Required Lecture

Learning Objective I

Compare the time period from 1921-1933 with the time period from 1870s-1901. Also discuss contemporary wealth disparities and the problems associated with it.

President Harding's Inaugural Speach

Shortly before the United States entered the First World War, Woodrow Wilson remarked to Secretary of the Navy Josephus Daniels:

"Every reform we ha*e won will be lost if :we go into this war. We have been making a fight on special privileges. . . . War means autocracy. The people we have unhorsed will inevitably come into control of the country for we shall be dependent upon the steel, ore, and financial magnates. They will run the nation."

Wilson's prediction was essentially correct, although not every reform was lost.

What helped make this possible was that Wilson's own Democratic unity, so firmly united during most of his administration, fell into snarling factions and became so helpless that for two successive elections it was unable to play the role of a responsible opposition.

President Warren Harding called for a return to normalcy to the days of J. P. Morgan and John D. Rockefeller, where the country was governed by the principles of laissez-faire.

President Coolidge, more normal than Harding, announced that the business of the United States is business.

President Hoover insisted that the American system was a product of rugged individualism (Confusion of Ethics).

Thµs, the decade after the First World War, like the decades after, the Civil War, featured conservatism m politics and in social philosophy.

In both eras, the Republican party enjoyed almost undisputed control of national affairs.

The Republicans avowed the philosophy of laissez-faire, but in practice made government an instrument of large corporations, as did the Republicans in the post Civil War period.

Wilson's successors Presidents Harding and Coolidge did not dissolve the regulatory agencies that were created during the progressive movement, by naming commissioners who were less than sympathetic to regulation they reordered these agencies ineffective. Harding named conservative advocates of big business to the Interstate Commerce Commission, the Federal Reserve Board, and the Federal Trade Commission.

Both decades saw rapid industrial expansion and changes in manufacturing and business techniques

Also, there was a uneven distribution in wealth which led to an acute and prolonged depression .

Currently wealth inequality can be described as the unequal distribution of assets within a population. The United States exhibits wider disparities of wealth between rich and poor than any other major developed nation

We equate wealth with “net worth,” the sum total of your assets minus liabilities. Assets can include everything from an owned personal residence and cash in savings accounts to investments in stocks and bonds, real estate, and retirement accounts. Liabilities cover what a household owes: a car loan, credit card balance, student loan, mortgage, or any other bill yet to be paid.

In the United States, wealth inequality runs even more pronounced than income inequality

The best official U.S. source of data on household wealth distribution comes from the Federal Reserve’s Survey of Consumer Finances, an in-depth survey of the finances of some 6,000 American families conducted every three years over the past three decades. The latest Fed survey results, released in September 2014, reflect data collected in 2013.

The wealth share of America’s top 3 percent, Fed researchers calculate, rose from 44.8 percent of the nation’s wealth in 1989 to 51.8 percent in 2007 and 54.4 percent in 2013. The top 3 percent now hold over double the wealth of America’s poorest 90 percent of families.

The vast majority of American families — 94.5 percent, the latest Federal Reserve survey data make clear — hold one sort of financial asset or another, from savings and checking accounts to stocks and cash-value life insurance policies. But the overall ownership of these financial assets has become stunningly concentrated. America’s richest 10 percent now hold nearly 85 percent of these assets. In 1989, the nation’s richest tenth of families held 79 percent of them. - See more at: http://inequality.org/wealth-inequality/#sthash.pRKr3NII.dpuf

All the Federal Reserve data reflect the responses surveyed households give to the triennial Survey of Consumer Finances questionnaire. In 2014, economists Emmanuel Saez of the University of California Berkeley and Gabriel Zucman of the London School of Economics unveiled a different approach to measuring wealth. The pair base their research on the comprehensive data on capital income — dividends, interest, rents, and business profits — that have been reported on individual U.S. income tax returns since 1913. They then essentially worked backwards from these income flows to calculate the wealth that produced this income. The resulting calculations enabled them to track the nation’s distribution of wealth back a century. -

See more at: http://inequality.org/wealth-inequality/#sthash.pRKr3NII.dpuf