A long-view look at a problem that has been vexing economists and policymakers lately—namely, financial and social inequality.
In theory, America is a society not riven by the class divisions of old Europe, and in the beginning, with some exceptions, American colonists were indeed equally not-well-to-do. Independence, write Lindert (Economics/Univ. of California, Davis; Growing Public: Social Spending and Economic Growth since the Eighteenth Century, 2004, etc.) and Williamson (Emeritus, Economics/Harvard Univ.; Trade and Poverty: When the Third World Fell Behind, 2011, etc.), was an expensive proposition, with incomes falling as much as 30 percent. The early republic, however, was an economic phenomenon, and with the steady expansion of the nation into the continental interior, fortunes were built—though, as the authors note, history had a way of intervening, as when the Civil War served as a modest equalizer in the South even as it built still larger fortunes in the North. Of particular interest in this cliometric account are the factors that the authors identify in the making of “the Great Leveling,” which followed the Gilded Age and persisted into the 1970s. “While educational attainment, measured as the average years of schooling completed by adults, advanced by nearly one school year per decade during the Great Leveling,” they write, “a marked deceleration followed.” The lesson here is that education is both a powerful economic engine and a democratizing force. At times critical of the Piketty school of thought, the authors further identify other factors in our present levels of inequality, including the refusal to regulate the financial industry, to fund education, and to tax large inheritances. The opportunities to end inequality are as obvious as C-notes dropped on the ground, they write in closing: “Of course, the fact that they are still lying there testifies to the political difficulty of bending over to pick them up.”
Some familiarity with economic principles will benefit readers, but its conclusions are both accessible and urgent.