In a new Gilded Age, support for under educated, under employed and poor must be strengthened

GlobalPost

OWL’S HEAD, Maine — The book that's capturing the headlines this spring is, surprisingly, a 600-pager by a French economist, Thomas Piketty.

What's particularly striking about "Capital in the 21st Century," is that its key point — how during the last four decades the US has returned to the kind of economic inequality that last existed in the Gilded Age of the 1890s — is something we've all sensed that now we finally grasp.

Economic stagnation for the majority of Americans over the last two generations is only part of the story. Our country’s unique uni-power status in the aftermath of the Soviet Union's disintegration initially boosted US self-esteem and subsumed the underlying economic developments. But in the aftermath of the failed Bush wars in Iraq and Afghanistan, they resurfaced with a vengeance.

A few statistics tell the bleak story of how the can-do character of America has been undermined. A recent projection by the World Bank that the Chinese economy is likely to overtake the US within the year is disheartening news.

Moreover, it turns out that the middle class in Canada is doing better than the American middle class that, for nearly a century, has been the richest in the world. A recent social progress index of 132 countries ranks the US 16th, just above Slovenia. Worse is that in basic education, we rank 39th.

So it shouldn't be a surprise that a large majority of Americans believe the country is "on the wrong track." The NBC/Wall St. Journal poll, initiated in 1997, peaked at 71 percent just after 9/11, driven by a temporary boost of nationalism. It has been declining since. Today 14 percent think we are "generally headed in the right direction" and an incredible 78 percent don't.

That's the broad view. A narrower focus shows that American optimism has suffered from a breakdown in confidence in the key institutions of the country, private as well as public. The poor showing of Congress is well known; currently it merits only a 9 percent approval rating.

Trust in the executive branch is not much better. In the '50s and '60s, under Eisenhower and then Kennedy and Johnson, trust in the federal government was about 70 percent. The Nixon scandals brought it down below 50 percent; Carter's own sense of melancholy in the midst of galloping inflation didn't help. Reagan stabilized things, but it wasn't until Clinton — boosted by the end of the Cold War and the tech boom — that the majority of Americans once again had faith in Washington.

It's been on a downhill trajectory ever since. Now, less than 20 percent of Americans trust their own government, which helps explain why a large percentage of Americans want us to get out of Afghanistan, and stay out of Syria. President Obama's oft-repeated bromide that it's time to rebuild at home is a crowd-pleaser not just because our infrastructure is collapsing but because Americans have lost faith in the ability of the US government to win at war or even win at peace. A 21st century form of isolationism is the natural result.

Nor is it just government institutions in which we've lost faith. Organized religion is below 50 percent. Our medical system, the Supreme Court and the public school system are below 40 percent. The criminal justice system, banks, television news, newspapers, big businesses are below 30 percent with organized labor at 20 percent. Health maintenance organizations are in the teens and then we hit rock bottom with Congress.

The economic data from the Piketty book is just as bleak. First of all, as a result of the redistribution of income away from salaries and work to return on capital, it shows how an increasingly large percentage of the economic growth of the last four decades has accrued to the top 1 percent; that the current trend of economic inequality is likely to continue without serious -- and highly unlikely -- changes in our tax code, specifically a large tax on capital.

Our economic stagnation, when coupled with the perceived failings of our major institutions, has created a sense of pessimism that could be self-perpetuating. When The New York Times recently published a poll asking whether the current economic inequality is inevitable, the results were astounding. A mere 20 percent took a traditional chin-up, American view: "stop complaining and work harder." A quarter saw it as a "systemic issue" while over 40 cited "rapacious capitalism that has become the norm." But the most surprising result was that the remaining 13 percent believed that "the only way to end inequality is with a revolution."

If violent revolution seems a little far-fetched, the return to a more aggressive kind of populism — perhaps some weird hybrid, part right wing, Tea Party-like libertarianism, part left-wing Occupy-Wall-Street movements -- may indeed occur in the years ahead.

A serious obstacle to any solution is certainly Congress. With 9 percent approval rating, but a 90 re-election rate, American electorate will continue to be frustrated by its leadership long into the future.

Meanwhile, true to form, the traditional conservative right wing of the Republican Party, as personified by Washington Post columnist George Will, neglects the economic data and blames our current problems on what he calls the "dependency on government" that Lyndon Johnson's Great Society created. Citing a new booklet by the conservative American Enterprise Institute (AEI), Will mixes statistics on out-of-wedlock births among blacks with unemployment figures and then concludes with a quote from Barry Goldwater, "What's happening to this country of ours?"

There is indeed a problem between the availability of good jobs and the number of well-educated American workers to fill them, but to blame food stamps and Medicaid for the disappearance of the high-paying, low-education jobs that our steel plants and auto assembly lines created after World War II is to ignore globalization and falling education standards.

It's hard to believe in 2014, that a serious columnist really thinks that the US would be better off without the safety net that LBJ's Great Society created. But that's clearly the message from George Will and his AEI friends: we're in a new Gilded Age, and just think how much more gilded it could be if we stopped supporting our poor or our under-educated or our unemployed.

Mac Deford is retired after a career as a Foreign Service officer, an international banker, and a museum director. He lives at Owls Head, Maine and still travels frequently to the Middle East.

Sign up for our daily newsletter

Sign up for The Top of the World, delivered to your inbox every weekday morning.