Old and tired

By M.S.

DAVID BROOKS argues that analogies between today's America and that of the Progressive era are misplaced, and Progressive-era solutions ill-suited to modern times, because today's America faces challenges it didn't face back then. For example, today inequality is rising:

Moreover, the information economy widens inequality for deep and varied reasons that were unknown a century ago. Inequality is growing in nearly every developed country. According to a report from the Organization for Economic Cooperation and Development, over the past 30 years, inequality in Sweden, Germany, Israel, Finland and New Zealand has grown as fast or faster than inequality in the United States, even though these countries have very different welfare systems.

So, what was happening with inequality a century ago? In the 19th century, as basically everyone has always recognised, the budding industrial economy created very large increases in inequality.

The Gini coefficient on taxable wealth in Massachusetts increased from 0.734 in 1820 to 0.907 in 1900, and in Ohio it rose from 0.806 in 1830 to 0.864 in 1900 (Steckel 1994).

But maybe Mr Brooks meant to refer to the beginning of the 20th century? What was happening with income inequality from, say, the point when we can start consulting income-tax data, in 1913? Well, the share of pre-tax income earned by the top 1% of American households went from 18% in 1913 to 24% in 1928, pretty much exactly the same thing that happened again in America between 1993 and 2007.

Mr Brooks also argues that things are different now because improvements in efficiency mean that "factories that used to employ 1,000 workers can now be even more productive with less than 100." This is true. It was also true in the 1890s, the 1900s, the 1910s, the 1920s, and most striking of all in the 1930s, when mass unemployment coincided with revolutionary improvements in efficiency that generated some of the highest annual productivity gains in American history. Multi-factor productivity growth was highest between 1928-1950, and in general was much higher from 1890-1950 than from 1980 on, though it has picked up again since 1996.

The rest of Mr Brooks's column criticises high rates of out-of-wedlock births and other vague indicators of moral malaise. "Bad habits have accumulated. Interest groups have emerged to protect the status quo," he writes; apparently interest groups did not attempt to protect the status quo in 1911. "The job is to restore old disciplines, strip away decaying structures and reform the welfare state," he finishes. This leaves him open to the riposte "no it's not", a rebuttal against which his column has failed to provide any evidence.