The most popular columnist’s phrase in America today is: “this has never happened before in America.”
But from a long economic lens perspective, the last cycle of US history occurred roughly from 1870-1970 and we are now living through the early-middle period of the rewind of that cycle, about fifty years into one that began in about 1970, in other words, we are in the strongest period of reactionary, wealthy-oriented policy, and will soon enter a period of aggressive progressive policy.
From 1870-1900, the country went through what is often called it’s Gilded Age. Rapid industrialization without significant government relation and negligible taxes created the world’s first billionaires, led to great wealth for the top percent, and created unprecedented advances in technology and top-line economic growth. But the great mass of Americans were left behind and great dissatisfaction rose, most notably in the populist campaigns of William Jennings Bryan, which almost captured the presidency on a radical platform of wealth redistribution.
Recognizing this threat - and its inherent opportunity, President Teddy Roosevelt assumed a semi-populist, yet also business friendly and semi-technocratic, mantle and began breaking up the great corporate trusts, implementing the first social programs and government regulation, and made modest steps to improve the welfare of the greater populace and break up the corporate trusts and the stranglehold that a few huge conglomerates like Standard Oil had on the economy. It also led to modest new rights for some parts of the population, including Women’s Sufferage. But this resulted in backlash and the Roaring Twenties led to the greatest period of wealth inequality in US history, as well as the most stringent and racist immigration policies of our nation’s history.
The resulting Great Depression from 1929-1935, and the rise of Franklin Roosevelt, led to the downfall of the Republican Party for the better part of a generation and to the New Deal contract between the government and the American people. Aided by the war mobilization for World War II, this created the greatest middle class in world history, drastically reduced income inequality, and reached its apex in the 1960s with the Great Society Programs, Medicare, Medicaid, Fannie Mae and Freddie Mac, and the Civil Rights Movement.
Beginning in 1970, the tide of history turned and those gains began to be rewound. First, the curtailing of the civil rights in the 1970s and onward, then the lowering of government oversight, taxes, and regulation in the 1980s and onward, the beginnings of incarceration and voting suppression in the 1990s and onward, and eventually to where we are today, which, from an economic-historical perspective, is somewhat akin to a rewind of the late 1920s. We have left the Teddy Roosevelt-Barack Obama period, marked by modest reforms and technocratic rather than wholesale attempts to address income inequality, corporate power strangleholds, and massive tax avoidance, and are now in the reactionary 1920s.
If history repeats itself, what we will have is a few years of rampantly growing income inequality, reduced rights for minorities and racist immigration laws, before we enter another period of dramatic economic recession and rebalancing. Today, we are, quite alike to the late period Roaring Twenties of 1928-1929 - in our 99th month of consecutive job growth that has grown increasing anemic of late. This dramatic rebalancing will produce a progressive renewal, which will sweep Democrats back into power, in order to write a new “Better Deal” as they recently branded it in campaign slogans - with the American people.
We will see what comes to pass. But, if history has lessons for us, it is that you can always catch the replay.