The Real Story of Our Economy: Why Our Standard of Living Has Stalled Out

[Hissyspit]

http://www.alternet.org/story/150343/the_real_story_of_our_economy%3A_why_our_standard_of_living_has_stalled_out?akid=6746.24869.aVofZr&rd=1&t=2

AlterNet / By Les Leopold

The Real Story of Our Economy: Why Our Standard of Living Has Stalled Out

For more than a quarter century after WWII the fruits of America's productivity were shared with average working people, year in and year out. Not anymore.

March 23, 2011 |

Do public sector workers earn more than private sector workers? Who cares? This boneheaded question has us fighting over the crumbs. (And the answer is no -- all credible studies show that when you account for educational levels, the total compensation packages are about the same.)

The real question is: Why have most workers seen their standard of living stall over the last generation? The answer is both obvious and appalling. More and more of our nation’s wealth is going to the few, while the many have seen their real wages actually decline. It’s a disgrace.

- snip -

It’s not just that theft of society’s productivity is unfair. It’s also incredibly dangerous. We learned both in 1929 and in 2008 that when you combine financial deregulation with too much money in the hands of the few you get a casino, a bubble, and then a crash. In the most recent crash, the super-rich had so much capital they ran out of real investments in goods and services. So Wall Street came up with new exotic bets on subprime loans to soak up the excess capital. But the fundamental cause was that the super-rich walked off with years and years of productivity gains that should have gone to working people in the form of higher wages and benefits. Show me a worker who invests in synthetic CDOs.

Watching politicians pit public and private employees against each other is the cruelest joke of this entire crash. First of all, there would be no state and local budget gaps were it not for the fact that the Wall Street crash destroyed more than 8 million jobs in a matter of months. In any rational world, the Wall Street gamblers would be paying reparations for the damage they’ve caused, rather setting record profits based on our bailouts.

MORE

[Lasher]

1. Thanks to neoliberalism of the past 30 years.

It's plain as day.

[xchrom]

5. indeed. nt

[Skidmore]

6. Neoliberalism is BS word substitute for good old fashioned

robber baron thievery. It is a construct which attempts to smear the left with right wing economic voodoo.

[BobTheSubgenius]

31. I couldn't agree more.

I just hate the term. I see NOTHING "liberal" about it, and it is a bit of semantics designed to slag the left, as you say.

[FredStembottom]

44. Nope that's the term. Always has been.

Remember the crux of neo-liberalism (neo just meaning resurgent) is free markets. The liberalism is the freedom from restrictions on capital. Just as liberalism in the social sphere means freedom from (social) restrictions.

Nothing has changed. These are long-established terminologies.

What's confusing is that most political Liberals are social liberals but economic conservatives - conservative in wanting restrictions that keep the economic system from bull-dozing over most people and stop a feared slide to oligarchy and monopoly. They prescribe solutions like unions, tariffs, regulation to protect the people.

Political Conservatives fear the disruption in social arrangements brought on by sexual and moral Free Markets and the slide to broken families, drug addiction, STD's and prescribe restrictions like religeon in response. In matters of money, however, it's "sex, drugs and rock and roll", so to speak, for them. Conservatives (in America at least) are economic liberals.

on edit: see Lasher's better-stated reply below. #14

[chervilant]

48. hmm...

I beg to differ with you. I think your comment is quite good.

[Zoeisright]

53. Yep.

That term is pure shit.

[dotymed]

10. I think if the "new tax structure"

was included in this graph, 2010-2011 income levels of the wealthiest (1%) would easily top those of 1929.

[Lasher]

13. I have no doubt of that.

Sorry about the old graph. It was the best one I could come up quickly without spending a lot of time looking.

[chervilant]

12. Neoliberalism?!

Sounds like you're drinking the right-wing kool-aide... Care to share what exactly you mean by 'neoliberalism'?

[Lasher]

14. I'd be pleased to elaborate.

The word refers to economic and not social liberalism. Here is a good overview:

What is Neoliberalism?

A Brief Definition for Activists

Neo-liberalism" is a set of economic policies that have become widespread during the last 25 years or so. Although the word is rarely heard in the United States, you can clearly see the effects of neo-liberalism here as the rich grow richer and the poor grow poorer.

"Liberalism" can refer to political, economic, or even religious ideas. In the U.S. political liberalism has been a strategy to prevent social conflict. It is presented to poor and working people as progressive compared to conservative or Rightwing. Economic liberalism is different. Conservative politicians who say they hate "liberals" -- meaning the political type -- have no real problem with economic liberalism, including neoliberalism.

"Neo" means we are talking about a new kind of liberalism. So what was the old kind? The liberal school of economics became famous in Europe when Adam Smith, an Scottish economist, published a book in 1776 called THE WEALTH OF NATIONS. He and others advocated the abolition of government intervention in economic matters. No restrictions on manufacturing, no barriers to commerce, no tariffs, he said; free trade was the best way for a nation's economy to develop. Such ideas were "liberal" in the sense of no controls. This application of individualism encouraged "free" enterprise," "free" competition -- which came to mean, free for the capitalists to make huge profits as they wished.

Economic liberalism prevailed in the United States through the 1800s and early 1900s. Then the Great Depression of the 1930s led an economist named John Maynard Keynes to a theory that challenged liberalism as the best policy for capitalists. He said, in essence, that full employment is necessary for capitalism to grow and it can be achieved only if governments and central banks intervene to increase employment. These ideas had much influence on President Roosevelt's New Deal -- which did improve life for many people. The belief that government should advance the common good became widely accepted.

But the capitalist crisis over the last 25 years, with its shrinking profit rates, inspired the corporate elite to revive economic liberalism. That's what makes it "neo" or new. Now, with the rapid globalization of the capitalist economy, we are seeing neo-liberalism on a global scale.

More here

[many a good man]

29. Thank you for the definition!

All liberals should understand what a loaded term "liberal" really is and what it has meant over time.

WRT Adam Smith, we should remember liberalism fought against mercantilism, which restricted trading privileges to the few favored by the Crown. Being liberal in trade meant being more open, more democratic. In the times when one great power exercised complete control over trade with a particular colony, "liberal" international trade policies were the prescription for weakening their iron grip. The word Liberal still has this meaning in terms of international trade.

American liberals should also be aware that the translation of liberal in a political sense in many foreign languages is closer to our definition of libertarian.

[chervilant]

47. Yeah,

I can google the word and read what Wikipedia tells us. I'm more interested in how recently this term has been bandied about here in the US--and WHY.

I wonder, too, whether the propagandists kowtowing to the corporatists who've usurped the global economy get a wee chuckle out of seeing left-leaning individuals pick up this particular gauntlet.

Interesting, isn't it, how words can be used to divide and mislead us?

BTW, I find it anathema to use ANY variation of the word liberal to describe the vile corporatists who've usurped our media, our politics, AND the global economy.

[jtown1123]

19. Wow, very telling. Excellent graph.

[Moostache]

46. Sadly, this simply proves the adage:

Those who do not know their history are doomed to repeat it.

This is nothing new.
We've seen this kind of naked cash grab before - and more than just in '28 and '08.

The rich have been doing this to the poor since time immemorial.

[JFN1]

51. I think "NeoDemocrat" fits better

NeoDeomcrat: An offshoot of the Democratic Party, where it defines national interests to include ideological interests e.g. "bi-partisanship" as an exercise in capitulation, and the use of American military power to bring "democracy" and "freedom" to other sovereign countries who are part of the global oil supply chain; and where it defines economic interests through policy driven towards corporate, or "market" interests, tax relief for wealthy individuals and corporations combined with austerity measures for lower income groups, and the dismantlement of whatever social safety nets and government regulations necessary to support the overall economic schema exclusively benefitting wealthier income groups and corporations.

[pampango]

2. Exactly. We still produce more wealth per capita than Europe or Canada, but

it is shared so inequitably that our standard of living (for all but the rich) has declined while it has improved elsewhere.

[Bonobo]

3. There's an answer to that problem. It's called "Conscious Capitalism"!

:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl:

[HughBeaumont]

8. Consciously endorsed and authored by that bastion of progressive ideas, John Mackey of Whole Foods!

Conscious Capitalists are unapologetic advocates for free markets, entrepreneurship, competition, freedom to trade, property rights, freedom to contract, and the rule of law. They recognize that these are essential elements of a healthy, functioning economy, as are trust, compassion, collaboration, and value-creation.

:wtf: :wtf: :wtf:

It sounds like Lets-All-Fail Reaganomics with smiley faces and Hello Kitty stickers.

[chervilant]

11. From the same guy

who told US citizens that we don't need health care reform--we just need to get off our fat asses and exercise.

[freshwest]

38. Oh, that's just so special of him!

[nolabels]

9. The other part of the equation (as in your icon) monkey see - monkey do

Our government, the corporations or our society has in-cultured so many lemmings that it's to the point of frightening. The fish rots from the head first also

[JDPriestly]

45. Actually, to the extent that conscious capitalism seeks to

end regulation, there is not much conscious about it at all.

The businesses that cause environmental devastation cannot afford to police themselves. Regulation is absolutely necessary in many fields. We saw the result of the failure of the system that was supposed to be regulating the stock market and commodity trading and similar institutions caused in 2008.

In the business world, the drive to profit and the pressure to compete overwhelm conscience and consciousness.

[Karmadillo]

4. Excellent article. If another FDR is too much to ask for, at least Obama & the Dems could try to

emulate Eisenhower. Seems unlikely though. It looks like it will be war and concentration of wealth and austerity for the serfs all the way down.

[bluethruandthru]

7. At this point I would be thrilled with Eisenhower!

Problem is he'd be run out of Washington and be forced to wear a red "S" on his clothing. The "S" standing for Socialist!
Scary to think how far to the left Eisenhower was to the current Democratic Party.

[FiveGoodMen]

30. At this point, even Nixon would be an improvement

And that's saying something!

[NBachers]

41. The Arch-Enemy of my entire political existence

and even I'm ready for yet another Nixon rehabilitation.

[chervilant]

49. "All the way down"

being the operative phrase here...

I never dreamed I'd be 55, and fearful of homelessness and destitution in this United States.

[blackspade]

15. Thanks for posting!

[old mark]

16. K&R-Great post and absolutely right...nt

[hfojvt]

17. I disagree with the first paragraph, but it makes some good points anyway.

Reminds me of what I wrote about deficits.

Deficit spending stimulates the economy. There are two ways to get a deficit. One is by spending more and the other is by taxing less. When you spend more you get things like highways, bridges, levees, schools, school lunches, heating assistance, veteran's health care, medicare, etc. When you tax less, you get rich people with more power and more ability to indulge themselves in whatever they desire. This can be good, depending on what they desire, but the old lesson is that "power corrupts".

[bertman]

23. "There are two ways to get a deficit. One is by spending more and the other is

BY TAXING LESS."


Excellent, hfojvt.

[hfojvt]

33. I do have a talent for stating the obvious

But I think it is ridiculous the way the Republicans and the media always steer the conversation to the spending side and ignore trillions in tax cuts.

[reformist2]

18. It's globalism and a lack of white-collar unions.

[Yavin4]

20. Our Standard of Living Has Stalled Out Because We Stopped Joining and Forming Unions

It's no big mystery. It was unions that forced companies to share the benefits of productivity.

Vietnam created a major schism within the Democratic party between unions and the younger, more idealistic liberals. That schism lead to the election of Nixon in 1968 and 1972. That schism persisted through Ford, Carter, and the election of Reagan in 1980. When Reagan was able to fire the Air Traffic Controllers and then went on to win re-election in a 49 state landslide, that sent a strong message to corporations that labor unions were no longer a political force in America.

Then after two more Republican losses, and the idealistic, anti-Vietnam Liberals became leaders in the party (see Gore, Clinton, etc.), they turned on labor unions as well. Now, you have a situation where neither major political party is a strong advocate for labor.

And today, there are new, fresh attacks on labor. However, labor is fighting back. Maybe the tide has finally turned.

[creon]

25. I agree

I think that your post is true and accurate.

[anneboleyn]

52. Excellent points, and I also hope the tide is turning.

[freshwest]

55. Yes, I remember. That was the turning point.

[Xicano]

21. K&R

Thanks Hissyspit

[hifiguy]

22. Les Leopold is a very sharp guy

He, Bob Reich, Richard Eskow and Simon Johnson are always worth reading. They GET it.

Tnx for the link!

[Fuzz]

24. Wish I could recommend more than once.

[BobbyBoring]

26. The cruelest joke of this entire crash is

We elected a "Leader" that swore to put an end to all the "Business as usual".

That's the cruelest joke and I'm not laughing.

[Atypical Liberal]

27. It's not about envy, it's about power

It’s not just that theft of society’s productivity is unfair. It’s also incredibly dangerous.

This is the message I keep pounding with my conservative mother. She keeps going on about "envy" and the "evil rich". I have finally made a crack in her ideology by explaining that this is not about envy. It's about the concentration of power that wealth brings. The rich aren't necessarily evil. They are just doing what we all do - trying to protect what we have and get more of it. But when you start to amass wealth, it gets easier to amass more wealth. And when you are super-wealthy, you start to wield power to influence governments, and to influence policy decisions that will protect and enhance your wealth even more. Thus wealth snowballs.

And that's where we are right now. The Forbes 400 right now control as much wealth as half the nation. This is a huge, huge imbalance of power. Those 400 people almost certainly have more political influence than all the votes of half the country combined. This is a plutocracy and an oligarchy.

This is completely contrary to the principles of a government of the people, by the people, and for the people.

Unfortunately when she agreed this was a problem but what was my solution, I had nothing, as I don't know what the solution is.

[w4rma]

32. Tax the wealth back. Simple solution. Harder to impliment as they gain more and more power. (nt)

[Atypical Liberal]

34. And do what with it?

That's the key.

The key is to funnel it into jobs. But not just federal jobs, somehow it has to get converted back into private industry jobs.

But if we could undertake something great with it, like an awesome space program, or build an entire new green infrastructure, that would be awesome.

[w4rma]

39. Do all of the above with it. (nt)

[WatsonT]

43. Create a tax incentive for companies to hire workers here

Say for every US worker they employee (as in one paying taxes to the IRS) they get a tax benefit.

The maximum benefits could be set for those with a total compensation something like 50% greater than the median income for the country for that year. And it can decrease after that so that eventually it drops to no benefit for either very highly paid, or very poorly paid individuals. So the incentive is entirely based around hiring solidly middle class types.

Won't solve all our problems but will push things in the right direction.

[chervilant]

50. Let's TRULY fix public education, shall we? n/t

[WillyT]

28. K & R !!!

:kick:

[nashville_brook]

35. k and r

[riderinthestorm]

36. Great article! Proud to K and R! nt

[pansypoo53219]

37. was ronald reagan's tax cuts and welfare bashing

worth it.

[mistertrickster]

40. Wow! This is the clearest explanation I've seen of what happened and why.

A must read.

I never say "send this to everyone you know," (because I hate spam chain-letters etc.) but this should be sent to everyone you know.

[KoKo]

42. "unfair. It’s also incredibly dangerous" Absolutely! K&R for this post.

:kick:

[upi402]

54. k/r "In any rational world, the Wall Street gamblers would be paying reparations "

The rule of law has been cancelled, just like the damn news.