CT Blue

I continue to plow through Richard White’s The Republic for Which It Stands. Here’s yet another way in which that age paralleled our own.

First, it goes without saying that income inequality was as much of a problem then as it is now. At the time, as now, American productive capacity exceeded consumption. Americans did not consume as much as they could produce because so many of them were impoverished, a direct result of inequality.

But, lets put that aside for the moment. In 1892 the wise men running the country took it as an article of faith that the country must stay on the gold standard. This kept the supply of money low, which had multiple catastrophic consequences, leading directly to a major depression in 1892, the worst depression until that in the 30’s. But none of this shook the faith of the wise men of finance. It mattered not what experience showed, the stuck with gold with religious fervor.

The gold standard is now a thing of the past, remembered fondly only by kooks like Ron Paul. But in our own age, we have the shibboleth of the balanced budget and fiscal austerity during bad times. We are now seeing fascism once again show its ugly face in Europe (as I predicted some time ago here), most recently in its home town of Italy, as a reaction to austerity there. It has two faces here, one when it comes to benefitting the masses, when austerity is absolutely required, and one when it comes to benefitting the rich, in which case, not so much. 

Give the folks in the Gilded Age credit for one thing; their opinions were based on what was then considered to be sound economic theory, whereas the entire notion of austerity, as it has been practiced here and in Europe, is embraced by a portion of economists so tiny that it has to be considered a fringe belief. It serves only to maintain high levels of inequality, but it is not good, and never has been, for the economy as a whole. Another point of satisfaction in the Gilded Age: the plutocrat’s insistence on the gold standard took down more plutocrats then than insistence on austerity has done in our own Gilded Age.