Third, estate taxes were introduced in 1916, in the name of equality and to prevent the children of successful parents from becoming a parasitic leisure class. Andrew Carnegie (1835-1919), the Scottish emigrant who became one of the richest men in America, believed that rich men had a duty to give away their money and die poor, or else forfeit their wealth. He wrote: ‘The parent who leaves his son enormous wealth generally deadens the talents and energies of the son, and tempts him to lead a less useful and less worthy life than he otherwise would.’ In the mid-20th century the American estate tax rate rose to almost 80 percent. Even today it stands at 40 percent for fortunes above $11 million, falling to $5 million in 2025.
Fourth, in the 1930s Franklin Roosevelt’s New Deal established the principle that the federal government should intervene on behalf of distressed citizens everywhere. It introduced Social Security (old-age pensions) and a growing array of farm subsidies to prevent rural depopulation. In the 1960s Lyndon Johnson’s Great Society programs went further, introducing healthcare for the poor (Medicaid) and for the elderly (Medicare). Poor citizens in every city gained access to public housing complexes and were offered food subsidies and welfare benefits. By the late 1960s and early 1970s the Nixon administration was even toying with the idea of a federally mandated guaranteed income for everyone.
During wartime emergencies in 1917 and 1942, the major industries were organized and run by central government departments in the name of efficiency and to prevent wasteful duplication.
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