These are all self-inflicted wounds
Robert Reich for Inequality Media
I rarely ask you to look at charts. Today is an exception.
This one is from the Economic
Policy Institute. It compares the typical American’s pay starting just
after World War II (light blue line) with the nation’s increasing productivity
since then (dark blue).
The chart shows the widening divergence between the rise of
pay and the yields from productivity.
In the first three decades after World War II, the typical American’s pay rose in tandem with the nation’s growing productivity. The benefits from higher productivity were broadly shared.
But then, starting in the late 1970s and dramatically after
1980, pay barely grew, even as productivity continued to soar. The benefits
from higher productivity went increasingly to the top.
Why?
I’ve been looking into this question for a long time.
I’ve also been living it, as head of policy for the Federal
Trade Commission under Jimmy Carter,
secretary of labor in the Clinton administration, and an economic adviser to
Obama. I’ve chronicled this in my upcoming memoir, Coming Up Short.
Much of the answer has to do with a giant upward shift in
power.
It started in 1971, with a memo written for the U.S. Chamber
of Commerce by Lewis Powell exhorting corporations to play a far more active
role in American politics. They did, and their increasingly active role paid
off, at least for their CEOs and top investors.
It continued through Reagan’s tax cuts and deregulation, his
legitimization of union bashing, and the emergence of corporate raiders who
insisted that corporations maximize shareholder value above all else.
And onward through George H.W. Bush and Bill Clinton’s North
American Free Trade Agreement, their support for China’s accession to the World
Trade Organization, and their deregulation of Wall Street.
And then through George W. Bush’s tax cut — again, mainly
for big corporations and wealthy individuals — and Barack Obama’s bailout of
Wall Street after it nearly destroyed the world economy.
Deregulation. Privatization. Tax cuts. Free trade. Stagnant
pay for most. A soaring stock market for the top.
That’s the legacy of neoliberalism.
It also brought us Trump — who exploited the anger and
resentment stirred up by all this and pretended to be a strongman on the side
of the working class (while quietly giving the emerging American oligarchy
everything else it wanted, including a giant tax cut; he’s readying another as
you read this).
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