The new Gilded Age could be bad for Republicans — and Big Tech

Summary

POLITICO Tech Episode Summary: "The new Gilded Age could be bad for Republicans — and Big Tech"

Release Date: March 4, 2025

In this insightful episode of the POLITICO Tech podcast, host Stephen Overlead engages in a compelling conversation with historian and best-selling author Joshua Zeitz. They explore the notion that the United States may be experiencing a second Gilded Age, drawing parallels between the economic dynamics of the late 19th century and today’s technology-driven society. This summary delves into the key points, discussions, insights, and conclusions presented during the episode.

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Introduction: Setting the Historical Context

Stephen Overlead opens the episode by introducing Joshua Zeitz, who posits that America is navigating a second Gilded Age. He recalls the first Gilded Age, characterized by the Industrial Revolution, with magnates like bankers and railroad tycoons wielding substantial influence over the economy and government. Zeitz extends this comparison to contemporary tech titans such as Elon Musk and Jeff Bezos, highlighting similarities in wealth accumulation and political influence.

Stephen Overlead [00:34]: "Joshua Zeitz thinks America is living through a second Gilded Age... But Josh wrote in Politico magazine recently that the business moguls then and now aren't so different."

Defining the Gilded Age and Its Modern Counterpart

Zeitz elaborates on the characteristics of the Gilded Age, emphasizing unprecedented wealth, technological advancements, and significant income inequality. He draws a direct line to the present day, noting that current tech giants have amassed wealth comparable to their 19th-century counterparts, supported by substantial government subsidies and contracts.

Joshua Zeitz [02:22]: "We had unprecedented wealth and an enormous increase in wealth and income inequality... And we're seeing something very similar happen today."

Parallels Between Historical Tycoons and Modern Tech Giants

The discussion shifts to specific individuals from the first Gilded Age and their modern equivalents. Zeitz compares historical figures like Cornelius Vanderbilt and Jay Gould to today’s tech leaders like Elon Musk and Jeff Bezos, highlighting their reliance on government support to build and sustain their enterprises.

Joshua Zeitz [06:16]: "Elon Musk's various tech companies have benefited by about $38 billion in government subsidies and incentives and bailouts... They are beneficiaries of taxpayer investments."

Impact on Politics: The Republican Party and Wealth Concentration

Zeitz argues that the concentration of wealth among tech giants poses significant challenges for the Republican Party. Drawing parallels to President William McKinley’s reliance on industrialists, Zeitz suggests that modern Republican leaders, such as Donald Trump, similarly depend on wealthy tech figures. This dependence may alienate the broader electorate and provoke backlash.

Joshua Zeitz [09:45]: "McKinley relied on the wealthiest magnates for his campaign... Similarly, Trump relies heavily on Elon Musk for campaign funding and operations."

The Inevitable Backlash: Lessons from the Past

Reflecting on the end of the first Gilded Age, Zeitz highlights the intense labor unrest and the rise of populist movements that ultimately led to the Progressive Era. He warns that a similar backlash could emerge today as workers and ordinary citizens react against the disproportionate influence of Big Tech and economic inequality.

Joshua Zeitz [12:29]: "Labor unrest from the 1870s through the 1890s... This very much mimics the potential for a new progressive movement today."

Signs of a New Progressive Era Brewing

Zeitz points to current signs of populist discontent, such as anger towards billionaires like Elon Musk infiltrating government operations. He draws a direct analogy to the late 19th-century populist movements, suggesting that a modern progressive push could reshape American politics and policy significantly.

Joshua Zeitz [14:25]: "Republican congressmen from deep red districts are facing anger against billionaires... This is a direct analogy to the early 1890s populist movements."

Violence and Political Turmoil: Historical and Modern Parallels

The conversation touches on the violent reactions that marked the end of the first Gilded Age, including assassinations and targeted attacks on industrialists. Zeitz cautions that similar tensions could escalate today, referencing the murder of a United Healthcare executive as a modern instance of such unrest.

Joshua Zeitz [14:25]: "Henry Clay Frick was shot almost to death... A United Healthcare executive was murdered in New York, reflecting similar tensions."

Lessons for Business Leaders and Politicians

Concluding the discussion, Zeitz urges current business leaders and politicians to recognize their dependence on government support and to adopt a more socially responsible approach. He emphasizes the importance of viewing the government as a public institution rather than an adversary, advocating for policies that ensure fair economic regulation and reduce inequality.

Joshua Zeitz [16:12]: "Business leaders should recognize their reliance on taxpayer largesse and view the government as something that belongs to everyone... They should consider if they want the path that led to the Progressive Era."

Conclusion: Looking Ahead

Stephen Overlead wraps up the episode by thanking Joshua Zeitz for his valuable insights. The conversation underscores the critical need for awareness and proactive measures to prevent the potential pitfalls of the modern Gilded Age, advocating for a balanced relationship between Big Tech, government, and the populace.

Stephen Overlead [16:40]: "That's all for today's Politico Tech... See you back here tomorrow."

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Key Takeaways:

1. Economic Parallels: The current tech-driven economy mirrors the first Gilded Age in terms of wealth concentration and government reliance.

2. Political Implications: The Republican Party may face significant challenges due to its ties with Big Tech, potentially leading to increased political polarization and populist backlash.

3. Inequality and Labor Unrest: Growing economic inequality and labor dissatisfaction could ignite movements akin to the Progressive Era, demanding greater regulation and fairness.

4. Responsible Governance: There is a pressing need for business leaders to adopt socially responsible practices and for government policies to address the disparities exacerbated by technological advancements.

5. Historical Lessons: Reflecting on the past provides crucial insights into managing the present and preventing the adverse outcomes of unchecked economic power.

This episode serves as a thought-provoking analysis of the intersection between technology, economics, and politics, urging listeners to consider historical lessons in navigating contemporary challenges.

Transcript

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[Stephen Overlead]

Hey, welcome back to Politico tech. Today's Tuesday, March 4th. I'm Stephen Overlead. Here's a tip I've learned as a reporter. If the politics of the moment ever seem too confusing or too unprecedented or just plain weird, call up a historian because there's a good chance they can find a parallel to events of the past. Take Joshua Zeitz. He's a historian and best selling author who thinks America is living through a second Gilded Age. Now to refresh your memory of US History, the first Gilded Age coincided with the Industrial Revolution when big bankers and railroad tycoons held massive sway over the economy and government. Today, those tycoons build social media sites and rocket ships and electric vehicles. They're tech titans like Elon Musk and Jeff Bezos. But Josh wrote in Politico magazine recently that the business moguls then and now aren't so different. They're getting richer and richer. Economic inequality is getting worse, and if history repeats itself, the outcome isn't so great for President Donald Trump and the Republican Party. On the show today, Josh gives me a history lesson that could not feel more timely. Here's our conversation. Josh, welcome to Politico Tech.

[Joshua Zeitz]

Hey, great to be here. Thanks so much for the invitation, of course.

[Stephen Overlead]

So you argue that the US Is perhaps in the midst of a second Gilded Age, and that could be a cautionary tale for President Donald Trump and fellow conservatives. Tell me why.

[Joshua Zeitz]

So just to level set on terminology, the Gilded Age is this period after the Civil War really leading up to the end of the 19th century, where you had unprecedented wealth and technological advances, but an enormous increase in wealth and income inequality. And you also had in this era an unprecedented level of business control over government at the state, federal and local levels, meaning that the sort of titans of wealth in this era enjoyed unprecedented control over the institutions themselves. And we're seeing something very similar happen today, arguably in the early days of the second Trump administration. And the cautionary tale is that to every reaction, there's a counter reaction to every swing of the pendulum that's going to swing back. And in the late 19th century, the reaction to this excess of greed and private sector interference in what should have been a public sector good created a wave of progressive reform that is arguably a very good thing. I would argue it is. But for those who are the biggest advocates of the current second gilded age, so to speak, the warning sign is as follows, right? That if you go too far, you may very well end up provoking a second progressive era that you won't like very much, Although it might be one that's pretty necessary.

[Stephen Overlead]

So take me back then to the first Gilded Age. It's roughly what, 1870, I guess the civil war has just ended. What is the state of the nation at that time? And what are the parallels you see between kind of business and culture then and today?

[Joshua Zeitz]

There's a couple of things. Ironically, the Union ended the war, you know, victorious, but in economic ruin. Because the war had been extremely costly and the Lincoln administration was really kind of like struggling to finance it till the end. That having been said, a couple of things during the war created a massive post war private sector economic expansion, set aside government finances to. For one, the government printed an enormous amount of money in order to finance the war. Now that was inflationary, but it also helped to finance a lot of business and technology investment. Government also did a number of things during the war to feed and clothe and move troops. And that led to the rise of all sorts of new industries, from railroads to canned food, which sounds a little silly, but like the idea of canned food and processed food was something that was really an innovation of the war because you need to feed all these troops. You saw massive investments in clothing and textiles in order to clothe troops. You saw the rise of things like ready to wear, made to wear, pre sized clothing, an entire industry that came up after the war. So a combination of the money supply and massive federal spending created an enormous post war economic boon that was also aided by other wartime policies that the Republican party in Washington undertook. For instance, land grants to homesteaders in the west or land grants, massive land grants to railroad companies. They would get so many dollars and so many acres of land that they could then monetize by selling it per mile of track that they laid. And this created a whole transcontinental railroad system in the post war period. All of this together just creates enormous opportunities for wealth accumulation by a small number of people who really controlled a lot of these industries. And it creates a lot of national wealth, but it also begins to create an enormous amount of economic inequality. So you're seeing the government really falling into the control of the very people who benefited so sharply from government contracts and subsidies and policies. And it, in many ways, you know, presaged some of what we're beginning to see today.

[Stephen Overlead]

Got it. Got it. So the Gilded Age, the first Gilded Age, is being led by these business tycoons of the day, people who you sort of see as the equivalent of a modern day, you know, Elon Musk or Mark Zuckerberg or Jeff Bezos. How were they like the tech titans we have now?

[Joshua Zeitz]

Let me talk about a few of them. So, Cornelius Vanderbilt, who made his fortune in railroads and shipping, but he benefited enormously from land grants and government programs that helped him build those shipping routes and those railroads. Jay Gould, who was a financier at the top of his game in this period, he also profited from land grants and subsidies. Leland Stanford, you know, the namesake for Stanford University, was the founder of the Central Pacific Railroad, again heavily subsidized by the federal government. I believe he served in the US Senate afterward as well. Collis Huntington, who owned the Central Pacific Railroad, lobbied aggressively for government subsidies and contracts. All of these people were in many ways creatures of the federal government, but they didn't believe that or understand that or see that in their minds. They were entrepreneurs who had boldly created new industries. In their minds, Right. The private sector needed the government to stay out. Stay out, of course, when it wasn't providing them with a whole raft of benefits.

[Stephen Overlead]

Right, right, right.

[Joshua Zeitz]

I would say that you're looking at a very similar situation today. The Washington Post recently ran an article that attempted to look at the reliance of Elon Musk's various tech companies on federal largesse. He has benefited, according to their count, by about $38 billion in government subsidies and incentives and bailouts. They've been instrumental at times. Some of his companies wouldn't have still been standing had it not been for that aid. You look at somebody like Jeff Bezos, AWS is effectively where Amazon's big bet is now. I read somebody sort of said it's a cloud company that owns a bookstore, but it's really a cloud company. And one of his largest contracts are with federal and foreign government entities. If you took the public sector entities out, his cloud business would not be a fraction of what it is today. You look at Peter Thiel and Palantir, it relies enormously on public sector contract contracts, both at the federal state and foreign state levels. In every way, shape or form, they are beneficiaries of taxpayer investments. And that's not a bad thing per se or necessarily. But this notion that somehow the government is something that's standing in their way, that the government is bad, that it needs to be trimmed down to size. It's the same mentality that governed Gilded Age era business leaders. I would argue that the 19th century railroads are today's tech companies. It's really the two largest industries, one for each era, and they're creatures of the federal government. And the total lack of a sense of social contract in both eras is just striking. And it could very well, as it did in the in the late 19th century, create a counter reaction.

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[Joshua Zeitz]

3 month plan equivalent to $15 per month required intro rate first 3 months only, then full price plan options available, taxes and fees extra. See full [e-mail] well, so let's talk.

[Stephen Overlead]

About then the election of President William McKinley in 1896, because you write that his election, quote, epitomized the growing influence of moneyed interests in gild America. Was he to the first Gilded Age what Trump is to this second Gilded Age?

[Joshua Zeitz]

Oh, I would argue probably so, although I think McKinley had a little more going for him. He was actually a decorated Civil War veteran who served his country courageously and nobly during the war. So I wouldn't entirely draw that parallel because I don't think this current president has that kind of public spirited. Got it public mindedness. That having been said, sure. I mean, he relied in every which way on the wealthiest of these magnates not only for his campaign coffers in 1896. And you know, they raised an enormous amount of money for him that year. It was one of the first presidential elections that relied that heavily on a small group of people putting money in the pot, but he also relied on people like Mark Hanna, who was an industrialist who later served in the U.S. senate and one of his chief political strategists. He relied on him to organize money to bail him out financially before he ran for president because his family was going bankrupt for a number of reason. So he was very much a creature of and a Beneficiary of that moneyed class. And, you know, he supported the things they supported. He supported hard money policy, which really hurt many debtors, particularly farmers and workers. He supported a high tariff policy, which, you know, was a policy that was supported. Well, it's supported by the current president now, but it was, you know, it was a strong point of. Of interest for the industrial class in the late 19th century. All of these policies, in many ways, you know, bore down harder working Americans. And it's not like he was bought and paid for, per se. I think these were policies that he fundamentally agreed with. But the parallel is fairly striking that he was wholly reliant on that group of people both to fund his campaign in the same way that Trump relied heavily on Elon Musk, one person, to fund his field operations and his advertising operations in a number of key swing states. But, you know, you could argue that anything from Trump's crypto coin to or meme coin to the way in which he's found people who parked money in his real estate properties or endeavors, or the way in which he basically managed to create a media company that somehow makes no money and no profit and yet made him a billionaire. In many ways, these were modern day, more sophisticated wealth transfers analogous to that which we saw in the days of William McKinley, when McKinley had to turn to Mark Hanna for a personal financial bailout.

[Stephen Overlead]

It's fascinating, all these parallels. I mean, so you have rich guys were getting richer, just like today, and the workers who made their wealth possible ultimately were getting worse and worse off. This ultimately led to the undoing of the Gilded Age. What kind of backlash brought an end to that sort of first era of the Gilded Age?

[Joshua Zeitz]

Well, there's an enormous amount of labor unrest from the 1870s through the 1890s. I mean, you think about the great railroad strike of 1877, or it's the hate market riots, the Homestead massacre riots. Ordinary workers were just beyond exasperated with the conditions in which they were living. You know, there were high rates. It was a very dangerous time to be an American worker at this point. You know, there were high rates of industrial accidents and people dying on the job. Farmers were falling into indebtedness and tenancy, not only in the south, but also in the Midwest, in the Plains states. And so you, at the same time that you saw a lot of labor unrest in this period emanating from urban workers, industrial workers, you also saw new organizations like the Grange and eventually the populist party rise up in rural parts of the country where there was a revolt Particularly against the Republican Party, but also against the Democratic Party. Both parties were sort of implicated in this, but more so the Republicans. And it creates a populist movement and a populist political party in the 1890s that really presages the Progressive era. You can't really date the beginning of it, but call it 1900 and 1920. And this is, you know, this is an era where there's a regulation of the economy, regulation of industry, regulation of health and safety standards, the creation of more democratic processes and institutions from the US Senate all the way down to municipal government. And so ordinary people were really demanding that A the economy be regulated more fairly in a way that worked for them, and B, that government be more responsive to popular needs and desires and less the tool of a small group of industrialist and wealthy people, again, many of whom really owed their, their tremendous wealth to government policies.

[Stephen Overlead]

You know, we see obviously a populist streak now both that Republicans and Democrats have tried to tap into in recent election cycles. Do you see today signs of the emergence of a new progressive era?

[Joshua Zeitz]

I certainly see signs of a counter reaction. If you look at the Republican congressmen from deep, deep red districts in places like Texas and Oregon, you know, the eastern part of Oregon that's, that's extremely rural and red, and the reaction they faced when they held town halls just recently, a week ago or so, it was clearly a deep amount of anger brewing against Elon Musk and the so called Doge and the ability of billionaires like Musk to insinuate themselves into the workings of the government. So if I were a Republican, I would be looking at that and then I'd be going back to read about many of the local populist party meetings that occurred in the early 1890s that presaged the movement's, you know, development of its own political party and eventual takeover of the Democratic Party. They never won the presidency, but it clearly was a movement that had an enormous impact on the trajectory of American politics and policy in the coming two decades. And I think that that's a, a fairly direct analogy. I think the darker thing that I would urge them to be worried about is that there was a tremendous amount of violence and, and violent anger toward industrialists in this period is, you know, Henry Clay Frick was shot almost to death. Now, I think about the United Healthcare executive who was murdered in New York, which was just a terrible thing right at the time it happened. A number of historians I know said this, this is awful. And it also is not without precedent. And that the very people who built this system in the late 19th century were often the targets of very violent and angry reactions. Let's not forget that McKinley was ultimately assassinated.

[Stephen Overlead]

What do you see then as kind of the lesson for not just politicians but also these business leaders to take from the first Gilded Age, if we are, in fact, in the middle of a second one?

[Joshua Zeitz]

I mean, I don't expect that they're going to change course, but I mean, I think it would be, it would behoove them to recognize the extent to which they've been beneficiaries of taxpayer largesse and maybe to think of the government as something that doesn't belong to them but really belongs to everyone and has played a constructive role in the creation of this economy. I think that they should look at what came after in the 1900s and ask themselves if that's what they want.

[Stephen Overlead]

Hmm. Well, listen, Josh, appreciate you being here on Politico Tech.

[Joshua Zeitz]

A pleasure to be here. I really enjoyed the conversation.

[Stephen Overlead]

That's all for today's Politico Tech. If you enjoy Politico Tech, please subscribe. And for more tech news, subscribe to our newsletters, Digital Future Daily and Morning Tech. Our managing producer is Annie Reiss. I'm Stephen Overle. See you back here tomorrow.