“We hold these truths to be self-evident that all men are created equal,” but what happens thereafter is subject to circumstance. When it comes to the concept of the “One Percent,” which emerged in the collective consciousness out of the Occupy Movement, perhaps for the words “all men” and “equal” are nuanced terms. In the following paragraphs I will give evidence that principles embedded in the American system serve dual purposes: Primarily, defending against political tyranny and less overtly, protecting the accumulation of wealth in influential sectors of American society from challenge.
Is the One Percent a new phenomenon? How long has this type of income disparity existed as a feature of American society? Is it and aberration or a part of the fabric? How did it come about? What perpetuates it?
In the popular imagination income disparity may be viewed as a transient problem. We have in our minds periods of excess and archetypes such as the Great Gatsby. Perhaps we think back further to the era of the Robber Barons. We may compartmentalize these periods as we remember Progressive Eras when the situation seemed to be brought back in line because of some inherent justice embedded in the American system.
In a graduate research paper I prepared for a recent class I asked the question, “What if the income disparity we see today is not an aberration, but instead a feature the American system?” We know income disparity is persistent in the recent decades, but just how far back does it span? My answer came in part from University of California, Berkeley Professor of Economics Emmanuel Saez, in the paper “Top Incomes in the United States and Canada over the Twentieth Century.” Professor Saez demonstrates that over the past forty years since the 1970’s top shares of income have increased dramatically. Further this trend is the resumption of a long-term historical pattern that was interrupted only during intervals of time, most notably the period of 1914-1945.
Recent generation’s view of income disparity may be distorted because of the “great equalizer” of the two World Wars as described by Bradford Lee in his article, “The New Deal Reconsidered.” The truth is that besides that notable period, income disparity is an embedded feature of the American system.
How can this be in a republic whose founding testament begins in part by saying the purpose of the federal government is to, “promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity?” Language holds the key.
Part of the answer to this question is to ask, when the Founders said, “We the People,” who did they really mean? We know that they did not mean to include the human beings that even the authors of those great words held as possessions. Women were similarly excluded. In fact in the time of the founding of the American Republic, the franchise of citizenship was intimately tied to possessions; land, money and property.
The reality is that the Founding Fathers were the One Percent of their day. This is proven in part after making some subjective judgments about the occupations up until 1787 of the members of the Constitutional Convention. As Brown writes the Founding Fathers were, “a group set apart.” There was a degree of social distance between these men and the ordinary citizens of their day.
By occupation forty three percent were lawyers either full or part time. The next largest categories are the merchants (20 percent, including those who were both merchants and planters). The next largest groups are those who derived their wealth from agriculture (11 percent as planters and 4 percent as farmers). Eight percent were politicians, six percent were physicians, three percent were ministers and two percent were land owners who earned their living from rents and speculative transactions. These occupational distinctions carried through among members of the early congresses. During the administrations of Adams and Jefferson 75 percent of the members of Congress were lawyers.
By comparison to the rest of the population they were wealthy. According to Tyree and Smith, per capita annual income from 1799 to 1800 as measured in 1926 dollars was $216. Professions typical to the Founders incomes averaged $878 versus $165 for other work classifications. At this time 99 percent of the country’s population lived on farms. Unlike the participants of the Constitutional Convention, Onuf writes, few ever traveled more than 50 miles from home and when they did it was typically travel into town to barter.
Machiavelli wrote, those who obtain power through their own means, “cannot leave their foundations and correspondencies fixed in such a way that the first storm will not overthrow them.” From Samuel Adams to Newt Gingrich American history is filled with lessons that once power is obtained, the tendency is to protect it. Adams who played such a key role in rallying the people of Massachusetts to revolt against the King showed an abrupt change in perspective towards the Shaysites. Even though he had aggressively espoused similar tactics towards the Crown and against similar grievances, in letters and correspondences and as part of a three-person General Court committee Adams labeled Shays’s revolt, “a wicked unnatural rebellion.” He urged Massachusetts Governor Bowdoin to denounce Shays’s followers as insurgents and branded them as traitors.
So when we look at a feature of our system as persistent as income disparity, isn’t it reasonable to conjecture that the authors of that system may have built in features to sustain their hard fought gains?
It is true that a core ideal of the American national system is to protect the people from the passions of the majority. The features of the national government including the system of checks and balances, the separation of powers, the bicameral legislature, the differences in electoral cycles between the two houses, equal apportionment of Senators, the need that both houses agree upon the exact text of a bill before it can be sent to the president for his signature, the needs for super majorities to overcome the veto and filibusters and other features creating procedural resistance accumulate to limit Congress’ ability to deal with complex problems. This resistance was inserted intentionally.
This is demonstrated by the mythology surrounding the example of the bicameral legislature. Thomas Jefferson is said to have asked George Washington, “Why do we have two houses?” Washington answers with an analogy of pouring hot tea into a saucer, “to cool it.” James Madison in Federalist No. 39 described the bicameral system by saying that the Senate is there to provide, “more wisdom, than the popular branch.”
Extensive arguments have been written about the compromises that led to ratification of the Constitution. It is beyond the scope of this discussion to go further than to say that commercial motivations were among the many reasons for the compromises adopted. Ackerman and Katyal describe how the Virginia Plan ostensibly intended to mollify the opposition of “the decentralizers,” provided for equal apportionment of the Senate and in the words of Madison established of the states as “political and co-equal societies.” It also established the Senate as, and gave to those who influence that body, a powerful control mechanism.
The Great Compromise in turn provided a set of tools for interests who sought a gate-keeping mechanism. Over time the effectiveness of this tool is shown in the disparity in power between the Senate and the House. According to Mayhew, data from the decades between 1820 to 2000 shows that Senators have had greater impact on policy by a four to one ratio. By extension results accomplished by those able to create influence with Senators pays off more than investment in the less powerful House. Other decisions made during the Founding Period can be viewed through this perspective.
The commercial interests of Northern entrepreneurs factored into the compromises over slavery. Although at the time, “merchants, farmers, and fishermen of the North” viewed the institution of slavery with “deep suspicion,” it is also true that the expansion of cotton cultivation is directly related to the manufacturing revolution taking place in the Northeast states. Entrepreneurs in the textile industry depended upon access to low cost domestic raw materials. According to the Gale Encyclopedia of U.S. Economic History, by 1810 a growing industrial base stretching from New England to Philadelphia and the Delaware Valley produced approximately $200 million in goods. By 1860 the textile industry generated $2 billion in products. Even in the face of the abolitionist movement and the growing recognition of the immortality involved, slavery, “found congenial company in the market revolution’s growing demand for raw materials.”
Across the history of our country there are many examples of how mechanisms in the federal contract work to perpetuate income disparity. There are the impacts of the concentration of wealth resulting from tariffs imposed by Congress in the Antebellum Period. There is the example of the Interstate Commerce Act of 1887 that extended federal power as never before and eventually preempted state control over the railroads resulting as Hovenkamp said the, “beneficiary of federal policy toward the railroads during this period was the railroads themselves.” Contrary to those who advocated for it, the Sherman Act proved that Congress was unable to confront the status quo and as Bork writes, “The federal courts in all the years since 1890 have never arrived at a definitive statement of the values or policies which control the law’s application and evolution.”
There has been a long term trend of accumulation of wealth in the top socioeconomic strata that began in the earliest days of the American Republic. It was impeded only by periodic historical events and today is exceeding historical levels. This persistent feature of our society is baked in by the codicils embedded in our national contract: the United States Constitution.