Our predicament, in a nutshell

Both of these articles are hugely insightful regarding our economic predicament today--particularly Fraser's, which compares the original Gilded Age of the late 1800s to the reenactment we now see around us (there's a reason Karl Rove loves that period). Fraser writes:

As in [the] days [of the first Gilded Age], there is today no end to ideological justifications for an inequality so pervasive that no one can really ignore it entirely. In 1890, reformer Jacob Riis published his book How the Other Half Lives. Some were moved by his vivid descriptions of destitution. In the late nineteenth century, however, the preferred way of dismissing that discomfiting reality was to put the blame on a culture of dependency supposedly prevalent among "the lower orders," particularly, of course, among those of certain complexions and ethnic origins; and the logical way to cure that dependency, so the claim went, was to eliminate publicly funded "outdoor relief."

How reminiscent of the "welfare to work" policies cooked up by the Clinton administration, an exchange of one form of dependency -- welfare -- for another -- low-wage labor. Poverty, once turned into the cultural and moral problem of the impoverished, exculpated Gilded Age economics in both the nineteenth and twenty-first centuries (and proved profitable besides).

Even now, there remains a trace of the old Social Darwinian rationale -- that the ascendancy of "the fittest" benefits the whole species -- and the accompanying innuendo that those consigned to the bottom of the heap are fated by nature to end up there. To that must be added a reinvigorated belief in the free market as the fairest (not to mention the most efficient) way to allocate wealth. Then, season it all with a bravura elevation of risk-taking to the status of spiritual, as well as economic, tonic. What you end up with is an intellectual elixir as self-congratulatory as the conscience-cleansing purgative that made Professor Sumner so sure in his cold-bloodedness.

Then, as now, hypocrisy and self-delusion were the final ingredients in this ideological brew. When it came to practical matters, neither the business elites of the first Gilded Age, nor our own "liquidators," "terminators," and merger and acquisition Machiavellians ever really believed in the free market or the enterprising individual. Then, as now, when push came to shove (and often way earlier), they relied on the government: for political favors, for contracts, for tax advantages, for franchises, for tariffs and subsidies, for public grants of land and natural resources, for financial bail-outs when times were tough (see Bear Stearns), and for muscular protection, including the use of armed force, against all those who might interfere with the rights of private property.

So too, while industrial and financial tycoons liked to imagine themselves as stand-alone heroes, daring cowboys on the urban-industrial-financial frontier, as a matter of fact the first Gilded Age gave birth to the modern, bureaucratic corporation -- and did so at the expense of the lone entrepreneur. To this day, that big business behemoth remains the defining institution of commercial life. The reigning melodrama may still be about the free market and the audacious individual, but backstage, directing the players, stands the state and the corporation.

Crony capitalism, inequality, extravagance, Social Darwinian self-justification, blame-the-victim callousness, free-market hypocrisy: thus it was, thus it is again!

The Great Silence:
Our Gilded Age and Theirs - TomDispatch

The second article, Kevin Phillips's discussion of America's shift from a manufacturing to a finance-based economy, is also incisive, if ultimately less optimistic:

Bubble and Bail - The American Prospect