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America's journey from equality to disparity

The United States used to be Sweden: According to new historical research, the country of the Founding Fathers was "more egalitarian than anywhere else in the measurable world."

That finding might surprise most Americans, given that both inequality and American exceptionalism are high on the political agenda. One idea that brings the issues together is the belief that Americans have an exceptional cultural tolerance for income inequality. Unlike Europeans, the thinking goes, most Americans are confident that they are "soon to be rich." As a result, middle-class Americans look up to their 1 per cent and are loath to tax them.

But research by economists Peter Lindert and Jeffrey Williamson shows that when it comes to inequality, this exceptionalism is an inversion of the conditions that prevailed at the time of American Revolution.

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"There has been an absolute reversal," Prof. Lindert told me. "Compared with any other country from which we have data, America in that era was more equal. Today, the Americans are the outliers in the other direction."

In relative terms, Colonial America was a great place for the 99 per cent, particularly when compared with the folks back in the old countries.

"Americans who were free were very well off, and better off than their counterparts in the mother country," Prof. Lindert said. "Every kind of person by occupation was better off than their counterpart by occupation. The carpenters, the shopkeepers and so forth all had a slightly better income than in the mother country."

Even when slaves are included in the economic calculations, "the American colonies in 1774 were still the most equal in their distribution of income among households, though by a finer margin," he said.

Members of only one group fared better in Europe than their colonial peers – the people at the very top. "Even the richest Charleston slave owner could not match the wealth of the landed aristocracy [in England]" he said.

Today, the opposite is true: "The rest of the world can't come close to the 1 per cent in America."

This portrait of Colonial America might come as a surprise to most Americans today. But, though the Lindert-Williamson data are fresh, the picture they paint fits with historical accounts.

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In a letter he wrote from Monticello in 1814, Thomas Jefferson applauded the young country's economic equality. "We have no paupers," he wrote to one correspondent.

"The great mass of our population is of labourers; our rich, who can live without labour, either manual or professional, being few, and of moderate wealth. Most of the labouring class possess property, cultivate their own lands, have families, and from the demand for their labour are enabled to exact from the rich and the competent such prices as enable them to be fed abundantly, clothed above mere decency, to labour moderately and raise their families."

By contrast, Jefferson believed, as the Lindert-Williamson research confirms, that members of the 1 per cent were worse off than their European counterparts: "The wealthy … know nothing of what the Europeans call luxury. They have only somewhat more of the comforts and decencies of life than those who furnish them."

This Founding Father didn't pull his punches about which social order was preferable. "Can any condition of society be more desirable than this?" Jefferson opined about egalitarian America.

Foreign visitors also took note. After his famous journey to the colonies in the 19th century, Alexis de Tocqueville returned to France to report that "nothing struck me more forcibly than the general equality of conditions among people."

The Lindert-Williamson research makes a particularly important contribution to the current debate because, as chance would have it, those who argue that inequality is as American as apple pie tend also to hold the views of the country's founders in particularly high regard.

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"I see it as a puzzle," Prof. Lindert said. "Those of us who insist that inequality is fine would also invoke a Founding Fathers' society for which it was not true.''

Equality, not only of opportunity but also of outcome, turns out to be one of the features that really did make the United States exceptional in the age when the country was born. That startling fact is worth bearing in mind as Americans struggle to figure out how to remain exceptional in an altogether more complicated era.

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