Drawing The Battle Lines Of Class Warfare

Folks are mad as you-know-what over the state of the economy. And as we saw in the recent outrage over the AIG bonuses, millions of Americans are looking for somebody to blame. Our Cover Story is reported by chief political correspondent Jeff Greenfield:

"In America, at least, we don't resent the rich … we want to be rich," said President Barack Obama.

Indeed, in good times, we even celebrate excess, and pay homage to the Masters of the Universe and all they have accumulated.

But when times turn hard, the celebrations then turn to anger.

"Someone quite frankly has got to take these people to the woodshed," said Rep. Tim Ryan, D-Ohio. "I mean, let's be honest - they just don't get it."

"The letters AIG stand for Arrogant Irrresponsible Greed," said Rep. Lloyd Doggett, D-Texas.

Indeed, there are times in our past when such anger has turned deadly. On September 16, 1920, a horse-drawn cart loaded with 100 pounds of dynamite exploded on Wall Street's busiest corner. Thirty-eight people were killed, more than 400 injured.

Today's attacks on Wall Street, of course, come in the form of arguments, not bombs.

But there is a powerful current of anger that runs from Main Street to the Halls of Congress. And it's raised once again an argument that's almost as old as the Republic: Is too much wealth and power concentrated at the top? Should the government try to redress that balance?

Or is that idea nothing but "class warfare"?

Two centuries ago, Thomas Jefferson denounced "bankers and speculators" as the biggest danger to the Republic.

President Andrew Jackson waged war against the Second Bank of the United States, and the "elite circle" of financiers.

And Franklin Delano Roosevelt began his Presidency by indicting the "money changers" who he said had caused the Great Depression:

"The rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence," FDR said in his first inaugural address in 1933.

"There was a great deal of cultural as well as political resentment at the rich, for having gotten away with murder in effect for too long," said Princeton historian Sean Wilentz. "One certainly saw that in the 1930s. You can't look at a popular movie from the early 1930s and feel that palpable sense that the rich, personified by a fat guy sitting on moneybags with a cigar clenched in his mouth … that they are the enemy."

In our time, the populist cause is made by voices like Ohio Democrat Sherrod Brown, who won his Senate seat in 2006 by focusing on corporate misbehavior and a skewed economic playing field:

"I think there's no question that the government sings with an upper class accent," he told workers in Ohio.

"The government has too often sided with the people with great advantage against the least privileged," Brown said. "In the last three decades, the five percent at the top have done much, much better than the rest of society."

Populists like Senator Brown argue that, according to recent data from the Economic Policy Institute, the top one percent of Americans have more than 22 percent of income, a number that hasn't been matched since 1929.

"Those who have done very well under this system, those who have made huge, huge, huge profits, and not shared those profits with their workers, why should they not pay a higher tax rate?"

Republican Congressman Jeff Flake of Arizona is a mirror opposite of Senator Brown.

"When you have the top one percent roughly 35 percent of all income taxes," he said, "it's tough to make the case that those at the top aren't paying their share of income taxes."

America may have a more unequal distribution of wealth than other nations, Flake says, but that misses the point:

"Look eastward to Europe: You have a so-called fairer distribution of income there," he said. "But it's a lower income, and it's a lower quality of life than we have here. And I think it would be tough to argue otherwise."

But Flake is no apologist for the Wall Street players who put the global economy in danger:

"They knew full well at some point, it would not last. They knew full well at some hint of a bubble bursting in the real estate market that they were gonna be in trouble. But they went ahead knowing they could get theirs and then go away, I guess. And so I think people were justifiably outraged, and still are."

Kimberly Strassel, a member of the Wall Street Journal editorial board, think class warfare is often motivated by politicians.

"It's not politically acceptable to tax the middle class as a whole," Kim said. "So, you wanna go out there and wring more money out of the top one percent or five percent. And to do that, you have to set up the argument that somehow it's unfair that they have the money that they have."

So, how does this argument play outside of Washington?

Pennsylvania's Lehigh Valley was once a steel-making center of America. The mills shut down years go, but the Valley has made a comeback with high-tech enterprises like Air Products, which successfully reinvented itself as a supplier to cutting-edge businesses. The company is holding its own, and its employees still have their jobs. But …

Employee Scott Hansen, who believes in playing by the rules and having trust, says his 401(k) is now a 201(k). "Now I'm going to have to work longer and hard in order to achieve my goals for retirement."

There's plenty of anger out there, but most of it here is not directed at the rich.

Kim Chaney is angry at people who bought homes they couldn't afford. "I found a home and a payment I could live with. I took responsibility. I feel that these people are not paying for their poor decisions.

"I've played by the rules, I did it right," she said. "It is infuriating that I have to pay for someone else's mistake."

We aren't angry at the rich, says the Wall Street Journal's Kim Strassel, because we believe that we, or our children, can someday join their ranks.

"What's interesting to me is that the average American aspires to be that millionaire," she said.

"Now, is that a rational belief, or is that a myth?" asked Greenfield?

"I think in this country, it's far more rational than anywhere else in the world, that you would have the opportunity to one day be that millionaire," Strassel said.

But MIT professor Simon Johnson argues in the Atlantic Monthly that there is too much money and power at the top, and that the rules have, for far too long, been tilted in favor of those in the powerful financial sector.

"I'm the last person to engage in class warfare; I'm a professor of entrepreneurship, right?" Johnson said. "I work with people who set up companies who want to make money. They want to build good things for society.

"The problem is not the wealthy people. It's the concentration of power around people who run these major banks."

Johnson, former chief economist with the International Monetary Fund, argues that - much as with other troubled economies - the financial elite in the U.S. drove us off the cliff.

"What I think now has happened is, we let certain interests become too powerful, like we did at the beginning of modern industrialization, I'd say, over 100 years ago in the United States. And it's something that is not good, but it can be addressed. It's gonna be economically painful and politically difficult. But it's not the end of the world. We can absolutely handle it."

However policies and programs may change in the days and years ahead, our history tells us that today's anger will NOT trigger drastic shifts in the balance between the opportunity for great wealth, and the impulse to contain and control its excesses.

"It's not that the rich are rich," said historian Sean Wilentz. "Everyone wants to be rich in America; nothing wrong with it. But if you've gotten there by ill-gotten gains, if you've gotten there by screwing over the American public and the American taxpayer … well, that's another matter."