Earlier in Jobs Crisis In Real World ... Just Not In DC I wrote about the gap between DC/Wall Street thinking about the jobs crisis and reality in the rest of the country. Summary: Our government is not addressing out problems because it is captured by interests:
Out here in the real world the real problem is not "structural," it is that there just are not enough jobs, they don't pay enough, "free trade" deals have lowered wages and undermined our manufacturing base, there is not enough demand in the economy and the government is not doing its job of picking up the slack and after 30 years of tax-cutting the infrastructure is crumbling and not supporting competitiveness for our businesses.
There are millions of unemployed and millions of infrastructure jobs that need doing. There is a new green energy and manufacturing revolution going on in the world and we do not have an economic/industrial policy to capture our share. There is problem after problem that is not being addressed by a government captured by interests.
Harold Meyerson writes today, in What's holding back the U.S. economy? that income has stagnated for everyone, while a few at the top are raking in tremendous amounts, because we have "lost power to our corporate and financial elites."
From 1947 through 1973, according to the Economic Policy Institute's State of Working America report, released this week, the incomes of the poorest 20 percent of Americans rose 117 percent, while the middle 20 percent saw a rise of 104 percent and the wealthiest 20 percent a rise of 89 percent. From 1973 through 2000, however, the income of the bottom fifth increased by a scant 9 percent, the middle fifth by 23 percent and the richest fifth by 62 percent. Since 2000, the concentration of income gains at the very top has grown only more pronounced. The share of income going to the wealthiest 1 percent of Americans, which was less than 10 percent in the early '70s, reached 23.5 percent in 2007 - the highest level on record save for 1928. (Note: Both years preceded epic crashes.)
Lagging innovation may explain many things, but it doesn't explain the rise of the rich over everybody else. For that, we need to look at changing power relationships, something that most mainstream economists resolutely ignore. Surely, the shrinking of unions - from 35 percent of the private-sector workforce in the 1950s to less than 7 percent today - has decreased American workers' ability to win good wages. Surely, the offshoring of manufacturing has diminished both the number of good jobs and our ability to exploit our innovations productively. Surely, the deregulation of finance has diverted more and more resources to a relatively small circle of bankers and speculators. And that tiny cadre has chiefly enriched itself at the expense of the rest of the nation.
Meyerson is saying that the changes in our economy that are causing the middle-class-destroying joblessness and wage stagnation are not due to lack of innovation, a great stagnation from a "lack of low-hanging fruit," or any of the other excuses we are hearing. (Other countries and their economies are growing.) He says it is because the economic benefits of growth are now going to a very few.
The difference between America pre- and post-1973 is that in the years preceding, the benefits from economic growth were widely shared, while in the years following, they increasingly went only to the top.
These things are happening because we have lost the checks and balances that functioning democracy brings to our economic and political system, which are supposed to moderate the savage effects of unbridled, top-down capitalism. As a result both systems are captured by the very wealthy interest who are running things to further concentrate their wealth and power.
As I began the earlier post: Who is our economy for? Who is our government for? For 30 years we have been undergoing a transition from "We, the People" democratic government to a plutocracy run by and for the wealthy.
Jobs, income, infrastructure, dignity, security and mostly the benefits of democracy, all falling away from us at a faster and faster rate. This is The Reagan Ruins, hitting us upside the head like a hammer. This is "trickle down" not trickling down at all.