What caused the change in wages over the past 20 years ?

[Jhhnn]

Bill Gates has accomplished great things that would not have been accomplished if his fortunes were taken and redistributed by our government.

Historically, (USA) Wealth distribution gets corrected when it gets to far out of balance.

Gates has thrived under a variety of tax codes, and will continue to do so regardless of whatever real world tax burden is placed upon him. Nobody is suggesting that taxes be confiscatory, at all.

And, for sure, corrective action has been taken when wealth concentration gets out of hand, but that has generally taken something like the great depression as a catalyst for change. We've never faced a situation quite like the one today, where the financial elite has used federal debt as a mechanism to obfuscate what's really happening, and also to gain leverage over the govt. Nor have we faced the loss of our manufacturing base in the process, which is not to mention our huge dependence on foreign oil.

Few people understand that the balance of payments deficit is also a form of debt, made possible by offshoring. As consumers, we benefit from low prices, but not proportionately to stagnant wages and lost tax revenues- debt has been created to cover the difference, cast the illusion that we haven't been sold out. Ultimately, of course, our ability to maintain such debt loads will diminish, because we simply can't produce at a sufficient rate to keep up. That's because American capitalists aren't really investing in America, at all, other than in creating the means to further our economic demise and in the military means to protect their foreign investments.

Current economic theories regarding trade imbalances and currency valuation don't account for huge federal borrowing on an international level. US govt securities are the world's safest investment, or at least they have been in a historical sense. Availability makes dollars a lot more attractive than they should be, holding dollar value at a false high level... nor do current theories account for an economy looted from the top down, dependent on ever increasing debt acquisition to keep it from crashing.

Sooner or later, we'll arrive at a tipping point where dollar value will fall precipitously, simply because our govt, guided by the financial elite, has gone to extraordinary lengths to hold it so high for so long. All those foreign goods and resources (oil) will become very expensive, almost overnight, and the extraordinary and unwarranted affluence we've enjoyed for so long will disappear, because there are no domestic sources for much of it, and no investment potential to re-create it, either.

That won't really damage the financial elite nearly so much as the middle class. Their wealth is increasingly international in character, so losses on one side of the balance sheet are made up on the other, and the price of goods is really immaterial to their lifestyles, anyway.

Face it, when a presidential nominee doesn't even know the brand of automobile he's chauffeured around in, he sure as hell doesn't care about the price of gas, or healthcare, or food, or anything else that really, really matters to the rest of us...

 

[MJinZ]

If you look at charts like this one:

Up until about 20 years ago wages were pretty much in line with productivity and increased each year , then all of a sudden wages stopped increasing yet business was able to produce more and prices for goods increased. Basically business benefited while the workers got shafted. I think that has to do with the economic problems more than anything else. People had to borrow to buy the same things they had before because wages lost pace with cost.

So what caused it to occur ? I heard some people say it was computers and automation that allowed factories to turn out more and need less skilled workers so there was no need to increase wages . The problem with that is in some countries they have kept the wages increasing over the years even though they have modernized the factories and production. So what is it we are not doing ?

The graph you linked simply shows the decline of the middle class and stratification of wealth (the wealthy become ultra wealthy, and more people become wealthy).

While wages may not have risen at the same rate, productivity increases mean overall increases to time-saving, life extending, conveniencing, and entertaining products. That is to say, it does not mean quality of life for the middle class has declined.

 

[Infohawk]

Globalization. I assume these are average wages. The flip side is those who still have good jobs can now buy more.

 

[Jhhnn]

Globalization. I assume these are average wages. The flip side is those who still have good jobs can now buy more.

More of what? More debt? obviously so. More healthcare? probably not. More people with more equity in their homes? definitely not. More mobility? not when you're completely underwater on your mortgage. More opportunity for their children? More security in their investments, their jobs, their retirements? dream on...

 

[ebaycj]

Why not just keep the unions and whatever higher quality of life and standard of living they bring and just ban all imports?



Do you really think those guys are the equivalent of rock stars or top athletes and almost completely irreplaceable? I bet that if those same jobs were offered for a mere $500,000/year without bonuses or other perks other than standard insurance benefits and that if only the top 5% of all MBA holders by IQ were eligible that we could form a huge line of volunteers, probably consisting of more than 100 times the amount of positions available.

This is an EXCELLENT point. CEO's used to get 40x the average employee salary in 1970, when there were SIGNIFICANTLY less qualified people (MBA, experience, intelligence, etc..). Why is it that their salaries would go UP, when the size of the pool of qualified candidates has significantly increased (and therefore should have a downward effect on wages for that position)? Why does economics 101 work for everything except CEO salaries?

 

[colonel]

Replublicans sent jobs overseas in 2000 with tax breaks for these companies, government regulations, unions, health insurers packages.

 

[dmcowen674]

Threads like this vindicate me from years of Republicans lying that wages were going up when I said they were clearly going down.

 

[Ozoned]

This is an EXCELLENT point. CEO's used to get 40x the average employee salary in 1970, when there were SIGNIFICANTLY less qualified people (MBA, experience, intelligence, etc..). Why is it that their salaries would go UP, when the size of the pool of qualified candidates has significantly increased (and therefore should have a downward effect on wages for that position)? Why does economics 101 work for everything except CEO salaries?

I think the dot com era and some obscure hidden regulations had something to do with educating a new type of ceo/thief. Either that or you have to blame the huge rise on Clinton.



Check out these graphs

 

[soccerballtux]

I didn't see class envy in his post. He may have exaggerated with "precious little out there", but the trend is as he said. the middle and lower classes have been hugely stagnant for years now while the upper tiers of society become richer at an increasing pace.

There are many reasons. One is certainly government in the back pockets of corporations who excessively lobby to the benefit of their upper management and shareholders.

Righties are sooo tedious. You act as if this discussion has no roots, as if it hasn't happened many, many times before, As if supporting information hasn't been linked ad nauseum.

Quote 1 hatchet-job apologism from the WSJ and it's all better, right? Don't let facts interfere with the formulation of your opinion, ever, because your wannabee ego won't allow you to be wrong, ever.

Income share of the top 1% has grown enormously of the last 30 years-

http://www.taxfoundation.org/news/show/250.html

Perhaps I should interpret the share of income and tax rate numbers for you, sir?

Like I said, wingnuts don't need no steenking facts, because they have faith, because they *Believe*, because their blindness is quite willful.

That's what I'm talking about, everybody just claims "data has been provided" and it never has. If it's been provided so frequently then surely it wouldn't be hard to find it again and repost it. Still no proof that top 1% is a problem. If markets were allowed to function and no bailouts like GM, AIG et al. given, and if people would be financially wise, then prices would fall until the % of your income that you spent on item XYZ fell back in line. As prices fell ability to pay out absurd bonuses would fall as well.

In other words, the problem is systemic with the people (we are getting what we deserve), and simply trying to take from the 1% earners is silly and foolish thinking, it's trying to apply a bandaid when an amputation and wound cauterization is needed. That you think the government officials will not misuse the money either is even sillier and shows just how little of the world and humanity liberals understand.

 

[Elias824]

This is caused by a shift from being an industrial nation to a post industrial nation. We automate everything, and it takes less man power to create more products, which means less jobs, which means lower labor demand, which means lower wages. Add on top of that mass immigration and workers who are willing to do almost any job for minimum wage, and greater competition from china/india and you have you answer.

 

[Jhhnn]

That's what I'm talking about, everybody just claims "data has been provided" and it never has. If it's been provided so frequently then surely it wouldn't be hard to find it again and repost it. Still no proof that top 1% is a problem. If markets were allowed to function and no bailouts like GM, AIG et al. given, and if people would be financially wise, then prices would fall until the % of your income that you spent on item XYZ fell back in line. As prices fell ability to pay out absurd bonuses would fall as well.

In other words, the problem is systemic with the people (we are getting what we deserve), and simply trying to take from the 1% earners is silly and foolish thinking, it's trying to apply a bandaid when an amputation and wound cauterization is needed. That you think the government officials will not misuse the money either is even sillier and shows just how little of the world and humanity liberals understand.

Your pseudo intellectual ignorance is astounding, soccerballtux. You confuse the results of work with the results of ownership. All the people who worked in manufacturing didn't lose their jobs because the owners couldn't make a profit employing them. Those factories closed down because the owners could make greater profits offshoring the work. If they hadn't been profitable with American labor, their capital would have been depleted and they wouldn't have had the resources to offshore production. They have the capital, they determine where the work will be done, and who gets to do it. Those left unemployed will find other work, right?

Which all sounds peachy at a micro level, but that's not what we're talking about. It's systemic, basically eliminating a broad class of employment, introducing nothing to replace it. Well, nothing other than debt and self-righteous accusations.

When we look at the balance of trade deficit, we need to realize that American capitalists are taking their piece off the top of it. When we look at federal deficits, we need to realize they're getting their piece off the top of that, too, in the form of contracts, off the backside, in the form of consumers buying their products, and in the middle from interest earned on govt securities.

As I've pointed out many times, one of the basic attributes of the New Deal was an implicit partnership between capitalists and labor that expanded the middle class enormously in Post-WW2 America. When capitalists chose to repudiate that arrangement, they had to manipulate domestic economics to make it more palatable to the rest of America. They did that with debt of all kinds, made money off that, too. Now that we're apparently approaching the endgame, simply because credit extension can't go on forever, they resist paying for the results of their own actions, those results being the need for more public assistance, more "socialism", and higher taxes on the "haves" to pay for it all. This is democracy, after all.

Americans aren't un- and under- employed because they won't work, but because there aren't enough productive jobs to go around. This real estate debacle didn't happen because buyers didn't want to pay, but because they couldn't, and because they'd bought in to fastbuck schemes, not that they'd perpetrated them.

At what point would you concede that income distribution becomes a problem, anyway? The top 1% share has nearly tripled in the last 30 years, and is skewed extremely to the top within that. Middle class incomes derive increasingly from deficit driven govt employment, and assistance of various kinds is becoming the norm rather than the exception. Apparently that's because the people at the top want it that way, because it grows their share of income and wealth even more than actually employing Americans... and because they can ultimately disown debt maintenance, their wealth becoming increasingly international in character... it's like getting the landlord to pay the rent, after all...

 

[Craig234]

Your pseudo intellectual ignorance is astounding, soccerballtux. You confuse the results of work with the results of ownership. All the people who worked in manufacturing didn't lose their jobs because the owners couldn't make a profit employing them. Those factories closed down because the owners could make greater profits offshoring the work. If they hadn't been profitable with American labor, their capital would have been depleted and they wouldn't have had the resources to offshore production. They have the capital, they determine where the work will be done, and who gets to do it. Those left unemployed will find other work, right?

Which all sounds peachy at a micro level, but that's not what we're talking about. It's systemic, basically eliminating a broad class of employment, introducing nothing to replace it. Well, nothing other than debt and self-righteous accusations.

When we look at the balance of trade deficit, we need to realize that American capitalists are taking their piece off the top of it. When we look at federal deficits, we need to realize they're getting their piece off the top of that, too, in the form of contracts, off the backside, in the form of consumers buying their products, and in the middle from interest earned on govt securities.

As I've pointed out many times, one of the basic attributes of the New Deal was an implicit partnership between capitalists and labor that expanded the middle class enormously in Post-WW2 America. When capitalists chose to repudiate that arrangement, they had to manipulate domestic economics to make it more palatable to the rest of America. They did that with debt of all kinds, made money off that, too. Now that we're apparently approaching the endgame, simply because credit extension can't go on forever, they resist paying for the results of their own actions, those results being the need for more public assistance, more "socialism", and higher taxes on the "haves" to pay for it all. This is democracy, after all.

Americans aren't un- and under- employed because they won't work, but because there aren't enough productive jobs to go around. This real estate debacle didn't happen because buyers didn't want to pay, but because they couldn't, and because they'd bought in to fastbuck schemes, not that they'd perpetrated them.

At what point would you concede that income distribution becomes a problem, anyway? The top 1% share has nearly tripled in the last 30 years, and is skewed extremely to the top within that. Middle class incomes derive increasingly from deficit driven govt employment, and assistance of various kinds is becoming the norm rather than the exception. Apparently that's because the people at the top want it that way, because it grows their share of income and wealth even more than actually employing Americans... and because they can ultimately disown debt maintenance, their wealth becoming increasingly international in character... it's like getting the landlord to pay the rent, after all...

One factor to remember is that one way to help or hurt a group is whether it has to compete more or not.

So workers do worse when unions are outlawed, better when allowed; robber barons do better when monopoly or peice fixing is allowed, worse when there is real competition.

So one factor is that when the rules allow for 'global labor arbitrage'. companies are faced with 'if you don't use cheap Chinese factores, your competitots will and you will go out of business'.

This is how the rules are used to prevent any 'do gooder' factory owners from resisting a movement that shifts wealth to the top - whether it's intentional or an accidental side effect isn't that relevant.

This is why the 'next big thing' needed in the world is governmental cooperation - to not let private power force governmnens into a 'race to the bottom', where they can blackmail governments to bad policies.

We already see this all the time in the US in the few factories being built here - states are forced into a race to the bottom giving hundreds of millions in concessions - tax breaks, construction, etc. - to get the factory.

In the meantime, economically ignorant Americans see no problem with the top 0.01 skyrocketing their share of wealth - you never see the corporate-owned media say a word about the issue.

They just rail against 'all politicians', as if we should get rid of democracy, in a situation the rich are happy to see - people against the one thing that could help them against the rich, a government for the people.

 

[StageLeft]

In the meantime, economically ignorant Americans see no problem with the top 0.01 skyrocketing their share of wealth - you never see the corporate-owned media say a word about the issue.

Well the cursory answer is that this wealth is available to all of us with a good education and drive, but of course that's glossing over the issue. Money is like gravity. As its mass grows it sucks more in and not always without taking it from others.

 

[Modelworks]

Lots of good answers , thanks !

I'm wondering how this all relates to the bank loan failure. It seems that around 1980 when wages stopped increasing, people started borrowing more often and for larger amounts. It was almost like they needed more money to live and since they didn't have it from work they borrowed more till it got to the point the whole tower of debt collapsed.

 

[Craig234]

Lots of good answers , thanks !

I'm wondering how this all relates to the bank loan failure. It seems that around 1980 when wages stopped increasing, people started borrowing more often and for larger amounts. It was almost like they needed more money to live and since they didn't have it from work they borrowed more till it got to the point the whole tower of debt collapsed.

Yes, public debt has shot up the last few decades but private debt a lot more than public. You should read Kevin Phillips' "Bad money"/

 

[soccerballtux]

Your pseudo intellectual ignorance is astounding, soccerballtux. You confuse the results of work with the results of ownership. All the people who worked in manufacturing didn't lose their jobs because the owners couldn't make a profit employing them. Those factories closed down because the owners could make greater profits offshoring the work. If they hadn't been profitable with American labor, their capital would have been depleted and they wouldn't have had the resources to offshore production. They have the capital, they determine where the work will be done, and who gets to do it. Those left unemployed will find other work, right?

Which all sounds peachy at a micro level, but that's not what we're talking about. It's systemic, basically eliminating a broad class of employment, introducing nothing to replace it. Well, nothing other than debt and self-righteous accusations.

When we look at the balance of trade deficit, we need to realize that American capitalists are taking their piece off the top of it. When we look at federal deficits, we need to realize they're getting their piece off the top of that, too, in the form of contracts, off the backside, in the form of consumers buying their products, and in the middle from interest earned on govt securities.

As I've pointed out many times, one of the basic attributes of the New Deal was an implicit partnership between capitalists and labor that expanded the middle class enormously in Post-WW2 America. When capitalists chose to repudiate that arrangement, they had to manipulate domestic economics to make it more palatable to the rest of America. They did that with debt of all kinds, made money off that, too. Now that we're apparently approaching the endgame, simply because credit extension can't go on forever, they resist paying for the results of their own actions, those results being the need for more public assistance, more "socialism", and higher taxes on the "haves" to pay for it all. This is democracy, after all.

Americans aren't un- and under- employed because they won't work, but because there aren't enough productive jobs to go around. This real estate debacle didn't happen because buyers didn't want to pay, but because they couldn't, and because they'd bought in to fastbuck schemes, not that they'd perpetrated them.

At what point would you concede that income distribution becomes a problem, anyway? The top 1% share has nearly tripled in the last 30 years, and is skewed extremely to the top within that. Middle class incomes derive increasingly from deficit driven govt employment, and assistance of various kinds is becoming the norm rather than the exception. Apparently that's because the people at the top want it that way, because it grows their share of income and wealth even more than actually employing Americans... and because they can ultimately disown debt maintenance, their wealth becoming increasingly international in character... it's like getting the landlord to pay the rent, after all...

You make some very good points I agree to (you should read Vonnegut's "Player Piano" or at least the wiki on the premise).
Manufacturing never really left, its just the number of jobs didn't grow-- because we moved to more and more automated processes, increasing efficiency-- this is a good thing, always. The number of jobs stayed the same, while the rest of the economy grew.

New investment opportunities are available when human capital is freed (through efficiency growth) to engage in more productive occupations. Manufacturing is not productive anymore. Anything in the medical sector is. They need to get re-educated.
One sure way to undermine the recovery is to pass a health bill which limits profits pharmaceuticals and doctors can take home, to 10%. Great way to kill all investment in that sector, when you might burn through 100 cures to find just one that works.

There would be no doctors if we were all farming our own land with a plow because someone like you said we shouldn't allow tractors, because the tractors are produced abroad. They produce the tractors, we produce the doctors that everyone else in the world with money travels to receive treatment from, because they are the best, bar none.

History speaks for me: in the long run, protectionism is bad for all parties involved. If all people would be fiscally responsible, then they would not take on $1,000,000 houses when they're making 10% of that; no matter what the bank tells them. Then we would not have the huge problem we have now. The systemic problem is humanity, which no amount of federal government or stimulus can fix: we have to let the market forces work; lay off government workers left and right so they can start being productive again (anybody who has worked in gov't knows you simply. can't. get. fired.) and participating in the private sector.

As they become willing to take jobs for less money more opportunities for employment open up. As they have less money, fewer companies in the economy make obscene profits, as they are unable to charge so much for their items.

If we would let the market function as it should and get government out of the way, these pressures WOULD return our country's economy to efficiency.

 

[brencat]

If markets were allowed to function and no bailouts like GM, AIG et al. given, and if people would be financially wise, then prices would fall until the % of your income that you spent on item XYZ fell back in line. As prices fell ability to pay out absurd bonuses would fall as well.

In other words, the problem is systemic with the people (we are getting what we deserve), and simply trying to take from the 1% earners is silly and foolish thinking, it's trying to apply a bandaid when an amputation and wound cauterization is needed. That you think the government officials will not misuse the money either is even sillier and shows just how little of the world and humanity liberals understand.

I agree. We need to stop the bailouts and experience a little deflation -- while this would no doubt skyrocket unemployment in the short term and possibly lead to a mini Depression, our country would be the much better for it in the long term. It would scare off a generation of investors potentially in the worst case, but it would return people to individual fiscal responsibility giving them a healthy dose of reality and cynicism in the best case. Deflation can be a good thing -- especially for those of you railing against disproportional wealth being concentrated toward the rich...which stand to lose the most in a market wipeout scenario. Best realigner of wealth disparity I can think of.

Now regarding the OP topic, I think two things -- technology being the biggest contributor to the disparity between top and middle/bottom income brackets and those educated in using technology/computers vs. those who aren't. And second...the relentless focus on profits by PUBLIC companies to satisfy shareholder demands for double digit growth in Revenue/EBITDA/EPS in perpetuity, a philosophy taken mainstream by the former CEO of GE, Jack Welch.

I laugh when I read some of these P&N posts about the implicit relationship between owners and workers. In my 18 working years, I have yet to see evidence this relationship ever existed. Which means you are speaking of long ago in a time far removed from today's reality. But stop dreaming this is ever going to change. Shareholders own these public companies -- they really don't care how the company makes money or even that the product is good. Portfolio managers are paid to pick winners, period. Or they're out within 1-2 years. Investors expect returns. If you are a private company, you have the luxury to grow at 5%, take care of your employees with good benefits, have on-site daycare, and take a 100k salary as CEO.

As a public company CEO, you'd better make that stock price go up. Make a better product, cut expenses, offshore production, accounting method changes in your favor, whatever it takes, just get it done. Because you don't own the company, shareholders do!

I wish less companies were public so they could be more compassionate. Sadly, my realistic and cynical nature demands I accept reality and go with the flow. Or I will be an angry, poor old man othewise. And so will many other people if they don't wise up.

 

[Craig234]

I agree. We need to stop the bailouts and experience a little deflation -- while this would no doubt skyrocket unemployment in the short term and possibly lead to a mini Depression, our country would be the much better for it in the long term. It would scare off a generation of investors potentially in the worst case, but it would return people to individual fiscal responsibility giving them a healthy dose of reality and cynicism in the best case. Deflation can be a good thing -- especially for those of you railing against disproportional wealth being concentrated toward the rich...which stand to lose the most in a market wipeout scenario. Best realigner of wealth disparity I can think of.

Now regarding the OP topic, I think two things -- technology being the biggest contributor to the disparity between top and middle/bottom income brackets and those educated in using technology/computers vs. those who aren't. And second...the relentless focus on profits by PUBLIC companies to satisfy shareholder demands for double digit growth in Revenue/EBITDA/EPS in perpetuity, a philosophy taken mainstream by the former CEO of GE, Jack Welch.

I laugh when I read some of these P&N posts about the implicit relationship between owners and workers. In my 18 working years, I have yet to see evidence this relationship ever existed. Which means you are speaking of long ago in a time far removed from today's reality. But stop dreaming this is ever going to change. Shareholders own these public companies -- they really don't care how the company makes money or even that the product is good. Portfolio managers are paid to pick winners, period. Or they're out within 1-2 years. Investors expect returns. If you are a private company, you have the luxury to grow at 5%, take care of your employees with good benefits, have on-site daycare, and take a 100k salary as CEO.

As a public company CEO, you'd better make that stock price go up. Make a better product, cut expenses, offshore production, accounting method changes in your favor, whatever it takes, just get it done. Because you don't own the company, shareholders do!

I wish less companies were public so they could be more compassionate. Sadly, my realistic and cynical nature demands I accept reality and go with the flow. Or I will be an angry, poor old man othewise. And so will many other people if they don't wise up.

I think you are a bit naive about private companies. Some small business can work that way - but many can't afford to do much for employees.

But larger private companies I think are much more likely to be bad for the country - less disclosure and transparency, simply completely operated for the one or few person(s) who get the profit.

Also, even if private companies were more like you say, they compete with the public ones, so if the public ones cut costs by things like outsourcing...

 

[brencat]

But larger private companies I think are much more likely to be bad for the country - less disclosure and transparency, simply completely operated for the one or few person(s) who get the profit.

It's their company -- a private company. They can do anything they want and extract as much or little money they want out of it for themselves. They are under no obligation and you as a worker shouldn't feel you are entitled to anything other than employment and routine worker protections which by law apply to everyone.

Also, even if private companies were more like you say, they compete with the public ones, so if the public ones cut costs by things like outsourcing...

Yes they do. Except private ones have a choice to grow at a lower pace / less profitable % than public companies as private investors are often willing to accept a longer investment horizon than institutional stockholders who are short term traders and make-the-number quarterly earnings/guidance jockeys.

 

[soccerballtux]

I agree. We need to stop the bailouts and experience a little deflation -- while this would no doubt skyrocket unemployment in the short term and possibly lead to a mini Depression, our country would be the much better for it in the long term. It would scare off a generation of investors potentially in the worst case, but it would return people to individual fiscal responsibility giving them a healthy dose of reality and cynicism in the best case. Deflation can be a good thing -- especially for those of you railing against disproportional wealth being concentrated toward the rich...which stand to lose the most in a market wipeout scenario. Best realigner of wealth disparity I can think of.

Now regarding the OP topic, I think two things -- technology being the biggest contributor to the disparity between top and middle/bottom income brackets and those educated in using technology/computers vs. those who aren't. And second...the relentless focus on profits by PUBLIC companies to satisfy shareholder demands for double digit growth in Revenue/EBITDA/EPS in perpetuity, a philosophy taken mainstream by the former CEO of GE, Jack Welch.

I laugh when I read some of these P&N posts about the implicit relationship between owners and workers. In my 18 working years, I have yet to see evidence this relationship ever existed. Which means you are speaking of long ago in a time far removed from today's reality. But stop dreaming this is ever going to change. Shareholders own these public companies -- they really don't care how the company makes money or even that the product is good. Portfolio managers are paid to pick winners, period. Or they're out within 1-2 years. Investors expect returns. If you are a private company, you have the luxury to grow at 5%, take care of your employees with good benefits, have on-site daycare, and take a 100k salary as CEO.

As a public company CEO, you'd better make that stock price go up. Make a better product, cut expenses, offshore production, accounting method changes in your favor, whatever it takes, just get it done. Because you don't own the company, shareholders do!

I wish less companies were public so they could be more compassionate. Sadly, my realistic and cynical nature demands I accept reality and go with the flow. Or I will be an angry, poor old man othewise. And so will many other people if they don't wise up.

I think you are a bit naive about private companies. Some small business can work that way - but many can't afford to do much for employees.

But larger private companies I think are much more likely to be bad for the country - less disclosure and transparency, simply completely operated for the one or few person(s) who get the profit.

Also, even if private companies were more like you say, they compete with the public ones, so if the public ones cut costs by things like outsourcing...

Do you even know what percentage of the revenue they get? It's ridiculously miniscule.

 

[BoberFett]

Lots of good answers , thanks !

I'm wondering how this all relates to the bank loan failure. It seems that around 1980 when wages stopped increasing, people started borrowing more often and for larger amounts. It was almost like they needed more money to live and since they didn't have it from work they borrowed more till it got to the point the whole tower of debt collapsed.

You've hit on one of the problems. Some of the finance "experts" around here like to say that debt is good but fail to say how. Probably because their livelihood depends on it.

As off-shoring occurred, and it was inevitable that it would, Americans started financing everything. If the amount of available money to spend on any given product shrank as did our average incomes, prices would have to come down to match. Instead, when Nike started laying off Americans, making shoes in some 3rd world country, then charging that same American the same price to buy the more cheaply manufactured shoe who then has to buy it on a credit card, that's a straight transfer of wealth to the top.

Essentially, middle class America allowed this to happen by being consumer whores. Newsflash to Americans: You don't need to buy every goddamn thing the commercials on the idiot box try to sell you.


Edit: I see jhnnn hit upon this, and he's exactly right. Consumer credit was a blight on this country, it allowed the wealthy to extract everything the middle class had.

 

[BoberFett]

I think the dot com era and some obscure hidden regulations had something to do with educating a new type of ceo/thief. Either that or you have to blame the huge rise on Clinton.



Check out these graphs

I see that nobody has commented on this post. I guess the fact that they can't blame a Republican president for the vast growth of executive wages knocks down their little house of political cards.

 

[brencat]

Essentially, middle class America allowed this to happen by being consumer whores. Newsflash to Americans: You don't need to buy every goddamn thing the commercials on the idiot box try to sell you.

Edit: I see jhnnn hit upon this, and he's exactly right. Consumer credit was a blight on this country, it allowed the wealthy to extract everything the middle class had.

On the one hand, you say the middle class did it to themselves by being consumer whores, then you say the wealthy "extracted everything the middle class had" in an accusatory tone. Which is it? Is it the wealthy that have the problem or lack of personal restraint on the part of the consumer to have to keep up with the Jones' regardless of income?

Just because credit is available doesn't mean you max out your credit card / house to live a lifestyle you can't support long term. As far as I'm concerned, those people (and there are a LOT of them) deserve to be wiped out.

 

[razor2025]

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Essentially, middle class America allowed this to happen by being consumer whores. Newsflash to Americans: You don't need to buy every goddamn thing the commercials on the idiot box try to sell you.

This is a common myth. Here is a good lecture from a Harvard Law professor regarding the very issue:

http://www.youtube.com/watch?v=akVL7QY0S8A

The lecture essentially concludes that the real spending habit of middle-class Americans has not really changed over time. Things like child-care and 2nd car were due to the demand of having 2-income household, rather than "luxury" spending. Most discretionary spending, such as cloths, remained the same( oops, it's actually LESS!). For things like gadgets (TVs, computers, and what not), I think many of us here have biased outlook. Spending on those items, in general, did not significantly impact the family budget of typical middle-class family. Remember, most middle-class Americans don't buy LCD TVs and Quad-core PCs every year.

The biggest impact against middle-class budgets were housing, education and health, according to that lecture. Housing has increased dramatically, despite the average size of houses have remained largely the same. Education costs has skyrocketed well beyond rate of inflation. Educational requirement to maintain middle-class living also dramatically increased. Health spending has also increased dramatically beyond rate of inflation. These costs aren't something that your average family can "control".

More and more people are financially in trouble NOT because they couldn't resist buying a new iPhone. They're getting screwed because of broken real-estate market, massive student debt, or catastrophic health problem.

I think the biggest point from her lecture is this. STOP BELIEVING IN YOUR ANECDOTAL EXPERIENCE. Just because you see kids running around in iPhones, doesn't mean your everyday middle-class household is a consumer whore.

 

[Jaskalas]

This is caused by a shift from being an industrial nation to a post industrial nation. We automate everything, and it takes less man power to create more products, which means less jobs, which means lower labor demand, which means lower wages. Add on top of that mass immigration and workers who are willing to do almost any job for minimum wage, and greater competition from china/india and you have you answer.

I rather agree with this post. Shame people sort of glossed over it, but I'll give it a free bump to the top.

Cliff notes, immigration and globalization.