OK, kids. Remember the middle class? ‘Course not. You young’ns grew up after that. But Gramps remembers. Gather round the fire burning in the dead TV set. I’ll tell you all about it.
After WWII, America experienced an unprecedented wave of prosperity. That prosperity was based on manufacturing, technology and, believe it or not, farming. I know it’s hard to believe! But, once upon a time, Americans made stuff and grew stuff. We produced things, we were good at it, and so – compared to the rest of the planet – we were living pretty good.
America had a broad middle class with purchasing power. A broad segment of our economy was devoted to making and selling stuff to the middle class. I’m talking about folks like us – I’m serious! We used to drive cars and live in houses and eat three meals a day. We had jobs that paid real money! See, we made stuff – and that meant folks with money needed us. I ain’t lying to you! It was a consumer economy, but it was based on a production economy.
In the 1970s, we went into a long, painful slide. The reasons are complicated.
The top reasons …
The military industrial complex. As Eisenhower warned, it kept growing like Topsy, sucking up talent and resources – and burning stuff up in periodic wars that justified the military budget.
Industrial dinosaurs. Auto companies refused to adapt, leaving us vulnerable to competition from Japan and oil embargos in the Middle East. One of many examples. Basically, America started making crap and the rest of the world kicked our ass.
Massive corruption. There was a three-card monte game going on – both the public and private sectors were in on the take. It’s too complicated to talk about. Con games work that way. But corruption is the enemy of production and innovation.
Globalization. Hey, why pay workers a living wage and worry about pollution? Shut down your factory over here, and open a sweatshop in the third world. Off-source your Triangle Shirtwaist Factory!
Garbage in, garbage out. Democracy only works if people aren’t idiots. A free press was supposed to prevent that. Once upon a time, boring news magazines and boring news programs did. Then everybody started screaming at each other. News based on boring “facts” was replaced by Manichean ideology on the intellectual level of professional wrestling scenarios. Politicians took their ideological bullshit seriously. Bad information crowded out good information. Bad decisions resulted. Pragmatism died.
Lots of reasons for the ruin. Folks still argue about that.
But you can’t argue about the results.
By the early 1980s, America’s industrial sector was shutting down; America’s farms were consolidating like mad. The con artists sold America on the notion we could be “a service economy” and still be prosperous. But a service economy is an economy of servants, ain’t it?
The GNP expanded. The pie got bigger – but the slices stayed small for average slobs.
Wealth began to concentrate.
In 1980, America’s top 1% earned 8.46% of the nation’s reported income. By 2010, that went up to 22.8%. Now – well, folks like us can’t get that kind of information anymore. My guesstimate would be sortof along the lines of everything.
Middle class Americans experienced incredibly shrinking purchasing power. Most of them, after all, weren’t actually making anything – they next to zero clout with employers. Real wages stagnated or fell. The hours most Americans worked went up, up, up.
You’d expect a typical feedback loop – average slobs would kick back and demand more money. (Hey, you work your ass off for 60 hours a week, you don’t want to live on rice and peanut butter.) The system would correct.
Instead, the system started handing out E-Z credit. The production economy dried up. But the consumer economy kept roaring along. Only now, we were buying crap from China – with borrowed money.
Starting in the Reagan years, the cult of conspicuous consumption came back with a vengeance. Everything was “select” this, “elite” that. The Invisible Hand – that used to distribute affordable stuff to the Middle Class – started going for the high end of the market. $200 tennis shoes. Bottled water. $30,000 compact cars – in the 80s! Average slobs couldn’t afford it. But they bought it anyway. WITH BORROWED MONEY.
Rhetoric aside, the greed-is-good cult of the 1980s never went away.
By the 1990s slobs were driving around in Hummers and living in Mega-Houses. The top 1% made the money.
But most of the money the top 1% made didn’t come from making stuff or selling stuff like Hummers and houses. Most of the money came from moving money around.
Back in ’78, the average CEO made 35 times what a working stiff did. That shot up to 262 times in 2005. Theoretically, that was a reward for competence, but it didn’t always work that way.
Due to the quarterly report effect, this resulted in relentless consolidations, downsizings, layoffs and closures in every sector of the economy. Efficiency went up! Which, basically, meant you worked harder for less money because you were scared shitless about losing your job.
But the dust bowls and breadlines didn’t kick in right away.
America bought time with the software/PC/Internet revolution. But we blew it.
Cheap oil fueled the whole illusion. America refused to kick its addiction. But this meant getting involved in the psychotic family squabble of Middle East politics. Which meant propping up plutocratic petro dictators. Who, as it turned out, maintained their tenuous hold on power and wealth by paying off the Islamic world’s lunatic fringe by subsidizing the madrassas where they spread their totalistic, apocalyptic, lunacy.
So, instead of spending three trillion dollars to fund a Manhattan Project for alternative energy.
America spent three trillion dollars on two wars in the Middle East.
Which, not counting the dead and wounded, had the same effect as setting it on fire.
The three trillion dollars was, of course, money the government borrowed.
Back on the home front, as the actual productive sector of the economy shrank to almost nothing, the top 1% convinced the average slobs that they could create wealth by taking out a second mortgage, or if they were really clever, housing speculation. They also convinced ‘em they could fund the government by cutting taxes and lowering tax rates for rich people. It never worked – when’s the last goddamn time a rich person paid you for something? -- but they kept selling it and the dumbass idjitheads kept buying it.
Back in 2007, the three-card monte shuffle stopped. The Mark pointed at the card. The Dealer lifted it up. Sorry, pal. You lose.
Guess that’s it kids.
Way I see it, it’s all Obama’s fault.
You gonna eat that rat?