The New Gilded Age

from the on-line Washington Post: The 202

The Daily 202: Why a Republican strategist thinks we’re in a new Gilded Age

October 4

 

With Breanne Deppisch and Joanie Greve

THE BIG IDEA: Everywhere he looks, Republican strategist and lobbyist Bruce Mehlman sees “eerie” parallels between the Gilded Age and today.

Mehlman produces quarterly reports about the political climate. In his latest, which he’s distributing to his clients today, he argues that “data is the new oil.” He likens Facebook’s Mark Zuckerberg, Google’s Larry Page and Amazon’s Jeff Bezos (who also owns The Washington Post) to captains of industry like Andrew Carnegie, John D. Rockefeller and Cornelius Vanderbilt.

“Back then you had iconic innovators who built these dominant companies and amassed great fortunes. You’ve got that again today,” Mehlman explained in an interview. “You saw income inequality spike. The last time it was as high for the top 10 percent as it is today was the Gilded Age. … In politics, you saw a rich few increasingly dominating spending to impact elections similar to today.

Mehlman, who was the assistant secretary of commerce for technology policy under George W. Bush and the policy director for the House Republican Conference before that, outlines additional similarities — and the lessons that might be learned from them — over 36 PowerPoint slides:

  • The economy shifted dramatically away from agriculture toward manufacturing from 1870 to 1920, just as it has moved away from manufacturing toward service over the past half century.
  • The last time immigrants made up as large a share of the population as they do right now was also during the Gilded Age.
  • President Trump’s win should be viewed partly as an aftershock of the Great Recession, just as the fear that lingered after market crashes in 1873 and 1893 affected the outcome of multiple elections.
  • The country was intensely divided politically. In 2016 and 2000, the candidate who lost the popular vote won the presidency. The last time that happened was 1888 and 1876.

— Fear of disruption, backlash to change and frustration with inequality, immigrants and global trade all contributed back then to the sort of populist backlash we saw with Trump’s victory last November. The Republican Party, which dominated national politics in the decades after the Civil War, splintered. An aggressive press exposed corruption and the excesses of unfettered capitalism, which ratcheted up public pressure for reforms. The industrial age created new public policy problems and generated new alliances. William Jennings Bryan never became president, despite being the Democratic nominee three times, but he helped transform the country’s politics.

— The passions of the populist movement eventually gave way to the Progressive Era. The federal government busted trusts, banned corporate political contributions, imposed food safety regulations and restricted child labor. Four amendments to the Constitution were enacted, including women’s suffrage and the direct election of senators, as well as the imposition of an income tax and the prohibition of alcohol.

Global trade powered tremendous economic growth at the dawn of the 20th century. While there were a lot of winners, there were also a lot of losers. Mehlman believes that now, as then, “the winner’s circle is too small.” Success in modern America is closely correlated to where you live, how much education you received, and which sector you work in.

— Technology companies are coming under growing pressure because of the rising tides of populism, protectionism, nationalism and nativism. Mehlman, who was the policy lead at Cisco Systems during the collapse of the first tech bubble, believes industry behemoths need to worry about antitrust problems, strengthened consumer protection laws, security concerns, trade policy and new regulations that increase intermediary liability. Headaches are coming from lots of places, from Brussels to Beijing and Washington to Sacramento.

— Against this backdrop, Mehlman thinks American politics has become less left vs. right and more insider vs. outsider. The globalist consensus that dominated through the Obama era is crumbling. “On issues like race and on immigration, we’re now finding the culture war is competing with a class war,” Mehlman said. “You used to hear it from the Pat Buchanans of the world and some of the Democrats like Bernie Sanders, but it’s now becoming mainstream in, for sure, the Democratic Party and, increasingly, the Republican Party. … The president campaigned and said we need to increase taxes on the rich. The class war has joined the culture war — both in the Progressive Era and potentially today. It could realign the political parties.”

— In this environment, he believes that it will be very hard to get any marquee legislation enacted. “Almost every Republican and almost every Democratic rank-and-file member wants to get more done,” said Mehlman, a partner at the firm Mehlman Castagnetti. “The politics that we have, and at the top, the leadership, makes it difficult, less because there are not compromises and more because to stay on top of the tiger you have to keep feeding it. So it’s very difficult to get the really big ticket things done.”

Mehlman does expect Congress to get something done on taxes. “It will probably not be 1986-style comprehensive, permanent reform,” he predicted. “It will probably be smaller. Maybe just tax cuts. It’s always easier to cut taxes than to pay for it. The climate is different today than it was in 1986.”

I asked what worries his clients most: “Around the world, the greatest concern is opacity,” he said. “They don’t know how to read the United States anymore. Once upon a time you could predict Republicans and you could predict Democrats and you kind of knew where policies and politics were going. These days, it’s unclear whether the president is going to build a new Republican Party that’s fundamentally economic nationalism, or whether he’s going to be a more traditional right-of-center Republican.”

Go to the original WaPo article for video,
Trump: I could ‘shoot somebody and I wouldn’t lose voters’
Republican presidential candidate Donald Trump jokes that he wouldn’t lose support for his campaign even if he shot people “in the middle of Fifth Avenue.” (Reuters)

— In his previous powerpoint, Mehlman made the case that Trump is to politics what Uber is to the technology industry. He highlighted parallels between the cycle of disruption that’s churned through Silicon Valley and what’s now wreaking havoc on Washington. (Read my July Big Idea on this theme: “Trump is the disrupter-in-chief in an age of disruption.”)

Since then, Trump’s culture wars have further inflamed his opposition and limited the potential upside of his economic nationalist message. Mehlman refers to the president’s most loyal supporters as “Fifth Avenue Republicans.” This is a reference to when Trump boasted last year that he could shoot someone in the middle of Fifth Avenue, and his supporters would still stick with him.

“The core challenge for the president politically is to try to grow his base,” Mehlman said yesterday. “There’s 98 percent support for the president among people who voted for him in the primary. And that’s great, but it’s not going to be sufficient in 2020. … As long as the culture war is concurrently raging, it’s going to be very hard to gain the support of registered Democrats and independents.”

See Mehlman’s full slide deck here.

— Listen to a 10-minute excerpt of my conversation with him at the end of today’s Big Idea audio briefing:
Subscribe to The Daily 202’s Big Idea on
Amazon Echo, Google Home, Apple Podcasts and other podcast players.

— Go deep: If you really want to bone up on the Gilded Age, I recommend Stanford professor Richard White’s “The Republic for Which It Stands,” a sweeping history of the United States from 1865 to 1896 that just published last month. It’s 941 pages but beautifully written and a gripping narrative of a tumultuous era. (White was one of my favorite professors at Stanford. I took two of his classes.)

About Bruce

Work for sustainable development of small islands; ex-Peace Corps (Volunteer and staff) in LA & Caribbean; cruised Caribbean on S/Y Meander for three years; like small tropical islands, French canals, Umbria, Tasmania, and NZ. Married 50 years. Former President (1995 to 2016) of Island Resources Foundation.
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