Perspectives on 20th Century America: Readings and Commentary

By Otis L. Graham Jr. | Go to book overview

mates shattered the assumptions of the 1950s. In the article below, Richard Parker, a young staff associate of the Center for the Study of Democratic Institutions, offers a summary view of the literature on income distribution and poverty and dispells the myth that America in the 1950s was a land of uniformly spreading affluence.

Parker describes for us the myopia of economists and others in the 1950s who made complacent and quite inaccurate statements about a continuing income revolution and about the widespread blessings of affluence, and he refers to economic studies of the 1960s to argue that the contrary was true. But he does not tell us how the redistribution trends of the 1930s and the war years were reversed, nor why intellectuals were so long in finding this out. Many of the reasons for the surprising income trends of the Eisenhower period seem to lie in public policy; a few have to do with "natural" economic developments. Under Eisenhower, federal tax policy became less progressive, both through changes in the revenue laws (especially in 1954) and in Bureau of Internal Revenue rulings. More important, state and local taxation remained steadfastly regressive, as it had been for years, so that the total impact of taxes in America by the 1950s was at best neutral and probably had a regressive effect, despite the widespread assumption that the United States had a progressive tax system. Public policy made a further contribution to the maintenance of a large poverty sector as Eisenhower gradually shrank nondefense, public-services spending as a proportion of the federal budget. Further, the administration continued the shift, commenced in the Truman era, from spending on public services that benefitted the lower classes (such as aid to tenant farmers, or low-income housing) to expenditures that aided the middle- and even the upper-income groups (such as the federal highway program to assist suburban commuters to reach the inner city, or middle-income housing, or subsidies for large farmers). It was also administration policy to control inflation through restrictive fiscal and monetary policy; and the resultant high level of unemployment and low level of economic growth had the effect, apparently unintended, of slowing the rate of upward mobility of the lower classes. These trends in public policy combined with natural economic developments, such as the decline in the number of unskilled jobs and the resultant deterioration in the economic bargaining power of low-income workers, to put an end to the redistribution of income that had commenced in the 1930s and continued until about the Korean War. This meant, among other things, that the poor could not climb out of poverty through the redistribution of income and that they would escape their plight only by the very gradual process of participating, along with everybody else, in a general rise in the American standard of living. But, as the studies of the 1960s revealed, millions would not climb out of poverty even then, for they were frozen out of the job market entirely, unemployable or underemployable because of physical disability, dependent children, race, or functional illiteracy.

Although it is now clear that progressive income redistribution had ended with the 1950s, and that the number of Americans in poverty was very high (estimates in the 1960s varied from 23 to 50 million people) and was falling only with agonizing slowness, almost no one in the 1950s called attention to these fundamental social trends. Why were these developments overlooked for an entire decade? This is a question that is basic to the analysis of the 1950s. Too few economists were interested in the distribution of income, too

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