Over at Interfluidity there’s a good post titled “Why Are Americans So Unhappy?”
Part of the answer boils down to this graph:
What this measures is what percentage of expenses of employees wages pay.
You’ll notice it keeps going down. It peaked near 100% around 1968 and has been trending down since. It’s now under 80%. Note the spike in 2020 when the government let lose the taps and actually helped people. I know a lot of people who, contra the “lockdowns sucks” remember 2020 as the only time they got to take a paid vacation. (And suicides in the under 18 group dropped massively, because school sucks.)
What makes up the rest of the money people use to support themselves? Well, for the better off its assets based wealth: dividends, capital gains and all that good stuff. But for all intents and purposes if you aren’t in top 10% the amount of money you get from these sources is infintesimal. So, in fact, what actually makes it up is having two people working where one plus maybe a minor part time job would cover it.
The post is worth reading in total, but I want to point out something simple: this is deliberate. This is a result of policy. This is what American elites worked hard to create.
There are a lot of moving parts, but the most important for a long time was that the idea of NAIRU, that unemployment below a certain level was bad and caused inflation, so every time unemployment got low, the Federal reserve would crush the economy. (This is why good employment news would cause the market to go down, and bad employment news would cause it to rise all through the 80s to 2000s.)
Low unemployment is when employers are forced to raise wages, since there’s more jobs than applicants. It’s when labor has pricing power. So the Federal Reserve spent over 30 years (and still does occasionally) deliberately suppressing wages because they figured that wages were the most important form of inflation.
Or that’s what they said. There’s lots of sources of inflation, but somehow the Fed was never concerned with bubbles, never concerned with moral risk, never concerned with oligopolies and monopolies, never concerned with actually supply as opposed to demand. Nope, it was all those nasty workers who wanted raises.
Now a cynic, or perhaps a realist, might think “if there were a lot of ways to deal with inflation and the only one they did was crush wages” that perhaps inflation wasn’t at least 50% just an excuse to crush wages.
A realist might notice that everything else happening, like tax cuts on the rich, the end of Glass-Steagall, deregulation and much more all seemed to have as its effect making the already rich richer, and notice that wages are an expense to rich people, not their primary source of income, and that crushing wages thus also helped make the already wealth even richer.
Since many people pointed out, as early as the mid 80s, that the result of the policies being pursued would be rampant inequality, and indeed it was showing up in the stats as early as those 80s, one can safely assume that decision makers, whether at the Fed, Congress or anywhere else understood what the results would be.
But, after all, they are the important people. The good people. The job creators. The people who are worthy of having lots of money. Nurses, orderlies, janitors, clerical workers, garbage men: pretty much everyone who has a job that actually does something the economy actually needs done and when it isn’t done people scream, they’re putzes and don’t deserve to have a good life. Just disposable trash.
At its heart it really is this simple. There were plenty of ways to deal with inflation, and many were suggested at the time. The most regressive path, one everyone knew would cause a lot of poverty and increase the wealth of a minority massively was chosen. It was chosen because it benefited the people in charge and their retainers, and those people didn’t and don’t care about anyone else.
Along the way the morons also managed to piss away America’s industrial and tech lead and lose America’s superpower status. But being fake rich (because it’s China that’s actually rich now, no matter how many billions of US dollars you have) and crushing their lessers was what was important to them.
And yeah, plenty of people, your kind and gentle host included, predicted this, well in advance. It was known. If you didn’t know, it was because you metaphorically had your fingers in your ears as you chanted “it doesn’t matter who makes things, or where. The market is global and fungible. It doesn’t matter who makes things, or where the market is….”
Anyway, it worked out for a few people. A few million. It’s a big club, as a comedian once noted, and you aren’t in it.
Your living standard was crushed, your wife was forced to work (not just permitted, but forced) and your children’s future was pissed down the drain deliberately, along with America’s place in the world, because it made a few million people rich, and a few thousand so rich Gilded Age barons would be jealous.
There was a class war.
The rich won.
You lost.
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Rahm Emanuel might be the biggest asshole in politics. That was certainly the consensus back in the 2000s when I had lots of political contacts. He’s also filth in many, many ways and I don’t trust him.
