Fortunately, Lansing was an epicenter for the booming auto industry. General Motors and Fisher Body had major factories in town, and Dad got a job first at Lansing Die Sinking and then at Metal Machining Company. While he’d learned to be a competent machinist, he was no journeyman, but he was very, very good with details and bookkeeping. For the next forty years, he and a friend pretty much ran the office of that little fourteen-man business on behalf of the largely absentee owners, keeping the books, buying materials, making sales of finished products, and pitching in with the huge machines when necessary.
The machinists union was good to Dad—the company was a union shop. From the time I was around six, when he got that job, until the day he died in 2006, he, Mom, and their four sons all had full medical and dental insurance (I remember the doctor making house calls!); he had a pension when he retired; and we took two weeks of vacation every year, usually up to Newaygo to visit his sisters and my cousins. Dad made enough to buy a house in 1957 for about $15,000, with a government-guaranteed 3 percent thirty-year mortgage, which was fully paid off by the time he retired. He bought a new car—and paid cash—every three or four years.
He and Mom were obsessive antique and book collectors—they owned more than twenty thousand books, and my bedroom was carved out among the library-like rows of bookshelves in the basement. Dad was proud that he had read nearly every one—every night instead of watching TV, Dad and Mom would read for hours before we all went to bed (when Mom would read to us boys to put us to sleep).
This was all for a guy who had dropped out of college.
Had he been born a half century earlier, or in a nation that didn’t have specific government policies, he would have been working twelve-hour days, six or seven days a week, and never been able to afford the house, the car, or the vacations, much less all those antique books that we went searching for every weekend at the Salvation Army.
And my dad’s story wasn’t unique—the era of the fifties, sixties, and seventies saw the American Dream being realized all across the nation.
My dad lived the American Dream and had a good and happy middle-class life because FDR changed the laws of American commerce. Instead of a “free market,” we had a “middle-class market,” which is actually pretty rare in human history.
The Elusive Middle Class
In her writings, which have become foundational for libertarian theology, author Ayn Rand suggested that the only purpose of government should be to prevent oppression by force. What she neglected to consider was all the force inherent in nature.
If you are hungry, there is the “force” of biology. If you’re homeless, you confront the “force” of wind and storms, ice and snow. If you’re sick, you confront the ravages and “force” of disease.
These were the forces that provoked the first governments. The first communities, clans, and tribes. The first nation-states.
It’s easy for libertarian elitists, such as multimillionaire TV talking heads or college kids reading Atlas Shrugged, to talk about how there should be “no government beyond police, the army, and courts.” They all have enough resources that they don’t need to deal with the forces of raw nature. And that explains why billionaires would bankroll libertarian-leaning think tanks that will, when the crash comes with its full force, tell us it was “caused” by “big government.”
However, in the real world, humans must confront both nature and other humans. Which is why we create governments, and why we create economies.
But it wasn’t until 1776, when Thomas Jefferson replaced John Locke’s right to “life, liberty, and property” with “life, liberty, and the pursuit of happiness,” that the idea of a large class of working people having the ability to “pursue happiness”—the middle class—was even seriously considered as a cornerstone obligation of government.
(That was also the first time in history that the word “happiness” had ever appeared in any nation’s formative documents. As Jefferson wrote in 1817 to Dr. John Manners, “The evidence of this natural right, like that of our right to life, liberty, the use of our faculties, the pursuit of happiness is not left to the feeble and sophistical investigations of reason, but is impressed on the sense of every man.”)50
As Jefferson realized, with no government “interference” by setting the rules of the game of business and fair taxation, there could be no broad middle class—maybe a sliver of small businesses and artisans, but the vast majority of us would be the working poor under the yolk of elites.
The Economic Royalists know this, which gets to the root of why they set out to destroy government’s involvement in the economy.
After all, in a middle-class economy, they may have to give up some of their power, and some of the higher end of their wealth may even be “redistributed”—horror of horrors—for schools, parks, libraries, and other things that support a healthy middle-class society but are not needed by the rich, who live in a parallel, but separate, world among us.
As Jefferson laid out in an 1816 letter to Samuel Kercheval, a totally “free” market, where corporations reign supreme just like the oppressive governments of old, could transform America “until the bulk of the society is reduced to be mere automatons of misery, to have no sensibilities left but for sinning and suffering. Then begins, indeed, the bellum omnium in omnia, which some philosophers observing to be so general in this world, have mistaken it for the natural, instead of the abusive state of man.”51
Although this may come as a sudden realization to many, we’ve really known it all our lives.
In fact, in the six-thousand-year history of the “civilized” world, a middle class emerging in any nation has been such a rarity as to be historically invisible.
The United States has had two great periods of what we today call a middle class. The first was from the 1700s to the mid-1800s, and was fueled by virtually free land for settlers (stolen from the Indians) and free labor (slavery in the South and indentured immigrants in the North).
The result was (as de Tocqueville pointed out) the most well-educated, politically active, middle-class “nonaristocrats” in the world.
The second period didn’t take hold until after World War II, during my dad’s lifetime. Unlike the first, which was fueled by free land and slaves, the second had to be carefully constructed with specific (and what some might define as “socialist”) policies put in place during the New Deal, which asserted more democratic control over the economy and workplace in order to hold the Royalists in check.
Step One: Progressive Taxation
To both stimulate and balance that domestic economy, FDR reinstituted progressive taxation, which gave workers more to spend and gave the rich an incentive to pay their workers better to maintain a stable workplace (since if they took the money themselves, it would just mostly go to taxes), thus stimulating demand for more goods and services.
Progressive taxation has a long history: As Jefferson said in a 1785 letter to James Madison, “Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.”52
FDR eventually hiked the top income tax rate paid by the superrich in America to 90 percent. This had a twofold effect.
First, it held income inequality in check and ushered in an era of equal income growth among all classes. Unlike the Gilded Age, when the economy grew at a blistering pace but the gains were afforded only to the Robber Barons, the period between 1947 and 1979 saw unparalleled equitable growth.