Robert Reich Cuts to the Chase
Conservative economists have it wrong. The underlying problem isn’t that so many Americans have priced themselves out of the global/high-tech labor market. It’s that they’re getting a smaller and smaller share of the pie.
Yes indeed.
Friday’s unemployment news was good only in the sense that the raw numbers are moving in the right direction; unemployment decreased from 9.0 to 8.9 percent.
But, as Reich says, the new jobs ain’t like the old ones:
But to get to the most important trend you have to dig under the job numbers and look at what kind of new jobs are being created. That’s where the big problem lies.
The National Employment Law Project did just that. Its new data brief shows that most of the new jobs created since February 2010 (about 1.26 million) pay significantly lower wages than the jobs lost (8.4 million) between January 2008 and February 2010.
While the biggest losses were higher-wage jobs paying an average of $19.05 to $31.40 an hour, the biggest gains have been lower-wage jobs paying an average of $9.03 to $12.91 an hour.
This is not a recipe for sustainable prosperity and broadly-rising standards of living. It’s a recipe for an America where there are a few oligarchs doing just great, while the bulk of us shop at dollar stores and barely get by.
The thing is, a majority of people alive right now remember a different economic reality; one where prosperity was broadly shared and Americans were proud of having the world’s highest standard of living.
They and I won’t accept an America where there are a few people at the top making obscene heaps of money, while the vast bulk of the population lives one paycheck away from penury. Such an America is one that cries out to the heavens for justice. Such an America is a nation where social stability will begin to seriously degrade.
There seems to be this idea in the heads of our political elites that the United States is exempt from political instability because we’re America and thus apart from history (hubris much?).
Unless our political and economic structures are reformed, our elites are going to learn that the US is solidly within the river of history, and that river will flood, and they will learn that history has neither pity nor remorse.
Comments are closed.
This is exactly what capitalism, when it is not regulated, leads to.
I know, the response is, “regulations cost jobs.” Deregulation costs lives, not just now, but for the future.
The “we will give you a job now if you don’t regulate us” temptation is just the kind of temptation one expects from Satan. A brief moment of pleasure, if one accepts the deal, leads to self-destruction after.
I would put it this way, Henry: Both over- and under-regulation are bad. Over-regulation can strangle economic dynamism; under-regulation leads to…well, we’re currently living with the consequences: yawning wealth inequality, political corruption, periodic financial crises, and social unrest.
The problems of middle class stagnation aren’t limited to the United States. You can find the same trends in places like Canada and Western Europe.
Since stagnation isn’t confined to the United States, it’s unlikely to be caused by things like “under-regulation,” or declining unions, as these things are not present in other countries that face the same problems of stagnation.
…which tells me that the oligarchs’ power crosses borders, BA. They are rigging the whole game so that the lion’s share of economic benefits goes to them, wherever in the world those benefits come from.
Which reminds me of something I’ve been meaning to post on: since the scope of the game-rigging is international, the scope of the the restraint of the oligarchy also needs to be transnational. I’d say coordinating top marginal income tax rates and regulations among the major industrialized countries should be a priority there, plus much else.
Failing to do that will result in a world where international corporations become essentially a locust-like organism; milk a country until a wage-expensive middle class begins arising and demanding things, and then decamp to the next victim.
Matt,
The problem is that the solutions you are proposing have been tried in other places, and you still get the same result.
Blackadder – The solutions I’m proposing (basically a revival of the New Deal approach) were tried right here in the United States and they worked.
It was when these structures began to be abandoned in the 1980s that inequality and economic instability returned from a 40-year absence.
I guess I’m a little unclear how the regulation issue comes into this. Most of the long term net job losses have been in construction and in real estate finance related jobs categories (real estate agents, assessors, mortgage industry and financing people, etc.) Those jobs haven’t come back because we’re not back in a housing bubble, which is arguably a good thing.
Now, one of the reasons why higher income jobs (as defined in this article) came back so quickly after the 2001 recession is because the housing bubble was busy inflating — in other words, people were getting lots of jobs building houses and doing all the sales and finance work related to mortgaging and selling them.
A more regulatory state might have prevented that bubble from inflating in the first place, but that would just mean we wouldn’t have had those moderate to high wage jobs in the first place. Back in 2001-2005 we would have seen more of the retail and service job growth that we’re seeing how, and it would have been much slower without the stimulus of the housing bubble.
I suppose one could try to apply regulations that would keep the richest people from making so much more money, but I’m not clear that would actually result in people in low wage jobs making more — it would just provide them with the minor comfort of knowing that the rich aren’t getting richer as faster as they could otherwise be doing.
Now, I’m not arguing that this is a slow and uninspiring recovery — especially for people in areas that were hit hardest by the real estate bubble or by the continued decrease in the need for manufacturing workers — I’m just not clear what it is that non “capitalist” regulation would do in order to make it better.
I’m just not clear what it is that non “capitalist” regulation would do in order to make it better.
I’m not sure what you mean by non “capitalist” regulation, DC – regulation of the economy (to one degree or another) is a fact of life in every current industrial country. The question ought to be, “what actions will help us deal with our current predicament.”
I think a revival of the New Deal approach (what I’ve been talking about for awhile now) would be a great thing; the “leave it up to the goodness of bankers’ hearts” plan has been tried and found wanting.
Well, um, okay, what sort of regulation, exactly, do you think would assure that higher wage jobs would be put on offer than are currently available? I mean, one could re-instate Glass Steagall, but how would that require that more high paying jobs be created?
The reason all those workers are taking wage cuts is because the rampaging banksters nearly destroyed the economy. Re-regulating the financial sector (Reviving Glass-Steagall, etc) would prevent future financial crises from occurring.
“How do we create more high-wage jobs?” is the right question to be asking, DC. One approach would be through direct government hiring of workers; there are a bunch of projects that need doing (e.g., fixing our crumbling infrastructure -bridges, overpasses, dikes and levees, build high-speed rail between major cities, build out lots of wind and solar power capacity, research other green energy alternatives, etc. etc. etc…).
Since this is in part a problem of income distribution, anything we do needs to be oriented towards correcting this. Raising the minimum wage, supporting the institutions that give workers bargaining power (unions)…
There is plenty that can be done, Darwin; but again, the “leave it up to ‘the market’ approach hasn’t, and won’t, work.
PS One idea that has a certain attraction for me is to tie future congressional salary increases to increases in the median wage. That would go some distance to countering the tendency of congresspeople to be essentially bought and paid-for servants of the privileged.
Well, okay, but here’s the thing: Glass Steagall, if it would have prevented the financial crisis, would arguably have done so by having prevented real estate from having got so out of control in the first place (by making it less advantageous to create junk mortgages in the first place and providing less of a market for commoditized mortgages)in which case those construction and financial industry folks would never have had the high paying jobs in the first place, which they lost in the crash.
It’s unclear to me how such things would have resulted in creation of high paying jobs which failed to be created in the situation as we saw it.
Also, just as a side note: I’ve heard of very few cases of people having their wages cut because of the financial crisis. In some cases, people with higher wages have been replaced with people with lower wages, or higher paying jobs have vanished while lower paying jobs have been created, but it’s fairly unusual (except in the sort of long term contract situations which the unions you are fond of create) for people to be asked to accept lower wages for the same job. Out here in the non-unionized private sector, they either freeze wages and don’t give bonuses, or they have layoffs, but wage cuts are very, very unusually.
FWIW, I used to be strongly supportive of limiting congressional salaries to what their constituents made — until I was successfully convinced this would mostly just encourage corruption and get us worse congressmen. (It’s kind of similar to the reason that most large unions employ top people who make over $200k.)
Darwin – Aren’t there other options for higher-paying work beyond “people benefiting from inflating asset bubbles?” Once again, the problem is wage distribution way skewed toward the top; thins needs to be fixed, and the only entity historically capable of doing that job is government, through the tax system, regulation and support for labor.
(On the congressional pay thing, I’m not suggesting they make only the median wage; only that future increases be tied to the rate of increase of the median wage.)
I’m not entirely convinced construction crews had high paying jobs to begin with. I have some family members that were roofers and builderes and they were complaining about being undercut by other competetors because they were hiring illegals. I think wage decrease is a combination of many factors. First companies are moving out of our country so they can make larger profits. Secondly, many construction crews and other jobs were not hiring American workers, therefore this was helping drive down our wages. Also people are not buying American. On 60minutes a few weeks ago they did a spoof and they said if every household would just commit to buying American items it would help boost our economy. I mean if we all would just commit to this even if it’s just a few products we know maybe would cost more, it may help. Also don’t you think our trade policy is flawed? How could it not be when you really think about what we make and what we export? We have a major trade imbalance with China for starters. Yet here our politicians can’t get it together. I mean this is one of the most important things they could actually mesh on for the American public, yet they can’t get along and do what needs to be done. That is what is really messed up. I think this is why the attack on the Unions in the first place. I think many trade policies have to get union approval, especially in manufacturing like the auto industry. These agreements get held up for vaious reasons, and it’s easy to scapegoat the Unions for it. I mean this is a crisis, but we are all asleep. Is our biggest export weapons? If so, that’s really sad.
Sure, there are lots of other ways to get highly paid work other than “people benefiting from asset bubbles”. And I think that we will, gradually, work back in that direction. If things are done more the way I would picture them, those jobs will probably show up in some hard-to-predict field providing some new service or good which lots of people want. If things are done in a more statist/redistributive fashion, I guess those jobs would mostly be in “green energy” and high speed rail and such.
The thing is, naturally developed high paying jobs tend to take a while to show up. Companies tend to be reluctant to add lots more high paid workers because they’re actually pretty reluctant to lay people off, and so they’re cautious about adding headcount. (For instance, when I took my current job six months ago, it was one of just two jobs added in this department over the last year. This year we’re adding one more. It’s a slow process even though revenues are growing because everyone is worried that sales will eventually dip again, and afraid to set up a situation where there might be layoffs again like there were five years ago here.)
I’m not arguing we need to have bubbles in order to have jobs, I’m just suggesting:
- Applying regulation right now won’t actually help “bring back” the jobs that (assuming your theory) lack of regulation first allowed to develop and then be lost.
- It’s certainly true that our recover right now is slower and more painful than in 2001-2005, but that’s probably a good thing as in that case our “solution” was to get involved in all sorts of unsustainable real estate.
- It’s probably fairly natural for low wage jobs to come back first, both because it’s primarily people with lower skills and lower education who are out of work, and also because companies often need low wage sales and service workers to actually make sales, increase revenue, and grow. Corporate headquarters staff, who are higher paid, can simply work harder for a while until things seem safer before adding jobs.
If we do not create new manufacturing jobs here, there will be no good paying jobs for the good people not toting college degrees. The bad news is the GOP will not allow such investments.
The good part is that if the GOP had allowed us to develop those good paying jobs here by helping to fund a brand new green manufacturing sector, eventually the Corporate boards of those companies would get greedy and export those high paying union jobs to another country and get tax credits to do so.
Plus they, like many other current major U.S Companies would contribute zilch to the federal government through tax revenues.
So the GOP really just did the middle class a favor of not getting their hopes up only to be crushed later when the serious greed kicked in.
Oh and I left out the part about how the GOP saved the unskilled workers in the service sector by killing card check so they won’t get unionized, start making better money, only to see companies like Walmart and Taco Bell outsource their jobs to the internet later when they get greedy too. That would break their hearts just like it did U.S. Steelworkers so thanks to the GOP for shutting card check down too.
Didnt they do away with the Glass Steagall Act? Isnt that what they mostly argue did us in with the banks? I would guess this would be one cause to tell Darwin Catholic about. At least it is an example.
Glass-Steagall is a perfect example of the need for more regulation, Cindy – thanks.
Glass-Steagall didn’t cause the crisis. See http://delong.typepad.com/sdj/2008/09/toward-universa.html
And you write about the need for more regulation as if you are unaware of the 1500-page Dodd-Frank bill — is that the case?
Higher incomes should come once our economy starts to have an upturn. I mean how many people had their 401k price matching taken away because of the economic crisis? How many companies have re-instated it after taking it away. My husbands company took their’s away, but then re-instated it the following year. Now my company took our’s away, but have yet to re-instate it. They claim that they review it, and it just doesnt seem like they can do it right now. Yet, they fly all the new hires to the Caribbean for a novice meeting. They fly all upper management from all of our area stores once a month to Philadelphia for meetings. A meeting that would be more cost effective if they would just fly the District manager into our area and hold a few seperate meetings. So they can waste money like that, but then tell the worker, that it just isnt feasable to re-instate that price match on the 401k.
Do they really care about their employee’s? It makes one wonder. So my point with this is, our numbers are higher in sales this year over last year. You wouldnt believe it but travel is on the up again as of late. Flights are full, people are spending money on trips to Europe and more exotic things. I do question how people have the money, but they do. At least some of them do. So how do you get a bigger cut of the pie? Who knows. The laws are in favor of the big guy, who has no care for the little guy. In my company again for example, they can’t re-instate that 401k price match, but they can renovate all of our stores. Branding is so important, but not the people inside. It’s all what it looks like on the outside, while the employee’s are treated pretty poorly on the inside.
It depends upon how you classify regulation. One thing is very clear, over the last 30 years, American corporations have fattened their bottom lines by sending good paying union jobs overseas.
For the most part manufacturing jobs no longer exist in this country. Most of the companies that exported these jobs to increase profit margins received tax incentives and breaks from Congress to do so.
In fact, most of the largest corporations to not pay any federal income tax, but yet we continue to hear them whine about how high corporate tax rates are in this country.
Last year whales were tagged and samples were taken and in all cases these whales had levels of heavy metals in their bodies that were 100s of times over the levels that either the EPA or the FDA would allow for human consumption. Yet we hear whining about the oppressive regulation of these two agencies. I might also add that acid levels in the Atlantic have been steadily rising as well, so it is quite obvious we do not have enough regulations or enforcement in these areas.
I could go on and talk about the recent regulations passed to try and avoid a repeat of the 08 financial crisis but were watered down by intense lobbying, but the bottom line is everywhere you look greed (avarice) is winning. The number of Americans below the poverty line keeps rising, and the middle class keeps shrinking all while a tiny few continue to amass more billions.
Meanwhile we increase tax breaks but try and break up unions and cut expenditures for education, and you can look at what just happened in Florida with it’s budget, or in Wisconsin with it’s Governors attempt to bust the unions.
We have the wolf guarding the sheep now. We asked ourselves what kind of country we wanted and apparently it was something that looks like India 60 years ago with a few greedy titans and an enslaved, exploited population.
We got here by the way because good Christians like us were lured to support the party of greed by the dangling of wedge issues like abortion and gay marriage. Truth is we actually lost ground on those issues and managed to simultaneously empower a bunch of thugs. I hope you guys are satisfied.
“Unless our political and economic structures are reformed, our elites are going to learn that the US is solidly within the river of history, and that river will flood, and they will learn that history has neither pity nor remorse.”
I don’t know. I just can’t get past the immigration argument. Even if the U.S. economic system is unjust, it must be less unjust than most of the world since, judging by looking around me, the entire world seems to want to live here.
Yes, I’m exaggerating. I know that people are also emigrating to Europe in large numbers. Nevertheless, people come here because they hear that opportunity is plentiful, and because friends and family who come here affirm that, yes, opportunity is indeed plentiful. The rich may be getting richer, but that’s not stopping a lot of immigrants from making a good living, sending money home, and urging their friends and family to follow.
Take Filipino nurses as an example. Nurses make good money, and since they are in short supply, nurses from other countries can get visas more easily than they could otherwise. Filipinos have heard about this, and so for a generation or two, thousands upon thousands of Filipinos have taken up nursing, and thousands upon thousands of them have emigrated here to work as nurses and make good money.
The Philippines is a poor country, much poorer than the U.S. Yet Filipinos manage to get trained as nurses and get good-paying jobs in this country — and are thrilled to have the opportunity. They probably can’t believe that all these jobs are sitting here in our own backyards, and yet Americans are not filling them — all the while complaining about the lack of good-paying jobs.
Therefore it’s hard for me to agree that there is no opportunity, or that poor Americans are being oppressed. Lacking any other sufficient explanation, I am forced to conclude that we are dealing not with a justice problem, but with a cultural problem: People from other cultures come from halfway around the world and make good money, while people in our own culture sit and complain that there’s no opportunity. I just can’t buy it.
Again, Agellius: The issue raised in this post is equitable distribution of income. Saying that things are better here than in the Philippines doesn’t really engage that point at all. I’ve actually been to poorer parts of the world myself, and have seen the poverty you refer to first-hand. I understand the desire to emigrate from places like that to the US.
What I’m saying is that an economy structured such that the only people who benefit are those at the very tippy top of the economic ladder is manifestly unjust, and that even a cursory study of history would seem to indicate that this situation leads (eventually) to social unrest and economic ruin.
Matt writes, “What I’m saying is that an economy structured such that the only people who benefit are those at the very tippy top of the economic ladder is manifestly unjust, and that even a cursory study of history would seem to indicate that this situation leads (eventually) to social unrest and economic ruin.”
And I’m saying that if things are so good that millions of people are coming here from other countries, then I doubt they’re bad enough to result in widespread civil unrest.
Furthermore, the point of my last comment was not merely that things are better here than in poorer countries — which is a mere truism. The point was that the problem in the U.S. is not a lack of good-paying jobs, but a **culture** that does not take advantage of the good-paying jobs that exist, so much so that we are forced to import thousands of qualified immigrants yearly to take the good-paying jobs that employers are desperate to fill.
What is it about our culture that leaves thousands of Americans unemployed while thousands of immigrants come here and get rich? That, to me, is the question. If it were a simple matter of the rich hogging all the wealth for themselves and not letting the poor have any, then immigrants from poor countries would not be coming here in droves and driving Lexuses. Why don’t Americans take advantage of the same opportunities that immigrants are taking advantage of?
When my hometown stops feeling like a foreign country, because immigrants find that they can’t make a buck no matter how hard they work, and start returning home in droves, that’s when I will be more open to the idea that the American poor are being oppressed.
Agellius – I put up not one, but two graphs illustrating inequality of wealth in the US in the last 30 years. This is unjust. That’s my point.
The point was that the problem in the U.S. is not a lack of good-paying jobs, but a **culture** that does not take advantage of the good-paying jobs that exist, so much so that we are forced to import thousands of qualified immigrants yearly to take the good-paying jobs that employers are desperate to fill.
Agellius – so, according to your statement, there are 20+ million un- and underemployed workers in the United States who aren’t “taking advantage” of “the good paying jobs that exist”?? Do you want to walk that back a smidge?
The problem, again, is this: all the benefits of economic growth are going to the top. It is immoral, unjust, and unsustainable. Something needs to be done.
Agellius,
How much do Philippine people go into debt by getting their education? Is University free over there? How do they afford to the schooling and wonderful training that they get? Do you know?
When I was in the Dominican Republican I met a family from Armenia. They explained to me their schooling. They ran a successful jewelry store in LA. They told me that they laugh at American schooling. They said we learn over here, but we learn anything but how to run a business. They said in their high school they had to learn how to run a business. They did different tasks and they said it was pretty extensive. They said in their High School they were learning things that you would learn in our colleges, but they said that theirs was more hands on. We talked all through the night about the differences between their schooling and ours. I think we waste a lot of time here on things we will never use. Maybe that’s the differences? Also, look at the cost of a college education here, and compare it to other places. Is it the same?
Cindy:
I don’t know the answers to those questions. I do know, through family connections, that things are generally a helluva lot cheaper there, including medical care (since medical care is generally paid out of pocket or through charity, and not through insurance).
So even if they do have educational debts from nursing school, I suspect they could be very quickly paid off with the dollars they make once they start working here.
Matt writes, “I put up not one, but two graphs illustrating inequality of wealth in the US in the last 30 years. This is unjust. That’s my point.”
This assumes that there is not merely a moral obligation to provide opportunities for people to make a decent living, but further that there is a moral mandate that says that some people may not be a helluva lot richer than other people. On what ground is such a moral obligation based?
Matt writes, “The problem, again, is this: all the benefits of economic growth are going to the top. It is immoral, unjust, and unsustainable. Something needs to be done.”
“All” the benefits? Do you want to walk *that* back a smidge? I think it’s quite obvious that a good chunk of the benefits have been going to immigrants.
“In 2008, a total of 276,252 [H-1B] visas were issued and in 2009 that number decreased slightly to 214,271.[7]” An H-1B visa is for people who do jobs “requiring theoretical and practical application of a body of highly specialized knowledge in a field of human endeavor including but not limited to architecture, engineering, mathematics, physical sciences, social sciences, biotechnology, medicine and health, education, law, accounting, business specialties, theology, and the arts, and requiring the attainment of a bachelor’s degree or its equivalent as a minimum”. http://en.wikipedia.org/wiki/H-1B_visa#Duration_of_stay
I’d say those are good jobs. So there’s 214,271 good-paying jobs in 2009 *alone* that had to be filled by foreigners — in the middle of a recession — because there aren’t enough Americans qualified to do them.
Each H-1B visa is issued for a period of 3 years, with an option to extend to 6 years. So over the past 10 years, that would appear to be over 2 million good jobs that Americans have been unable to do. If Americans had filled all those jobs, who knows how much domestic economic growth might have resulted; how much fewer benefits might have been applied for and paid out by the government; how much better those workers might have been able to educate their children to fill the next generation of good-paying jobs so that foreigners don’t have to be brought in to fill them.
And this only refers to temporary visas. How many more immigrants have come here and started businesses from scratch, or bought existing businesses and made them successful? How come Americans didn’t start those businesses? How come Americans haven’t filled those thousands of nursing jobs that Filipino immigrants are taking? “60,000 Filipino nationals migrated to the United States every year in the 1990s to take advantage of such professional opportunities.” http://en.wikipedia.org/wiki/Filipino_American
No, I will not say that there are 20 million jobs waiting for every one of the 20 million unemployed (your figure, not verified by me). But if Americans had the cultural values of Filipinos, Indians, Koreans, Chinese, etc., i.e. get an education at all costs and work like hell to make a good living, then a heck of a lot of those 20 million unemployed could have been taking the jobs that immigrants have been taking, or building the businesses that immigrants have been building.
Immigrants don’t come here for the heck of it. They come because there are opportunities to make a good living. If there are opportunities to make a good living — and not just opportunities, but so many opportunities that *millions* of immigrants have come here in the past 30 years, many of whom have gotten downright rich — then I don’t buy that the poor are being oppressed. They’re simply not taking advantages of the opportunities that have been there all along, which immigrants have taken advantage of and continue to do.
I would welcome a discussion of what it is that Americans are lacking, culturally and educationally, that immigrants do not lack, and what may be done about that. But I’m convinced that it is primarily due to culture.
Agellius – I get sick of repeating myself, but the problem is unequal wealth distribution; this is not fair or just or right. And I stand by my claim that the gains in income in the last 30 years have gone to the top- see the graphs I posted. There is ample research backing up my claim. The richest 400 people, for example, now hold more wealth than the bottom 50 percent of the population. All the entrepreneurial success stories in the world, immigrant or otherwise, have not changed the fact that the top of the income scale is hogging the lion’s share of economic gains. I see this as an obvious injustice, and more than that, an absurdity; 400 oligarchs don’t do more work than me and 150 million other people do. Again: something must be done.
Matt:
You write, “I get sick of repeating myself, but the problem is unequal wealth distribution; this is not fair or just or right. And I stand by my claim that the gains in income in the last 30 years have gone to the top- see the graphs I posted. There is ample research backing up my claim. The richest 400 people, for example, now hold more wealth than the bottom 50 percent of the population.”
Could you give me a source for that claim?
A big part of the problem I’m having with your arguments, I think, is your phrasing: You say “all of the gains in income” have gone to the rich. But that’s plainly false on its face: My income has gained quite a bit in the past 30 years, and I’m not rich.
Really, it seems like all you’re saying is that the people who are rich now are richer than the people who were rich 30 years ago. But what that leaves out, is that some of the people who are rich now were not rich 30 years ago. So it’s not a situation where the rich are hunkered down in some castle on a high mountain and hoarding all the gold, and shooting anyone who tries to come near. On the contrary, some new people enter the castle, while others who used to be in the castle have left. There may be more gold in the castle than there used to be, but anyone is welcome to climb the mountain and try to get some of it.
You write, “All the entrepreneurial success stories in the world, immigrant or otherwise, have not changed the fact that the top of the income scale is hogging the lion’s share of economic gains.”
You may say that the immigrant entrepreneurial success stories are irrelevant, but they are precisely relevant to what you’re claiming: If an immigrant comes here poor, and after 20 years of hard work he’s now rich, then “all of the gains in income” have not gone to the rich, because his income increased *while* he was poor, *until* he became rich.
You write, “I see this as an obvious injustice, and more than that, an absurdity; 400 oligarchs don’t do more work than me and 150 million other people do.”
I might agree that it’s absurd. I can’t call it an injustice unless you can tell me what moral law is being violated.
You may say that the immigrant entrepreneurial success stories are irrelevant, but they are precisely relevant to what you’re claiming: If an immigrant comes here poor, and after 20 years of hard work he’s now rich, then “all of the gains in income” have not gone to the rich, because his income increased *while* he was poor, *until* he became rich.
That’s the myth being peddled good and hard by the aristocracy. “You too can become rich! And if you’re not getting richer, then it’s your fault for not being worthy of it.”
The truth is that money buys power in our system, which allows the wealthy to rig the game. Money buys you and yours a million little advantages.
My source for the combined wealth of the richest 400 Americans comes from Forbes magazine, here.
My source for the combined wealth of the bottom 50% of the population is the Federal Reserve’s Arthur B. Kennickell’s paper, “Ponds and Streams: Wealth and Income in the U.S., 1989 to 2007, p. 35″
Matt:
The Forbes link is a dead link.
The “Ponds and Streams” link is an 89-page document. To save me potentially a lot of reading time, would you mind telling me what page contains the information you are citing?
Sorry for the dead link, Agellius. The Forbes info can now be found here. The info in the Ponds and Streams paper can be found on page 35 of the linked document.
Matt writes, ‘That’s the myth being peddled good and hard by the aristocracy. “You too can become rich! And if you’re not getting richer, then it’s your fault for not being worthy of it.”’
If that’s what you think I’m saying, you misread me. I’m not saying it’s necessarily the fault of individuals. I’m saying (and I’ve said it repeatedly) it’s mainly the fault of our culture.
We experienced a period of about 30 years in which the manufacturing sector in this country grew exponentially (sort of how China is growing now), from the end of World War II to about the mid-70s. During that period, low-skilled yet fairly good-paying manufacturing jobs — jobs that didn’t require degrees or much personal savvy — were plentiful.
I think people got used to that state of affairs, a state in which you didn’t have to work hard in school or necessarily acquire vocational or professional skills, because you could go from high school straight into the nearby factory. I think the expecatation of preparing onself to make a living with so little effort became engrained in the culture, such that when it became more difficult, people complained that they were being treated unjustly. As opposed to the Armenian, Korean, Chinese, Indian, etc. cultures, who knew full well that jobs and opportunities existed, but that you had to be willing and able to prepare yourself for them — You have to meet the jobs where they are, geographically and in terms of qualification, rather than complain that the jobs are not meeting you where you are.
Real estate was relatively cheap compared with today because many areas had not been built up yet. Where I grew up in a Southern California suburb (60s and 70s), there were still a lot of empty lots here and there. Now the place is completely built up. Back then my parents bought a fairly new house for about $13,000. Now the same house goes for over $300,000 (though the neighborhood has deteriorated), because Southern California real estate has become scarce and the population has ballooned.
So now you have a situation where real estate is a lot more expensive, and low-skilled, good-paying jobs are a lot rarer.
But that culture, where people came to believe that by right, all they should have to do to get a good-paying job is graduate from high school and move straight into a conveniently located factory, became ingrained over that 30-year period, in many places and especially in the lower economic classes. And I think the rhetoric of the left has helped contribute to the perpetuation of that culture, by convincing a lot of people that the lack of good-paying, low-skilled jobs is the fault of greedy rich people, rather than being due to the evolution of our economy from manufacturing to service.
Manufacturing is a phase that capitalist economies go through in the course of their development. It should never have been expected that plentiful manufacturing jobs for such a long period of time would be a permanent situation. That situation was an aberration from history: We went from a primarily agrarian society, to primarily a manufacturing society, to primarily a service society. We should not have expected the manufacturing phase to be permanent, any more than we should expect a return to the agrarian phase. Things have changed, but the culture of the working classes has not, although hopefully that change is currently in process. I don’t blame individual working class people for this.
I myself am the product of working class parents, a truck driver and a secretary. When I graduated from high school, community college was virtually free and everyone who applied was admitted. I had a golden opportunity to get a good education and have a good career, despite my low-income background. But I lacked the *culture* to go through with it: I had no role models or peers who had trod that path before me, and little expectation that I should or could do it myself. I was smart enough to do it, I just lacked sufficient incentive to subject myself to additional schooling when I was so relieved to be done with high school. I expected that I could get a decent job without a college degree, as both my parents had done. As a result, I’m basically working class: I make a living but know that I could have done a lot better.
In a sense, it was no one’s fault but my own, but in another sense, it wasn’t my fault either. It was just the culture I grew up in, and I don’t think anyone can be blamed for creating such a culture on purpose. It was just the way history worked out in my geographical area and economic class.
Agellius – while it is true that the structure of the economy changed from manufacturing to services as you describe, that still doesn’t get at what caused the growing disparity in wealth between the rich and everyone else.
You assume that manufacturing jobs just naturally pay more; the fact that they do is the result of working class people uniting and insisting on a bigger piece of the pie, back during the dark period of US history when the plutocracy last controlled the proportion of wealth they do today. Unionization was very good to and for the American worker – not just the unionized ones, but the workers who worked in non-union shops as well (where management paid close to union scale to avoid being themselves unionized.)
The wealth disparities that exist now can’t be explained by the “culture” of the working class not accepting that Things Have Changed. It is the result of the aristocrats systematically weakening the only voice the working class had that was strong enough to pry wealth-share out of their hands on behalf of workers: unions. This means there is nothing standing in the way of the plutocrat’s greed.
You’re actually making a case for unionizing the service sector (and the SEIU is currently doing just that).
Don’t buy that stuff about lazy, stubborn, set-in-their-ways attitudes from workers; that’s just Wall Street messing with your head.
I’m curious as to the claim that the only reason service jobs pay less than manufacturing jobs (actually, I think it’s more complicated than that, but leave that aside for a bit) is that unions controlled manufacturing (to an extent) while they don’t control service (as much).
The way that a union could push wages up was by threatening to walk off the job if they didn’t get higher pay. This works if it’s hard to replace the workers and there’s lots more money to go around at the company (something that worked at the Big Three for a while, though arguably it’s now helped drive them into a ditch) but it doesn’t work if the company can simply hire other workers who are quite happy with the wage on offer.
That’s why the grocery strike in California dragged on and ended in the union having to give up on most of its demands — because there were lots of workers who were happy to work for the wages and benefits on offer.
Given that, unions can mainly have an effect when companies try to treat workers so badly that workers are willing to unite in refusing to work unless things improve, when they can take advantage of trade barriers to control the workforce of an industry with a virtual monopoly, or when they can control pay via the political process (as with public employee unions.)
It’s hard to see how unions are going to step in and provide any of those in regards to the modern service economy — especially if one holds to a justly open immigration policy.
Matt write, “Don’t buy that stuff about lazy, stubborn, set-in-their-ways attitudes from workers; that’s just Wall Street messing with your head.”
For about the fifth time, I’m not blaming the individual workers, I’m blaming American culture.
I don’t need “Wall Street” to tell me that the only thing holding me back from a professional career was my expectation that I could do just fine without a college education, due to my background and the culture I grew up in. This isn’t brainwashing, it’s my own experience.
Further, it wasn’t union-busting that caused me to choose a less lucrative career path than I could have achieved, nor was it the super-rich. A free college education was practically handed to me on a platter, and I declined it.
When I combine my personal experience, with the fact that millions of people from around the world have come here and gotten good jobs or started business and made good livings, I arrive at the conclusion that Americans like me could have had the good jobs which immigrants have, or started the businesses which immigrants have started, and from which they have often grown wealthy.
Why haven’t we? That’s a question you’ve basically ignored. I have contended — and continue to contend since you have offered no refutation — that it’s not individual laziness or stubbornness, but culture — and that the reason immigrants have done those things, is also culture.
Agellius –
We’re going around and around on this.
Let me see if I can at least summarize our two positions: You’re saying that the high and rising wealth disparity of the last 30 years can be explained primarily by a lack of an entrepreneurial culture among working class Americans (as a result of cultural problems among non-immigrant Americans), and I’m saying it can be explained primarily by the lack of counters (strong unions, government support for same, plus high marginal tax rates for the wealthy) to the structural tendency of capitalism to concentrate wealth at the top.
Is that an accurate summary of our two positions, in your view?
No. What I was arguing with was, first, your assertion that economic conditions in the U.S. are so unjust that they are likely to lead to political instability. I doubt that very much, on the ground that if our economic system were intolerably unjust, then immigrants from around the world would not be beating down our doors the way they have been for the past 30 years.
Second, I was arguing with your point that “all the benefits of economic growth [during the past 30 years] are going to the top”, since I am earning a lot more now than I was 20 years ago, let alone 30, and I am nowhere near “the top”. Therefore, some of the benefits of economic growth over the past 30 years have gone to people who are not “at the top”. Further, much of the benefit of economic growth over the past 30 years has gone to immigrants from poor countries, which is plain to see by simply looking around.
Finally, I was making the point that if those at “the bottom” are poorer now than they were 30 years ago, much of that may be attributed to the fact that working-class Americans, for cultural reasons (including myself), have not worked as hard to prepare themselves for good-paying jobs as immigrants have. If they had been working as hard as immigrants have, for the past 30 years, then many of the good-paying jobs that have been filled by immigrants, might have been filled by Americans instead. Thus, either there would be fewer people at “the bottom”, or those at “the bottom” would not be as poor as they are.
Prior to 30 years ago there was a massive number of Union workers in this country. You seem to be ignoring the fact that millions of those jobs were sent overseas and primarily to workers who were taking a dollar a day or less to do the same jobs.
These jobs were not sent to China or Mexico to save a few bucks per hour from what they had to pay union workers, they were sent there to exploit the rough equivalent of slave labor. Fact is these jobs are gone.
You also fail to notice that the majority of immigrants to this country are still living in poverty or at the bottom of the middle class. They are not all rolling in dough either.
Even if you were correct that we lack an “entrepreneurial spirit” and even if I were wrong that millions of good paying jobs were sent overseas, we still have some facts we can both agree on.
Poverty is increasing, the middle class is shrinking. What exactly are we going to do about it now? Argue all day about what caused it and not fix this inequity?
What are you solutions to change this inequity? What are they?
Gisher writes, “Poverty is increasing, the middle class is shrinking. What exactly are we going to do about it now? Argue all day about what caused it and not fix this inequity?”
I think the first step is figuring out what’s causing the problem. Then you can try to address it. Although I don’t think I would consider it a job of government to try to change people’s attitudes towards making a living. The government is supposed to follow the people’s will, not shape it.
I am personally trying to improve the situation of the working classes by instilling in my kids the understanding that you get out of life what you put into it: The harder you are willing to work at acquiring and applying a skillset, the better your chances of making a comfortable living, and vice versa; and explaining how if I had stuck with college instead of dropping out when I did, we might have been able to live closer to work and school and not have such a long commute, take nicer vacations, drive a nicer car, etc.; and also trying to make sure they have all the guidance they need, good role models, and peers who set a good example.
Hopefully they will absorb that lesson and pass it on to their kids, so that in another 30 years they won’t be counted among those on “the bottom”. In my opinion this is largely how culture is changed and developed: By values being passed on from generation to generation. In fact I don’t know of any other way, except by government “instruction”, the idea of which I find disturbing.
Calling the situation an “inequity” in my opinion begs the question: Whether or not it is rightly called an inequity depends on what the cause is determined to be, which is the topic under discussion.
Agellius – the high and rising wealth and income disparities have little to do with cultural problems, at least not in the working and middle classes. It has everything to do with the decline of unions, the free-trade selling out of the American workers, and tax cuts heavily tilted toward the rich.
Look at the way income and wealth inequality began rising quickly around the same time that Reagan cut the tax rates on the wealthy from 70 to 28 percent, fired the Air Traffic controllers, and deregulated business in a serious way. The signal to the wealthy was clear: “We, the government, are in your corner now.”
If anything, cultural problems are in the upper crust, not the workers they’ve laid off and outsourced. Global capital have begun acting like locusts; milk an economy until the middle class arises and starts demanding things like decent wages, then move on to greener cheap-labor pastures.
This is all sitting right there in plain sight. I’m convinced that I’m not going to persuade you to see it; that’s fine. Just…give this some thought.
Matt writes, “This is all sitting right there in plain sight. I’m convinced that I’m not going to persuade you to see it; that’s fine. Just…give this some thought.”
Well, I happen to think that my explanation is equally obvious. How ’bout we make deal: I’ll give yours some thought if you’ll give mine some thought. : )
Deal :)