Yves here. For those who didn’t grow up in the era of good union-protected manufacturing jobs, it’s hard to convey adequately how different things were then. Blue collar workers could buy a house and a car, support a stay-at-home wife, and often also afford a recreation luxury, like a boat or a cabin. Those manufacturing wages also set a foundation for white collar wages. In addition, in manufacturing towns, class differences were minor. The kids of plant workers played with the children of the local business owners and (comparatively few) professionals and managers. And as the article points out, children of blue-collar workers regularly went to college, both public universities and private colleges on scholarship.
This sort of nostalgia may seem naive, but this was an era when America had a more equal society, and more equal societies are happier and healthier than unequal ones.
By William Lazonick, Professor of Economics, University of Massachusetts Lowell, Philip Moss, Professor of Economics, University of Massachusetts Lowell and Joshua Weitz, Research Associate, Academic-Industry Research Network. Originally published at the Institute for New Economic Thinking website
In his “I Have a Dream” speech at the March on Washington for Jobs and Freedom on August 28, 1963, Dr. Martin Luther King declared that a century after the Emancipation Proclamation, “the Negro is still badly crippled by the manacles of segregation and the chains of discrimination. One hundred years later the Negro lives on a lonely island of poverty in the midst of a vast ocean of material prosperity.” Racial justice demanded equal employment opportunity.
Upon the signing of the Civil Rights Act on July 2, 1964, discrimination in access to jobs because of an individual’s race, color, religion, sex or national origin became illegal under the landmark legislation’s Title VII. The following year, the U.S. government created a new federal agency, the Equal Employment Opportunity Commission (EEOC), to implement Title VII. But what, in fact, was the employment opportunity that white males possessed to which Blacks, other minorities, and women, wanted equal access?
The employment opportunity that privileged the white male was much more than a job. By the 1960s, growing numbers of white men had employment that gave them steadily rising real earnings, often with decades of tenure at one organization. The “career-with-one-company” (CWOC) that had become the employment norm by the beginning of the 1960s included health insurance and a defined-benefit pension, both funded by the employee’s business corporation or government agency. This white-man’s world constituted the foundation for the “vast ocean of material prosperity” to which Dr. King referred. It is what, in the decades immediately after World War II, turned much of white America into a growing and thriving middle class.
This was a white middle class made up of, at the lower end, blue-collar workers with no more than a high-school education. Union representation in collective bargaining enforced the unions’ first-hired, last fired “seniority” principle while securing wage increases in step with productivity growth, with “cost-of-living allowances” that adjusted wages for inflation usually built into the contracts. Aided by government subsidies such as the federal GI Bill and tuition-free higher education at state “land grant” colleges, the male offspring of the white blue-collar worker had ample opportunity to transition to higher incomes, superior benefits, and even more employment security as white-collar workers. In the 1950s, the white male who had recently ascended to the upper echelons of the middle class became known as “the organization man.”
Our forthcoming book, Fifty Years After: Black Employment in the United States under the Equal Employment Opportunity Commission, analyzes how, in the immediate aftermath of the 1964 Civil Rights Act, African Americans with no more than a high-school education gained access to CWOC employment at the blue-collar level. Owing to strong demand for production workers in the 1960s and 1970s and affirmative-action support under the EEOC, Blacks were making inroads into white-male privilege by gaining substantial access to well-paid and secure operative and craft occupations; big steps up from the common-laborer jobs into which they had previously been segregated.
In research published last month on the website of the Institute for New Economic Thinking (INET), we outline how the decline of unionized jobs from the beginning of the 1980s in the United States decimated an emergent African American blue-collar middle class. Over the decades it became clear, however, that, while African Americans were hit earlier and harder than whites, they were not the only ones to fall out of the middle class. Increasingly, white blue-collar workers with no more than a high-school education also lost their middle-class status as the ideology that companies should be run to “maximize shareholder value” put a permanent end to the CWOC norm. Over subsequent decades and up to the present, growing numbers of American workers with only a high-school education, regardless of race, have experienced stagnating incomes, downward socioeconomic mobility, and even, at certain times, declining life expectancy.
In our new INET Working Paper, “Employment and Earnings of African Americans, Fifty Years After: Progress?”, we provide a statistical overview of the devastating impact that the decline of the American middle class has had on Blacks. For a quest for economic equality to become a reality, the pay and stability of employment for Blacks must be improved far more than for whites. But in view of the downward mobility of white workers, even a substantial closing of the Black-white income gap will not solve the problems of poverty and injustice in the United States. Contrary to the situation in the 1960s, in the presence of the impoverished and vulnerable American working class of the 2020s, “equal employment opportunity” will not yield the “jobs and freedom” that the 1963 March on Washington demanded for Blacks.
It should be no surprise that the Covid-19 crisis is having an especially devastating impact on people of color, but workers of every race and ethnicity are feeling immense pain. But even when the public-health crisis has abated, the gargantuan political task for the years and decades ahead will be the restoration of employment opportunity that will enable all Americans to live healthy, secure, and happy lives.
The government-policy equivalent of therapies and vaccines will be required to eradicate the malicious “maximizing shareholder value” disease, which bears prime responsibility for the decades-long destruction of the American middle class. On July 9, in outlining his economic platform, Democratic presidential candidate Joe Biden declared that “it is way past time to put an end to the era of shareholder capitalism.” Yet there is virtually nothing on the subject in the 110 pages of the Biden-Sanders Unity Task Force Recommendations released the previous day. The only policy aimed at U.S. corporations that Biden mentioned was an increase in the corporate tax rate from 21% to 28%, which would put it halfway back to where it was before the Republican tax cuts.
As Americans unite to fight for jobs and freedom, we are curious what happened to the Joe Biden who, in September 2016, as vice-president of the United States, wrote in a Wall Street Journal op-ed: “The federal government can help foster private enterprise by providing worker training, building world-class infrastructure, and supporting research and innovation. But government should also take a look at regulations that promote share buybacks, tax laws that discourage long-term investment and corporate reporting standards that fail to account for long-run growth. The future of the economy depends on it.” At this fraught juncture in American history, bold leadership matters.
https://www.ineteconomics.org/perspectives/blog/there-can-be-no-equality-without-a-dramatic-renewal-of-employment-opportunity-for-all-american-workers
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But, you Americans are voting for biden. How will that bring back equality?? It’s all well and good to write about these things but the voting patterns depict a different story.
Not all of us.
I’m not going to vote for either of the major presidential candidates. They haven’t earned my vote, so why should I give it to them?
This will be the third Presidential election in a row where I will not have voted for one of the two “choices” TPTB allow me. Previously it was several mistaken lesser evil votes. although I’m not sure what equal horror Gore would have had to offset 9-11/Iraq/Patriot Act. I am sure the inequality would have continued apace and we still would have the 2008 crash.
One of the most disheartening things about the pandemic has been the sheer craven disregard for reality and the current state of most Americans lives displayed by all but a couple of our elected officials. And that we have no means of changing it or them any time near.
…voting may change the details, but not the bottom line. Oaf plant *austerity garden*.
Good coinage there!
Can I steal the phrase, ‘Austerity Garden?’
…Sure!…but hands off my Serranos! (just please ask first)
I grow, but seldom use, jalapenyos and habaneros. Your Serranos are, relatively, safe. (Now, if we have to start using “day old” meats, the use of chiles will expand infinitely!)
The Cusine of Austerias!
In any case, equality and employment are two different things, often mutually antagonistic. And in any further case, capitalist employment will lead to further production, further consumption, further development, further destruction of the Earth, thus eventually further inequality. If you want equality, go for it directly: socialism or communism.
Off topic. Sorry. I really like the comments section on NC. That is why I sent money to save it when there was a chance it might go away a while ago. (Thank you again, Yves.) I make personal choices with my money for things I believe in. I also make personal choices to not send money. I used to subscribe to the Chicago Tribune but when they endorsed Bush over Kerry in 2004 they never got another penny or any clicks. But, speaking to a lot of commenters here, my vote is more than my personal choice. It is what I think is best for my country or my state or my city. So it is disheartening to read comments from highly intelligent educated people that they are not going to vote- especially this year when it looks like every vote is going to be needed to unseat the president*. My two cents but I let Yves know in an email when I contributed to NC that “I am glib but not intelligent” so cut me some slack.
This commenteriat will “cut [you] some slack.” That’s the nature of that particular beast. Be assured though, that both Trump and Biden will gleefully cut your throat. We are being presented with a non-choice for 2020.
If one does adhere to the idea of electoral politics as being an effective methodology for bringing about change, then starting at the lower reaches of the political milieu is the optimal course for now. That’s how the original Evangelical political activists managed their counter-reformation.
Yes, they started at the local school board level. Then “preached” to a national audience.
Call me a cockeyeed optimist but I don’t think a Biden administration will have protesters bundled off in unmarked vans to be disappeared. Not that they’d let the protests go on for long, but I don’t see Argentina junta tactics as a Democratic party thing.
Under Rahm Emmanuel, Obama’s chief of staff, the Chicago PD ran an entire black site (both senses). Of course, Rahm had excellent PR, as did Obama.
How quickly I forgot. I guess it seems worse when it’s the federales but no, it’s not.
Many of us, myself included, believe that both Trump and Biden are deadly. They may wield different sledge hammers but neither care about the overall health of our country.
Biden, like Obama, would be in position to direct much needed change to our policies and laws and insure their enforcement. Also, like Obama, he would make sure that never will happen. Like single payer in a pandemic and unemployment crash being off the table, the continued need to decimate Social Security and yes Medicare, the continued and patently false promotion of Russia as an aggressor to encourage more military and intelligence follies… (Think of it this way, from their vote Obama’s judicial nominees have just as hard a time recognizing forms of “quid pro quo” outside of the most obvious as any Conservative jurist.)
Trump is despicable, Biden is just a supposedly more presentable despicable.
Now think about why so many democrat voters voted for Biden. Maybe the blame lies not just with the politicians but the people as well. When it’s so clear that Sanders would have improved things vastly more, the majority chose Biden. Maybe they are as corrupt as the politicians themselves
Actually, the “majority” did not choose Biden. A small, highly manipulated minority in several southern states did the defenestration of Sanders. Without the “Obama Night of the Long Knives,” (look up the reference for a deeper dive into what just happened,) Sanders would probably be the front runner for the Democrat Party nomination for president for November. So, a small minority (in more ways than one) voting bloc swung a small, not even majority Democrat party state into the Biden sphere, and the rest of the nation has to follow??? This was classic ‘insider’ politicking.
Night of the Long Knives: https://en.wikipedia.org/wiki/Night_of_the_Long_Knives
” We go to election with the candidate we have, not the candidate we wish we had or would have preferred to have at some future time.”
— Ronald Dummsfeld
Even in Detroit, in the 1950’s auto industry, there were frequent layoffs and many irregular incomes.
The key factor that let blue collar workers own homes and send their kids to college was that homes and colleges were cheap.
There is nothing wrong with focusing on middle class incomes, as Lazonick has done in this and other writing. However, it is also important to focus on expenses.
Great point. This article is pointless kibbitzing . Giving false hope by providing silly dreams. The likes of lazonick want us to go back to capitalism when it clearly has so many pathologies. It’s stupid.
The fresh-out-of-high-school worker as a member of the “middle class”? “Opportunity”? Watch the neolibs try to get out in front of the mob and call it a parade while not getting run over.
The destruction of the middle class would be the best thing to happen to the USA. Their only function is to lord over the working class to the benefit of the elites, a complete counterproductive waste of useful effort.
Likely nothing will change in this election cycle, but there’s hope for the future with more progressive Dems and maybe even some Repubs being elected to Congress. At least I hope so!
Plus sa change!
WWII many young men were killed, much of the productive manufacturing capacity in Europe and Japan was destroyed. For a brief two decades the US enjoyed the position of being a manufacturing superpower.
In addition the lucky young men who returned from the war were anxious to get married and start families aka “the baby boom”… They were also “in demand” as labor. The 50’s and 60’s were boom times… especially in my industry, automotive..
And then competition came. Ignored at first, the Japanese began to make inroads, aided by the weakness of the Yen and the “Gas crisis” they improved their product quality steadily and began to improve market share.
GM and Ford were vertically integrated making the vast majority of the components required for Automobiles. Fords “Rouge” plant even made it’s own steel. All those plants were UAW. The UAW soon realized they could strike only “critical” plants and cripple the whole company. They would chose one company at contract time and target them to get a model contract for the whole industry. Labor costs went up..
In response, Companies focused on cost control and so began the rise “the bean counter” in management
replacing “the car guys”. The product suffered, first the consolidation was in brand to brand components,
then slowly moving to less vertical integration, outsourcing component manufacturing and closing factories
Internally it was called “product rationalization”. My division was downsized when the first front wheel drive cars were designed (late 70’s)..
This is not to say the UAW was to blame, Management sucked, arrogant in their market share they were slow to adapt products and quality control to meet increasing competition. Within the lower ranks focus was on getting enough years in to retire or slashing costs to advance in the short term without regard to the longer term consequence.
As an example: My division supplied other component plants.
Buyers at the component plants would get quotes from outside suppliers at much lower cost (below our cost). Initially buyers were told to keep business in house and we would concede to a price reduction, but as cost pressures grew they finally caved and outsourced.The buyer promoted. We would de-tool our factory burden distributed over fewer parts effectively making our factory higher cost (and for a year or two the component plant would enjoy lower cost (until the contract expired, then price would rise back to a fair value IE my divisions old price) Part gone not to be re tooled, Buyer promoted to do it again and again
Rinse and repeat over so many divisions. My plant one of three in the division, was one of the first ESOP conversions, GM sold us the plant, held the paper and gave us a contract. We lasted 6 years closing our doors in August 1987. The second plant closed 10 years later and finally the third plant sold to private equity group,
I don’t think those times can be repeated. I don’t know the answer. Big companies are better able to absorb labor cost, Unions across the board would kill a lot of small business leading to more oligarchies.
Thank you for the excellent report on the US auto industry! However, there is a difference between macro and micro and your story is an excellent micro economic descritption.
The US had become an industrial superpower before the war. The New Deal had created jobs for everyone that wanted them and had then worked with industry, using both carrots and sticks, to get industry to invest rather than pad ownership’s wealth. Even the New Deal didn’t initially have the nerve to see this program through into institutionally weakening and constraining still dominant capitalist voices. This led to the 1937 recession when Roosevelt knuckled under to the “deficit hysteria” of his day.
Very few Americans were killed in the war compared to the deomgraphics of all the other combatants. Roosevelt had been Secretary of Navy in WW1 and understood from that experience why the post war recession happened then. He set up working groups to prevent that happening again and they worked.
From 32 to 45 there was continuous work on improving the provision of public goods: work for those who want it; healthy food; a roof over one’s head, freedom from want. At the same time, Roosevelt was an ardent capitalist, he understood the importance of risk taking and local knowledge in technological industries and set about regulating them to ensure capital resources, from cash to plant to labor, were used in a competitive and managed capitalism that ensured advances in technology rather than rent seeking.
The tools used still exist and have become the fetish of Neoliberals under the ruberic of “State Capitalism” as posted on here the other day. These are essentially the tools Hamilton outlined in the 1790s for how to make a powerful capitalist nation. China and Korea are making best use of them, to my mind, at present. We could too, but not with the policy market we currently have where policy is sold to the highest bidder, who’s interests inevitably prevent any concessions to public goods: profits must come first.
Systematic constraint on economic power to prevent it corrupting politics is the core public good the New Deal provided and what made America a beacon and role model after the war. It had its warts and flaws, but it really was better than most countries in very important ways. Big companies are better able to absorb costs right now because they are not threatened by competition. Break them up, make them compete, prevent financial cheating etc. Oligarchy is when the petty authoritarians of business are allowed to buy protection through government.
Take back the government (won’t be happening with Sleepy Joe, so maybe in a few years), break up the big businesses, make them compete: the whiny executives we have now will all be turfed out because all they’re good at is looting which is the opposite of competition.
Thanks to you both for great comments.
I can only add that the Great Depression left a deep determination in everyone not to repeat that experience, to never let it happen again. Keeping men (then, it was mostly men) in jobs was considered more important than Wall St. profit margins or any ‘shareholder value’ theory. Jobs and incomes were far more important in the nation’s unspoken assumptions. The civil rights movement captured some of this ‘men in jobs’ thinking with the Memphis sanitation worker’s strike: the striking workers each carried a sign that said ” I am a man.”
The Depression/WWII generation’s kids never experienced the Great Depression except for hearing occasional stories. When they entered the workforce, and as their grandparents and then parents left the workforce, keeping men in jobs as a national first priority lost its hold on people
s thinking. That was Wall St.’s chance to move in to center spotlight again. Enter: the theory of “shareholder value”.
When companies look to go broke, maybe the *shareholders* should bail them out, not the Federal Government.
This is helpful as far as it goes, but misses important pieces of the puzzle as articulated in Judith Stein’s “Pivotal Decade”
https://yalebooks.yale.edu/book/9780300171501/pivotal-decade
The US State Department as early as the 50s began to betray US labor by supporting and promoting asymmetrical trade deals with Asian and European countries as part of their “containment of communism” strategy.
After all, you can’t profitably “offshore” without the complicity of your own government to lower trade barriers that would otherwise prevent the “race to the bottom” we’ve all “enjoyed” for so many decades now.
None of this de-industrialized blight was necessary — all of it was aided and abetted by policy decisions made by American governments on behalf of American oligarchs and at the expense of the American people.
eg wrote: ‘ all of it was aided and abetted by policy decisions made by American governments on behalf of American oligarchs and at the expense of the American people.’
Starting with the original policy decision that the U.S. dollar would be the world’s reserve currency, implemented in Bretton Woods in 1944 by the Roosevelt administration. Let’s be honest about that.
If the U.S. was to be the global hegemon and the dollar the global reserve currency that foreign nations wished to hold reserves of, then the U.S. had to be willing to supply the world with enough dollars to fulfill that global demand. This was always and inevitably going to lead to serious trade deficits.
Indeed, post-WWII U.S. policy consciously rebuilt Germany and Japan as industrial centers specifically because it wanted them as supports and counterweights in the global dollar system it was building.
And for ordinary Americans being the global hegemon with the global reserve currency worked very well. Till it didn’t.
For American finance capital, of course, it’s only gotten better since Nixon ended the gold standard and the U.S. gained the exorbitant privilege of printing as much of the global reserve currency as it liked. For the mass of the American people, of course, much worse.
But empires are never about the little people.
Turning America into de-industrialized blight was the whole and only goal of Free Trade. As long as Free Trade exists, America will stay de-industrialized blight.
If we want to turn American back into industrialized non-blight, we will have to abolish Free Trade first.
And if we abolished Free Trade, we could begin to reduce global warming, which is largely caused by Free Trade to begin with. It would be a ” two-fer”.
We have a more globalized economy now with more globalized workforce. High school diplomas here more directly compete with high school diplomas there, and the cost of living is oh so much lower there. They can afford to work for less. Ultimately, these jobs will go to robots. The industry might return, but the factory worker is not coming back at previous levels.
Nixon White House knew US manufacturing was dead after August , 1971 . Nixon wanted nothing to stand in the way of a re-election (a recession) — into that void stepped Peter G Peterson with a solution ( Nixon shock ) – after a stint at Lehman Brothers ,Peterson went on to co – found The Blackstone Group … manufacturing sweat equity didn’t stand a chance – Washington has spent the last 50 years tying a economic colostomy bag around the necks of those folks forced to compete against a debt – based currency …collateral damage was the same for union / non – union alike … https://www.nytimes.com/1971/12/30/archives/study-for-nixon-backs-new-rules-in-world-trade-peterson-report.html
There is no equality–nothing approaching it–in a capitalist system, which is structurally and functionally based upon producing and sustaining inequality. How basic can you get? A few own, the rest work for them–and where’s the equality in that? The few accumulate inordinate wealth, the many experience varying degrees of deprivation, austerity, and suffering.
A-B-C.
Yves, had to stop at the first paragraph. Here in michigan, in the 50s & 60s, blue collar workers were able to buy cabins, boats, etc. But for a couple other reasons. First, many were able to take advantage of a future labor trend: husbands & wives working. Not only did they have the husband’s income which supported the whole family, they had double that income which was then completely available for savings, investment, etc. Second, here in Michigan, properties “up north” on lakes were tremendously cheap. None of the land or small towns around these lake towns were developed. You were essentially going to a cabin in the middle of nowhere, on a lake.
what has been happening for the last 20 years is the parents have died off, the cabin is being torn down and a massive house Is being built on the property. Turning what was once a worthless piece of property on a lake into some of the most expensive property in the state. Which is now unaffordable by blue collar workers. (I won’t get into my opinions that this creates racial divides, but you won’t see blue collar minorities at these locations, unless they play professional sports). Now it is nearly mandatory that a family has to have 2 incomes to maintain a standard of living above 3rd world. Not to mention other costs that did not exist when “mom & dad” bought the lake “cottage” (health insurance, no more pension).
Finally, I want to refine the word “manufacturing”. What created all this blue collar wealth was that these jobs were creating value. They were taking natural resources and adding labor input to create products with value. when you build a car, its worth is the value of the natural resources plus labor input. In a service economy, there are no natural resources. The only input is labor. how do you establish a minimum value for the output (a mowed lawn)?
I’m sure you considered all this, so I just think it’s worth mentioning for your readers, and to give my personal perspective of it having lived here in Michigan all my life.
Great summation. Thanks for that. My own personal experience- my Dad was a truck driver his whole life. He was the breadwinner for me sainted Oyrish mum and the four of us kids. My Mom started working in a department store sometime in the late 60’s and through the 70’s just to keep up. By the 80’s when at least me and my brother (we both funded our own college education BTW which is impossible today) were out of the house they had a break but I noticed that friends who married earlier than I did had spouses who were working immediately after marriage and then by the late 80’s and 90’s were maxing out their credit cards just to keep up. It’s not news here that the middle class is being destroyed but just my perspective. Fortunately, my wife believes as I do that “debt is slavery” and we have worked assiduously to keep us and our two kids out of debt.
I realize that Elizabeth Warren draws much-deserved heavy fire hereabouts, but her collaboration with Amelia Warren Tyagi in “The Two Income Trap” is a useful examination of the process alluded to by Ep3 and SouthSideGT.
There are few things as valuable as a sensible wife.
We don’t do debt either. House, cars, cat paid for with cash.
It is in the long run a far cheaper and more secure way to live.
Part of the change in real estate was the shift to producing large amounts of what I call ‘funny money’ which was available only to people and institutions which were already rich. This affected other markets as well, such as equities and collectibles. By keeping the new money away from the poor, inflation in the real economy (labor, goods, actual services) was avoided.
However, people have to live somewhere, and the real estate market is one of the crossover points where tension and conflict have developed and were going to continue before the plague arrived. I haven’t figured out what’s going to happen now, especially given the incompetence of the Federal government and the Ruling Class. In 2005 they were handing out money, then they got scared and pulled back, and began the chain of events which led to the collapse of the financial system a few years later. Money depends on belief, and the more fictional the money becomes, the closer we approach the point where the suspension of disbelief so necessary to the success of fictions breaks down.
It’s time to put that cliche to use for the good “guys”: Let’s not let a good crisis go to waste. I have suggested to Howie Hawkins, who proved to be years ahead of me (he is older than I), that the Department of Labor should set up an office to help people build worker-owned co-operatives. They can, and should, be “marketed” as the economic equivalent of New England town hall democracies.
As the short-lived Federal action on weatherization, under President Obama, briefly but clearly demonstrated, there’s an ocean of potential in retrofitting all kinds of existing buildings to save energy. Then, such buildings will need solar arrays and/or wind turbines to generate their own electricity. New storage batteries that might soon come on-line will make this strategy even more viable. Finally, the production of bio-diesel offers, I believe, a cleaner alternative than burning any fossil fuels for heat.
There is/are alternatives out there – especially with regard to the Presidential contest – and now is the time to capitalize on them.
Thank you! There is an alternative!
If (when) we kill ourselves with filthy drinking water and untreated sewage, co-ops and energy re-fits won’t matter a damn — or a dam. We need a federal jobs program last year to rebuild and replace 100-year-old basic water and sewerage infrastructure across the nation. And we have to have federal support for municipal water and sewer utilities to slash rates to the point that rate payers can actually pay them. We live just a few miles from Lake Erie, our water supply. Our two-person household paid $175 for water last month, and $150 for sewer. Low and moderate income households cannot pay rates like these month in and month out.
Wow, our municipality just sold our sewer system to American Water.
I don’t forsee gettin it back, soon.
There is some validity in some of the above comments. Shortages of labor lead to higher wages. Unions help. Globalization brings competition as wages vary around the world. The growth mania has been abetting habitat destruction and toxification.
But a major fact hasn’t appeared: Human population has tripled since the end of WWII. That floods labor pools, multiplies the externalities of human industrial economies (including agriculture), displaces habitat for other species except human parasites, multiplies three fold the solid, liquid, and airborne stream that has overloaded waste sinks.
Technology is a double edged sword which can increase efficiency in production, but also in the mining of non-renewable resources. Jevons Paradox still applies.
If we were 1/3 our number, jobs would pay a lot more, and human health would improve. Obstacles: religions want larger flocks (tithing), businesses want expanding markets and cheap labor, and indebted governments need revenues and cannon fodder. Nature will cull us faster and faster as we get deeper into overshoot. We’re Homo superstitious, not sapiens. Otherwise we would shrink voluntarily.
That must be why some economists are panicking over falling birth rates. ;)
But seriously, I’m not sure increase in population automatically leads to a fall in wages. If the labor portion of profits distribution was the same now as in the 1960’s then:
1) wages would be much higher today than they are; there’s been no raise in 30 years for worker as the profit share going to stock holders has taken almost all the gains from increased productivity.
2) if a larger population has the same wage/profits share ratio of the 1960 then wages should be fine regardless of the size of the population. More people mean more customers as well as more workers.
3) politics is as much to do with global wage arbitrage, destruction of unions, and the rise of gig work as does population size. politics is involved with profit share of productivity.
an aside, a bit from MLK’s last speech made after the Selma to Montgomery march:
http://rosemarieberger.com/2016/09/05/martin-luther-king-eats-jim-crow/
The divide and conquer tactic keeps wages low and work precarious.
typo: MLK’s
lastspeech made after the Selma to Montgomery march:Not his last speech.
This is a good piece. Regarding the idea of single-income middle-class families, I’ve long wondered if any economists have done work on past, current and theoretical income distributions. For example, compare 1968 (peak min. wage) to now. Or the possibilities for further compression of the distribution. What kind of lives could be led if we were all clustered around the median?
Costs would shift, but should be the same in aggregate (some prices would go up, others down). Dynamic effects would have to be considered, but given historically narrower distributions with lots of innovation–probably more than now and certainly more useful ones than today’s–it’s hard to see how incentive effects could outweigh the benefits of greater equality. (Besides, more broadly, motivations/incentives are socially constructed and can be changed: an extra $100,000 in 1968 probably was as “motivating” as an extra $1 billion in 2020, and money need not be the prime motivator. We can change norms.)
I guess the larger point is that we can create whatever kind of society we want, and economists can give us the tools to do so. Instead, they are often advocates for those who have benefitted from the transformations described in this article.
Perhaps it bears mentioning the work of historian Walter Scheidel on past events that have led to lessening inequality:
From https://www.project-syndicate.org/onpoint/inequality-and-the-coming-storm-by-edoardo-campanella-2017-12
“But while inequality has been a persistent feature of civilization, it has not been constant. Scheidel chronicles long stretches of high inequality that were followed by bursts violent compression, owing to cataclysmic historical events – his book’s titular “great levelers.” Specifically, Scheidel designates mass warfare, violent revolution, state collapse, and lethal pandemics as the “Four Horsemen of Leveling.”
“His most prominent examples are the twentieth-century world wars, the Russian and Chinese Revolutions the fall of the Roman Empire, and the Black Death, respectively.”
I believe that any political attempts at lessening USA inequality will fall in the “window dressing” category as wealthy USA political donors will fight to keep their gains. And maybe the top 30%-40% in the USA have enough fear of future precariousness that they will side with the elite wealthy.
I remember LBJ’s War on Poverty, but that happened when the USA was still an oil exporter, had union manufacturing jobs and there was feeling that the country could afford to do big things simultaneously (space program, make America beautiful, War on Poverty, and unfortunately do the Vietnam War).
That was 1964 and the USA population was 192 million vs 328 million now and climate change was not a looming concern.
From above, historian Scheidel finds that lethal pandemics decrease inequality (by shrinking the labor force dramatically), but one can wonder if the Covid-19 USA response is increasing inequality from all the benefits handed to the financial industry.
Scheidel suggests that inequality is the norm, not the exception.
As does Piketty’s “Capital and Ideology” but he does not accept that any particular level of inequality is a given — it can be changed, and it can be changed by policy.
That a particular level of inequality can be changed by policy seems reasonable.
One can suggest that many policy changes were instituted in the USA to INCREASE inequality.
Might there be a historical upward bias in inequality that is difficult to counteract?
Will the USA political sphere recognize the problem and then do “just enough” to avoid great social strife?
I would like to clarify something for the new readers on this site; there is no direct link between Human population size and real income for the 90% of the population. Hence doubling the population does not mean an automatic decline in real income for the people. It is productivity, the ability due to organization, skill and technological ability to extract and process resources and to distribute goods, PLUS an appropriate and compassionate economic system (invariably monitored and regulated by a competent and non corrupt unions and government) that will result in decent income for the ordinary people. Hence rising productivity due to automation should result in more leisure time and a comfortable income for the majority of people, provided the profits are not hoarded by the 1percent. North America has many times more people now than in the 1800’s, and real income for the middle 80%, is far far higher (in terms of goods and services enjoyed, and leisure time, pre- Covid 19).
However, the environment does limit the maximum size of a sustainable real economy and real incomes enjoyed by the population. The availability of clean air and water, the capacity for ecosystems to process waste, the accessibility of natural resources, these ultimately dictate the long term health and sustainability of an economy… an economy that exceeds its natural limit due to resource, soil and water depletion or change in climate, must adapt in some manner ( import, innovate, reduce waste and /or shrink), or go the way of the Mayans and Khymers and become extinct).
I remember the 50s clearly. And it is instructive to look back. I find it very interesting that the idea of maximizing shareholder value came about as good investments became less profitable. That should tell us something. (even if it is unspeakable, like we were idealistically and ignorantly mismanaging our economy in every detail…) – Hindsight is a belated gift. So per above with some editing, “The future of the economy depends on… regulations that… (encourage) long term investment and (strict) corporate accounting standards for longterm growth… the future of the economy depends on it.” Understatement of the Century. I’d just add that we clearly need an express legal concept for maximizing economic balance. But we still have that recurring mental illness to contend with – the fear of all those commies.
It was fear of the communists that drove the US to push the oil majors to sell Saudi Arabia Aramco and the oil wealth under it which Aramco had leased until 1990 or so. The Saudis wanted to control Aramco and the oil but the oil majors owned it fair and square. Just like the Saudis own a huge hunk of Citibank. Our politicians and foreign service figured out a way to give it to the Saudis to keep them from joining the Russian side in the cold war.. They proposed an income tax be levied by the Saudis to buy the majors out. And they pushed the IRS to consider this hidden royalty ruse legitimate. The oil companies who refused to raise the contractually agreed royalty rate were told that they could deduct the “taxes” they were going to pay the Saudis from their US income taxes so providing a miassive boost to the Saudis outside of the contract was harmless to the oil companies US oil companies were relieved of a tax liability for a long time. The Saudis generated enough to take Aramco over thanks to the US taxpayer. As soon as Saudi Arabia got control of the oil the US found and drilled for the costs soared. Cheap energy became a thing of the past and US productivity and competitive ability began its 50 year collapse. Wages have not risen since. The US taxpayer provided the seed money for the destruction of cheap energy and the elevation of the mid east. Too bad we could not have funded our black population as we could afford to buy out the oil majors with a tax benefit so the Saudis could buy Aramco which was done out of fear of communism. Of course with global warming thsi is not going to be much of an issue any more……maybe.
Back then the US was pretty much a social democracy which TPTB have been violently stamping out around the world including here ever since then. Making the world safe for our special brand of capitalism.
Couldn’t treat your population like garbage if you didn’t want them to go Red. People should read more about the great depression and learn how close the country actually was to revolution during that time period. They never seem to mention that in your high school history class.
Ideas ideas everywhere , not a drop of change.
I remember the 1950s and 60s. The big difference was shelter and healthcare were affordable. Jobs were available. What happened starting with Jimmy Carter was that the worker’s New Deal was dumped. Inflation was conquered by busting unions, freeing immigration, and offshoring production. By Bill Clinton, the neoliberal counter-revolt was successful. Working families compensated by wives going to work and then going head over heels into debt. After the pandemic any middle-class wealth left will be gone.
Biden or Trump is not a choice. Among the many things not mentioned is that for the young in the West Coast there is no new frontier for them to move too. As an ex-Seattleite, the protests there and Portland OR, to me, are driven by the fact that the young can no longer afford to have families. They have nowhere to go to start anew.
New jobs programs are the starting points to rebuild society and Constitutional Democracy.
>>> They have nowhere to go to start anew.
This. All the bloviating about education that’s unaffordable for jobs that do not exist to move to places that now only exist in the past. I have reluctantly thought about moving from my home, but aside from a lack of money, just where could I go?
Anyone who preaches about education, moving, and pulling one’s self up by their bootstraps are either blind, bought and paid for, or deranged.
How do the mechanics of the monetary system determine how widespread prosperity is?
Our policymakers don’t understand the monetary system, so they are not going to know.
Financial liberalisation was a really bad idea, but they didn’t know that.
MMT have made advances in this area, and have found much of their new knowledge isn’t actually new, but was known in the past and then forgotten again.
The monetary system actually has zero size, it all netts to zero.
You can’t make the pie bigger so we can all get a bigger slice, there isn’t even a pie.
It’s just positives and negatives, money and debt.
It all sums to zero.
Bank loans create money out of nothing, and debt repayments to banks destroy money.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
Money and debt come into existence together and disappear together like matter and anti-matter.
If private sector wealth sums to zero then the billionaire’s positives have to be matched with lots of smaller negatives elsewhere.
As they get richer, other people get poorer.
Richard Koo used to work in the Federal Reserve Bank of New York and is only too familiar with the flow of funds in the economy.
Central banks use the flow of funds to see what is going on in the economy, it sums to zero.
It’s essentially the same as the chart of the US above (46.30 mins.), but divides the private sector into household and corporate sectors to give more information on what is happening in the economy in monetary terms.
This is Japan when they had a financial crisis in the early 1990s, the Government was running a surplus.
Richard Koo shows the graph central bankers use, and it’s the flow of funds within the economy, which sums to zero (32-34 mins.).
https://www.youtube.com/watch?v=8YTyJzmiHGk
Richard Koo’s graph of the flow of funds shows the Japanese Government ran a surplus as the financial crisis hit.
The terms sum to zero so, as one is going positive, another is going negative.
The Government was going positive, as the corporate sector was going negative into a financial crisis.
For the household sector to be nett positive, where the billionaire’s positives can be matched with negatives elsewhere.
What would you need to happen?
One of these three things.
1) The corporate sector would need to be negative.
2) A current account surplus
3) The Government running a deficit
Capitalism only shared its prosperity widely in the Keynesian era.
They ran big Government deficits allowing the private sector to become nett positive.
Whether or not they actually knew what they were doing, I am not sure, but much has been lost from the 1930s and 1940s.
There are still millions of ‘good jobs’ in America, in terms of a family wage, health insurance, etc.
However, some families have two of them. Also some of the good jobs are held by single men and women.
This is a major change from the 1950’s, when good jobs were informally reserved for male heads of families. Of course this was raw discrimination and would never fly today.
There does not seem to be any crisis amongst highly-educated, two-income families in the affluent suburbs. It is everywhere else that we see a collapse.
Incidentally, a Republican named George Gilder predicted this about 50 years ago in a book called Sexual Suicide. He said if a society does bribe men into forming families by giving them good jobs, crime and social decay will result.
‘If a society does not bribe men’ ….sorry
Gilder is now a tech investor and he was sponsored by the rich, but his insights into American ghetto culture are unerring. If men do not get good jobs, they turn either into gangsters or drug addicts. Margeret Mead once said that the greatest challenge of any society is “what do you do with the men.”
A few things. I am an older Millennial who was born in 1984 as some of you here know, as I am in the comments section fairly often.
Anyway, I am rather in awe about how much of a different country the US was from the postwar years to the late 1970’s. The prosperity for the average worker in those years was over and done before I was born, and will probably not be seen again in my lifetime due to how many things need to change and how ossified neoliberalism has become in our government regardless of which party is in power.
So, for starters, we absolutely need to bring back unions. I realize that they were not perfect but having the option to join one at your workplace should at least be available. They will probably need a helping hand to get up and running again since companies today have so many more tools at their disposal to bust unions and retaliate against employees for doing so, legally and illegally. One major problem with unifying labor now is that it is also so much easier for companies to close domestic facilities and move them overseas, especially under the threat of unionization. I am not sure how you would stop them without some sort of international body and good luck getting everyone on board for that.
It would also help if we got rid of the idea of “at-will” employment. Employees were always free to seek employment elsewhere in most cases. Plus, looking at how more and more employers are forcing employees to sign non-competition agreements Employment At-Will offers nothing to labor but gives employers an easy way to wantonly break labor laws or get out of any sort of obligation to their workforce. They can easily make up any sort of reason on the fly for getting rid of a potential whistleblower and it is very difficult to prove wrongful termination cases in court.
I am not sure how it works in Montana as that is the only state to my knowledge that does not have Employment At-Will, or in other countries but I think that employers should at least be forced to gave a justifiable reason why before terminating a worker.
The H-1B program should also be terminated or severely overhauled at the very least. I used to work in the biotech industry, and I saw how it has basically been a backdoor way to destroy many research and engineering fields since the late-1980’s. This is because it is far too easy for companies to use it to saturate various job markets with legions of poorly-paid, poorly-treated, foreign workers who can be dismissed and sent back to their home country at any time and it is all perfectly legal. This is both for companies to duck out of any sort of obligation to their employees as well as to supress wages domestically.
Another thing is that we should also focus on reigning in the explosive growth of housing costs and real estate as has been metioned before on Naked Capitalism but I am not sure of the best way of doing so. At the very least, I think that it should at least be possible for people to live wherever they please in terms of finding affordable housing instead of being forced to leave or avoid massive regions of the country due to not being able to afford rent or a mortgage on the wages they make.
In regards to college tuition, college should be free, but that is only part of the problem. There are so many people coming out of college already in fields that have an overabundance of that particular degree. We need some way to prevent employers from requiring degrees for things that could easily be learned by people off of the street with the investment of some job training. Companies used to do this, so why not now? As an aside, I do not think that the only value of higher learning is finding employment but I am sure that most degree holders would like to work in the fields that they went to school for.
Finally, healthcare costs have also taken a huge toll on the financial stability of labor over the decades. The only way to stop this is to have a single-payer healthcare system. This has been obvious for decades but our political system refuses to listen even in the midst of a pandemic.
So, it might be too late to save millennials like myself but that is probably what is going to have to happen in future generations if my country has any hope of saving itself from the internal rot of neoliberalism. Millennials will be reaching middle-age soon, and then we will witness what new hells await us when we add age discrimination to everything else that has disadvantaged my generation.
Nothing of the income inequality will change unless somehow this thing of corporate stock ownership be made that only those employed by the corporation be of ownership, In other words no absentee ownership allowed. Why, for two reasons: Those employed by the company possess a work ethic of want, of desire to produce a good product – an incentive with a reward of dividend. Only an employed is positioned to effect what the product is.
Absentee owners are just fickle money mongers.
Result: More even distribution of incomes.