The Occupy Wall Street and Tea Party movements are justifiably angry about the state of affairs today. Unemployment is over 9 percent — including underemployment, 16 percent. Middle-class incomes have fallen, while inequality is at the highest levels our country has faced since 1928. They rightly demand that we do something. How we can solve the problems facing our country today is unclear. Yet American history provides us with a great model for how we can move forward: the leadership of the Progressive Era Presidents Theodore Roosevelt and Woodrow Wilson.
While we often compare our situation with that of the Great Depression, our situation today is actually more analogous to that faced by America exactly a century ago. While millions of Americans are experiencing hardship, it is not quite as extreme as the situation that existed during the Great Depression, when nearly a quarter of the nation was out of work. What we instead face is a prolonged economic malaise that is making life hard for millions of working Americans, a situation similar to what the United States went through for several years after the Panic of 1907.
At that time, America was at the end of the Gilded Age that resulted from the transition from an agricultural and commercial economy to a large-scale industrial economy. The American economy has undergone a comparable transformation over the last 30 years from an industrial economy to a service-oriented, finance- and technology-dominated economy competing in a global marketplace. Both of these transformations have created great wealth, but have distributed it highly unequally among the American people.
Roosevelt and Wilson saw that industrial capitalism could create unrivalled prosperity for all Americans. They also recognized that the unbridled form it took in their day contained excesses that were leaving behind millions of Americans. What these leaders sought was a middle path between a plutocratic America and the radical redistribution many in the burgeoning populist and labor movements demanded. They viewed the role of government as the honest broker between business and populist elements. Government as they saw it should aid the weaker side in this debate at a given moment to create parity while ensuring that the rights of free enterprise and labor were respected.
While progressivism if often seen today as synonymous with liberal or leftist viewpoints, true progressivism is neither. Progress like what Roosevelt and Wilson achieved comes from finding the moderate, pragmatic path between two extremes. The solution for the Progressive Era presidents was reform, not revolution. They never attempted to get rid of the American system of corporate enterprise or even drastically alter it, but rather aimed to moderate the excesses of the Gilded Age and its chaotic boom-and-bust cycle. In doing so, they put policies in place that created better lives for millions of working class America and an overall richer society. They introduced regulations designed to protect Americans from harmful products and vigorously prosecuted antitrust cases against enormous corporations. They instituted the income tax, which served as a great equalizer in American society.
We need our own set of Progressive Era-style reforms today. Following their example, we need to have greater but not crippling regulation of the complex financial mechanisms such as derivatives that have come to be central to financial markets. We also need to get rid of loopholes like the carried interest tax loophole that help perpetuate excessive inequality. Much like the progressives took on the trusts, we may need to reconsider allowing financial institutions that are too big to fail. These are only a few ideas of what can be done, but the middle path forged by the progressives of enabling workers to take home more of their income while protecting the property rights of the wealthy.
As much as it has been demonized, an economy grounded in finance and services can bring the same broader distribution of wealth that occurred with our industrial economy. The progressive leaders of the early 20th century were able to tame the beast of Gilded Age capitalism. We can do the same with large financial companies. We don’t need to get rid of large banks and corporations, or necessarily even eliminate government support for them. We do not need populism, be it from the Tea Party or Occupy Wall Street. What we need is for the government to be the honest broker the Progressive Era leaders envisioned.
alex steiner is a junior in Berkeley College. Contact him at firstname.lastname@example.org.