealth of our nation. My proof? Sometimes pictures are worth a 1000 words. Look the first graph.

During the shared prosperity of the late 1940s to the late 1970s, all income groups of families saw their average incomes double after inflation with the exception of the richest 5%. It was period in which a rising economic tide was lifting all boats. Poverty rates plummeted, income gaps between whites and people of color were narrowing and women began to gain on men.

Many challenges remained to create shared prosperity, and genuine economic opportunity and security for all Americans. However our long-term direction of the nation was producing greater opportunity and security for most Americans. Now look at the second graph.

Since the late 1970s, shared prosperity disappeared. The poorest 20% of families saw their average incomes drop by 11%, the lower middle class’s average income only rose 2% and the middle class’s rose only 10%. During the previous 3 decades the income gains income of these three groups were 116%, 100% and 111%.

The past three decades have been wonderful for the super-wealthy and corporate America. Between 1979 and 2006, the average income for the richest 11 thousand American families rose 386 percent. In 2006, their average income was $35.5 million. Tax rates for the super-wealthy were also cut. By 2010, corporate after-tax profits as a share of the total national income reached a record high while federal corporate tax rates reached the lowest point in more than 60 years. Times have never been better for Corporate America.

Today, we are still recovering from the worst recession since the 1930s. High levels of unemployment, mortgage foreclosures, poverty, and hunger and widespread economic insecurity remain serious problems. To understand the way forward to a renewed broadly shared prosperity and secure future, we must acknowledge that both Republicans and many corporate Democrats strongly supported financial deregulation which allowed Wall Street and Corporate America to collapse the economy and steal our shared prosperity.

Today, we face a crossroads in our nation’s history. The election of Mitt Romney will unleash a new wave of corporate domination and continuation of policies that advance the wealthy and powerful at the expense of the people. The re-election of Barack Obama is critical but it is far from enough. Next month we can begin to explore the long-term strategy to bring renewed economic security and opportunity for all Americans.