The entrance at the 1912 Democratic National Convention held in Baltimore, Md. The theme of the presidential campaign of 1912 was economic inequality, but looking at the data, the problem is worse today than it was more than 100 years ago. Photo courtesy of the Library of Congress/Wikimedia Commons.
*Paul Solman answers questions from the NewsHour audience on business and economic news here on his Making Sense Business Desk page.
Here’s a question from Carolyn of Chicago, Ill., who writes:
“There is a lot of talk about income disparity between rich and poor today. How does it compare to the disparity 100 years ago?”
One hundred years ago? How about 101? Economic inequality is often cited as the key issue in the 1912 presidential election that pitted William Howard Taft (Republican) against Woodrow Wilson (Democrat), ex-Republican Theodore Roosevelt (Bull Moose Party), Eugene V. Debs (Socialist Party) and Eugene Chafin (Prohibition Party).
Roosevelt said around that time in a famous speech that the struggle for liberty “appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will. At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth.”
Sitting President Taft said in a 1912 campaign speech: “Insofar as inequality of condition can be lessened and equality of opportunity can be promoted by improvement of our educational systems, the betterment of the laws to ensure the quick administration of justice, and by the prevention of the acquisition of privilege without just compensation … all are in sympathy with the continued effort to remedy injustice and to aid the weak.”
Unfortunately, when asked what he would do about high unemployment, he said “God knows.” He ran third in the election.
Given these facts, it might be reasonably supposed that inequality a century ago was greater than it is today. Not so, however.
The most definitive published analysis I’m aware of measures the share of pre-tax income going to the top 1 percent of Americans from 1913 through 2008. It comes courtesy of economists Thomas Picketty and Emmanuel Saez and looks like this:
Source: Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913-1998,” Quarterly Journal of Economics, 118(1), 2003. Updated to 2008.
This picture suggests that, looking only at the 1 percent-99 percent split, we’re back near the income inequality high of 1929 and above the gap in 1913 when a Socialist got 6 percent of the vote to the Republican incumbent’s 23 percent. As I wrote in a post on the centennial of the income tax in April, it was originally established, in 1913, as a way to “soak the rich,” so far above the common man were they thought to be perched.
(Incidentally, unemployment in 1912, best guess, from table 1 on page 215 of a paper from the National Bureau of Economic Research was at 7.9 percent, just about what it is in 2013.)
Making Sense reader Carolyn writes that there’s “been a lot of talk” about inequality. I’d like to remind readers, and especially new ones, that some of that talk has been ours. Indeed, I first reported on growing economic inequality for the NewsHour in 1987, not long after starting to work for the program, and have reported on the issue again and again. Here’s a compendium of many of our inequality stories and a Making Sense Business Desk post chronicling our inequality coverage.
Those who just can’t get enough inequality might enjoy taking this online inequality quiz run last year by the Christian Science Monitor.
Finally, anyone who hasn’t yet seen the viral animated inequality video on YouTube should do so, if for no other reason than to keep pace with the more than 6 million people who already have.
Here is a more personal question about my hats.
Jim – Oklahoma City: Paul, I too have a cranium free of unsightly hair but my doc advised me to simply apply lotion with 55 SPF sunscreen and everyone gets to admire my scalp. Et tu?
Paul Solman: Jim, a woman once said she admired my scalp at Prairie View A&M University in the early ’90s. The reason I remember is that’s the only scalp admiration I ever got and even her comment was, I thought, more consolation than approval. “Grass doesn’t grow on a busy street,” she reassured me.
The truth to tell, though is I like hats. I even wore them in the early ’70s, when I had enough hair for the two of us. Then, they were perhaps an affectation. But by now, they’ve become a signature.
Last item is this remarkable video of high-frequency trading (HFT), slowing down one half-second of trading to 10 minutes, so that you can actually see the action in milliseconds. Amazing.
And here’s an article from the New York Times from Tuesday reporting on stratospheric real estate rental rates in northern New Jersey “because it is also where data centers house the digital guts of the New York Stock Exchange and other markets. Bankers and high-frequency traders are vying to have their computers or servers, as close as possible to those markets.”
Watch my explanation of HFT that aired on PBS NewsHour in March 2012.
This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions