The biggest difference between today’s super-rich capitalists and the robber barons [a much more descriptive term] of a hundred years ago appears to be style. Handlebar mustaches, wool suits, top hats and protruding bellies are out of fashion, but today’s plutocrats share the same values of the captains of industry of the early 20th century. In fact, they openly long for that so-called Golden Age, when capitalism was unfettered by pesky consumer protections, labor rights, bank regulations, income taxes and safety nets. We’ve seen it all before.
We’ve also seen how the Progressive Movement of the early 20th century figured out how to reign in the excesses and help create a thriving middle class. The trouble is that, today, many of the accomplishments and lessons learned in earlier days of progressivism have fallen by the wayside—whether through corporate-influenced legislation and/or regulation, by complacency or by a failure of memory. But the lessons and ideas are still out there, and progressives need to reinvigorate them.
That’s what veteran labor journalist Sam Pizzigatti writes about in his new book, The Rich Don’t Always Win: The Forgotten Triumph over Plutocracy that Created the American Middle Class. In a post at Inequality.org, Pizzigatti suggests five public policies—all of which were on the table during the Great Depression—that could put the U.S. back on what he calls “the plutocracy-busting track.”
One: Income disclosure
Require the rich to annually disclose the income they’re reporting to the IRS and how much of that income they actually pay in taxes.
Pizzigatti notes that, in the 1930s, progressives proposed just such a measure, contending that disclosure would make it harder for the wealthy to play games with taxes. It would also make it easier to see which loopholes need to be plugged.
But, in an intriguing historical footnote, Pizzigatti points out that:
In 1934, progressives actually added a disclosure provision to the tax code. But the super rich counterattacked with a media blitz that tied disclosure to the infamous Lindbergh baby kidnapping. If all rich Americans had to disclose their incomes, the argument went, kidnappers would gain a wider pool of targets.
The 1930s obsession with the Lindbergh baby kidnapping proved to be a powerful detour, and the provision was scrapped. But the basic premise behind income disclosure remains a solid idea, says Pizzigatti. And today we’ve got the the technology to make it happen.
Two: Leverage the power of the public purse against excessive corporate executive pay
Pizzigatti knows that government can’t set specific limits on what private corporations pay their executives. But Congress could impose limits indirectly by denying federal government contracts and subsidies to corporations that lavish rewards on top executives.
This is not a new idea, either, notes Pizzigatti. But it’s one to build on:
In 1933, then-senator and later Supreme Court justice Hugo Black won congressional approval for legislation that denied federal air- and ocean-mail contracts to companies that paid their execs over $17,500, about $300,000 in today’s dollars. But the New Deal never fully embraced the Hugo Black perspective.
Pizzigatti suggests that we could actually do that today, “by denying federal contracts and tax breaks to any companies that pay their CEOs over 25 times what their workers are making.”
Three: Give Americans a safe alternative to private banks.
There’s precedent for this idea, too, says Pizzigatt:
For Louis Brandeis, a reform giant who also became a Supreme Court justice, prohibiting financial institutions from speculating with the savings of average Americans always remained a top priority.
In the early 1930s, Brandeis advocated the expansion of postal savings banks, a system — in effect since 1911 — that paid 2 percent interest on modest savings accounts maintained with the post office. That expansion never took place, and postal savings banks withered away. They deserve a second shot.
Four: Tax undistributed corporate profits.
America’s biggest corporations are currently sitting on stashes of cash that have hit mega-billion levels, says Pizzigatti.
Money that could be invested in creating jobs sits instead in income-generating financial assets that only sweeten corporate bottom lines and executive paychecks.
A similar problem plagued the nation back during the Great Depression, and progressives pushed for a stiff tax on these “retained earnings.” In 1936, Congress passed a watered-down version of this tax that didn’t last and didn’t make much of an impact.
A stronger tax today just might.
Five: Cap income at America’s economic summit.
In a world in which Congressional Republicans refuse to even talk about raising taxes on top earners by even 3 percent, this is probably Pizzigatti’s most pie-in-the-sky idea. But if we want a rational discussion of revenue, it’s worth talking about.
First, the historical context:
In 1942, in the midst of a war-time fiscal squeeze, President Franklin Roosevelt proposed a 100 percent tax on all individual income over $25,000, the equivalent of about $355,000 today.
Congress didn’t go along. But lawmakers did set the top tax rate at 94 percent on income over $200,000, and federal income tax top rates hovered around 90 percent for most of the next two decades, years of unprecedented prosperity.
America’s rich fought relentlessly to curb those rates. They saw no other way to hang on to more of their income.
So, what is Pizzigatti proposing? A restructured top tax rate that would give the rich what he calls “a new incentive.”.
We could, for instance, set the entry threshold for a new 90 percent top rate as a multiple of our nation’s minimum wage. The higher the minimum wage, the higher the threshold, the softer the total tax bite out of the nation’s highest incomes.
Our nation’s wealthiest and most powerful, under this approach, would suddenly have a vested interest in enhancing the well-being of our poorest and weakest.
Pizzigatti concludes his fascinating history lesson this way:
Years ago, progressives yearned to create an America that encouraged just that sort of social solidarity. They couldn’t finish the job. We still can.