The Myth of Equality in the 1950s

1. 1. 1. Debate: Is There Too Much Inequality in America? | Learn Liberty (video): Prof. Steven Horwitz and Jeffrey Reiman debate questions about wealth, fairness, and inequality in the United States. 
      2. Does Inequality Matter? Exploring Poverty and Finding a Way Out (on demand program): Prof. Sean Mulholand delves into questions like does inequality matter, is there income mobility in the US, and what are the best ways to reduce poverty.
      3. The Other America: Poverty in the United States by Michael Harrington (book): To learn more about the dire economic climate of the 1950s, check out Michael Harrington’s book that shed light on poverty in the US and argued that economic growth was crucial to ending poverty. 

Brian Domitrovic: We always hear that the 1950s was the golden era of economic equality. That’s when the rich paid their fair share in taxes and everybody had a job and everything was great — post-war prosperity. This view got a real big boost a couple of years ago when Thomas Piketty in France wrote his best-seller, Capital in the Twenty-First Century, which has a famous graph showing how equal it was in the ’50s and how unequal we’ve become since.
Boy, is this a big, fat myth. In the 1950s, the United States had an agonizingly slow rate of economic growth, only about 2.5% per year from 1953 on, and the inequality situation was actually one of the most horrendous of modern times. We can think about this in two particular ways. Number one, there was a lot of poverty in this country. Number two, the situation for African-Americans was dire.
Let’s talk about poverty. The best-selling book that Penguin Nonfiction ever produced once they started publishing books in the United States in 1962 was a book called The Other America: Poverty in the United States, by Michael Harrington, published in 1962. This immense publishing sensation at the time, which caught fire in the United States, argued that there was about 50 million poor people in the United States, almost a third of the population, that could barely get by on conditions of destitution.
The main reason, Michael Harrington, who was a Democratic Socialist, said that we have this problem is there is not a sufficient rate of economic growth. The Democratic Socialist said, “We could solve at least half of this problem by doubling our rate of economic growth to about 5%.” He said, “We might need a great society for the other half, but the main thing is we have to increase our rate of economic growth.” There was widespread consensus in the 1950s and early 1960s that the 1950s saw an enormous problem of poverty in the United States.
The second aspect of the inequality problem in the 1950s has to do with African-Americans. African-American unemployment and destitution was so bad in the 1950s that by the election of 1960, when there was lots of surveying on this topic, most African-Americans were saying that they were growing tired of the civil rights movement — tired of the civil rights movement! Why? They said there wasn’t enough jobs, “We would rather there simply be more jobs than we get civil rights.” That’s how bad the unemployment situation was for African-Americans. How bad was it? First of all, the unemployment rate for African-Americans was double that of whites. When you have severe recessions like in 1957, ’58, black unemployment just spiked massively.
The other problem was that unions were very discriminatory. The AFL-CIO umbrella union basically shut blacks out, and this meant that if there was not going to be robust economic growth, which there wasn’t in the 1950s, the AFL-CIO liked that because that drove workers into their arms. Hey, there aren’t a lot of jobs. Who doles out the jobs? The AFL-CIO. Workers were driven into the arms of the AFL-CIO because of slow growth, and the AFL-CIO had to make sure that somebody didn’t get the jobs, so they reserved unemployment for the blacks. This led blacks to say, “We need jobs even more than we need civil rights.” This was the famous divide between the two great black leaders at the time, A. Philip Randolph, who led the largest black union, Brotherhood of Sleeping Car Porters, and Martin Luther King, who was saying we need civil rights.
It was Randolph who led the March on Washington for Jobs. That was the name of the event in 1963, the March on Washington for Jobs. The destination was actually not supposed to be the Lincoln Memorial. It was going to be the headquarters of the AFL-CIO, “We really need jobs.” It was only at the last second in the summer of 1963 that Martin Luther King jumped on, and they renamed the subtitle of the event, the March on Washington for Jobs and Freedom.
When you talk about the 1950s being some kind of paragon of equality economically, it just kind of flies in the face of these tens of millions of poor people the nation has conceded and even African-Americans despairing of the usefulness of the civil rights movement because there aren’t enough simple jobs. All that changed when you had tax rate cuts in 1963, ’64, and you have a huge boom of 5% growth and you see the greasing of the African-American civil rights movement. It turned out that the solution to the incredible, intractable inequality problems of the 1950s was tax cuts, a return to sound money, and getting the government out of the way and letting the private sector roll.