The Government Had Better Ideas for Fixing Income Inequality 100 Years Ago

Then, again.
Feb. 15 2012 6:50 AM

Radical Solutions to Economic Inequality

If only Americans today were as open-minded about leveling the playing field as we were 100 years ago.

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The depth of violence and anxiety about class revolt is one of the most striking differences between then and now. What’s just as remarkable, though, is the commission’s willingness to engage a vast range of opinion on the subject. The “great men” of the day—Guggenheim, Rockefeller, Andrew Carnegie, Henry Ford—showed up to testify at commission hearings. But so did hundreds of reformers, organizers, and ordinary laborers, all invited to speak under official government auspices, and all with their own ideas about how to fix a broken system.

The most controversial witness was William D. “Big Bill” Haywood, general secretary of the IWW. Less than a decade earlier, Haywood had been on trial for conspiring to murder the governor of Idaho in the midst of a bitter union war. During his testimony in 1915, the commission listened patiently as Haywood explained that workers would continue to fight regardless of what the commission might do, and “of anything that capitalists and their shareholders and stockholders may say to the contrary.” Imagine the federal government inviting Noam Chomsky to weigh in on American class relations at an official hearing, throw in a murder charge and a series of mass revolts, and you have some idea of how just how ambitious the commission’s experiment in democracy really was.

Haywood’s testimony marked the high point of Americans’ willingness to entertain radical solutions to the inequality problem. By 1917, the country was at war; by 1918 Haywood was on trial for criticizing the draft. But what the commission did in its final report was radical in its own way. Despite divisions among its members, the commission insisted that the growing divide between rich and poor was more than an economic problem. Wealth inequality, the final report concluded, struck at the heart of American democracy, threatening to undermine the national ideal that hard work would bring just reward.

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There is something almost quaint—but decidedly refreshing—about the commissioners’ blunt language. “Effective action by Congress is required…,” the report proclaimed, “to check the growth of an hereditary aristocracy, which is foreign to every conception of American Government and menacing to the welfare of the people and the existence of the Nation as a democracy.” Far from debating whether “corporations are people,” the commission took for granted that concentrations of corporate power were undemocratic, that gigantic fortunes “constitute a menace to the State,” and that it was the duty of government to restore a balance of power.

How did they plan to do it? The commission offered two chief solutions, neither one of which has won much of an airing in our latest rounds of debate. The first was an inheritance tax, aimed not at the fearless entrepreneur, but at his sons and daughters, who had done nothing to deserve a fortune. The second was increased support for union organizing, on the principle that workers deserved to elect their own representatives on the job just as they did in the government.

 Both of these ideas ultimately became law—the inheritance tax almost immediately, union organizing rights in fits and starts over the next few decades. Today, by contrast, we seem to be going in the opposite direction, with unions under attack and the so-called “death tax” all but moribund as a political issue.

The partisan stalemate in Washington suggests that situation is unlikely to change anytime soon. But today’s lawmakers could do worse than to follow the Industrial Commission’s broader example of democratic debate. The national conversation about inequality is already underway. The least they could do is listen.

Beverly Gage, a Yale history professor, is the author of The Day Wall Street Exploded.