Bill Moyers interviews Steve Fraser, author of Wall Street: America’s Dream Palace, about the modern parallels to the first Gilded Age.
BILL MOYERS: The vast divide between people at the top and people down below, way below, has been dutifully reported in the WALL STREET JOURNAL, where reporter Robert Frank dubs the glaring inequality “Richistan”, a wonderland of private boats, private schools, private planes and outrageous private consumption. Pop culture has taken notice: Stephen Colbert regularly reports on the excessive appetites of those at the top.
STEVEN COLBERT: This is Colbert Platinum. One New York restaurant has just the thing … A $175 hamburger…
REUTERS: It comes from pampered, beer fed cows that have daily massages… Forget bacon this ones sports foie gras. And the chef, over the top sprinkles gold leaf …
STEVEN COLBERT: The burger is very popular with the hedge fund crowd. Because $175 is a small price to pay to literally crap gold …
BILL MOYERS: It only hurts when you laugh. Even as our streets and highways crumble, our schools gasp for help, and health care becomes more and more costly for those who are fortunate enough to have it, wealth is being so ostentatiously squandered that historians are calling this the Second Gilded Age. The first gilded age, so named after this novel, published by Mark Twain in 1873, depicted the late 19th century as an era marked by great frauds, shabby scandals and mediocrity in high places. Greed and speculation drove big business, and politicians lined up to do what trusts and corporations told them. Tycoons provided the capital; human nature did the rest. Sound familiar? Well, as Mark Twain himself said, history may not repeat itself but it certainly does rhyme.
Parsing our new Gilded Age, with its income gap the greatest in a hundred years, is historian Steve Fraser. His award-winning books include EVERY MAN A SPECULATOR, LABOR WILL RULE, and his latest, WALL STREET: AMERICA’S DREAM PALACE. Welcome.
STEVE FRASER: Thanks very much for having me.
BILL MOYERS: Let me ask you, Steve. You’ve written often about our national obsession with Wall Street. An obsession that’s brought scandal after scandal after scandal. Have we learned anything?
STEVE FRASER: That’s a very good question. You would think, given the avalanche of scandals and the recession that’s followed the dot com bust in 2000, that we would have learned a variety of lessons. A, that Wall Street was not really a place that was so welcoming to every man. B, that it was a place that should be closely monitored in order to protect ordinary people against the transgressions that people like Ken Lay, for example, of Enron, had committed. But we really didn’t learn those lessons, unfortunately. Basically, we left the financial marketplace largely unregulated. A tendency which had begun under Reagan and continued at an accelerated pace all through the years since Reagan. Including under the Clinton Administration.
BILL MOYERS: You wrote somewhere about when Ronald Reagan brought morning back to America you describe the inaugural scene in 1981. And you quote the great style guru Diana Vreeland.
STEVE FRASER: Right.
BILL MOYERS: Money and power are in.
STEVE FRASER: They are in. They are back. And we welcome them back. And it actually…
BILL MOYERS: Don’t fret about it.
STEVE FRASER: Don’t be embarrassed. Right. And believe me, since then, they haven’t been…
BILL MOYERS: And you think that’s when regulation began to be…
STEVE FRASER: Yes.
BILL MOYERS: Obscene.
STEVE FRASER: Yes. It became obscene. And it was a very interesting phenomenon. The men who railed against it, railed against two things.
Bureaucratic government interfering with business. And they seemed to be rebels against old, ossified, corporate America, which was too bureaucratic. And they were going to save the American economy both from government bureaucrats and corporate bureaucrats. They came on the scene like buccaneers, like lone rangers. And …
BILL MOYERS: And they were admired. They were on the covers of magazines …
STEVE FRASER: They were on every single magazine. The proliferation of TV shows devoted to their worship was incredible. And this continued all through the 90s. This love affair with the capitalist as heroic rebels against the old order.
BILL MOYERS: And the little guy, once again, pays for it. Right?
STEVE FRASER: That’s right. We saw that so painfully just with Enron. How it shattered the lives of employees of just normal share holders. People who lost their pensions. People lost the ability you know, we became an economy and a country and a society whose daily wherewithal was based, to some degree, on the stock market. You know, people were leveraging their own holdings in pension funds or other kinds of to send their kids to college.
BILL MOYERS: So it’s not a conspiracy. It’s sort of a mindset. It…
STEVE FRASER: It became a mind set. It did. There were conspirators who were really perpetrating frauds. There’s plenty of those. But also, it was buoyed up by a kind of general mindset. And a belief in this kind of what I would call pseudo populist message that the government was the enemy.
BILL MOYERS: And by pseudo populist, you mean that this is what this is the government conspiring against the people?
STEVE FRASER: That’s right. Exactly. So that, for instance, you have K street lobbyists. You know, dressed up in blue jeans and hard hats, rallying for tax cuts for the rich. And saying, “These are not for the rich. This is for guys like us, you know, who wear dungarees and hard hats.” But they were — it was like some staged and you had a lot of that kind of thing. You have, you know, in the olden days, back in the 19th century our business elites masqueraded as you know Louis the 14th and Henry the 8th. Today, they don’t do that. They instead masquerade in cowboy hats. And they’re just plain folk. And they’re supposed to be democrats like the rest of us, defending us against those pointy headed bureaucrats in Washington. And so on. And so, there’s this kind of inversion of this populism.
BILL MOYERS: Do you think that the believers in the free market you had them in the first great Gilded Age, 130 years ago, and you have them today. Do you think that the people who almost profess a religious belief in the market really ever truly believe in that God?
STEVE FRASER: They don’t behave like they do. That is to say, there’s a rhetoric, which is effusive about the virtues of the free market. And it’s full of praise of the self reliant individual. And of the kind of virtues of the free market, as ensuring economic efficiency. And rails against government regulation as a kind of irrational interference with but these same people look at Bear Sterns. You know, look at what’s going on.
BILL MOYERS: What did you learn from Bear Sterns?
STEVE FRASER: What you learn from Bear Sterns is that, when push comes to shove, businessmen and their political enablers makes talk the talk about the free market. But when times get tough, they turn to the government to bail them out. As the government did in Bear Sterns’s case and as the government does over and over and over again.
BILL MOYERS: The government is us?
STEVE FRASER: The government is us, the tax payers. Right. They don’t- and this has been true since the late 19th century, during the early stages of industrialism. Industrialism, say the building of the railroads. Dependant on government largesse. It depended on the government donating huge amounts of land on making subsidized loans. On all kinds of tax exemptions and so on. To this very day, the same thing goes on. The same businessmen who talk the talk of the free market are relying on the government to either bail them out of difficulties or to make their businesses profitable.
BILL MOYERS: It has become commonplace, as you know, to read that we’re living through, quote, “The Second Gilded Age.” Do you think we are?
STEVE FRASER: Yeah. I think we are living through the Second Gilded Age.
STEVE FRASER: The most striking similarities are it was the sort of the cronyism that informed the period. That is this close, almost incestuous relationship between business and government. And as I’ve just eluded to the government was in the business of subsidizing in a variety of ways the success of various kinds of business enterprises, the railroads above all. And sometimes, this even produced the kind of Jack Abramoff like crony scandals that we’re so used to today on during the Bush Administration. And even before the Bush Administration.
BILL MOYERS: The Senate was called the millionaires club.
STEVE FRASER: Exactly right. And what was meant by that was not only that they were rich, but that they didn’t represent their constituents. They represented corporations. There was a Senator for Standard Oil. And a Senator for the Erie Railroad. And a Senator and they did the bidding of the business community. And of course, we’re very used to this now. Again, this kind of crony capitalism, where the tax system is set up to benefit where or you have Halliburton making a bundle off of it thanks to with inside connections in Iraq, off the destination of Iraq. So crony capitalism is one.
A second is the extreme inequalities in wealth and income. I mean, the appalling inequalities in wealth and income that now characterize our economy also characterized it during the first Gilded Age. I read the other day, I mean this is incredible, that the hedge fund managers had average— the 50 top hedge fund managers had averaged, I think, 29 billion doll— or had accumulated 29 billion dollars in 2007. The one who was at the top of the list had made a 3.7 billion dollar income in 2007, largely by speculating against sub prime mortgages. That is to say he’s made a huge amount of money speculating they would collapse. Three point seven billion dollars is— comes out to be 30 times— and in an hour, that man made 30 times what the average American family made in a year.
BILL MOYERS: So the Wall Street Journal editorial page might ask, so what?
STEVE FRASER: Well, one of the one of the things that it indicates is that, when you have such enormous disparities of income and wealth, there’s a kind of warped set of priorities. So that the amassing of wealth and this was true of the first Gilded Age, comes at the expense of funneling vital capitol resources into improving the material lives and even the cultural lives of ordinary folk. Because we’re living in the Second Gilded Age during a period of downward mobility for millions of Americans, even while the hedge fund managers are or others are accumulating this wealth.
BILL MOYERS: Do you realize that on the eve of George W. Bush’s second inauguration, The Economist of London, no socialist rag, had a penetrating piece about the growing inequality in America. And said that the United States could be on its way to becoming like Europe. A class ridden society.
STEVE FRASER: Right. And the thing about that is that it’s not new. This has been said about what’s happening now, as recently as the early 1990s by a variety of people who are watching these tendencies, which already accelerated under the during the Reagan years. And if you go back to the first Guilded, there’s always a there’s a comment by Henry Demarest Lloyd, who was a great political journalist and public intellectual of the late 19th century. A leader of the anti-trust movement and so on. And he once said that liberty produces wealth. And that wealth destroys liberty. And what he meant by that was two things. First of all, that the amassing of great wealth would stifle the economic opportunity for millions of other Americans. And secondly, that it was putting in jeopardy political democracy. Because the amassing of that wealth gave enormous power and influence to a very tiny business elite back then. And it does again today.
BILL MOYERS: You know, I just read the other night a long piece to that effect in, of all places, “The American Conservative,” which is a conservative magazine. It’s not just liberals or progressives or people on the left who are concerned about this. It’s intriguing to me that over on the right, people are beginning to make, in some way, the same argument about these wide disparities that you’re making.
STEVE FRASER: Yes. This is this is true. And it was true again in the in the late 19th century. You had the denunciation of this amassing of wealth and the kind of callous cold blooded lack of concern for the poor and working people by all kinds of Evangelical Christians. Something we find so amazing today. Here we live in a society that’s saturated in a kind of a Christian moralizing of our family values and other matters. But it never says a word, or rarely says a word, about the iniquities and inequities of this mammon worship that has produced all of this inequality.
But back in the 19th century, you had a very vibrant evangelical community denouncing mammon worship. After all, William Jennings Bryan, in 1896, electrifies half the country by saying, “You shall not crucify mankind on a cross of gold.” And that’s a kind of redolent, protestant language that’s elected its concerns of at wealth.
BILL MOYERS: They’re all progressive Evangelicals today who’re making this case. But they’re not regarded by the press as effective spokesmen for another view.
STEVE FRASER: The greatest single difference between the first Gilded Age and the second is what I call the great silence. That is to say, the first Gilded Age was informed by enormous resistance to this amassing of wealth and political power in the hands of the small elite.
There were labor uprisings. And very bloody ones. The Homestead Strike in 1892. The Pullman Strike of 1894. The Great Railroad Strike of 1877. The Great Uprising of 1886. Massive uprisings with whole communities joining in resistance to the power of coal mine wealth and railroad wealth and other forms of industrial wealth.
BILL MOYERS: Having read in that period, I know what you mean when you talk about the general outrage, the sense of indignation that motivated political forces, union forces.
STEVE FRASER: Yeah.
BILL MOYERS: Popular uprisings. Where is the outrage today?
STEVE FRASER: Where is the outrage today? I don’t know. To some degree, it’s what we’ve been talking about. It’s the falling in love with the free market. The chance for every man to be a speculator, to quote myself. The get rich quick. But my own view is that this is changing. And I think 2006, the off year elections, already signaled a change where you began to hear the voices of the economic populism, and which used to be very loud within the Democratic Party. But were not if not silenced, very subdued during the last quarter of the 20th century. But you’re beginning to hear them again. And now, the country is facing a profound set of crises, which I would suggest will open the door to this kind of …
BILL MOYERS: What are the forces you see gathering?
STEVE FRASER: Well one is the war. And it’s a disaster at many levels. But it’s a disaster, certainly, economically. It eats up wealth that could be used for more socially productive purposes. The second is the economy. Every indication in various vital sectors indicate that this economy is headed into a kind of a serious recession. And perhaps, worse, the government is doing what it can to bail out business. But I don’t know that they can succeed at this. And moreover, this is coming on top of 20 years, 25 years of downward mobility, of de-industrialization.
Of the wiping out of whole towns and regions that have become ghost towns. We saw it in the primaries — in Ohio and in Pennsylvania. These people have been suffering now. This is not new. They’re suffering for the last 20, 25 years. If they have jobs at all, they go back to work at half the wages.
Let me tell you a statistic. If you get a job in the auto industry today, say you’re a new hire and you get hired by General Motors, you are going to make what your grandfather made in 1948. That’s where, for many people, the economy has been headed. While the hedge fund operators and the super rich, you know, with their heliports and petting zoos and other extravagant forms of consumption, have been doing well. Ordinary blue collar Americans have been doing badly for a long, long time.
BILL MOYERS: I want to quote you against you.
STEVE FRASER: Okay.
BILL MOYERS: I mean you say you talk about these converging forces. And you’re optimistic in one sense. I think you’re optimistic about we may be coming to a moment of wanting to do something about these gross inequalities. But you also wrote, “Our corporate elites today are much more adept than their Gilded Age predecessors were at playing the democracy game.”
STEVE FRASER: Yes.
BILL MOYERS: What do you mean?
STEVE FRASER: What I mean by that is business became much more aware, increasingly aware of the need to organize themselves to participate in electoral politics on an ongoing basis. And beginning particularly in the 1970s and 80s and since then, they have become much more sophisticated, building not only lobbying organizations, but think tanks of a variety of kinds.
Promoting various kinds of candidates, developing the K Street Project, which is this close alliance between the Republican Party on the one hand, and its officialdom. And corporate lobbyists on the other. So there’s a kind of back and forth exchanging of personnel. Government officials moving into these lobbying organizations.
The lobbyists actually writing some of the legislation themselves. So they’re much more sophisticated about being involved. And they’re much more sophisticated in this talking the language of a certain kind of populism. This kind of anti government anti big government sort of populism. And playing the role of every man, of portraying themselves as just plain folk.
BILL MOYERS: As you talk, I’m reminded that John McCain’s campaign is being run by lobbyists.
BILL MOYERS: Barack Obama, while he’s raised a lot of money from Internet sources, he has his hedge fund supporters and backers like that. So that no matter who takes the oath of office next January, it’s still right in the middle of what you call, with quotation marks, “The democracy game.”
STEVE FRASER: Yes.
BILL MOYERS: Pays its tribute to the dogma of democracy. But is, in fact, run for insiders.
STEVE FRASER: You are absolutely right. And the capitulation of the Democratic Party over the last 25 years, to that way of running affairs in government is one of the main reasons we’re in the predicament we’re in today. It no longer ceased being an oppositional party in many respects, entirely.
But here’s why I’m hopeful nonetheless. If you look at every major change that’s really had a profound effect on the way we govern ourselves and the way we conduct our affairs as a kind of collective nation, none of them have happened without purely by electoral politics. What I’m saying is that, right, if Obama is elected, if he’s elected, he does have these lobbyists around him. And maybe his instinct will be to play that game.
But I believe that there’s so enormous social expectations for change now. Look at the polls, people don’t like the fact, when they’re polled, that business has all this kind of power. They don’t like the fact that there’s this enormous inequality income and wealth. People actually, despite the populist rhetoric against the government by the right wing, actually want the government to play a greater role in providing social. We live in an enormously insecure society, where people can no longer count on their pensions, on their jobs, on regular work. And people polled again and again indicate that they want changes that have the government play a more a greater role in ensuring that kind of security.
BILL MOYERS: But what does it take politically? I mean, The Gilded Age did, as you say, the first Gilded Age did foster, nurture, create, propagate these cultural, social forces of change.
STEVE FRASER: Yes.
BILL MOYERS: Of resistance to the big power structure.
BILL MOYERS: Forget the politic the campaign.
STEVE FRASER: Right.
BILL MOYERS: Where do you see this on the ground today in this country?
STEVE FRASER: Well, I think one place it may be coming from is this vast immigrant community that a lot of this economy — we in some ways, we live in a very wealthy country that rests on sweatshops. And we have this vast population, millions upon millions of immigrants, both documented and undocumented, who man a lot of the industries we all live on. All the hospitals, the service industries, restaurants, construction crews, etc and so forth. Who are being treated abysmally. They’re being exploited, a word we don’t talk about anymore in America, but used to be very common in the old first Gilded Age. Are super exploited. And are becoming increasingly restive, don’t want to live a life of second class citizenship, just systematically discriminated against, as well as exploited.
I think some of the change will come from there. I think some of the change will come from people who are fed up with this kind of downward escalator that they been on. So that they’re moving from machinist jobs to check out counters at Wal-Mart. You know, making half or less without the health care benefits and so on. It’s going to come from the 45, or whatever it is million people who don’t have any health insurance. And who increasingly do all kinds of grotesque things just to keep themselves going. Can’t care for themselves. I think that there are all these pockets of potential resistance.
And let me remind everybody of one thing. When Franklin Roosevelt was elected in 1932, he was no raving reformer. He was very cautious. What changed between 1932 and 1934 and 35 and 36? You had the rise of the labor movement. You had the rise of outside the two party system of people like Huey Long and so on. Talking a kind of populist language. That they organized and demanded change. And Roosevelt was open-minded enough. He wasn’t a dogmatist. The people who run things now are they have a fixed about the free market. They can’t think their way out of it. Even as the whole country and the economy implodes around them. Roosevelt was not like that. He was experimental. And if he said today, “I’m for a balanced budget,” tomorrow he’d say, “Well you know what? Let’s try something else.”
BILL MOYERS: Is, in your drama of democracy unfolding now, is consumerism a Jekyll or a Hyde?
STEVE FRASER: Consumer culture has become this sort of defining nature of culture popular culture in America. It wasn’t so much far from it during the first Gilded Age. And what consumer culture does is to privatize people.
It makes them focus on their own personal well being. And not just material well-being. Why shouldn’t people be concerned with their material well being? But they see in acquisition of material goods a kind of self liberation, a kind of upward rise socially, and a kind of freedom. And to the degree that consumer culture captures your imagination, you lose a social imagination. You no longer see yourself as part of some kind of collective. Of and that is ..
BILL MOYERS: Which came out of the first Gilded Age. That sense of a collaborative commonwealth.
STEVE FRASER: That’s right. That’s right. Exactly. A cooperative commonwealth, something that could end this dog eat dog, Darwinian jungle like society that many people called that first Gilded Age. I said, “No, we can do better than this.” We can have a cooperative commonwealth. Consumer culture makes it somewhat harder to see look Wal-Mart’s a perfect example. Wal-Mart pays people badly, treats them badly, there’s a lot of — doesn’t give them a lot of rights and so on. And there’s been protest against Wal-Mart. But a lot of time, that protest is defeated by what Wal-Mart does well: Low prices. And so, the unity of the community is dissipating by that. And it’s understandable. And that consumer culture has that corrosive kind of effect. Yeah.
BILL MOYERS: You know I’ll close with this. I mean, you talked about Huey Long. I was growing up right next door to Huey Long. And I do remember, as you speak, he didn’t say every man a small “d” democrat. He said, “Every man, a king.”
STEVE FRASER: Every man a king.
BILL MOYERS: That’s what he meant by consumerism. Right?
STEVE FRASER: That’s right. That’s right.
BILL MOYERS: It produces each of us as a sovereign…
BILL MOYERS: In our own right.
STEVE FRASER: Exactly right. That’s right. And I if not exactly Huey Long talked about it, I do believe that we’re at that point where people are going to say, “Enough is enough.”
BILL MOYERS: Steve Fraser, thank you for being with me on The Journal. I’ve enjoyed this conversation.
STEVE FRASER: Thank you very much for having me.
BILL MOYERS: We close with a reminder of an America that is not so gilded.
Bernie Sanders, the Independent U.S. Senator from Vermont, took to the floor of the Senate recently to talk about what’s happened to everyday Americans over the last eight years.
BERNIE SANDERS: I think it is terribly important that the Senate hears from ordinary people to get a sense of what is really going on in America; the struggles that people are having,
BILL MOYERS: So, the Senator used his e-mail list to ask the people of Vermont to tell him about their lives today. Instead of a few dozen replies, he received more than 600 responses from all around the state. He has published them in a booklet that is available on his web site.
As Sanders told the Senate, they are not easy to read.
“… some nights we eat cereal and toast for dinner because that’s all I have.”
“… we have at times had to choose between baby food, diapers and heating fuel.”
“I don’t go to church many Sundays, because the gasoline is too expensive to drive there.”
“… the pennies have all but dried up… I am sad, broken, and very discouraged.”
“… my mortgage is behind, we are at risk for foreclosure, and I can’t keep up with my car payments.”
“does anybody in Washington care?”
Well, some people in Washington do care, some of the time. But most of the time our elected officials are on the side of the organized rich. That’s where they get the money to campaign, and money is the golden rule of politics; those who have it, rule.
Listen to this excerpt from the AMERICAN CONSERVATIVE MAGAZINE about our growing inequality.
The holders of great wealth, especially if they are organized into a political lobby of similar holders of great wealth, can buy not only more goods, more capital, and more people. They can also buy (through the vehicle of campaign contributions) more important people: politicians and other public officials and therefore public policies.
The result of great wealth buying public policies is a positive feedback loop, or perhaps a vicious cycle, which transfers ever greater wealth and power to the very rich and away from everyone else.
There’s only one way to break this cycle and bring fairness back to America and that’s to break the stranglehold of private money over politics. There are many ways we can do it. Check them out on pbs.org.
I’m Bill Moyers. We’ll be back next week with another edition of THE JOURNAL.
This transcript was entered on May 25, 2015.