1900: The Birth of Progressivism
Economist Milton Friedman (1912-2006) said US economic history has two chapters before and after 1913; the year of the 16th Amendment (income tax) and the Federal Reserve. Before 1913, the US had limited Fed Government and free market capitalism, and after 1913 had big Government, top down management of the economy, and wealth redistribution (ie: progressivism). In 1960 the US economy was 1/3rd that of Great Briton and by 1895 the US had the largest economy, highest standard of living, largest middle class, trading area, and greatest personal economic mobility (from poor to rich). So, why the birth of Progressivism? Four reasons + Teddy Roosevelt was the answer. One: 1898 Imperialism required larger Government and tax base than US tariffs. Two: Trust busting of big industrialists (ie, Standard Oil) for the benefit of local high cost producers. Three: Because of 1907 bank panic the Federal Reserve was created to stabilize the $. Four: The political power was local (and in the US House) instead of the industrialists and Pres T R wanted a strong Executive for the “common good”.