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Massive Income Inequality

Robert La Follette

One of the major issues raised by Bernie Sanders and other progressives in connection with the 2020 election is massive income inequality. Why has this happened?

Personally, I believe a lot of it has to do in part with the death or dying of our anti-trust laws. Read what TruthDig said four years ago:

“Last week’s settlement between the Justice Department and five giant banks reveals the appalling weakness of modern antitrust.

“The banks had engaged in the biggest price-fixing conspiracy in modern history. Their self-described “cartel” used an exclusive electronic chat room and coded language to manipulate the $5.3 trillion-a-day currency exchange market. It was a “brazen display of collusion” that went on for years, said Attorney General Loretta Lynch.

“But there will be no trial, no executive will go to jail, the banks can continue to gamble in the same currency markets, and the fines - although large - are a fraction of the banks’ potential gains and will be treated by the banks as costs of doing business.

“America used to have antitrust laws that permanently stopped corporations from monopolizing markets, and often broke up the biggest culprits.

“No longer. Now, giant corporations are taking over the economy - and they’re busily weakening antitrust enforcement.

“The result has been higher prices for the many, and higher profits for the few. It’s a hidden upward redistribution from the majority of Americans to corporate executives and wealthy shareholders.”

It may be remembered that our first anti-trust law was enacted by the Republicans: “The Sherman Anti-Trust Act passed the Senate by a vote of 51–1 on April 8, 1890, and the House by a unanimous vote of 242–0 on June 20, 1890. President Benjamin Harrison signed the bill into law on July 2, 1890.” Initially, it turned out to be relatively toothless. “Five years later, the Supreme Court dismantled the Sherman Act in United States v. E. C. Knight Company (1895). The Court ruled that the American Sugar Refining Company, one of the other defendants in the case, had not violated the law even though the company controlled about 98 percent of all sugar refining in the United States. The Court opinion reasoned that the company’s control of manufacture did not constitute a control of trade.”

However, when President Theodore Roosevelt got into office at the turn of the 20th century, he used that law in “trust busting.” Roosevelt was adamant about the need for dismantling monopolistic practices. Both he and President Taft were successful in using that Sherman Anti-Trust law. “In 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act, which created the FTC, and the Clayton Act. With some revisions, these are the three core federal antitrust laws still in effect today.”

The most radical time for Republicans were during Teddy Roosevelt’s years. He became president, then retired, and then returned and helped found the Progressive Party, otherwise known as the “Bull Moose Party.”

“His successor, President Taft, faced a restless public and a split Republican Party. National progressivism was nearly at high tide, and a large group of Republican progressives, called “insurgents,” sat in both houses of Congress. These Republicans, like a majority of Americans, demanded such reforms as tariff reductions, an income tax, the direct election of senators, and even stricter railroad and corporation regulations. Taft, who thought of himself as a progressive, was more conservative philosophically and lacked the qualities of a dynamic popular leader. His troubles began when he called Congress into special session in 1909 to take up tariff reform. When the measure that emerged from Congress increased rates, Republican insurgents and a majority of Americans were outraged, but Taft signed the bill and called it the best tariff law the Republicans had ever enacted. Conflicts and misunderstandings over conservation and legislative procedure caused the rift between Taft Republicans and the insurgents to grow. By 1910 the Republican insurgents were clearly in the ascendancy in Congress. Taking control of the president’s railroad-regulation measure, they added new provisions that greatly increased the Interstate Commerce Commission’s authority. The following year they bitterly opposed Taft’s measure for tariff reciprocity with Canada; it passed with Democratic support in Congress, only to go down to defeat at the hands of the Canadian electorate.

“Republican insurgents were determined to prevent Taft’s renomination in 1912. They found their leader in Roosevelt, who had become increasingly alienated from Taft and who made a whirlwind campaign for the presidential nomination in the winter and spring of 1912. Roosevelt swept the presidential primaries, even in Taft’s home state of Ohio. But Taft and conservative Republicans controlled the powerful state organizations and the Republican National Committee, and when the Republicans gathered at their national convention in Chicago in June 1912 it proved a bitter, divisive affair. Taft, Roosevelt, and Wisconsin Sen. Robert M. La Follette, a leading reformer, sought the nomination, but so complete were Taft’s supporters’ control over the party machinery that delegate challenges made by Roosevelt were all beaten back—leading Roosevelt to refuse to have his name entered into nomination. In the event, Taft was nominated on the first ballot, and Vice Pres. James S. Sherman was easily renominated. Convinced that the bosses had stolen the nomination from him, Roosevelt led his followers out of the Republican convention. In August they organized the Progressive (“Bull Moose”) Party and named Roosevelt to lead the third-party cause. Hiram Johnson, the reform Republican governor of California, became Roosevelt’s running mate

“Meanwhile, the Democrats had swept the 1910 congressional and gubernatorial elections, and after the disruption of the Republican Party in the spring of 1912 it was obvious that almost any passable Democrat could win the presidency in that year. Meeting in Baltimore, Maryland, a week after the Republican convention, the Democrats had a number of candidates contesting the nomination, including speaker of the House Champ Clark and former president of Princeton University Woodrow Wilson, who had a progressive record as governor of New Jersey. Ultimately, Wilson secured the Democratic nomination on the 46th ballot, and Thomas R. Marshall was chosen as his running mate.

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“The Democrats emerged from their convention in strong shape, given that Wilson was, in effect, facing two Republicans. Roosevelt and the Bull Moose movement stressed its progressive, reform credentials, even backing women’s suffrage. For Taft, his single objective in the 1912 campaign was to defeat Roosevelt. The real contest, however, was between Roosevelt and Wilson for control of the progressive majority. Campaigning strenuously on a platform that he called the New Nationalism, Roosevelt demanded effective control of big business through a strong federal commission, radical tax reform, and a whole series of measures to put the federal government squarely into the business of social and economic reform. By contrast, Wilson seemed conservative with a program he called the New Freedom; it envisaged a concerted effort to destroy monopoly and to open the doors of economic opportunity to small businessmen through drastic tariff reduction, banking reform, and severe tightening of antitrust laws.

“On election day, November 5, Roosevelt outpolled Taft but failed to win many Democratic progressives away from Wilson. Though Wilson captured only about 42 percent of the popular vote, he won 435 electoral votes. Between them, Roosevelt and Taft secured 7.6 million votes—1.3 million more than Wilson—but Roosevelt won only 88 electoral votes, and Taft won only 8. Taft’s 8 electoral votes represented the worst performance by an incumbent seeking reelection.”

Here is the final outcome, with electoral votes and popular vote included. Note the large number of socialist and socialist labor votes.

Woodrow Wilson

Democratic

435

6,293,454

Theodore Roosevelt

Progressive (Bull Moose)

88

4,119,207

William Howard Taft

Republican

8

3,483,922

Eugene V. Debs

Socialist

900,369

Eugene W. Chafin

Prohibition

207,972

Arthur E. Reimer

Socialist Labor

29,374

The 1912 election was high water mark for progressive politics until 20 years later when Franklin D. Roosevelt came into office with the Democratic Party and the “New Deal.”

The Republican Party retained its progressive roots after 1912, although they gradually withered away. For example, Robert La Follette, who had tried for the Republican nomination in 1912, tried again in 1924. When he failed that time, he copied Teddy Roosevelt and ran for President of the United States as the nominee of his own Progressive Party in the 1924 presidential election. Historian John D. Buenker describes La Follette as "the most celebrated figure in Wisconsin history."

His opponents, Calvin Coolidge and John W. Davis, were both corporate conservatives. La Follette’s candidacy was endorsed by the Socialist Party. His “platform was based on many of the issues that he had been campaigning on throughout his political career. He called for government ownership of the railroads and electric utilities, cheap credit for farmers, the outlawing of child labor, stronger laws to help labor unions, more protection of civil liberties, an end to American imperialism in Latin America, and a referendum before any president could again lead the nation into war.”

Just remember, he was a Republican. And he wasn’t the only Republican like that in those days. For instance, there was George W. Norris, a long-time senator from Nebraska, also a Republican. Norris was a leader of progressive and liberal causes in Congress. He is best known for his intense crusades against what he characterized as "wrong and evil",[1] his liberalism, his insurgency against party leaders, his isolationist foreign policy, his support for labor unions, and especially for creating the Tennessee Valley Authority. President Franklin Roosevelt called him "the very perfect, gentle knight of American progressive ideals. He was one of only six senators who voted against American entry into World War I. He has been rated one of the five best senators in the history of America.

Then there was Fiorello La Guardia, also a Republican. He served several terms in Congress and joined with George Norris to introduce the Norris-La Guardia Act. “It circumvented Supreme Court limitations on the activities of labor unions, especially as those limitations were imposed between the enactment of the Clayton Antitrust Act in 1914 and the end of the 1920s. Based on the theory that the lower courts are creations not of the Constitution but of Congress, and that Congress therefore has wide power in defining and restricting their jurisdiction, the act forbids issuance of injunctions to sustain anti-union contracts of employment, to prevent ceasing or refusing to perform any work or remain in any relation of employment, or to restrain acts generally constituting component parts of strikes, boycotts, and picketing. It also said courts could no longer enforce yellow-dog contracts, which are labor contracts prohibiting a worker from joining a union.” La Guardia went on to serve three terms as mayor of the City of New York, and has been rated as one of the best mayors in history.

Finally, there is Vito Marcantonio, who first took office as a Republican and as a supporter of La Guardia, but later served in Congress in the American Labor Party. https://en.wikipedia.org/wiki/Vito_Marcantonio “Marcantonio, who was arguably one of the most left wing members of Congress, said that party loyalty was less important than voting with his conscience (he was usually the only member of his party elected to office). He was sympathetic to the Socialist and Communist parties, and to labor unions. He was investigated by the FBI because of his alleged sympathy with communism and ties to the Communist Party.”

In 2010, historian Thaddeus Russell described Marcantonio as "one of the greatest champions of black civil rights during the 1930s and 1940s. He sponsored bills to prohibit the poll tax, used by southern states to disenfranchise poor voters, and to make lynching a federal crime.

But Republicans have become far more conservative and so, too, have Democrats, at least in comparison to what they were in the days of FDR. As a result, the power of anti-trust laws has withered away. “Basically the conservatives have redefined what competition is and in so doing have gutted antitrust’s versatility as a tool against concentrated economic and therefore social power. And the change is so pervasive at all levels of society that it may not be possible to reconstitute it as the same, powerful socio-economic tool it was in the Gilded Age. Justice doesn’t bring as many cases or seek to break up as many monopolists because the tools—the court decisions and enforcement paradigms—simply don’t find the behavior offensive any more. So thorough has the transformation been that there isn’t even a language to identify the problem let alone a solution.

“The one exception may in fact be the Microsoft case where the judge found Microsoft guilty of illegal monopolization. The administration changed from Democrat to Republican during sentencing, and the Republican Justice Department almost immediately settled [in 2001] leaving the company largely intact save for a few behavioral promises. Many . . . speculated that Justice would seek to break up Microsoft in the style of Standard Oil. That point in time—the moment before settlement—may have been anti-trust’s last high water mark.”

It’s possible that anti-trust laws will be amended and brought back to where they once were, but only if we have a progressive president like Bernie Sanders and a progressive Congress. Obviously, we cannot look to any assistance from the Republican Party, and even the Democrats are today much like the Democratic Party of the 1920’s. Our only hope is the change in the core of the Democrats which we saw in the 2018 election. If 2020 becomes something like 1912 or 1932, it’s possible that we shall see a reversal of income inequality through a strengthening of anti-monopoly laws and the addition of a strong wealth tax. I don’t count on it happening, but I do have some optimism.

michael hertz

Michael T. Hertz

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