The New Gilded Age


American undergraduate students are famous for enjoying a toke on the pipe. Kids smoking ‘herb’ is one of the stereotypes of a college education. So it was no surprise when a friend of mine in his mid-20s began dating a 19-year-old, that I found out that she liked to smoke weed.

More than a little, as it turned out.

Thanks to Emo

Sara* is pretty and blonde. She attends a prestigious New York liberal arts school. Her father is a fund manager on Wall Street. A while later, my friend told me about Sara’s latest purchase: a gold-plated bong, costing over $1200. Apparently, her dealer had stopped shopping his herb around. He now dealt exclusively to Sara. She was such a lucrative customer that he, too, was able to live off her dad’s money.

Sounds obscene? After nearly a year in Manhattan, I no longer shake my head at stories like Sara’s.

In a city where there are three dog gyms around my office, and you can buy a thousand-dollar pizza  conspicuous wealth seems to be everywhere.

Sara is a ‘trustafarian’:  

Portmanteau of ‘trust fund’ and ‘rastafarian.’ A hippie poser. Essentially a rich kid who smokes weed, wears hats designed to hold dreads when he in fact has none, and uses the word ‘peace’ to say ‘bye.’

In New York City, the word usually refers to a class of young adults running around the hip areas of town, like the Lower East Side and Brooklyn’s Williamsburg  neighbourhood. In many ways, they’re the city’s style leaders, purchasing the latest fashions and gizmos on dad’s credit card.

A lot of New Yorkers are uncomfortable about trustafarians. Their existence mocks Frank Sinatra’s famous lyric, ‘if you can make it here, you can make it anywhere.’ Trustafarians show that some New Yorkers don’t have to make it they’re simply born into it.

People like Sara also undermine the idea of the ‘American Dream,’ a key part of which is equal opportunity for all. This is the idea that Abraham Lincoln,  born in a log cabin, could become President. It’s the idea that all Americans have an equal chance to prosper. And that unlike England there’s no aristocracy in the United States.

Mega-celebrities Madonna and Oprah Winfrey  were born in poverty, and became extravagantly rich. Madonna famously moved to New York City with just US$35. She lived in squalor in the East Village in the early 1980s, before the area was gentrified.

But how many Americans’ lives actually mirror Madonna’s story?

In March, the OECD released a report  into the transmission of wealth across generations. The issue is controversial for liberals and socialists alike and indeed, for anyone who believes that we should all have equal opportunities to prosper that don’t depend on our father or mother’s income.

In June, much of the British media was incensed by another survey, this time conducted by the London School of Economics and the Sutton Trust,  which showed that Britain had the least social mobility in the developed world.

The LSE/Sutton Trust report found that children in the UK have a one-in-two chance of staying in the same class as their parents. But both the Sutton Trust and OECD research show an almost identical figure for the United States.n Despite all the rhetoric about kids born in poverty rising to the top, it seems that if you’re born poor in the United States, you stay poor.

Indeed, the OECD research finds that people born in the bottom 20 per cent of earners in the USA have only a 7 per cent chance of ascending to the top 20 per cent during their life. That’s less than half the figure for Denmark and Finland, traditionally strong welfare States where 15 per cent of the poorest citizens are amongst the top 20 per cent of income earners by the end of their lifetimes.

The OECD report also notes that the absolute difference in pay between the rich and poor in the US is likely to be even greater than those headline figures, because there’s a larger difference between what the richest and the poorest earn. So in the US, the poor have to climb harder than elsewhere to end their lives rich.

Taken together, the reports show why Democratic Party Presidential candidate John Edwards has been campaigning on the theme of poverty. (His promise to bring the ‘two Americas’ closer together economically prompted shock hack Ann Coulter to call for his assassination  in early July.)

Edwards famously opened his Presidential campaign this year in New Orleans it had been the squalor revealed by Hurricane Katrina that effectively made poverty an issue in US politics.

But a different hurricane perhaps illustrates how the gap between the rich and poor plays out in less dramatic circumstances. Author Robert Frank, who’s just published Richistan, a book  about the lives of the super-rich in the US, visited Fort Lauderdale, Florida, just after Hurricane Wilma in 2005.

‘Thousands of residents in the poorer sections of Fort Lauderdale (most of them Black or Hispanic) were left homeless,’ Frank writes. But for the super-rich at the international boat show a few of kilometres away, there was a chocolate fountain and the air-conditioning was ‘perfect.’

Pundits are calling the economic boom under George W Bush a ‘New Gilded Age’ a reference to the period just before the turn of the 20th century. The original Gilded Age was a time when ‘Robber Barons’ like JP Morgan made millions, largely through exploiting Eastern European immigrant workers.

The new Gilded Age has been at least partly created by Bush’s 2003 investment tax cuts. Three years after those cuts, the New York Times found that Americans earning over 10 million dollars were the big winners from Bush’s largesse.

The paper reported that super-rich Americans saved $500,000 in tax bills after the cuts. In fact, the super-rich today pay the same share of their income as the ‘merely’ wealthy those earning $200,000 to $500,000.

Meanwhile, the poor have been hurt most by the cuts in social services that partially financed the overall tax cuts. Bush has cut labou
r market welfare-to-work programs and low-income housing schemes. He’s frozen university tuition loan schemes, even as universities across America charge more to students.

And the numbers living in poverty have risen, along with the fortunes of the super-rich. By 2004, 36 million Americans were living in poverty and that figure doesn’t even include the tens of millions of working poor you’d find down at your local Walmart .

The first Gilded Age was a time of unprecedented labour activism, with anarchists assassinating President William McKinley.

While there’s little labour unrest right now in the United States, one can only imagine what Wilma refugees would have done if they had found out about the chocolate fountain at the international boat show in Fort Lauderdale.

*Not her real name.

Like what you just read? Click here to sign up for a free trial subscription to access all articles for four weeks.


New Matilda is independent journalism at its finest. The site has been publishing intelligent coverage of Australian and international politics, media and culture since 2004.