‘X’ Marks the Spot Where Inequality Took Root: Dig Here

Stan Sorscher, EOI Board Member

Stan Sorscher, EOI Board Member

In 2002, I heard an economist characterizing this figure as containing a valuable economic insight. He wasn’t sure what the insight was. I have my own answer.

The economist talked of the figure as a sort of treasure map, which would lead us to the insight. “X” marks the spot. Dig here.

The graphic below tells three stories.

First, we see two distinct historic periods since World War II. In the first period, workers shared the gains from productivity. In the later period, a generation of workers gained little, even as productivity continued to rise.

(Note: This table has been updated with more recent years after this blog was posted.)

The second message is the very abrupt transition from the post-war historic period to the current one. Something happened in the mid-70’s to de-couple wages from productivity gains.

The third message is that workers’ wages – accounting for inflation and all the lower prices from cheap imported goods – would be double what they are now, if workers still took their share of gains in productivity.

A second version of the figure is equally provocative.

(Note: This table has been updated with more recent years after this blog was posted.)

This graphic shows the same distinct historic periods, and the same sharp break around 1975. Each colored line represents the growth in family income, relative to 1975, for different income percentiles. Pre-1975, families at all levels of income benefited proportionately. Post-1975, The top 5% did well, and we know the top 1% did very well. Gains from productivity were redistributed upward to the top income percentiles.

This de-coupling of wages from productivity has drawn a trillion dollars out of the labor share of GDP.

Economics does not explain what happened in the mid-70s.

It was not the oil shock. Not interest rates. Not the Fed, or monetary policy. Not robots, or the decline of the Soviet Union, or globalization, or the internet.

The sharp break in the mid-70’s marks a shift in our country’s values. Our moral, social, political and economic values changed in the mid-70’s.

Let’s go back before World War II to the Great Depression. Speculative unregulated policies ruined the economy. Capitalism was discredited. Powerful and wealthy elites feared the legitimate threat of Communism. The public demanded that government solve our problems.

The Depression and World War II defined that generation’s collective identity. Our national heroes were the millions of workers, soldiers, families and communities who sacrificed. We owed a national debt to those who had saved Democracy and restored prosperity. The New Deal policies reflected that national purpose, honoring a social safety net, increasing bargaining power for workers and bringing public interest into balance with corporate power.

In that period, the prevailing social contract said, “We all do better when we all do better.” My prosperity depends on your well-being. In that period of history, you were my co-worker, neighbor or customer. Opportunity and fairness drove the upward spiral (with some glaring exceptions). Work had dignity. Workers earned a share of the wealth they created. We built Detroit (for instance) by hard work and productivity.

Our popular media father-figures were Walter Cronkite, Chet Huntley, David Brinkley, and others, liberal and conservative, who were devoted to an America of opportunity and fair play.

The sudden change in the mid-70’s was not economic. First it was moral, then social, then political, ….. then economic.

In the mid-70’s, we traded in our post-World War II social contract for a new one, where “greed is good.” In the new moral narrative I can succeed at your expense. I will take a bigger piece of a smaller pie. Our new heroes are billionaires, hedge fund managers, and CEO’s.

In this narrative, they deserve more wealth so they can create more jobs, even as they lay off workers, close factories and invest new capital in low-wage countries. Their values and their interests come first in education, retirement security, and certainly in labor law.

We express these same distorted moral, social and political priorities in our trade policies. As bad as these priorities are for our domestic policies, they are worse if they define the way we manage globalization.

The key to the treasure buried in Figure 1 is power relationships. To understand what happened, ask, “Who has the power to take 93% of all new wealth and how did they get that power? The new moral and social values give legitimacy to policies that favor those at the top of our economy.

We give more bargaining power and influence to the wealthy, who already have plenty of both, while reducing bargaining power for workers. In this new narrative, workers and unions destroyed Detroit (for instance) by not lowering our living standards fast enough.

In the new moral view, anyone making “poor choices” is responsible for his or her own ruin. The unfortunate are seen as unworthy moochers and parasites. We disparage teachers, government workers, the long-term unemployed, and immigrants.

In this era, popular media figures are spiteful and divisive.

Our policies have made all workers feel contingent, at risk, and powerless. Millions of part-time workers must please their employer to get hours. Millions more in the gig economy work without benefits and have no job security at all. Recent college graduates carry so much debt that they cannot invest, take risk on a new career, or rock the boat. Millions of undocumented workers are completely powerless in the labor market, and subject to wage theft. They have negative power in the labor market!

We are creating a new American aristocracy, with less opportunity – less social mobility and weaker social cohesion than any other advanced country. We are falling behind in many measures of well-being.

The dysfunctions of our post-1970 moral, social, political and economic system make it incapable of dealing with climate change or inequality, arguably the two greatest challenges of our time. We are failing our children and the next generations.

X marks the spot. In this case, “X” is our choice of national values. We abandoned traditional American values that built a great and prosperous nation. Our power relationships are sour.

We can start rebuilding our social cohesion when we say all work has dignity. Workers earn a share of the wealth we create. We all do better, when we all do better. My prosperity depends on a prosperous community with opportunity and fairness.

Dig there.

Posted in An Inclusive Economy, Column


  1. Saris says:

    I think there is also an increase in entitlement, of the average man not really wanting to work together or sacrifice. In a world where everyone plays independently, you will have some big winners who will earn it… And the average man with average competence, and no desire to work hard to win… Won’t win.

    The desire for comfort is and always has been dangerous.

    • “Entitlement” to having a roof over your head and enough to feed your children, perhaps. The “average man” has sacrificed plenty. The real entitlement is among those on top who have sacrificed, and seem willing to sacrifice, nothing. Everyone else is struggling to survive; they would like to be entitled to a living wage, but have no way of getting it.

      I entered college in 1973, and was introduced to Ayn Rand in the mid-1970’s. Full of her ideas, I (like Rand Paul and others today) was convinced that I was one of the elite, and that my superior ability and intellect entitled me to prosper. And that’s exactly how it worked through the early 1980’s. That’s when I started seeing the shift away from a viable middle class to an oligarchy.

      Around the mid-80’s to early 90’s, we went from a well-off, comfortable professional class to steadily compressing everyone below the executive level. In 1978, I made $18K/year and the company President made about 4 times that. The median employee probably made $12K/year, so the CEO made perhaps 6 times the median salary. That’s tenable, although likely the production workers struggled.

      When the average CEO now makes 345 times the income of the average employee, and other executives and sales managers make similar windfalls, that’s no longer tenable. The vast bulk of our productivity is being sucked into a small number of hands and being locked away in passive investments that do not spread the wealth.

      The struggle has moved from the poorest up to the factory workers, then the clerical workers, and on up to middle managers and professionals. Now very few people make a comfortable income.

      To talk about “entitlement” as though hard-working people want something extraordinary when they can’t afford rent or food is appalling. Those things were givens in the 50’s through the 70’s. Now they’re considered luxuries, and the people who ask for them are somehow greedy. We’ve turned American society into the orphanage in Oliver Twist – “Why ask for more when you know what’s in store?” Or to Les Miserables, where hard-working people are reduced to begging for crumbs or burnt loaves of bread because the aristocracy has all the wealth.

      • What I find most interest is your “causal” effect. While “greed” may be one characteristic, you leave out the substantial disruptions in society that occurred at the inflection point: Roe v Wade devalued life, No-fault divorce, encroachments in the labor/management relationship by an intrusive Federal Government, massive increases in State and Federal regulation, massive growth in State and Federal taxation, massive growth in entitlement spending, and massive increases in Federal debt. These are but few.

        To weave in “climate change” into this discussion shows that the writer is simply trying to advance a political agenda with little, if any, regard for the preceding paragraph’s causal realities. Indeed, the “social compact” was destroyed by the Labor Unions and their lackeys in Federal Government. It was a cozy relationship: workers demand higher wages and more restrictive work rules requiring greater wages for less output. In turn for their regulatory imposition of these goals, the Government grew at a phenomenal rate in the same period.

        One must also be cognizant of the fact that the top 10% income earners in the 1970’s paid approximately 52% of all taxes. Today, they pay 84%. In 1974, the working poor were consider so if they earned 20% below the median income. Today the working poor are considered such if they earn 150% of the median. So, when arguing statistics let us at least play with the same set of facts.

        Moreover, the cost of government regulation was estimated to be approximately 1.5% of revenues. Today it is 9% or 6 x’s what it was in the 1970s. Further, government receipts as a share of the economy was 17% vs. 22% today. Both of these phenomena demonstrate a direct correlation between liberal policies, the growth of government as a share of GDP, and the changes in real wages.

        The real question is how do we reverse this trend? While not simple, a good starting point is to withdraw the government from such a deep intrusion into the economy and reduce their share of the overall economy. Second, markets must rethink the wisdom of constant sequential quarterly growth in top-line revenues and earnings. Such attention is shortsighted and ignores the inherent advantage of build long-term shareholder value and a well-educated and compensated workforce.

        • ThatDontAddUp says:

          Duh, If you are taking 93 % of the Money you would be paying most of the taxes…

          • Suzann Fulbright says:

            Actually no, if you are taking 93% of the money you buy the politicians who will make sure you are paying record low tax rates, if any tax at all.

          • Ravi Dattani says:

            exactly. paying more taxes is the symptom, not the cause. anyone who makes the point of the rich paying more taxes needs to understand the basics of math.

          • Lamont Dakota says:

            Those taking 93% of the money _do_ pay a _lot_ of the taxes, but they don’t, by any measure, pay _most_ of the taxes, duh. Do you really believe that the tax laws that apply to ordinary people apply to the rich, duh? At _best_, those taking 7% of the money pay 53% of the taxes, whereas those taking _93%_ of the money pay _only 47%_ of the taxes. The rich do NOT pay 93% of the taxes!

            One billionaire even pointed out publicly that his secretary paid 35% of her income in taxes, whereas he paid only 15% of his income in taxes!

            Apparently, the ThatDontAddUps make up “the 5% that never get the word,” as we say in the Army.

          • jason sheaff says:

            not in Australia’s current taxation format , it seems that these days the systems are set up so that the top 93% don’t pay any tax and receive generous subsidies while everybody else gets shafted and the lower down the food chain you happen to be the more of the burden you are being forced to carry .

          • Debbie Tucker says:

            Well, you would think so, but this is not correct. The greedy rich have made it so they do NOT pay ‘their fair share’, and have not done so for decades! There are whistle blowers amongst the super rich who tell us about this – Nick Hanauer, the group Patriotic Millionaires for Fiscal Strength, writer Stephen King (check out his article, ‘Tax Me For F**** Sake!), and others. The greedy rich are PATHOLOGICALLY greedy and NEVER have enough – and they believe that regular working people paying a higher tax rate than they do is just FINE since they are entitled and ‘special’. So that is a MASSIVE problem that has snowballed for decades.

          • As above says:

            You’re also taking a hell of a lot of ‘7%s’ home so you’re still mega rich with lucrative investments while the working man is still insecure and struggling and is likely to be in debt rather than earning enough to save and invest! Don’t worry about the fat cats at the top, they never worry about you. I’m sure they have good ‘advisors’ who ensure some of those taxes end up back in their bank too!

          • Harry-in-your pocket says:

            I work in accounting. Wealthy clients hire us to ensure they pay the least in taxes possible and we’re very good at what we do. Honestly, those people making 93% of the money are not paying 93% of the taxes, Elsewise I’d be out of business. Do you think tax breaks and loopholes are the result of the lobbyists hired by the lower or middle class?

        • Fred says:

          I could “almost” agree with you William. BUT the ONLY way to shift the “wisdom of constant sequential quarterly growth in to line revenues” is to have an “ultimate authority” to keep it in check. Often business economics is equated to the game of “Monopoly”. The object of the game is to bankrupt the other players. The player who does, wins, But a board game can be put away in the closet without consequences. A population can not be put on a shelf, and the consequences to society are REAL. Vested self interest of the 1%ers will not change unless forced to (if you were a 1%er…. would you passively agree that you had too much and you couldn’t make any more?) A withdrawl of government intervention would merely enable more greed in the market. A case in point is the mortgage and housing crisis. The US financial markets were deregulated and allowed “self monitoring for compliance” (short term gain without responsibility of consequences). In Canada, such deregulation was never passed despite the lobbying of the financial markets. The US system virtually collasped, the Canadian didn’t. And WHO had to come in to provide the bailouts to prevent an entire social collapse??? The Government (ie working taxpayer).

          The biggest problem with the current system is that Government Leaders come from the corporate sector and create policy based upon their own economic frame of reference (the 1%ers). Intervention only occurs in extreme crisis. Had their been an intervention in 1975 that would have imposed limits on “greed”, then the pre 1975 trend would have continued…. or at least leveled off into stability. Yes, the 1%er would not be as well off. But the 1%ers could take a 75% loss right now and still own a better house, better car, and hold financial security for life.

          The 1%ers are playing monopoly with our economy because of the ego gratification they receive, They are completely insulated from the consequences of their actions ( a market crash will not force them to take a minimum wage job or loose their ability to provide food, shelter, clothing. They would merely become less rich.

          • Santa says:

            Stop that! You’re making sense! 🙂

          • Brenda says:

            Yes and I remember when the corporate mergers / takeovers started. Legislation had t be changed.

          • luposolo2013 says:

            Sadly, it’s been 44 years since the average working people of America got a REAL raise in pay! This is WHY they are all so flat broke and in debt up to their eyeballs!
            A number of things in America changed for the worse in 1973. Most notably, American wages and salaries, which had grown in lockstep with the growth in productivity up to that point, became uncoupled from the growth in productivity. For the next 44 years, right up to the present day, except for adjustments for inflation, there has been no REAL increase in American wages and salaries. This occurred despite HUGE increases in American productivity and corporate profitability after 1973. Forty-four years is a long time to go without a REAL raise in pay.
            The end of the REAL growth in American wages and salaries came two years after the then obscure corporate attorney, Lewis Powell, submitted his notorious memorandum to the US Chamber of Commerce. Powell’s 1971 memo, on how to undermine the liberal New Deal order in American society so as to further promote “free enterprise”, has served as the American right wing’s “blueprint” on how to make conservative ideology the predominant political and economic philosophy in America. It also outlined how to destroy the large, powerful, prosperous American middle class. For his efforts, Lewis Powell was rewarded with an appointment to the US Supreme Court. If the years 1945 to 1973 were the “Golden Age of the American Middle Class”, the years since 1973 have been the “Twilight of the American Middle Class”. With the election of Donald Trump as President and the Republicans in control of all three branches of the federal government, it would seem that night has fallen upon the average working people of America.

          • If you want an excellent example of those economics in action, look at Sears and Kmart. These are two stores (now one under the floundering Sears Holding) where all the profits were dumped into the CEO’s pockets, and little was done to actually maintain and operate the businesses that depended on those profits. Which is why most Kmarts look like their decor and buildings haven’t been updated since the mid 80s

            Unlike Macys, or even Gimbals, Sears/Kmart is a case that can’t be propped up on claims that online shopping crashed their business model.

            This is classic “vulture capitalism” in action. Siphon off the profits until the company starts to fail, say there aren’t enough profits to keep X number of stores open, so you close the stores, the income stabilizes just enough to claim victory, then write yourself another check and start closing additional stores. Lather, rinse, repeat.

          • Julie Johnston says:

            Re: “In Canada, such deregulation was never passed despite the lobbying of the financial markets. The US system virtually collasped, the Canadian didn’t.”

            A whole bunch of us Canadians fought hard against the Multilateral Agreement on Investment (MAI) and to counter the lobbying for deregulation. We were so relieved to win that battle, and although many Canadians still lost money in the 2008 economic collapse, very few were ruined.

          • mikeconnors says:

            I think that another reason for the decoupling of real wages from productivity gains is the fact that innovations in computation and finance are responsible for a large part of the productivity gains from mid-1970s onward. By nature, these things are detached from goods-producing workers.

        • Bbfile says:

          In the 1970’s, the top 10% of the earners controlled a much smaller portion of the wealth. But top tax rates were much much higher than they are today. Today the top 10% controls a much greater portion of the wealth and they pay much less percentage-wise in taxes.

          • Rik says:

            Your confusing gross and net. While the top wage earners had income tax brackets upward of 90%, deductions lowered that tax liability to the mid 30% range. The tax brackets were changed in the 80’s, lowering the rates, but also removing the majority of deductions. The net tax rate of today, is equal to the net tax rate prior to the 80’s.

          • Kevin Morgan says:

            Rik: that was true when the tax brackets were first lowered in the 80’s. But most of those deductions and favorable treatments have crept back into the tax code, while the rates have not been raised correspondingly. And many NEW tax breaks have since been added, to the point where the tax code is more complex than it was before the landmark 1986 tax simplification act.

          • Gary says:

            Almost no one is referencing the early 80s, Ronald Reagan’s tax cuts and the sham known as ‘Trickle Down” Economics…that doesn’t….unless, of course, you consider Communist China. They’re doing much better….

        • Dan Reed says:

          The Reagon supply side economics, and smaller government was supposed to solve your stated issues. Thirty years of Reagans supply side economics is now history, and where are we? 1.) deregulated corporate monopolies, industry collective oligarchies, and 2.) a rapidly expanding Aristocracy!

        • Ron Santos says:

          Roe vs Wade somehow affects income inequality? Conspiracy Theories and no causality based on any studies. And the top 10% paying 84% of taxes when their share of total income represents a dramatic increase out of the pie! And the cost of regulation should be higher today vs. pre-1970s because that was back when companies could create toxic dumps, water pollution to destroy drinking water and ecosystems, and just walk away with profits. The next big issue of climate change… if we let greed rule the land then all coastal communities will lose half their real estate in the next century, vast sections of the world will become deserts and uninhabitable 125 degree ovens, and agriculture and fishing will be severely impacted. Sure, unbridled greed with the short-sighted goal of maximum owner profits over the next 5 years are just what we need for survival…NOT

          • popesuburban says:

            In that it’s repeatedly been shown that lack of access to education and tools for family planning severely limits women’s economic achievement, yes. So in the opposite direction of where this chucklehead was going with it. Roe v. Wade stood to improve millions of women’s lives, and did, despite the way people insist on trying to chip at it. To take a dim view of that comment is only sensible.

          • Roe v. Wade was a decision based on the idea that not all innocent human beings deserve to live. It both resulted from and further perpetuated the mentality that “doing whatever I want” is more important than doing right by others.

          • Leo Horishny says:

            Exactly, abortion in a macro-economic hypothesis? LOLZ. The values shift in the 70s had zero to do with fetuses.

        • Marc Cates says:

          You could learn to interpret a graph. Your rant is symptom of plutocracy not cause. “It was a cozy relationship: workers demand higher wages and more restrictive work rules requiring greater wages for less output.” Is the opposite of what that graph conveys.

        • Lisa Beth says:

          Stop using women and body autonomy in your economic argument. Roe V Wade did not devalue life, it place women on more equitable footing. There is also another recent theory that if women would only have 1/2 a child (one child for every two women) we could end global warming. Same argument. Women are not political or economic pawns. We are human beings and one of those workers. The only place we are lacking is power and wealth.

        • Santa says:

          Very interesting. From 52% to 84%. Wonder why? DO I REALLY have to explain this to you?

        • T says:

          You are wrong. Watch a different channel.

        • Jake says:

          We’ve been through a “gilded age” before, and what saved the country then was the Progressive. agenda. The unregulated market squeezes wealth to those who already have it in true “robber baron” fashion. The antidote to this kind of dynamic of “trickle up” economics ( and it’s hardly a trickle) is conscientious government intervention..

        • John says:

          William Vaughn, you keep on repeating the same bullshit arguments being presented by the wealthiest 1%, without having a clue as to what is actually going on.

          In spite of all those issues you claim are placing such a hardship on the wealthy, you ignore the actual fact that that the top 1% have thousands of times more money than they had in the 70’s, while the average working man has about the same amount of money.

          If all of the things you claim are causing such a hardship on the wealthy, then they would have less money today, not vastly more money.

          Additionally, your attempt to characterize this as a moral issue, in the first part of your post, is beyond detestable.

          I have no clue why anyone would believe it was necessary to jump to the defense of the wealthiest 1%, who don’t actually need any help, because they are doing fine. If you saw ten adults beating a child, I imagine you would jump in and help the adults.

        • ScienceFTW says:

          Climate change is not a political agenda or a belief, it is a scientific reality.

          • Kip Russell says:

            About which nothing can be done. Climate has changed as an ongoing process for millions of years.

            Adapt, or die.

          • Yes and it will also further destabilize our country. The cost of rebuilding after disasters will continue to increase. Climate change is happening whether you believe in it or not. Morons believe the climate has always changed. Read a book and learn something. Our country has made it political while other countries believe their scientists. We are an embarrassment to the rest of the world.

        • Ormond Otvos says:

          I’m reminded, when I look at William’s Facebook page, of the old adage “It can be very hard to understand something when misunderstanding it is essential to your paycheck.”

          Pharmaceutical company bigwig?


        • Laurella Desborough says:

          You say the top 10 percent are paying 52percent in taxes. I don’t buy it for one minute. Not in any information I have read on taxes. Nope. Much of the changes we see are all part of the effort of the uber wealthy and their “helpers” in Congress who have destabilized the financial sector, allowed for risky loans. allowed for mortgage companies to fraudulently take homes, subsidized major corporations, involved our military in military actions that were not labeled wars but certainly used billions of our tax dollars, off shored basic manufacturing industries, Reagan reduced the ability of unions to properly advocate for the workers, and on and on. You want to withdraw the government from intrustion in the economy? Looks to me like that has already happened. We have NAFTA and looming the TPP. Talk about destroying the US economy, those two will do it just fine. Oh, and did I mention leveraged buy outs? Where one company buys another, takes over all the valuables and sacks the workers, closes the doors and moves on. Very destructive. The problems we face are not caused by the government, they are caused by those who lobby the government to do their bidding for the upper one percent.

          • Roberte Francis says:

            You are the only one I have read who truly “gets” what happened. I was there – and you are right. Reagan….

        • Philo Janus says:

          > encroachments in the labor/management relationship by an intrusive Federal Government,

          You mean with silly things like “worker safety” or “requiring that workers be paid for every hour worked”? (With the explosion of the “exempt” status I guess you’re glad *that* national nightmare is over!)

          What I really don’t get – you complain about government interference in “labor / management relationship” then you complain about Unions, which are the epitome of labor/management relationships.

          It seems to me like you’ve taken the okeydoke that the robber barons should be left alone to take as much as they can out of the economy that made their wealth possible.

        • chris says:

          “Roe v, Wade devalued life….” Got news for ya, buddy, life was devalued long before that, mainly by the age-old custom of warfare.

          • j.....c says:

            …and guess what major country spends in excess of 52% of the tax base on being ‘prepared for war? MAGA!??? Hardly.

        • Christian Jensen says:

          William… while on the surface your many facts and figures try to paint a certain picture, but to anyone with even the slightest knowledge of the what happened in the late 70’s in American politics and economics, your arguments are laughable.

          You say: “…a good starting point is to withdraw the government from such a deep intrusion into the economy…” History shows us that the OPPOSITE is true.

          What happens when we actually DO have strong regulations? Well, just look at the 50 year period between 1931 (Glass-Steagall act – tough regulations) and 1979 (Reagan and the initial assault on government regulations) when we had strict measures governing the financial industry? We had relatively stability and MASSIVE prosperity.

          So what happens when you tear down regulations, or as you call it… “government intrusion into the economy?” You get the same same thing that happened in 1929, naturally. Starting with Reagan’s ‘trickle-down’ economics in 1979, the next 30 years saw wave after wave of DEREGULATION (culminating in the dismantling of Glass-Steagall Act in 1991), followed of course, by wave after wave of financial corruption and economic disaster, namely the 1980’s savings and loans crisis, and the 2008 mortgage industry crash.

          So to summarize: 1) We already have TWICE tried deregulation, and it lead to financial catastrophe BOTH TIMES. 2) Since Reagan, we have experienced massive deregulation… so why are you arguing that we have TOO MANY regulations?

          • Dennis Juds says:

            it’s like the old “doctors” we need more leeches to get more of the bad blood out!

          • I think it’s funny that people are laying this at Reagan’s feet, when he didn’t get elected until 1980 and didn’t implement “trickle down ecomonics” until even after that. Gerald Ford was president in 1975. Then we had Carter from ’76-’80.

            I wonder if the people lobbying for subjecting businesses to more regulation have ever run a small business. The upshot of a lot of regulations makes it harder for working class people to start and run their own businesses while having a negligible impact on large businesses run by wealthy people who can afford to absorb the greater costs of additional regulation.

        • Roe vs. Wade simply made lives, for some, more valuable than you’d like. Very, very telling.

        • Rowan says:

          Enter the troll that’s been lapping up neoliberal rhetoric all his life. Correlates with liberal policies? I’d be dying laughing at how far off that is if it weren’t so scary. You seem intelligent and yet you actually believe this? Changes in government spending as a % of GDP are as much due to evolution of the global economy as anything else … and they pale in comparison to the % of GDP that’s filtered up instead of spread across all incomes. The problem is neoliberalism, not liberalism. Trickle down, free market, and other similar right wing nut job theories are shams and it’s obvious. They are the result of this very ‘greed is good’ cultural shift that the author mentions. Leave it to the right wing nuts and the US will be the new Mexico in a few generations. Millionaires and peasants with almost no middle class. Keep believing the hype and sooner or later one of your children or grandchildren will be one of those peasants.

        • kipoca says:

          It’s interesting that you suggest it was government growth that did this when government has been declining in all of the areas you point to as the cause since then. Ronald Reagan happened. The reason those other numbers are higher now (wealthy paying more) is because the middle class is shrinking. Median income has also dropped, which is why poverty is higher now – again, the result of a shrinking middle class.

          Marty Friedman, Al Greenberg, and Ronald Reagan’s entire economic team got what they wanted, and it’s what we have now. Obama is benchmarking himself against Reagan.

        • What a crock. Deregulation is what killed us. Holy crap, dude….

        • I very much doubt that the top 10% of people pay 84% of overall revenue, especially as corporate “contributions” have fallen dramatically from something like 30% to 12% over the last 50 years. Even if the individuals proportion has gone up by 30%, their earnings (if you even consider that they DO earn it) have gone up by 500%.

          • Axon says:

            >I very much doubt that the top 10% of people pay 84% of overall revenue

            It’s true, though. 40% of federal revenues come from the top 1% of taxpayers.

            *As it should be*.

            The problem is individual taxation. Nobody wants to pay taxes and everybody performs unnatural acts to avoid doing so, because they already think of that money as “theirs”.

            Tax corporate revenues, *at the point of revenue recognition*, before the surplus value is allocated, while it’s still just surplus value. Before you pay the worker, the supplier, the contractor or the shareholder; pay the man.

            Take the state’s share right off the top, just like they do in Vegas. You wanna play in this casino? This is the vig; hand it over. Nice business you got. Be a shame if something happened to it, no? Things burn, don’t they?

        • Larry Nance says:

          Dear William,
          This is very insightful to how drastic population growth and climate change will stress our resources more.

          The Horror, in part, is Global Warming, Climate Change.
          It is real and we are the cause.
          It comes down to chemistry, biology and physics. They do not negotiate. They supply the laws that govern the life cycles of the planet.
          Humanity is now a major geologic force and we are changing the chemical composition of the land, sea and air, affecting these life cycles. All life – in both hard and subtle ways – is being forced to change, adapt or die off, including us, that most are not yet conscious of.
          There will be more extreme and weird weather events, almost all of them bad for us.
          The only questions are “How fast?”, “How hard?” and “How soon?” will these changes take place.
          With a president-elect who thinks this is all a hoax, it seems we are poised to continue to do nothing to address this and Climate Change will evolve unabated.
          Everything you care about, everything you hope to achieve and create, everything important to you will become more fragile, harder to do and more difficult to hang on to as the planet warms.
          There will be local and regional differences, of course; weather will still happen. But, our institutions will be taxed and traditional differences and conflicts will be stressed, nudging, or perhaps tipping, us into new social and cultural equilibria. Syria is a perfect example of a region where a new, but well-known, equilibrium has been reached: one of conflict, killing, starvation, mass migration, division, dehumanization, and hatred and fear – in short, War. The Syrian Conflict is a Climate Conflict, precipitated by major drought that caused mass exodus from the countryside to the cities, putting stress on a fragile economic and political system. I need to say that as horrible as the Syrian Conflict is it is still a pretty small scale when you compare it to the fact that 10% of the world’s population lives on coast, and we are too slow wakening up to the fact of sea-level rise. That’s approximately 700 million people and Trillions of dollars of infrastructure and arable land at risk. Again, “How fast?”, “How hard?” and “How soon?” are the questions; however, the migration of that many people and the loss of that much wealth over even 2, 3 or 4 generations would be devastating. It is not a stretch to imagine other equilibria, even less appetizing than the Syrian Conflict, that could arise.
          We need to work against this.
          Our human dignity is at stake because there is already a great deal of warming momentum in the climatic system and it will take time for us to change and reverse this.
          USA’s political system did what it did. What’s done is done and a short cycle of 4-12 years. We need to start thinking in longer cycles of 20-50 years, and …
          We need a Planet-wide development of Consciousness to cope with this changing world and a new way of coping with one another and our environment.
          My gut suggests that a good place to start is by looking up and seeing yourself in the person next to you and act accordingly.”

        • Sara Parmar says:

          In the mid 70’s, in Canada, the government changed the purpose of the Bank of Canada and the method of financing infrastructure projects and loans to the provinces. Instead of interest-free fixed-term loans, it came through the private markets….causing exponential increases in national debt from then onwards. There is a law suit being fought against the government of Canada on this issue. What political/economic influences caused that change to occur would be interesting to investigate.

        • Lew Hackleman says:

          William, you are either in the top echelon and trying to justify it, or you not in the highest echelon and are totally ignorant.

        • K.S. says:

          Your use of statistics is atrocious. For example: If the top 10% of the wage earners, the wealthy, take in 93% of the cash, they should pay 93% of the taxes, yet they only pay 84%. Perhaps in 1970 the top 10% of the wage earners took in 52% of the cash, thus were paying their share back into the pie. If the living wage is 150% of the median pay, clearly the median pay does not give people a position to be consumers (& therefore actors) in the economy. It screws everyone over if people do not have a living wage, not just the people who make so little.

          • MARLENA MARKELL says:


        • I LIKE this theory. And feel it overlooks another huge factor: A majority of working age women began entering the workforce for the first time. Suddenly, the economy had to produce and sustain nearly twice as many jobs.

          That was a huge torque on things that often is overlooked.

          No suggestion here that women shouldn’t have an equal standing in the workplace. Just a note that the economy had to accommodate and absorb a huge, sudden social change. The money to support that had to come from somewhere. It came out of the middle class and lower working class laborers’ checks and benefits.

          For maybe the first time in U.S. history, we had a surplus of workers.

          • Angie Richardson says:

            Not just women: In 1974-75, the last of the first half of the Baby Boom came of age and entered the workforce! I can’t find an exact number, but 38 million seems about right; that’s a lot of people for any workforce to absorb!

            Further, in response to “X marks the spot. In this case, “X” is our choice of national values. We abandoned traditional American values that built a great and prosperous nation. Our power relationships are sour.” — Our president was revealed to be breaking the law, and forced to resign, in 1974. “Serpico” and “Death Wish” revealed that cops can be bad guys and/or incompetent. We didn’t abandon values, they were simply revealed to have been values that only the bourgeoisie held; the big guys and the ones in power didn’t have to obey the law or respect the President’s position or title, so why should we?

          • Jen says:

            Increased work force doesn’t explain the disparity in percentages of wage increase between higher earners and lower earners. And focusing specifically on women entering the workforce causing that increased work force ignores the time around WWII where there was also a jump in women entering the workforce where this disparity did not happen. I suppose it’s an interesting issue to study, but would be unrelated to the topic of this particular article. There are women executives and 1%ers

          • work4good says:

            @ Ken WInston Caine

            Um….actually …when women entered the workforce – the need for two cars doubled (hence the invention of the mini-van), woman needed to purchase a professional wardrobe, and the need for tons of other goods and services doubled.

            We had just about maxxed out on number of available households/consumers to sell things to – so growth had stalled. Getting women to participate in the workplace at such phenomenal rates was sold as patriotism, and blamed on feminism.

          • kate says:

            not just a large # of working age women, but working age people! that(1975) was the year the 1957 people graduated HS. Many entering job market , many going to college, many doing both. It has always been a ‘wave” year. Look to major crisis in Soc. Sec. and Medicare in the next few years as this group starts really cashing in!!

        • Kevin says:

          How can you say that unions demanded more wages for less productivity when all statistical evidence points to ever greater productivity with no increase in wages?

        • Kim Cooper says:

          The increase in regulations is actually not political — it is due to the increase in population density. The closer we are together, the more rules there needs to be to keep us from rubbing up against each other in negative ways. So, if you want to blames someone, blame the people who have more kids than to replace themselves.

        • TJ Ronck says:

          If the government is consuming more of GDP war and our global military presence. These are conservative values and those of the military-industrial complex. Not liberals.

        • John Lavoy says:

          I don’t have time to address your comment in depth, but your data use is a mish mash of real information and conservative misinformation. Primarily, you use a torrent of unrelated info to shift attention away from the main point of the article: productivity has climbed steadily regardless of all the so called liberal intrusions, and none of that gain has gone to workers. Tons of money has been made, and most of it has gone to the wealthiest people because American policy shifted to favor financial capitalism over productive capitalism.

          • DG says:

            Succinct and factual, stagnation of our economy due to millionaires is in a large part to blame. Money moving through the economic channels put to work growing the economy is how we stay healthy And viable.

        • Dave says:

          William Vaughn the CEO spin doctor at work! You sound like a religious apologist for the top 1%. Skewing the statistics in your favor to make it look like the top 1% are somehow victims of the system. Doing a great job in making it look like poor ignorant people deserve to be right where there at. Justification for greed, Ayn Rand in Milton Friedman would be proud!

        • mgdavis says:

          “One must also be cognizant of the fact that the top 10% income earners in the 1970’s paid approximately 52% of all taxes. Today, they pay 84%.”

          Bull. Fucking. Shit. You conveniently elide payroll taxes., and capital gains taxes reducing tax paid vs. wage income of thge same level. Fuck your capitalist apologia and libertarian solutions to problems caused by Randian idiots.

        • cityzenLBC says:

          most of what you are saying just isnt borne out by data. Taxes got lower, not higher. They were much higher in the 50s. Out of wedlock births are more a symptom of poverty than a cause.

          You’re repeating stuff you read in a comments section somewhere, or heard some politician or pundit say. It isnt based in fact.

        • Guy Moderelli says:

          You missed the gist of the article. As labor unions lost ground , so did everyone else.

        • Roger says:

          Well put

        • Chuck McKay says:

          “In 1974, the working poor were consider so if they earned 20% below the median income. Today the working poor are considered such if they earn 150% of the median. So, when arguing statistics let us at least play with the same set of facts.”

          One of the facts you’ve swept under the rug, William Vaughn, is that adjusted for inflation,150 percent of today’s median IS 20 percent below that of 1974.

        • Larry says:

          The deindustrialization of America also needs to be accounted for. Millions of living wage jobs were lost and major sectors of the economy moved overseas. Moved from manufacturing to service sector wages. People were left to fend for themselves in an economy that couldn’t provide the jobs. Neither party has stood up for the workers and still haven’t.

        • well, if women having control of their bodies, and unhappy couples being able to divorce more easily, etc., caused the downturn, then why is Sweden doing better than America in so many areas?

        • bobklahn says:

          Mr Vaughan,

          You display a real talent at right wing and esp religious right talking points.

          Abortion had damn little if anything to do with it.

          You also tried to blame liberals for damages suffered under Republicans from Reagan on. The massive increase in the federal debt is the main indicator, it jumped from 33% of GDP to 85% of GDP between 1981 and 2010. I would have been 92% if Clinton hadn’t pushed it down 9 points.

          Then Obama inherited a depression, not a recession but a depression, which automatically meant an increase in debt.

          Entitlement spending is a major fake talking point. First define entitlement spending. Back under Reagan and Bush I it was called “Social Welfare Spending” and consisted of anything that wasn’t military.

          If you look back at our history, the only times when the debt was paid down close to being able to pay it off was when we cut military spending drastically.

          Back in the early 1970s the top 20% of income recipients paid about 50% of taxes, and they had about 50% of income. I suspect you are confusing federal income taxes with all taxes. The biggest reason the top 10% pay so high a percentage of that is they have that much more of the income. Note the huge jump in the top income brackets share of income? Notice the decline in the lower income brackets share of income?

          Working poor? Give a source for your numbers. Give a definition. The median household income is somewhere upwards of $50,000. 150% of that is $75,000, which was upper middle class last time I looked.

          “To weave in “climate change” into this discussion shows …”

          “Indeed, the “social compact” was destroyed by the Labor Unions and their lackeys in Federal Government.”

          ” imposition of these goals, the Government grew at a phenomenal rate in the same period.”

          All of the growth of the federal government is defined by congress, with Presidential involvement. Considering the number of years the Republicans controlled at least one house of congress, and the number when Republicans held the White House, you just damned the Republican Party. OK, I won’t argue that.

          “government receipts as a share of the economy was 17% vs. 22% today.”

          Starting under Reagan spending was consistently above 20% of GDP, and typically above 21%. Clinton was the only one who pushed it below that, it’s a Republican thing.

          All of which shows the connection between Republican government and the increase in debt/GDP, govt spending and GDP, and decline in wages.

          The problem has developed when the government was not regulating.

          “Second, markets must rethink the wisdom of constant sequential quarterly growth in top-line revenues and earnings. ”

          Markets don’t think, they respond. People think, sometimes, and mostly how to get richer. We need to raise the capital gains tax significantly, and impose a small, perhaps 1%, transaction as they have in Japan.

          The idea is to make it more profitable to sell the product the company makes than to sell the company.

          “the inherent advantage of build long-term shareholder value and a well-educated and compensated workforce.”

          The last portion is how the first portion is achieved. That is the one part of your post I can wholeheartedly agree with.

        • You are blaming the social policies you don’t like as if they’re causal factors to economic greed (in reality one has nothing to do with another and you know it), so there’s very little of your post I can take seriously.

          Tax posts below, I can break it down with more specifics: the 10% make their wealth through high wages and pay a high marginal tax rate. This does amount to a substantial percentage of the tax burden. The very wealthy, top 2% or so, make much of their wealth through long term capital gains (entrepreneurship and investment), which are taxed at a max 20% marginal rate. They still pay a substantial percentage of the tax burden, but certainly less than the amount you’d expect them to be. How the tax code “should” be structured is outside of the scope of this article.

          The critical thing I think people must realize at this point in time is that we’re on the cusp of a second industrial revolution of sorts: the ascendance of automated skilled labor. This has the power to centralize wealth in a few hands to an incredible, unprecedented degree if society doesn’t recognize the social issues that would be creating. Think 80% in abject poverty while 20% live like kings and you pretty much have it. We have two choices at present: go full Ayn Rand and let people like me destroy people like you because “we have better minds” (in reality, particular skillsets that are highly valuable in a particular time and social context, in this specific case a talent for AI), or we can collectively recognize that such a society is going to suck and come up with a plan to ensure that everyone still has enough to eat by 2030. I will benefit more from the first scenario, but I really hope you all choose the second. However prepared you think you are and however hard you think you’re going to work, you’ll be swept away by what machines are rapidly becoming able to do.

        • Sam says:

          Your statistics do not prove much. Yes the rich pay 84% of the taxes and yes the today it is ( percent instead of 1.5 percent for government reguations. This doesn’t mean what you says it does though.

          The rich are far far richer than before, so if the average percent makes way less then yes he pays less overall taxes than the very rich. This even applies to the revenues. The rich had much higher tax break back then, but because they made less their total tax percentage was lower than it is right now. This isn’t accurate for taxes but lets say there is a flat 30 percent tax break. Take 50 poor people who made 100 dollars. That is 1500 dollars. If you take one rich person at 30 percent who makes 30,000 dollars, then that is 9,000 dollars. Simple math states that the rich pay more takes now than before because they make so much more than they made back then.

          • David says:

            Finally someone with common sense math…..how many times have we heard “the rich pay more in taxes” in order to control the middle class on down…..you hit it right…..it’s clever word play to get past those who do not think on the level you do….like the program Masters of Illusion…..the rich ate experts at getting the masses to “look over here” in order to get something done “over there” which is usually to gain power and or money.

        • Shazila says:

          Is your head in the sand?! Roe vs Wade did not cause this and union were there to protect workers rights and to make sure they got fair wages. You must be a CEO!

        • Max Norvell says:

          Mr. Vaughn, If you agree that the graphic this article uses is accurate, how do you explain wealth disproportionately landing in the pockets of the top 7% of the population? Do you think that 7% would allow the Government to remove their influence? (think military industrial complex). You point to Roe v. Wade. Really? I think that if people saw a way of affording a family, they would be happy to have children. Perhaps Roe v. Wade is a reflection of how economic influences have made such choices common.

          The rich pay more in taxes as a proportion of their income. This is appropriate. If the rich paid as much in living expenses as a proportion of their income that the middle class pays, I might sympathize. But it is a disingenuous to point to that fact as a justification for the status quo.

        • KLaCr says:

          So much is wrong with your argument that it is impossible to address everything, so let’s focus on your statement that “workers demand higher wages and more restrictive work rules requiring greater wages for less output.” This is absolutely staitistically wrong–we have more output and are paying lower wages. Did you even read the article or did you just come in with some preconceived notions you felt left spouting off?

        • rwm4213 says:

          if you think Taxes have went up on the rich since the 70’s then you are detached from reality.. honestly detached…please look up income tax rates from the 70s compared to today… Roe V Wade??? I think you might be living in a fantasy world

        • Robert Graves Jr says:

          The American Legislative Exchange Council was established in 1973, connecting mostly anti-government Republican legislators with corporations eager to subvert American economic policy, especially regulation. In 1981, a naive Ronald Reagan, who had been a shill for General Electric, eagerly promoted the “partnership” of government and Wall Street, inviting the fox into the hen house. From then on, K Street was a conduit of corruption, Reagan and the Bushes stocked the Supreme Court with pro-corporate “justices”, and Wall Street was rewarded with Citizens United and McCutcheon, corruption on steroids. Republicans were also blessed with the gutting of the Voting Rights Act, whereupon 14 Republican States began voter suppression tactics. They never guessed that the voting advantage they had gained would elect Donald Trump.

        • Hugh J. says:

          Sorry- that chart looks entirely different for other industrialized countries. Those countries ALL have robust regulatory regimes, entitlements, abortion rights, comprehensive health coverage, organized labor and less extreme inequality etc. etc. What was that you were saying about a political agenda?

        • Mary Hood says:

          Roe vs Wade does not devalue life. You are obviously male. But regardless, Roe vs. Wade probably had a positive effect on the economy. I have not done the research but I have heard theories that besides the obvious fact that more children keep women out of the workforce or cost families a small fortune in daycare, that the legalization of abortion in the 70’s had a dramatic impact on the decrease of the crime rate in the 1990’s. That would certainly be a positive for the economy in terms of the cost of housing criminals, court costs and so on.

        • Oleander says:

          >workers demand higher wages and more restrictive work rules requiring greater wages for less output.

          Except if you look at the chart, you’ll see that output and productivity continued to increase, even as wages stagnated.

        • Your argument that we must reduce government’s involvement in business to reverse the upward transfer of wealth is part of the ‘feed the rich’ con. Reagan deregulated the financial markets and within two years we had the Savings and Loan scandal where wealthy players worked the system with the new relaxed rules and screwed millions of people out of their life savings.

          The 2008 fiscal meltdown can be blamed on the same ideology of deregulation.

          The thing is, our fiscal well being hinges on government involvement and various studies have proven that.

          Interesting that you should blame all this on liberal policies when it is in fact faux conservative fiscal ideology known under various names such as supply side economics, Reaganomics, and trickle-down economics. The con we were sold being that if you give the rich more through tax breaks, favorable tax avoidance, and subsidies that they will in turn invest that windfall in infrastructure that will create good paying jobs. The problem is, we’ve had 30 years of that nonsense (greed is good) and what the graphs show are the results.

          Over the past 30 years, 93% of all income gains have gone to the top 10% (while doubling their share of the nations wealth to 67%) wage stagnation, a staggering increase in personal debt, and a shrinking middle class. The problem isn’t lazy workers, the problem is high end greed.

        • The death of unions? Massive investment in overseas’ cheap labor? Money owning congress? Corporate boards(other ceos) overpaying ceos and by reciprocal gratitude, themselves? Sheep not citizens?

        • H Sede says:

          Roe v Wade said no state could prohibit abortions under specified conditions … but many, many states already permitted abortions, Roe v Wade just made it a protected right in all states … you’ll need to go back to the drawing board with your unsupported hypothesis … try again …

        • “Roe v Wade devalued life, No-fault divorce, encroachments in the labor/management relationship by an intrusive Federal Government, massive increases in State and Federal regulation, massive growth in State and Federal taxation, massive growth in entitlement spending, and massive increases in Federal debt. ”

          Talk about weaving in a political agenda! The only you forgot was those damn gays getting married!

          Sure — go ahead and blame or economy on women obtaining divorces because their husbands beat them. Shame on them! They need to take one to the head for our nation’s economy!

          Logic? Hell no! ABortions are at an all time low right now, but that doesn’t stop our economy from ripping off people. And Jesus only knows that if the government would allow corporations to continue polluting and fouling our waters and our air, we would all be so much better off!

        • ckmn says:

          very logical and well thought.

        • Sean M O'Donnell says:

          making 340 time what your workers make has nothing to do with your comment

        • Ruthmarie Hicks says:

          You accuse the commenter of a political agenda? You might want to take a good look in the mirror on that score.

        • LKM says:

          I love your argument that a CEO going from 6 times the company average to 350 times what his employees make is because of s 6 percent chance in government take or because of Roe V. Wade, and have the gall to cry “liberal agenda” when spouting the hard right propaganda.

        • James Uscroft says:

          Excuse me William Vaughan, but how can you be so ignorant of the fact that the President who really kicked off the era of corporate greed and worker exploitation is your Republican Jesus Ronald Reagan!?…

          Perhaps because you are the one who is merely pushing your own political agenda.

        • cheyennesage says:

          As another here points out, regulation wasn’t the problem, it’s the lack thereof. The FCC stole our airwaves, impeding education about the problem partially by the huge mergers allowed by Michael Powell. Monopolies driven by proprietary laws crushed us with hugely expensive items now deemed indispensable. Intentional obsolescence has doomed our waters (swarming with used and unused poisons and plastics) and our aquatic animals are less likely to feed us or create our oxygen due to climate change deniers bent on preventing or rolling back regulations. Talk about your ‘shortsightedness’!

        • Alan says:

          Also, of course, mid-1970s is about the time we saw an influx of available labor that, through the law of supply and demand, we could expect would drive down wages. Also known as feminism.

          • Mika says:

            Women were already working in factories and such – for much lower wages than men – in the 1800s, so try again Mr Ahistorical

        • Kalli says:

          You sound good, but you are talking out your ass. The biggest giveaway is your claim that the working poor earn less than 150% of median household income. On its face, that is absurd. Median household income in the US is $50,000, no one considers an income of $75,000 as working poor. But better yet, lets look at reality. The United States Government sets working poor as a person who earns below the poverty level. The poverty level is based on number of persons in a household, so that number depends on a number of factors, like dependent children. For a family of 4 with 2 children, poverty level is defined as around $22,000. The rest of the world defines working poor as earning less than 50% of the median household income. Which is an even higher number. If the US government used a relative threshold for working poor at 50% of median household income, the rate of working poor in the US would more than double what the US government claims. I haven’t dug deeper into your claims, but this alone shows that your information is obviously incorrect and many of your conclusions are dubious.

        • Kathryn says:

          Re Roe v Wade and devaluing human life.

          Consider this, at the time of Rie v Wade only 2 states considered killing the unborn during commission on a crime – a crime.

          A drunk driver causes accident where mother injured but unborn child dies – no vehicular manslaughter has occurred.

          You rob a bank, shoot a pregnant patron and unborn dies. No murde has occurred.

          Why, black letter law. Unborn are not legal persons. To this day, even in so called Bible Belt states – nothing has changed.

          Check it out, Legislators who drink, take drugs, do not want to be held accoubtable for vehicular manslaughter.

          In Wa state in 2015 I think, three people murdered. One a nine months pregnant woman. Still only three murders.

        • Daniel Derrico says:

          To William Vaughn – Perhaps you really believe the nonsense in your response, that Ronald Reagan lie that “the government is the problem”, or as other Republicans have said – is the “enemy”. This idea gave us the “trickle down” lie that has clearly not happened as all of the additional wealth of the growth in GDP went to the wealthiest 1% or 2%. This wealth was created by the enormous advances in technology, not by the “genius” of the vastly overpaid corporate CEOs. If you really believe this nonsense, then you are ignorant.

          But if you really do not believe it, but say it anyway to justify you own personal economic interests or your right-wing political views, then that is much worse than just being ignorant.

        • Just the usual conservative dogma. What tripe.

        • Jeannine Silkey says:

          Whoa! Over the years, the Government (OF THE PEOPLE) only steps in when the large businesses do not properly reward and value ALL their employees or responsibly care for the environment. ALL laws are the result of someone or entity not doing what was in the best interests of the community. If the large corporations do not reverse that trend themselves — then the government needs to set the rules. Right now, the corporations, with all the “legalized” bribery, do things they would have been taken to court for years ago, and get huge REFUNDABLE TAX CREDITS, when, in fact, they had net profits in the billions. They not only DID NOT pay taxes, they got REFUNDABLE TAX CREDITS, but the publicity focuses on the little guy to keep people thinking in small terms rather than seeing how the “system works.” It is not about being liberal or not, it is about enforcing the intentions of the US Constitution and ensuring “life, liberty and the PURSUIT of happiness.”

        • alan says:

          this, from the guy (wililam vaughan) who repeatedly posts “news” from BREITBART on his facebook page. pretty much tells you all you need to know about the validity of his comments, aka “brainwashed drivel.”

        • Marion says:

          Wow, blaming the victim. We’re have we heard this crap before? You prove the author’s point.

        • Patricia Wolfenden says:

          Yes, unions brought “greater wages for less work.” For why that was necessary, I recommend reading Dickens, whose journalism became novels of what his own father and he as a child had suffered in the Industrial Revolution.

        • Liberal policies? lol I am pretty sure this was a conservative move and the wealthy do NOT pay more in taxes. In fact when America was doing well they paid higher taxes. It is quite obvious who is lacking in morals when a party is willing to welcome a child molester into their fold. Just look at the President and what morals or values does he represent?

        • Phyllis Thakis says:

          Remembering the times, I find what Sorscher says resonates with me. What led to the Reagan election? It was (forgive me) sort of a pre-45 moment. Watergate & Vietnam, plus the Ford pardon, turned me from an optimist & an idealist into a skeptical optimist & a cynical idealist by ’75. And up until that time I had been a die-hard, rose-colored-glasses-wearing Optimist & Idealist! So I’m sure most of the country was even more jaded than I.

          Max Lerner was the commencement speaker at my college graduation (Chatham College for Women, now Chatham University) in 1973. He talked about a recurring pattern among generations: War Generation , Me Generation, Idealistic Generation. WWI, Roaring 20s, Great Depression & rise of American socialism; WWII/Korea, Eisenhower ’50s, Vietnam & late 60s/early 70s “Hippie” Counter Culture (a mash-up of both War & Idealistic generations). With the signing of the Paris Peace Accords earlier in ’73, it seemed that the war was finally going to end. Lerner finished his address (at least in my memory) by entreating us (the 1973 graduating class) to not become another “Me Generation.” Well, of course, the late ’70 became exactly that, the incubator for the blatant me-ism of the ’80s.  

          So, yeah, I get it. The VN War ended. People were tired of protests, drama, strife, etc. They were ready to “have a good time.” Without the War’s boom economy, though, the steel mills & a lot of other businesses closed. Ford pardoned Nixon. Cynicism & apathy set.in. And little by little they grew. There was still enough idealism to elect Jimmy Carter in ’76, but the tide was turning. And Reagan was elected. I remember one of his campaign promises was that his administration was not “going to worry about human rights.,” a jab at Carter. After the 1980 election, I tried to join the Peace Corps, because I didn’t want to live in a country where a “B” actor ran the country & bragged about not caring about human rights. (Ah — in retrospect — so innocent :/ ) But I digress.

          I don’t know if Sorscher’s theory is correct or not, but it has validity for me, based on my experiences & memories of the time.

        • Laura Umphenour says:

          William Vaughn…nice to know another .o1% percenter.
          Thank you for standing with the wealthy that keep stealing from the rest of us.
          They need people like you defending them

        • Harry says:

          That is “conservative” dogma and doesn’t in any way explain the realities of the graph.

        • chicagoski says:

          You couldn’t be any more off-topic, could you? I’ll make it easy for you, and won’t ask you about the causal relationship between abortion “devaluing life” and the increasing income disparities between the rich and poor. Let’s just start with the one thing you seem to rail about more than anything else: how did increased government regulation result in worker wages stagnating while the incomes of the top 90% rising faster than either productivity or GDP? For extra credit, you can also talk about how economic stratification has been increased by “workers demand[ing] higher wages and more restrictive work rules requiring greater wages for less output”. I’m sure you have those causal relationships all worked out, so should be a breeze to enlighten the rest of us.

        • Wayman says:

          I think you forgot to mention massive government spending on the military and corporate entitlements aka welfare.

        • Jeanette Jordan says:

          You’re wrong. He’s right. You are part of the problem.

        • Scott says:

          Said Vaughn… author of the longest, boringest, agenda-laden “anti-agenda” fact-deficient tome ever memorized and Kyped from Fox nooz

        • Girish says:

          William, without going to the merits or otherwise of your arguments, my chief concern is that we have intelligent and apparently educated folks like you making statements about climate change being some sort of political agenda which i find to be incomprehensible. If at all this has been brought into party politics in USA alone, it is mainly because the Republican party has chosen to sell its soul to the fossil fuel industry and i am sure that the bosses at Chevron et all have succeeded beyond their wildest dreams. In case you are aware of any other country where this debate is divided between conservative and liberal thinking people i would be grateful if you could share that knowledge.

          The reason I have chosen to bring up this issue is that I find it very difficult to understand how anyone can choose to disregard the findings of the international community of scientists. It is these same disbelievers and their ilk who will be chastising the same scientists for not making their point forcefully enough and will be looking to the same scientific community to provide solutions when things really begin to go south in the coming decades. I am 66 years old so i hope that i will not be around to see the real damage that rising oceans and extreme and unpredictable climate conditions are going to cause. To all the sceptics out there all i have to say is “on your head be it”

      • tweberfree says:

        Thank you for speaking what is painfully obvious to those of us at the lower end of the pay scale. You just never know when you’re going to end up there. (I speak from experience.)

        • Kathryn says:

          Absolutely. People who want to do without health insurance that covers ER & hospitalization may really believe it cannot happen to them.

          Or, they know they have not significant assets and someone else will be stuck with the bill.

      • Lynda Bush says:

        I completely agree.

      • shodospring says:

        Thank you for saying this so well.

      • Trizz says:

        Well said.

      • Santa says:

        Bravo! We share a similar history. Human beings, by nature, are self-centered. We’re constantly looking for validation and often personal wealth becomes that validation. Until we have a reversal of fortune and wake up from our ego trip. I once had a comfortable 6 figure salary. Now I earn about $25k a year. My wife about the same. $50k sounds like a comfortable income, but with 3 kids, a mortgage, cars to get to work, child care and everything else that comes with the package, we still can’t pay our bills. I’m in my 2nd HAMP-style modification. The 3rd and final test period payment is due 9/1 and I don’t have it. That means foreclosure as I’m almost $25k in arrears. My house is falling apart from lack of needed repairs and my car is on its last legs, with a 45 mile each way commute to the only job I could find, outside of my customary industry of 35 years. I’m not stupid or lazy and I’ve proven that with my past success. Yet, no one gives me the time of day anymore. Why? Hmmmm….

      • ellen says:

        I agree entirely.

      • mjw1970 says:

        Interesting how you can recognize the problem but not see that the attitudes propagated by Ayn Rand and her ilk are the problem.

      • Julie says:

        Well said. Our middle class is rapidly evaporating while asshats like Trump and co. Are stealing from the working people.

      • WAB says:

        You hit it right on the head !

      • Val Serrie says:

        Brilliantly said, and very true. Ayn Rand poisoned the water for us all.

      • ashley hunter says:

        Thank you!!!^

      • Ed Falis says:

        Great expansion of the real story, firesmithCorey Cole.

      • Hamish says:

        Well aid Firwsmith.

      • Ted Hopkins says:

        In other words, this is the current dangerous trend corrupting Capitalism toward Capital Feudalism by which:
        •Capital replaces land as the feu;
        •International banking replaces the Church as the external arbiter of power;
        •Non-territorial international corporations replace kingdoms as the fundamental holders of the feu;
        •Corporate CEOs replace kings as the authorities by which the feu gets distributed and to whom loyal attachment must return;
        •Major corporate internal divisions and subsidiaries replace baronies, earldoms, dukedoms, counties, etc. as subordinate holders of the feu;
        •Corporate vice presidents, very senior managers, and subsidiary CEOs replace the various Lords of the Realm;
        •Corporate managers and highly skilled technical professionals replace knights;
        •Contractors replace the freeman peasantry; and
        •Ordinary common working people are reduced to the new serfs;

        • Patricia Wolfenden says:

          Freaking brilliant article, discussion, and this comment. I’m more engaged in this commentary than I’ve been in many a month. Thank you all.

      • I would just like to clarify, for the sake of discussion, that an “entitlement” is something to which one is entitled–i.e., one has a right to it. We can discuss whether all citizens are entitled to health care or a living wage, but we need to stop discussing our rights, i.e. our entitlements, as if they were undeserved handouts.

        • Patricia Wolfenden says:

          And behold, I give you Newspeak, where
          War is Peace
          Freedom is Slavery
          and Ignorance is Strength.
          Speaking of which, let’s not forget the role of permanent corporate war to artificially inseminate profit margins but is the ultimate zero sum game.

      • Well I’ll say one thing you did get an education in these United States because that was a well thought out piece of writing.

      • Rod Prather says:

        Entitlement is an evil work invented by Conservatives to chastise the working poor and the have nots in our society. Poverty is a liability of Capitalism. If you want to live in a Capitalist Democracy, there are certain responsibilities you must accept. I prefer to call what you view as “Entitlements” as the social responsibility of a Capitalists State. Get over it, the sick, the incapacitated, the weak and the functional failures of a capitalists state aren’t going away. Accept your responsibility. Quit blaming them.. That’s humanity.

        • Patricia Wolfenden says:

          They will not. Maturity accepts responsibility. The oligarchs are fully engaged in a death-culture intoxicated infantilism.

      • Steve Kowalski says:

        This guy understands! Thanks.

      • david sparkman says:

        Well here is a little digging that you suggest, although it is not the answer you want to hear. Straight out of the capitalism theory of competition:

      • MARLENA MARKELL says:


      • Yes yes yes thank you! The entitlement problem is the very well to do in this country and it seems like in the UK also from what I see in their politics.

      • Automotive PM says:

        Thank you for this very insightful post. I will be looking into your theory. As an automotive engineer I have seen my buying power go from “a very nice lifestyle” in the late 70’s, to “how do people eat” in the current year. Horrible.

      • Mike says:

        Where does your 345 times figure come from? Which CEO’s? I’m just curious?

      • NumberOneJewel says:

        AMEN Mr. FiresmithCoreyCole

      • MORRIE FOUTCH says:

        I would venture that we just came out of the Vietnam war during this period and we were all disgusted that it had to happen and were horrified at the loss of life. Perhaps we cynically decided that the financial industry and defense industries were the ones that needed more incomes and we let their lobbyists
        cozy up to the lawmakers of the time to give them a little more juice. Relaxation of banking and investment regulations followed and the end result was the worker took it on the chins when he lost his job; his home and savings in 2008.

      • democracydc says:

        Bravo! Although you went through the traditional brainwashing techniques, (formal education) you emerged and began to “see and think for yourself.”

      • This is a common problem, but the average CEO doesn’t make 345 times what a worker does. That figure is pulled from Fortune 500 CEOs which are in a league of our own. With any small to medium sized business the CEO does not even usually make what the top workers are making, and at best it is 2x to 3x.

      • Miriam Cowan says:

        Well spoken. Agree with you entirely. I worked as an associate attorney at a large M&A firm in the early 1980s, fresh out of law school. I became disgusted at the way the deals threw people out of work to make room for more “efficiency. ” It was a code word for a way to shift the $$ up to the top while forcing those at the bottom to work harder for less. Today, 40 years later, I make much less than I made in the high flying days at that M&A firm. But I sleep better at night.

      • Robin Allegra says:

        Thank you. Well said.

      • David Chandley says:

        I think the “entitlement” comment was directed mostly at those who do nothing and expect something , but you are right.. wages have not kept up. and with so many of our good middle class type jobs going abroad..Quality middle class job seekers were competing for the same jobs … we know from economics class what happens when there is an excess of labor and a shrinking job pool ..Not to mention what was happening to the lower class type jobs with all the legal and illegal immigration that was occurring at the same time .. Couple that with the ever growing tax burden,,Housing/ food bubble’s , wall street and banking gangster’s and a federal government that appears to be corrupt from the top to the very bottom ….It would seem to me that the outcome should have been obvious and quite predictable …One thing is for certain … Something has to change .. .

      • Ruth Renwick says:

        Well put ..thank you..very true I think

      • Kevin Crawford says:

        An outstanding rejoinder to the above parroting of the conservative line, Mr Cole. I myself worked one – often two – (blue-collar) jobs my entire life, found myself unemployed in the Bush recession when the bankers and Wall Street speculators crashed the economy and, at 60, essentially unemployable.

        Along the way, I tried “bettering myself” with two degrees but only wound up with a crushing debt that I will never, ever, be able to even put a dent in, having had to take early Social Security last year.

        Those “entitlements” Republicans speak of are nothing more than a misnomer for that which we worked for our entire lives – the cruelest possible euphemism for the social contract that we were promised: “Work hard, and you’ll be OK.” Well, I “worked hard,” but never got far enough ahead to invest, and now my meager Social Security check is being threatened to be put into the hands of the same people who threw the economy under the bus last time – even the modest safeguards passed after the last disaster repealed by our Republican Corporateers in Congress..

        I don’t know what the answer to getting a better breed of Congress-creature is, but if it relies on the American voter waking up to the snake-oil salesmen they’ve been electing so far, there won’t be an America left in another couple of years. It’s barely recognizable now.

      • Susan Hochberg says:

        Thank you for this answer. It is exactly right.

      • David says:

        Yes! You hit it right with the gain of power of the oligarchy at the expense of of everyone else.

      • Gabriel. Richrath says:

        Well spoken and thought out…today going above and beyond is derided.and seen as something to be destroyed…a job to be viewed as just a job instead of something of pride to do your very best and by that to advance based on the value of that being recognized. ..

        no more…long gone the way of exported work….education and educators tasked with items that society once taught and overloaded while underpaid…brought to an inability to actually do what education should do…prepare young people for a skill with which to earn adequate pay to build their futures.

        Instead all talk of college, college, college….a direction never meant for a population as a whole and today being priced through the roof.

        College for the doctors and other professions that demand that…not for the much needed plumbers, mechanics, repair men, builders…who also need to be educated on history, world politics, health, citizenship, mathematics and more but on a different plane.

        The upper elite wanting a dumbed down populace believing their control over these individuals to be more powerful and encompassing, but forgetting that history has shown time and again the rabble created eventually reaches a point of revolting.

        With revolt comes bloodshed and destruction and society’s set-back….where would our world be if the library of Alexandria had not been burned to the ground, if Rome had not been sacked and other civilizations that fell to violence had been allowed to flourish?

        Of course there is no way to predict…we might be worse off and then again we might be even further advanced traveling between galaxies at will….my hope that we find a way to move forward and not destroy ourselves as it seems we are on a path to do…

      • Albert E says:

        I guess Saris missed the point entirely

      • Mika says:

        Those at the top sacrifice. They sacrifice *us*. We’re the virgins thrown into the volcano to appease the gods.

    • Lynn Wilder says:

      Entitlement is a rich mans word…


      That’s just a convenient excuse from a privileged person who probably never worked in a factory for minimum wage in their life. The demographic you described were able to work and live because they weren’t yet being exploited. I was born in 1950 in a blue collar family in NYC – the embargoes happened in the mid 1970s and Reagan brought the change in values into government via regulation and a war on unions. I lived during these times – before the media was purchased by corporations that only offered one narrative with everything related to their narrative tailored to support their manufactured belief system centered around consumerism and legalized gambling in the “markets.”

      Please don’t patronize us with cheap shots at the characters of people you never knew – I knew them – they were hard working, honest and played by the rules. All of a sudden – a different demographic stopped playing by the rules of a US stable society and started operating like organized crime lords.

    • The fallacy of your “who earn it” by hard work, negates the fact that often, a person works very hard providing the labor/service that makes someone else rich. It isn’t competence and hard work, but rather greed, selfishness, and willingness to “use” others as collateral that make some rich at the expense of others. Do you not think the workers in the ” slave labor camps” and ” sweat factories” work hard? Do you not think those workers in the Triangle Shirtwaist Fire worked hard? What about all of those immigrants who laid the railroads from coast to coast? Teachers who work 65-70 hour weeks?

    • nonib56 says:

      The average competent human hasn’t lost desire, they’ve lost hope of ever digging out of the hole.

    • Santa says:

      Social Darwinism?

    • Jake says:

      I am suspicious of such ex cathedra pronouncements/generalizations about “the average man.” Rather than conclusions drawn from data, you seem to start with conclusions drawn from … what? Ideology? Talk radio? No critical thinking, just general conviction based on … Who knows?

    • That’s a right-wing talking point that is as old as capitalism itself. Dig deeper and think for yourself. People didn’t suddenly become lazy in the late seventies! Wake up! Quit letting the elites do your thinking for you.

    • John says:

      Saris, it’s like you didn’t even read the article. If you did read it, you have such a biased belief system that it defies reason, and evidence.

      If the average worker had no desire to work hard, and there was an increase in entitlement, as you claim, then productivity would be on the decrease, but it’s not.

      People aren’t poor because they are too lazy to get ahead. That is just the lie that your corporate masters tell you, so they can continue to exploit you and rob your soul.

      The mega wealthy are not job creators, providing you with a way to earn a living out of the kindness of their hearts. Consumers create jobs, and when the wealthy fail to pay a living wage to the majority of the workers, there aren’t enough consumers earning enough money to create those jobs.

      College graduates are not working minimum wage jobs because they are lazy. Until a large number of Americans can get rid of the idiotic idea that poor people are poor because they deserve to be, it will keep getting worse.

      Personally I am not holding out much hope, because the one resource we have an over abundance of in this country, are judgmental people who believe they are superior to the poor.

      It’s just a damn shame that the people who are earning middle class wages, believe they are being given something for their hard work, instead of recognizing they deserve a lot more, and would have a lot more, if the system wasn’t rigged.

      It’s not the poor people who are taking your prosperity. I checked. They don’t have a damn thing.

    • Jack Shelley says:

      Increase the tax for the people at the top, isn’t that what happened in 1975? The gigantic tax code that no one talks about got bigger and bigger. There are so many laws authored by lobbiests regarding tax code it would make the average joe puke!!!

    • jason sheaff says:

      so you are saying that a CEO works at the rate of 2000 of his workers ? great analogy , I have found that the ones who knew how to ”play the game ”and rort the system were and still are the real winners and the rest of the poor saps were left behind because they have a conscience and integrity.

    • civiletti says:

      How do you square that opinion with the continued increase of productivity?

    • Nico says:

      Though it is full of generalizations, the key presentation could be seen as the redefining of “entitlement.”

      He’s arguing that we used to see everyone as entitled to economic growth which they were a part of creating. [I don’t think the author is correct about his “golden era,” but that doesn’t change the basic analysis of the graph — that around 1975 wages were decoupled from productivity gains.]

      Why is the average person — who works a full week of work as we define it — not entitled to the fruits of his labor? That person doesn’t have to just “get by.” If we all put our labor into our joint economy, we should all bear the fruit of that — even if that means we all get “luxuries” and comfort. What is wrong with comfort? And what is this “winning” you speak of? Who wants to win when another hard-working person loses? Why would you want that and why would you want an economy that encourages that?

      The author also implies that one can not really “work independently” — unless you’re trapping your own food, our labor and risk are all interconnected.

      • Kay says:

        Totally disagree. He is saying that everyone who contributes should get a fair share of the pie. Right now, CEOs are earning an inordinate amount of the revenues when the company couldn’t exist without all of the workers. There is no respect or acknowledgement of the workers who helped the top succeed. Greed has become acceptable and that is a sad state. The entitlement, as you call it, is the worst at the top.

    • Tom says:

      I remember that time period. I was young, but my dad worked for a steel mill. The mid 1970’s were when Japanese steel became cheaper than American steel, and Japanese cars started flooding the US market. It was the very first time that America had significant foreign competition. And of course it was also the time of the oil embargo and the first time that gas prices AND interest rates started skyrocketing. It was indeed the end of the post WWII prosperity period.

      Obviously after that, things were never the same. Companies still had to turn enormous profits, but now those companies had to get their share of profits off the backs of the very people who were actually doing the work and making the most significant contributions.

      • micheo says:

        It’s an old story. “Those who produce should have, but we know that those who produce the most — that is, those who work hardest, and at the most difficult and most menial tasks, have the least.” Eugene Debs. 1855-1926

    • Bill Roberts says:

      What’s so strange, is that I can’t even assume you’re one of the well off, since even those that are most afflicted by this curse are exactly those that continue to perpetuate it by voting for politicians who give us oligarchic policies.

      Everyone should look to the Scandinavians for a view into what’s possible in a modern society.

    • WASP Calvinist values of predestination came to the fore – God gives success to those chosen for paradise while failure to prosper = damnation – but as a Calvinist theologian told me, the American model shifted away from community & generosity, e.g., mainline Protestantism, to evangelical greed, so-called prosperity gospel, more for each individual is better. This shift coincides with the managerial revolution & a dominion of bean counter MBAs over loyalty to the collective well being of firm, supply chain & consumers

    • Let’s not forget the obvious US pulled out of the great War Machine Vietnam in 75. Huge interest rates during Carter administration left us floundering to pay 18% mortgages decreasing average American net worth substantially.

    • Brian says:

      Well, Saris, it’s obvious that you’ve embraced the post 1975 values hook, line, and sinker. But I have to agree with the article’s author, those values are divisive, predatory, and un-American. But you are correct that the desire for comfort is and always has been dangerous, but you left off the conditionals that make it even more poignant: the desire for comfort is and always has been dangerous, especially when it overrides the best human attributes, namely, compassion, fairness, and charity. And this more complete statement of fact shows exactly where your philosophy, as stated, falls apart. You and the wealthiest in this country, have no standing to judge who has or doesn’t have the “desire to work hard to win.” And when the game is played on such an unlevel playing field, you cannot look at the game scores and claim that the losers just didn’t want it bad enough.

      The chart reveals the true redistribution of wealth that this country suffers under. It is not that taxes steal the money from those who earned it and give it away to the unworthy. If that were the case, the numbers in the chart would look very very different. Instead, it is the case of the unworthy stealing the wealth from those who work to earn it before it ever gets to their paychecks.

      The capitalist is a very important player at the start of a business venture, and should be rewarded fairly at that point. But once the equipment and other necessities of production are in place, the role of the capitalist is diminished, and the roles of those who make the production happen should predominate. The capitalist is still entitled to some return on his investment, but that investment adds nothing new to the production of goods or services, it is simply money made from having money, and therefore should be taxed at a rate higher than the salaries of the workers, who after all, are putting daily sweat and labor and ingenuity into their roles. Without the workers, once the mechanisms of production are in place, no goods and services can be produced. As productivity rises, so should worker’s wages–they, after all, are the driving force behind the gains.

      That wealth increase, siphoned off by management and capitalists, is being taken completely out of the American economy, shunted to tax havens, investment in other countries, and to stuff the pockets of crooked politicians to buy legislation that the industries write themselves. It is not giving away money to the poor that ruins an economy. Rather, it is giving it away to the rich, who hoard it and create dynasties. Dynasties lead to oligarchy, and no society that allows oligarchy to dominate it survives for more than a century before revolution takes it down. This is simple historical fact.

    • Harry McGrath says:

      That’s maybe 10% the case and probably about 90% pure malarkey. It if it gives you comfort, beleive whatever makes you happy.

    • Damon Hines says:

      Idiot… the uncoupling of social responsibility and benefit from the rights and responsibility of the corporation to maximize profits at the expense of any other concern is the disease inflicting humanity now, and until it is corrected

    • Stuart says:

      The average man sacrifices plenty that he or she shouldn’t have to. Namely, a quality K-16 education for his children and health coverage. Those things are far more valuable to society than another hundred yachts or lambos.

    • The big “winners” by and large inherited their lot in life. Most Americans are born, live, and die in the same 1/5th of economic status. That has nothing at all to do with earning it or competence. It has to do with connections.

    • Scott says:

      Saris, did you read the article. Your statement is the embodiment of the problem.

      “In the new moral view, anyone making “poor choices” is responsible for his or her own ruin. The unfortunate are seen as unworthy moochers and parasites. We disparage teachers, government workers, the long-term unemployed, and immigrants.”

    • That comment flies in the face of the data presented. The data being discussed is the increase in productivity. If people are being more productive then, obviously, they are working harder and smarter. They are doing more work not less.

    • permoccupy says:

      You completely failed to understand what you read, Saris.

    • Brian Goss says:

      Well, that serves to validate this article.

    • “I believe” based on what? I graduated high school in 71, married in 75. I find in this article an interesting question. What changed the values? A shift occurred, but why?
      You use a “buzz word”, entitlement. . Please explain how that came to be.

      • micheo says:

        The whole world has changed since the computer. We have been on the cusp of unimaginable and rapid change. Flux. When the Agricultural Revolution gave way to the Industrial Revolution, “everything” changed. Most of it unplanned. So it is, now. Most of our explanations are inadequate to explain what’s happening to our country and ourselves. The only constant is our human need to have explanations for our dilemmas. And, there are many (dilemmas and explanations). Which ones turn out to be appropriate or useful we have yet to see. Meanwhile, we take stabs at WHY.

    • Rose Anger says:

      Have you looked at Nixon’s Farm Bill and the death of the family farm? Happened right about the same time.

    • Karen McKim says:

      If American workers had suddenly gotten lazier in 1974, productivity would have declined along with wages.
      Nor did entitlement programs suddenly expand under President Nixon.
      Therefore, the “laziness” hypothesis doesn’t fit the facts.

    • Kim Cooper says:

      Saris — You are exhibiting the values we are discussing — the average man with average competence DOES work hard. Often very hard. The few who rise to the top are usually very lucky, rich to start with, and often ruthless more than talented. I know a number of people who were ruthlessly cheated by those rich and famous who you think work so much harder than the rest of us — people who had their good idea and hard work stolen.
      But, beyond that, always before, we believed that people who weren’t ambitious geniuses had a right to live. If they worked full time they had a right to a living wage. Even the guy who wasn’t so good but tried had a right to live. We thought “C” students were still valuable human beings. You didn’t have to be the very best at everything and tireless, healthy, ambitious, ruthless, and charming to boot. It was okay just to be a normal person. What happened to that? and why?

    • I was there, in 1975 working at a new job in Boston. I was a Union Butcher. We heard that wages and hours available to work were being tightened up. And it was because of imported goods like shoes, and clothes and durable goods. Nixon played a big part due to his talks with china, which was new. Full time work was the new enemy to corporations, they wanted part time employees, with less pay and benefits. They wanted these part time employees to be able to work anytime, no set schedule. The evil we live with now, was rearing it’s ugly head back then. I saw it begn to unfold.

    • Rod Prather says:

      Vietnam was shutting down and inflation was high. High inflation caused income to lag product prices so folks couldn’t buy as much product, This essentially flattened real wages. Also, progressive tax rates didn’t advance to meet increases in wages during the inflationary period from from 1974 to 1981. In 1965 to 1977 the top tax rate of 70% was paid by those making over $200,000 filing jointly, $100,000 singly. In 1981, the top tax rate was still only $215,000.

      From 1964 to 1971, the dollar inflated by 30.6% From 1974 to 1981, inflation was 84,4%. This means that we were laying our high tax rate more and more on a larger portion of the upper population. Wages weren’t following inflation. Prices were going up, but wages weren’t and taxes tracked earnings rather than purchasing power. Money flowed to the top.

      IN 1982, Reagan abandoned the 70% tax and dropped it to 50% on $175,000. In 1987 it fell again to 38.5% on $90.000 then in 1988, A Two Tiered Tax systems. 28% on only $29,500. This locked the continuous income and wealth increases for the top earners into stone. Had he instead Minimum income to the top earners, say to $500,000 and kept the 70% tax on top earners.. incomes would have continued to rise for the lower earners. IMHO, 1974 to 1979 was a fluke caused by Inflation and a flaws in the tax system.

    • Ken says:

      Economics tells us that wages should equal marginal product of labor. Unless the graph is mislabeled, it charts productivity gain from all sources, not just labor.

    • Sandra Urgo says:

      Read the following comment. That writer knows like I do that times have changed for the worst. You have been taken in by your conservative oligarch pundits. I’ve lived long enuf to know the hard working middle class is constantly swimming harder to keep up. Meanwhile, Google salaries of the top 1%.

    • Matt says:

      The sentiment in your comment promotes the myths that the author is trying to dispell. Nice one for being part of the problem not the solution… regards a full time hard working professional.

    • so you are just going along with this fictitious narrative of kindly father billionaires who can help themselves to anything they like for free from your daughter to you pension, and you are buying into this “entitlement” myth? When the biggest collectors of handouts from the government ARE THE LARGE CORPORATIONS- WOW.

    • The wealthy mostly didn’t earn it. They inherited it. Those who became rich had a large input of luck. When you read their stories there is always a ‘break’ which changes everything. There is no even playing field, there never was, but it is becoming more uneven all the time.

      The average person works harder than the wealthy, but get less. The idea that anyone can get rich is a fiction used to keep people from really looking at how the wealthy got their wealth.

    • Jim Davis says:

      I do hope you’ll forgive me if I disagree sharply with you. I came out of the Army in 1979 (Reserves) with a bright, shiny new MBA in Organizational Development. It took a year before I even found a “Veterans Readjustment Program” job with the county of Los Angeles. I then found a Veterans Service job with the American Red Cross which lasted till 1985. (every time they ask for a donation, I tell them I donated when I worked for them, for about half the wage I’d have earned in a private firm).

      I had to re-invent myself several times over the course of my career, spending my last 13 as a copywriter/editor for various marketing companies.

      Entitlement? Well, I am 100% service-connected disabled according to the VA, and in a wheelchair whenever I’m out of the house, plus I get SSDI. So, yeah, I think I’m entitled to these, based on what’s left of my spine, and why.

      I worked HARD at my job, as physically undemanding as it was. Yet, when I was let go from one job in 1998, there was an ad in the paper two weeks later for the same job — at half the price.

      At my last place of employment, we were told one year there was no money for raises or bonuses — as the CEO got a $1,000,000 bonus. Hell, the raise in just his car allowance was more than double my salary.

      So, what I have seen instead of the type of entitlement you describe, is an increased sense of entitlement from senior executives and CEOs, who expect more and more from their jobs. I don’t believe their proportional contributions to the company are equal to their increase in pay.

    • Robin Pettit says:

      You have bought into the new narrative. The people at the bottom of the wage pyramid worker harder than those at the top. So don’t tell me they don’t work as hard. They work hard and are fired if they speak too much about getting a raise.

    • Jeremy Deats says:

      From the article “Economics does not explain what happened in the mid-70s.”. It’s important to realize the article sort of pivots on this statement being a truth. There are plenty of economist who do believe a composite of things explain what happened and they point back to the things we can see occurring in the world in the mid 1970s a stronger embrace of foreign products. There was a cultural change to embrace Asian built consumer electronics and automobiles during this time, you also had corruption and weakening of labor unions in the US. Corporate greed driving decisions that benefit the company owners over the work force, taking the “shareholders over common good” philosophy to new extremes… Much of this can be classified under globalization.

    • 1975 is when Reagan betrayed the unions by dissolving PATCO.

    • bobklahn says:

      I think you have no idea what you are talking about. You are repeating right wing talking points.

      There are damn few who are not willing to work together. As to sacrifice, do you even know what you mean?

      Nobody becomes a billionaire by playing independently, no one can produce enough to accumulate a billion dollars. It takes tens of thousands or more to produce that much wealth, the ones who accumulate it take it from those who produce it.

      The average person is the overwhelming majority of the population. Average competence is the norm in this world. As to the desire to work hard, how about you never put the words work and hard together again as long as you live. If they are willing to work they should be paid well. Working hard is what slaves do. Or do you even have a definition for hard work? It’s another right wing working point.

      The desire for comfort is he driving force behind almost all productivity in the world, always has been. Just the definition of comfort has changed.

    • “I think there is also an increase in entitlement, of the average man not really wanting to work together or sacrifice.”
      With that comment, I would argue that such inaccurate beliefs are part of the problem.

    • You see! what you are saying here, you have fallen prey to the entire problem. It’s exactly that attitude that has gotten us where we are today. Make those less than you the enemy and you have fallen fir it like so many others. This is how they won…why they have all the money. It was their plan

    • Dylan Maxwell says:

      Saris, you assert that entitlements began in the mid seventies?

    • There IS merit in what you say. That feeling of entitlement does play here. However, don’t be misled and assume that the ‘average man’ does not want to work or to work together. It isn’t true. The average man with average competence has a role to play and should be treated with respect. It only plays into the aspect of greed to say that a person with no desire to work hard to … won’t win. You are assuming that winning is the goal. That is a ‘greedy’ attitude. The goal is fair play and community spirit. At least, that is my view.

    • You have been sold a bill of goods. GOP has paid mega dollars to create your sense that the “other guy” isn’t working but is taking from YOU. The truth does NOT bear this out. The person picking your pocket is that ULTRA rich donor to the GOP who wants you to join his serfs & work for pittance in bad conditions so he can line his pockets with gold.

    • Jennifer R says:

      Wow, this is unbelievably clueless and callous. Today it takes two parents to earn less than what one parent could earn, adjusting for inflation, in the 60s. My family did fine on one income in the 60s and 70s, even with three kids, and my dad was just a junior college professor. Today a community college professor would have to take on a night job and his/her spouse would need to work, too, and they still may not be able to afford to buy a modest home. The two-week family vacation is now rare, and people seem to think that’s normal. I remember my family taking long vacations in the summer, on one income, but most families are lucky if they can even take a week off – most have to use their vacation to cover school breaks, etc., if they even have paid vacation.

    • Dennis Ramon Martinez says:

      You make some presumptions to validate your opinion. That “the average man with average competence has no desire to work” for a start. Average men built this nation through hard work. They may not have been trying to win. That’s the point of the article. It was enough to get an honest day’s pay for an honest day’s work and earn a living wage. Maybe that’s what the average man wants.

    • J says:

      Which means the only way to beat it is to team up, to work together, to form unions, and community organizations, and ad hoc committees to accomplish what individuals cannot on their own. Whether it is in a natural disaster, or a democracy in crisis, or
      an economy.

    • Denialawareness says:

      “Average man”? … looks like someone forgot that women exist.

    • Mary Hood says:

      What is worth more? Hard labor (physical ability), or cognitive ability, or athletic prowess. Some people are born with some of these (one or more), some with none (the disabled). Many people have the desire, but regardless of how hard they try, cannot get ahead due to circumstances beyond their control. But once upon a time, it didn’t matter nearly as much as it does now if you were born with cognitive ability vs. the willingness to work hard. My Dad says his father, who was a pre-eminent chemical engineer in his time, lived in the same neighborhood as a ditch digger, because in those days, a man with a degree and a career running a research lab and publishing didn’t feel entitled to earn 100 x what a laborer did, and the laborer could afford a house in the same neighborhood as the man at the top of his profession.

    • When you look out at a crowd of people, what do you see? In your mind, do you see more then half as moochers looking for something they haven’t earned? People are messy, they are not perfect and make lots of mistakes along the road of life. The goal should be to help as much as possible so they can find their way. Some require more time then others. Denying the most basic of needs (food, shelter, healthcare) should not be considered a hand out. There should be a floor for which no one should fall below. We claim to be a civilized society, how we treat those at the bottom should reflect that by advancing policies that allow all to prosper.

    • A. Thomas Cavano says:

      I have never met this “average man who didn’t want to work.” Instead I see men offered little or no work, work at less-than-subsitence-level pay. The date also is instructive. After the Civil Rights era, when public housing and CETA programs became available to poor people, when Affirmative Action became normalized, the backlash began. It started, maybe, in 1975, but it was Reagan in 1979 that killed many of these programs, to lower the taxes of the wealthy. The magic powers of the marketplace were invoked, and the City on the Hill was imagined. This graph shows the reality of the City on the Hill. It was a con to squeeze profits to the capitalists and away from labor.

    • That is the con, isn’t it? The average joe these days wants a free ride – all the bennies without any of the work. I’ve been all over this country and have worked with people from all walks of life. The hardest working people I’ve know are the poorest.

      I think your perspective is part of the problem.

    • CP Cang says:

      The presumptions in your comment make you a poster child for the legitimate premises contained in the article.

    • Julianne Jaz says:

      This is precisely what entitlement is: “In this narrative, they [the already wealthy] deserve more wealth so they can create more jobs, even as they lay off workers, close factories and invest new capital in low-wage countries. Their values and their interests come first in education, retirement security, and certainly in labor law.”

      And you’re walking a very fine line of “victim blaming” there with your claim of “no desire to work hard to win.” It might seem you have no idea whatsoever of how hard the poorest of this country work – every day. If wealth were based on “hard work” there would be no poor people. Try working multiple jobs, taking care of a family, without health insurance, perhaps relegated to public transportation, where a single misstep means the very real potential to lose a job, or one’s housing. I drive by hundreds of homeless people every day in Seattle, and I roundly reject the pernicious idea they are homeless because they have “no desire to work hard to win.” That’s a self serving narrative that preserves a willingness to turn a blind eye toward the circumstances the poor have been forced into in this country.

    • Peter Kobs says:

      Interesting, but it’s missing some key data points that help explain causation, IMHO. Greed has been part of our society for a very long time. Even during WWII there was widespread profiteering and corruption. Ditto the Cold War era.

      So what changed in about 1974?

      — Our involvement in Vietnam mostly ended, winding down the wartime manufacturing economy.

      — Nascent inflation, which Nixon tried to control with his doomed price and wage control scheme, started soaring, which made average wages worth less in the marketplace.

      — The Arab Oil Embargo in 1974, following the failed attack on Israel, spurred even more inflation and nearly collapsed the auto industry, a key sector for blue collar workers.

      — Durable goods manufacturing by the “Asian Tigers” (Japan, South Korea, Taiwan, Indonesia, etc.) started booming as they ramped up exports to the US and Europe, particularly in electronics, automobiles, and capital equipment. The US had very little competition in these sectors for three decades due to the vast destruction caused by WWII, but now those economies were back on line.

      — Most important of all, China began its rapid conversion from state socialism to capitalism, opening up a huge manufacturing opportunity for exporters eager to take advantage of a billion low-wage earners moving from the impoverished countryside into the cities.

      Bottom Line: The efficiency gains in the US from automation and new production methods meant fewer good-paying manufacturing jobs for US workers. Meanwhile, those same jobs started moving to Asia in droves due to the huge wage disparities there. Unlike Germany, American politicians from both parties were too stupid or too myopic to see what was happening, and they failed to take meaningful actions to safeguard the manufacturing core of the US economy. Stagflation set in starting about 1974. We have never really recovered from these massive shifts. Whether “greed is good” or “we’re all in this together” attitudes prevail (usually for a decade or so), the macroeconomic forces are essentially in the driver’s seat. Remember that NAFTA under Bush I and Clinton simply intensified the damage wrought by the globalization forces that sprouted in the early ’70s.

      You need these facts to get beyond simplistic explanations, IMHO. Just my two cents on a chilly Saturday afternoon in the Rustbelt “flyover zone.”

    • Coltrane Decker says:

      smh – blame the victims

    • Did you read the article? We all do better when we all do better. When the economy created by the greedy who resent sharing the benefits of what their workers produce it doesn’t afford the lazy worker sufficient funds to live a dignified life – there is no incentive. Look at the graph. There used to be a time when the makers/workers were rewarded for their productivity.

    • Charlie says:

      Oh boy, where do you get off.
      You sound like Mr. Entitlement personified, maybe working off daddy’s wealth?
      Typical attitude of one who feels superior to those “deadbeats in the trenches”, and no doubt grew up having earned none of the advantages genetics delivered to you.
      Get a life.

    • Barb says:

      That is exactly the attitude the author is talking about as being detrimental. Just about everyone wants to work and be valued.

    • Then there is a group of people who just inherit their money, keep it in their family, and perpetuate the wealth disparity. Just cause someone is rich, doesn’t mean they worked hard for it. Just because someone is broke, it doesn’t mean they don’t bust their ass 7 days a week at two jobs.

      Your view is exceptionally narrow sighted, and biased towards not helping others.

      Why you bias yourself towards not helping people instead of helping people is very telling of your character.

    • Larry Swain says:

      “Big winners who earn it?” The big winners generally do no “earn” the spoils they are taking. They use power, money and influence they have inherited, lucked into, or cheated their way along to get in many cases. Those who “earn” wildly disproportionate wealth are probably the exception, not the rule. Even those whose hard work, perseverance and smarts helped them get ahead usually had some advantage early in life that they don’t bother mentioning, or dismiss as unimportant. Witness Trump’s “small” loan from his father. Oh wait, bad example. Trump largely blew through all of the advantages he was given on the way to multiple bankruptcies.

    • Jody Berland says:

      There is no evidence of any kind in current social or economic research that people are impoverished because they lack the motivation to work. It’s more likely that they work 3 jobs because the first two don’t pay for rent and food. This is silly rot dear Saris. To say that “everyone plays independently” sounds like your mind is still in the sandbox… with the “average man’ a figment of your imagination.
      a not so average woman.

    • John Kessler says:

      If hard work was the answer there wouldn’t be such a problem. Some of the poorest people I know are also the hardest working. A single mom working three jobs and just getting by is working a lot harder than a Wall Street investor, but not seeing the rewards. To many recent collage graduates with tens of thousands of burdensome student loan debt, who played by the rules and worked hard, now can’t find jobs that pay well enough to get ahead.

    • Kent says:

      You totally don’t get it, Saris. The decoupling of wages from productivity, together with offshoring of jobs, with the impetus of automation and robotics, means for the average worker it does not matter how hard or well one works. Work your heart out. Sacrifice yourself, John Henry style. It will not make any difference in your outcomes because you are powerless and the system has been rigged for wealth extraction at the top.

    • As Barbara Ehrenreich demonstrated in “NIckel and Dimed,” the so-called average worker at below subsistence wage and no benefits works incredibly hard for a pittance and is constrained by the circumstances that s/he endures. Meanwhile, the power elites, who, by the way, have not “earned” most of their super wealth but scammed or inherited it, then hid it in overseas tax havens, tout their putative superiority while manipulating the political system for their own further profits. Yes, we can find lazy folks anywhere. Some of the biggest crooks are not lazy at all; they work hard at their crimes. Extreme power continues to corrupt.

      The turning point in the graph you ignore was when the business elite finally drove the unions out and escalated their exploitation of workers by driving wages down and outsourcing production to nations with extreme poverty wages.

      We all desire comfort, but some desire more and more symbols of power — mostly money — and care not for their fellow human beings. “Entitlement” is the cover story for casting the victims of corporate greed as somehow evil and “undeserving poor.” When I was a teenager in the 1950s, we could get an entry level job, rent an apartment, buy a used car, and party on the weekends as we accumulated savings for college. The STRUCTURE of the economy is extremely different now, with the escalation of the class war by the super rich against the rest of us.

      Stop blaming the victim. For more on the corrupt plutocrats, see https://thehopefulrealist.com/2017/11/12/paradise-for-plutocrats-and-the-crimes-of-oligarchy/

    • Robin Schnell says:

      Saris, I haven’t met those average people you talk about who don’t want to work hard. That’s a myth to justify the wealth created by unfair wages. Working more than one low-wage job is very hard and without those workers of average competence, there would be no businesses at all.

    • Donald Hill says:

      The “average people” I have known over my 46 years as a pastor in mostly middle and working class parishes continue to work hard… but more and more the desk is stacked against it making much difference in their economic outlook. Pay has stagnated as basic costs have risen. Jobs are being lost more to automation and moving jobs overseas. Much of what is available is the service sector which usually doesn’t pay very much. And then those who are doing well look down their noses and claim that the average workers is lazy or not trying.

      One woman in my present parish works three jobs in order to pay rent and to afford the health insurance which none of the jobs provide.

      No wonder the standard of living in the U S is dropping except for the wealthy. It has more to do with luck, and privilege than ambition.

    • Patricia Wolfenden says:

      And bang! Your comment is a perfect example of the changed view of workers he’s talking about! The ONLY time hard work pays off is when society plays fair. As his piece clearly shows, the game is rigged now. And “Entitled” now defines any human being who desires a decent life and doesn’t have one.
      The other descriptor for your not-as-subtle-as-you-think comment is “scapegoating.”

    • Seudon Amous says:

      I beleive he explained people like you…I am entitled to my retirement that I started working for when i was 15 and which is now being pushed back so self righteous entitled pricks who drive cars worth more than my house can get tax breaks instead of paying back the debt cause from saving their 401k

    • Jeff says:

      That’s true to some extent but for the most part the system and the game or rig now just like the article said so that the wealthy the ones holding all the cards get draw more from and increasingly smaller deck. And then when someone tries to work hard tries to move forward there are roadblocks put in their way that aren’t there for other people going for the same piece of the pie

    • Bob says:

      Top financial families don’t do actual work, and therefore don’t earn their money. This wealth once was shared, through increased wages and benefits, with those who did the actual work. By buying lawmakers, the top 95 % have been able to change the rules thus tipping the playing field in their favor.

    • Claire Kramer says:

      No No NoNononononononononono!!!!! That’s what the wealthy would like you to believe. Truth is the average American struggles for simple things like feeding your family, owning your home and sending your children to college. Don’t judge who works hard and who does not, Some simply give up because it’s a constant daily struggle just to make ends meet and the wealthy accumulate more and more without taking responsibility for the way they make their money on the backs of the middle class. If I sound angry I AM!

    • John Thyne says:

      Interesting but wrong. The marked diversion of Figure 1 correlates to the intersection of politics and business in a very bad way.

      It wasn’t just a “greed is good” mentality that pervaded our social conscience, it was that mindset coupled with a progressive political movement that the fat cats used to stir passions for change in society while corruptly taking advantage of it.

      Ever wonder why big corporations get into political debates? It’s because it benefits their bottom line. — The big social catastrophe beginning in 1975-ish (which had the benefit of moral superiority that led to the intentional ignorance of its destruction to our social fabric) was the Equal Rights Movement in which women burned bras and took to the streets to protest inequality. It was a valid movement but the corporations exploited it and equated being equal with being welcome in the workplace.

      Rather than honoring the work of women at home as equal to men at work, or recognizing that either parent or spouse can work while the other cares for the homestead, we foolishly abandoned the work of keeping a home to go to work outside of the home only.

      The result? Twice the workers at half the pay, and a massive social degradation of the family. — With both spouses at work, latchkey kids became commonplace if couples had kids at all. — The companies doubled the work force and used that against the workers by cutting wages in half. Single family incomes became a thing of the past. Now both parents or spouses toil outside of the home and there is no time for family! —

      CEO’s, want to fix society? Pay your workers (women or men) a sufficient wage to have one spouse work at home for the family’s well being; and society, recognize that work at home on building a family is equally, if not more, important than work in business!

    • G C Walker says:

      Is that really the best argument you have to offer in respect of your Freidmanesque views
      Back to class for you.

    • Miller says:

      The attitude that you just stated is the problem . The idea that if you deserve wealth then you will get it, and that if you don’t deserve it then you won’t. Did you read the article? We used to appreciate the people producing goods and services. Production in this country is up, but pay is down. How is it right that the people who do the work don’t share in the profits of their labor?

    • katie kern says:

      This self-serving argument is utterly unsupported by the abundant evidence. People want to work, save and earn a decent standard of living. Corporate greed and entitlement have leveraged the power of obscene wealth to stack the decks overwhelmingly against what you call “the average man”. Capitalism without restraint is tyranny, and it never ends well. We need to redress the balance of power between civil society, the governments that are supposed to serve us, and business. It’s far and away out of whack.

  2. Edwin Spiessens says:

    Hear, hear!
    And there is no doubt that this is a ticking time bomb.

  3. mike says:

    Went off sound money gold standard in 73 due to overprinting to fund American adventurism in Korea and Vietnam. The rest is history.

    • John says:

      FDR took us off the Gold Standard on June 5th 1933. Wage and price controls were implemented in the timeframe you are referencing. Workers could not get a raise but capitalists could still take as much profit as the market would bear. It lasted a couple of years.

    • John Hightower says:

      I was positing the same response!

    • alsanbalaur says:

      The gold standard was abandoned LONG before 1973. As others posted, FDR did that in 1933 as part of the New Deal to relieve the Great Depression.
      The “Greed is Good” Economic shift in the 70’s has ensured that we will continue to have a bubble and burst economic cycle,with each bubble forcing more and more people into lower wage brackets, while ensuring the 1% gain a greater control over the remaining “piece of the pie”.As long as people keep blaming the powerless disenfranchised for the problem, instead of the actual cause, this will continue to get worse. In the end, there is only one solution, and it sure as hell won’t be at the ballot box.

  4. Gradivus says:

    That was when Nixon switched us to fiat currency, so our money was no longer backed by gold and silver.

    • Gradivus says:

      Dollar wages continued to rise with productivity as before, but the value of those dollar wages stayed the same because of inflation due to fiat currency.

    • Wrong. Check out Modern Monetary Theory. Stephanie Kelton of UMKC debunks that notion.

    • Exactly. Infinite credit became available to bail out the wealthy when crashes came along. Our financial system facilitated the kind of morale decline the author talks about. Market crashes are good for wealth redistribution so long the wealthy are not bailed out. We were all too clever by half and now face system collapse that will be the mother of all wealth redistributions.

    • kipoca says:

      No. Fiat currency is partially a driver of the post-WW2 economic boom. It allowed for the economy to grow as quickly as production instead of deflationary pressures of growing only as quickly as gold could be mined.

  5. david clark says:

    Lot of handwaving about values here. Leaves a lotto bedesired. Specifically what policies and events?

    • End of the labor shortage due to computerization and women entering the workforce in massive numbers. Failure of business class to reward increased productivity, and widespread acceptance of ideas like that put forth by Saris above.

  6. Alex Adams says:

    This still has no conclusion of your question. What combimation caused it? A president? Invention of super PACs? An event? A trade agreement? Give specifics…

  7. Ron Brown says:

    Good analysis, but why keep it local to the US.
    This is a global problem, and as much true here in Australia as in the US.
    Something’s going to give one day, and it won’t be pretty.

    • alsanbalaur says:

      Like Kennedy said “Those who make peaceful revolution impossible, make violent revolution inevitable.” But this time, that revolution may well be global. Most of the world has been being robbed by the 1%, but now more and more of the world is AWARE of it.
      Our economic model is untenable, and globalization is making that worse. People bitch about “fiat money” not realizing that most economies have bee fiat money based for better than a century. It is not whether there is a “gold standard” or “silver standard” or a credit standard behind the money unless one realizes that the true basis of value is in the work that drives the wealth. The worker creates the wealth, but is getting an increasingly smaller portion of it for their labors.
      As long as the 1% hold 90% of the wealth and 100% of the authority, then the bottom 95% will continue down the path to poverty. Then who will buy the goods and services that the profit of the 1% depends upon?

  8. Peak domestic oil? Break from the Gold Standard? Relationship with China ? All about the same time frame. All seem more likely than some evil plot to just make you poorer. The post ww2 period was unique in history, and the world keeps changing. Surely, you can’t suggest bombing the rest of the world so they can’t compete with you as a moral economic position just because the post ww2 was so great for workers?

  9. Just Some Dude says:

    What I find interesting is that if you look at the timelines of futurists of the era (most notably, Buckminster Fuller and Alvin Tofler) the automation and computerization that was largely responsible for the increase in productivity was going to be the catalyst for a new epoch in human development. It was going to be the driving force behind a world where, to paraphrase Fuller, using current resources to their maximum potential we could allow everyone to live the life of a millionaire.

    It seems to me that this shift in belief systems that you describe was something willfully imposed on society by a ruling elite who somehow saw the value of their own prosperity endangered by the prospect of universal prosperity.

  10. Whiteaker Roger says:

    Two words. IRA and Human Resources. Well, OK, that’s three words.

    When the IRA was introduced in 1974, it was designed to, “provide a tax-advantaged retirement plan to employees of businesses that could not provide a pension plan.” However, as corporations quickly realized, IRAs, even with modest company contributions, were way cheaper than company pension plans. By the year 2000, virtually all businesses had eliminated their company pension plans for IRAs.

    The other sea change was the movement from Personnel Management to Human Resource Management which also began in the mid-70’s. No longer were workers a valued and trusted member of the corporate team. Rather, they were a resource to be procured and discarded as the profits and losses of the company dictated. This trend was exacerbated by stock market speculation where analysts dictate which companies are “good” investments and which aren’t.

    • R. Allen says:

      Thank you for mentioning these two aspects of the situation, especially the human resources part. My take on what caused the break is that it was a backlash by the powerful against the changes of the 60s and 70s. The middle class had gotten wealthy enough that their children were able to go to college and come up with all sorts of ideas that challenged the power structure and the status quo on many fronts. The remedy was to ensure that there would be no more middle class, no labor unions to build it, no more security for anyone but the top. I’d be interested in seeing an additional factor tracked on this graph: labor union membership.

  11. The key paragraph in the article:
    “The key to the treasure buried in Figure 1 is power relationships. To understand what happened, ask, “Who has the power to take 93% of all new wealth and how did they get that power? The new moral and social values give legitimacy to policies that favor those at the top of our economy.”

    We would all like to see a blueprint and an agency or coordinator that did this. It seems too complicated to have happened without a managing force. The Powell Memo [Wikipedia has a nice summary] was timely. It gave corporate executives a coherent moral basis for dropping any residual social obligation to workers or public policy. In that sense, the Powell Memo broke the spell of the post-war period. The Powell Memo said, “Go ahead. You know what you want. Do it.”

    Power for workers and social interests comes from social movements. The labor movement of the 30’s, civil rights and peace movements in the 60’s, environmental protections and women’s rights in the 70’s were all about power relationships – the power to say, “We want this for our constituents.” Since the mid-70’s social movements have been on the defensive, and corporate interests have driven our cultural values.

    • Captain Obvious says:

      I read your article asking myself ‘where’s mention of the Powell Memo?’ It signaled the counterattack on average people and democracy, which took place in the same time frame that new, leveling forces had entered politics: women, minorities, environmentalists, and the working class started to tame the wealthy, business, and the military via well-deserved hostility. Reeling from the shock of modernity, those who held the most power in the US had the options of changing their traditional practice of nationhood or doubling down on failure. It’s not the first time in history ruler(s) have chosen to throw a tantrum.

      The various symptoms described in these comments miss the disease: those that own and rule in the US would rather destroy it on their own terms than evolve. Faced with the long-term impacts of what’s been a return to medieval barbarism, the responses have thus far been inadequate. At this point it’s a valid question if the will can be found to re-establish civic sanity. Re-asserting it will not be pretty and indeed the various Homeland Security (sic) efforts weren’t really directed at foreign actors but threats to America’s new and improved ancien regime, mad Puritan overlords in a nation/world coming apart at the seams.

      A sound first step would be describing the problem in those stark terms, something at which tepid liberal politics consistently fails.

  12. Tim Gatewood says:

    I think Nixon taking us off the gold standard opened the floodgates for the financial firms to create money from thin air, which gave them the funds to lobby Congress and begin to undo the restrictions placed on them at the end of the Great Depression, The shift from pensions to 401(k)s and IRAs followed after the shift to fiat money unbacked by gold. The growth of the MBA degree was part of this, as well, as it sold the lie that all companies could be run the same way and cutting costs was a good way to boost the profit of the business. Somewhere in there, schools with MBA programs started teaching the doctrine that maximizing returns to investors was the be-all and end-all of a business; before that, other values were also taught (such as the long-term viability of the company and the necessity for it to be a good contributor to the communities in which it operated).

    All of these factors could well have been orchestrated by a group of wealthy men, only those men would mostly be dead by now, as we are talking about changes that would have been in the works since at least the 1960s and how many of the uber-rich from that decade are still alive today?

  13. A log scale helps show that wages were lagging productivity gains by a lot from 1960 onward. https://research.stlouisfed.org/fred2/graph/?graph_id=249872

  14. Paul Racko says:

    Stan, you use the word “we” and “our” a lot in this piece, but I need clarification of what exactly you mean by those terms. Do you mean individuals each on their own accord decided to implement these harmful economic policies, or do you mean by “we” and “our” that the government (economic policy) implemented these policies? There is a big distinction there, and I think it deserves clarification if anyone expects to get to the bottom of the problem.

    You also ask “Who has the power to take 93% of all new wealth and how did they get that power?” Well, I think the answer is obvious but you never spell it out clearly. The state is the only entity to have such a power and regularly uses this power to grant special artificial privilege and confiscate wealth, but this finer point is neglected in your analysis. Is your claim that this is the case, or is your claim that business has arrogated these powers to themselves somehow with no actual legislative capacity of their own to do so?

    • Paul – It would be a combination of business and the government, caused by business effectively buying the government through donations and networking.
      While businesses cannot change laws directly, they constantly do so through lobbying. The money they give to a politician or party to for example lower taxes in their industry, ends up being far less than the gain they make from the changed laws

    • kipoca says:

      I thought it was pretty obviously “we” and “our” as in society.

      The government did not plunder that new wealth. If what you claim is true, the government would have been taxing (confiscate, as you put it) all of the wealth and then distributing it to the wealthy. It’s patently obvious the powers of taxation did not move new wealth to the rich. It was the abrogation of that power, cutting taxes, which allowed the wealthy to hoard new wealth. The government didn’t force companies to shift their wages from production to executive.

  15. Ron Glandt says:

    Sociologically and demographically the US was changing quickly as a result of ‘the pill’, War Baby Generation exerting their voice of different values, women’s rights influencing many aspects of society by becoming employed in large numbers, the beginnings of the break-up of families – indelibly changing children’s performance levels, the cost of wars diminishing domestic advancements.

    • kipoca says:

      Sweden provided gender equality long before 1975 and they don’t suffer these ill effects you describe.

    • The Civil Rights movement was a major factor in determining how the nation’s wealth and resources were to be shared – or not. Many people didn’t want their tax money benefitting “those people” and so, a lot of social programs that built the white middle class were cut back. Wealth move up and away from where “others” might benefit from it.

  16. IndyThreeWheel says:

    I really wanted to use this article but I can’t because it has one glaring inaccuracy. An inaccuracy that can derail the Democrats. The article says “Let’s go back before World War II to the Great Depression. Speculative unregulated policies ruined the economy. Capitalism was discredited.” This is wrong – dead wrong. Laissez Faire Capitalism was discredited.

    You want to say Capitalism was discredited then that means no jobs but government jobs in a command and control economy. You see, all economies have some Capitalism except complete Communistic command and control economies and there aren’t any of those left except for North Korea. Even Cuba has some Capitalism. “Socialist Europe” as the Republicans call it is mostly Capitalistic because most of the people work for private enterprise.

    The highest standard of living comes with Regulated, Civilized Capitalism with plenty of social programs that provide a social safety net, infrastructure, education and protections for the environment and the workforce. That is what the Democratic Party has always stood for. But lately, many on the far left end of the Democratic Party have confused Laissez Faire Capitalism (no government involvement whatsoever as in Ayn Rand) with regulated, civilized capitalism – the type of capitalism we had from FDR to Carter. Unless we stop the far left members of the Democratic from point blank trashing all forms of Capitalism, the Democratic Party is doomed.

    • Jim says:

      I think you give far too much credit to the Far Left with regard to its influence on the nation and the Democratic Party in particular. Bernie Sanders, who has been vilified as a (gasp!) socialist, is not anti-capitalism. He has become the de facto leader of the Left, but the Far Left is suspicious of him. The Far Left has always been a less influential fringe group than the Far Right. It’s simply easier to be reactionary than it is to be progressive.

      The Democratic Party has allowed itself to be nudged rightward for so long that it very much resembles the moderate Republicanism of forty years ago. It has been corrupted by Big Money to the degree that it puts up little or no resistance to the very successful Republican initiatives to “re-frame the debate”. Think of the distortion and demonization of the following words: “liberal”, “progressive”, and “politically correct”. The result has been that Sanders is perceived as being way out in left field, even though his policies and values are consistent with those held by such mainstream leaders as TR, FDR, and RFK. If the Democratic Party is doomed, it is due to the corrupting influence of $$$$$ and a wimpy response to divisive GOP tactics, not because of any clout wielded by the Far Left.

  17. tropicpine says:

    The intermodal shipping container was standardized by ISO in 1970. This standardization preceded a significant drop in the cost to ship manufactured goods intercontinentally.

  18. Changing moral “values” only follow and adapt to changing physical/economic realities. Work lost value because workers lost value in a world in which “human resources” is a commodity traded in by transnational corporations. The change in the moral “value” of work followed the change in the economic value of work and decline in the value of human life itself. The result is what one would expect – the decline in labor unions, the massive increase in bargaining power for those at the top of the corporatist global economy to roll back the gains made in the Progressive Movement, New Deal and Great Society, the accelerated degradation of the environment as a decline in human power opened the door to transnational coroporations and international financiers started shifting their costs of production onto future generations (at a hefty markup). The owners of the world economy just move their business to a place or places where humans were never valuable enough to have accomplished any of those protections from global corporate activity either for the environment or for human life itself. The key culprit is overpopulation – the explosion of human populations where antibiotics, vaccines, industrialized food production and other products of western medicine and industrialization were rolled out to non-industrialized societies. So why 1975? Pretty obvious, really: https://history.state.gov/milestones/1969-1976/rapprochement-china

    The “value” we place on work has been adjusted to reflect the actual, tangible and declining economic value of human life itself. Non-human “persons” are doing just fine . . . but only because they measure their success in short term profit. In the long term, our technology (including debt and corporations) is in the same soup pot in which we are all being slowly cooked.

    • David Brown says:

      Brendan, wish I’d seen this earlier (today = August 24, 2016). It is astonishing and disheartening that discussion of Earth’s human population vanished about, what, 15 years ago? 20 years ago? Today one NEVER hears any mention of the population problem and it’s direct link to the climate crisis we face and the worldwide geopolitical crisis that worsens with each new human inhabitant added to our little Earth. Here in the temperate, economically prosperous and not so overpopulated Pacific Northwest (outside of Seattle) there seems to be little reason for alarm. But being a fairly well educated populous here there is much talk about the need for reforms. E.g., more efficient utilization of carbon based fuels, more electric vehicles, more production of renewable electricity and using less in general. But there is NEVER any call for a campaign as strong and as focused as anti-cigarette smoking was for an even more important cause: that of anti-population growth. Every human NOT born to this planet adds that ever so tiny amount of wiggle room that we so desperately need to make it through the disaster we humans have created on our Earth. ZPG and NPG (Negative Population Growth) have faded into obscurity. Why? And can we reinvigorate those organizations? We really need to.

  19. Dale Wight says:

    Why doesn’t this mention what economists with whom I talked in the early 1980s discussed openly: the 1970s is when the Women’s Movement followed the racial-equality battles of the 1960s and housewives hung-up their aprons to enter the paid workforce. They already consumed goods and services so a proportional amount of jobs weren’t created when they started competing for jobs. This flattened wages as more people competed for jobs. This graph shows that productivity gains offset the downward pressure on wages from more people coming to look for jobs than how many jobs were created.

    Part of that movement, which continues, is the demand for equal pay for equal work. This broke the contract this article cites
    “In that period, the prevailing social contract said, ‘We all do better when we all do better.’ My prosperity depends on your well-being. In that period of history, you were my co-worker, neighbor or customer.”

    This included the idea of a “living wage” by which bread winners for families were paid more for the same work than were people who supported only themselves. Few women supported families when this concept was implemented so women and single men typically received one wage and married men received the “living wage” specifically as an extension of the contract that this article notes. The idea was that unpaid (not non-working) mothers, and children, were compensated/cared-for through the “living wage” that came into their homes.

    But when average pay for the same work was compared, men — many of whom received “living wages” — were paid more. This fueled the demand for equal pay. Everyone wasn’t going to receive the “living wage” so the resulting equalization reduced over time the gap by subsidizing increased wages for the new women in the work force by reducing the living-wage supplement. The high inflation of the 1970s masked much of this because all wages went up each year.

    A jaded look at this would be that the capitalists who run the economy realized that they could effectively reduce wages so they would obtain the labor of two people who now would have to work to pay for the families that had been supported by the wages of only a husband. Now, it would be financially difficult for many families to revert to the single-income model.

    One economist, Don Hilty at Chrysler while I worked there in the 1980s, explained to me that even as unemployment (measured by how many people looked for work) fluctuated, the % of adult population working increased every year and that was driven by the surge of women coming into the workforce.

    Why is all of this ignored in this article?

    • Stephen R. LaDue says:

      In addition to these social factors affecting the economy, it cannot be left out that wage and price controls were instituted by the Nixon Administration back then to try to contain the growth of inflation. In Addition to the many other valid points raised here this should certainly be in the mix.

    • Women entering the workforce in the 60s had to because either the husband died or divorced her & left her with the children. I know because I was there. What do you suggest, that the women & children move onto the streets or the woman get some sort of job so what was left of the family could at least eat.

    • LF says:

      Multiple factors coincide with the divergence point circa 1974. Oil embargo, end of Vietnam War, women entering the workforce in droves, the midpoint of the Baby Boom hit the age of majority and graduated college, post-Nixon administration effect of attacks on unions, the start with Nixon of the Republican agenda to reduce taxes on wealthy and emasculate unions. These changes cemented and accelerated with Reagan, when the big wealth transfer from the middle class really took hold, and union-busting became popular, driven by Reagan.

  20. AJ Barnes says:

    Dear Stan… better study up on your history, buddy. The Great Depression was the fault of BAD GOVERNMENT POLICIES. Read some Milton Friedman. Learn from the best. They quadrupled the tax rate and cut the money supply in half in 1929 which, according to Friedman, caused a massive shortage of money to fuel businesses. Without capital from banks, or savings, what would have been a ‘garden variety recession’ (as it was in the rest of the world) turned into a Great Depression. Love it when people instantly blame business for stupid government policy. And it wasn’t the government that got us out of the depressions either, despite what the Great Socialist FDR tells you… businesses fueled by wartime spending did. So, take some time and read a real economist. Blessings….

    • Jeff says:

      Yeah, “wartime spending” BY THE GOVERNMENT. There’s nothing special about war spending that makes it more effective, though. (For all that, the bad policies you decry were implemented by Republicans.)

      In any event, it’s not like everything was in the doldrums until then, or else how could FDR have won a second term (in a landslide, no less), much less a *third* term?

      No–things were pretty much back to normal by the end of ’38. Not boom times, but fairly OK. The Dow Jones average would have to wait until after the war was over to reach its ’29 peak again, AIUI.

    • Erin says:

      Milton Friedman! Look what happened in Chile. Friedman never took the human factor into his calculations. Trickle down was the creation of the UofC economics department. How well has that worked out. Ugh!

  21. Sy Schwartz says:

    A return to American idealism requires that the polity confront the details of legislation engineered by elitist. corporate toadies that created today’s conditions. See Hedrick Smith, WHO STOLE THE AMERICAN DREAM. It’s all there, very nicely spelled out. The people were betrayed by their own Congress and it is taking too damn long for this understanding to take hold in the body politic. Some one with a bully pulpit — Bernie?– needs to use it to draw attention to the details and results of specific legislation. Also, Smith shows just how we were propagandized into abandoning our altruism.

  22. paradocs2 says:

    Reading Picketty (“Capitalism in the 21st Century”), he would teach us in the period 1970 -1980 the rebound (and unusually high) national rate of economic growth which was a rebound from the devastation and destruction of the Great Depression and World War II came to an end and the world returned toward its usual state of inequality and plutocracy as the rate of return on capital exceeded the rate of national economic growth, empowering the very rich, who then overwhelmed justice in social policy. He and his Berkeley colleague Saez would also inform you that your second graph is inadequate as they have shown that the greatest growth in income has accrued to the top 0.01%

  23. Chas. says:

    I remember this time clearly. In the 60s, we had just advanced from the Wright brothers to the moon landings. We had a utopia like Star Trek to look forward to. Nobody questioned that the best way to move our civilization forward was to help everyone -rising tide lifts all boats. Then the OPEC oil embargo hit. Lines at gas stations. People suddenly realized that some things were just finite. Something another person had was something you didn’t. It was suddenly a zero-sum game. Interest rates went to 13%. Ever since then, greed has dominated. Those with the most power acquired the most stuff. Education funding dropped massively -why pay for someone ELSE’s kids? I’m not sure a civilization can recover from this. Few examples show doing so in history.

    • Jeff says:

      “People suddenly realized that some things were just finite.”

      You forgot the rest:

      “And we panicked. Lots of this was due to the media itself.

      And then there was someone there to take advantage of our panic. And we let him take over. And he made us feel good for a moment. So we trusted him. And we figured that however things were, those stupid hippies on the other side would just make things worse than otherwise. It’s taking us a long time to unlearn that lesson, and we’re just now seeing the fallout from it.”

  24. Erik Hare says:

    I agree that this is clearly related to the Baby Boom / women entering the workforce, driving down wages by supply and demand. As Baby Boomers retire we should see the workforce participation rate finally go back down to 60% or so, where it was before 1968.

  25. Jimmy Z says:

    The 1970’s was also the dawn of computers in the service industries and robots in manufacturing. Up to the 1970’s, answering the phone, taking a message, typing a letter, welding two pieces of sheet metal together or painting a vehicle on an assembly line was a compensated skill, and decently paid. Those “middle class” jobs, along with many others, have either been computerized or off-shored, or both

  26. fairleft says:

    Your perspective is ahistorical. The changed appears to have happened at the conclusion of the 74-75 oil shock. The economy began to recover but productivity was suddenly delinked from wages. This had nothing to do with a values change, there was no values change between between 1974 and 1976. It looks like a conscious decision was made by corporate leaders, who perhaps sensed that long-term decline of unions and a relatively high unemployment rate had weakened worker power sufficiently.

  27. tonymarq says:

    I see this as only a part of a much bigger and simpler picture that will continue to divest humanity for years to come. The mid 70″s supported two growing events, technologies and globalization, the latter doing irreparable harm to the American workforce, while the former continues to chip away at what’s left of the labor intensive workforce. I do recall the 70’s well, and I do recall it was a period of heavy pollution and the terms like “acid rain” was scaring the hell out of the people in this country. To combat this, we started outsourcing these polluting activities to Asia. However, what we did not expect was the repercussions of opening two new doors that would significantly affect our future position as the industrial leader of the world. 1) they not only took in and fixed some of the manufacturing processes and made it their own, but 2) they had a staggering workforce of over half-billion people who can do the jobs for pennies on a dollar. Today, with the advent of automation, new technologies, inclusion of other growing and developing countries and continents (i.e. India, S. America & Africa), I can easily see that things for this country will only to grow worst. I hear the arguments against isolationism but unless we take specific actions to protect our selves from this growing global workforce things will never be as they once were.

  28. Guy says:

    One thing you are obviously missing here, which had a huge impact on this, is the suppression of upward growth of personal incomes by doubling the workforce, by the inclusion of women. While I agree this was a necessary change, it had a very negative affect on the worker’s ability to make higher wages as there was a huge change of supply and demand in the labor market.

    Could you elaborate on this some?

    • Guy says:

      Keeping in mind of course, these factors are laggards, as was the shift of women into the work force to fill in newly created jobs.

      • kipoca says:

        Indeed, poor women were always in the work force. The working class never had a single bread winner. And when the middle class collapsed, you had more double-income family corollary.

    • kipoca says:

      Women didn’t double the labor force. The percentage of women in the work force did double, but that was between 1948 and 2000 on a continuous upward course.

      The number of workers grew because of population growth.

  29. Mike Lince says:

    The change in America’s moral compass led us on a direct path to the election of Ronald Reagan in 1980. Most of us had no idea what supply-side economics meant. It has taken us decades to comprehend the fallacies of ‘trickle-down’ economics, which conservatives like Paul Ryan still advocate in deference to their corporate masters.

  30. Heavypen says:

    A follow up to Fairleft – who appears to have started comments on the right foot.

    With all due respect to the author, the analysis is off the mark (pun intended).

    Social change doesn’t happen quickly. In fact, it NEVER happens quickly. Social change that affects baseline behavior is generational. Therefore, looking for causality for the decoupling of productivity v earnings is a bit like hearing hoofbeats and thinking “Zebras.”

    The decoupling is so dramatic – so sudden – that you have to look to monetary policy. A lot of people have. They call it the “Nixon shock.” However, I had a professor who called it the “Battle of Bretton” – the day that Germany and the rest of Europe decided to engage in a currency war with the U.S.

    With surprising legislative nimbleness, Nixon and Congress delivered tools to the US Fed to fight back. The measures were effective – the USD still is the dominant currency. But I agree that the cost has been greatest on American workers.

    I’ve since attended economic lectures (with clients) where this episode in currency policy history is often mention as the true point of demarcation for accelerated wealth inequality. In public, they’re careful to not name names, but privately – after a few beers – many of these dudes say that bankers – in Germany – started it.

  31. sweattshop says:

    Should say, “In this era, ‘populist’ media figures are spiteful and divisive.”
    Ok, this article has merit. Now how to explain it plain language to a nation with minimal education.

  32. Alan says:

    I have often reflected on a phrase that became popular in the 70’s: “Enlightened Self-Interest”. Most people are real good at the second part but very few have any interest in the first.

  33. The rationale for the seemingly greedy corporate behavior whose effects began to appear in 1975 was provided by Milton Friedman in 1969 with his call for a stock-holder based economy. From then on, business schools across the country proclaimed a company’s proper mission to be maximized financial return to the shareholder.
    Anyone who had previously worked for a major company that valued broader relationships with community, customers, and employees saw Friedman’s pronouncement as trouble down the road. They were right.

  34. Mark Combs says:

    Maybe someone mentioned it above, but one major technology shift that was occurring right then was the freeing of (extremely expensive, therefore tightly controlled) IT computing resources from centralized control due to the introduction first of relatively inexpensive departmental computers (DEC VAX, Wang, etc.), followed soon by the even more dramatic introduction of really cheap PCs into business. This enabled a huge amount of innovation and introduction of efficiencies into businesses big and small, which probably contributed in a big way to this shift: by investing in technology to analyse where costs existed that could be easily reduced through automation, businesses were able to increase productivity without any involvement by the workforce (except by their being laid off). Once networks became dependable internationally (even before the introduction of the internet), a lot of work in service industries could be moved off-shore, and/or outsourced, again increases in productivity at the direct expense of the workforce.

  35. jasonaquest says:

    The idea that there was a fundamental turning point in the nation’s values in the early 1970s seems a bit far-fetched, since people’s core values tend to be slow to change, and the population turns over very slowly.

  36. RJV says:

    You neglect to diagnose why the fruits of the work are not accruing to the workers in the US. Its simple, the Capital became mobile and moved to countries that offered Less Costly Labor, Lower standards of Environmental Controls, in short an environment where profits could be greater, and did benefit workers but in other countries. This suppressed the growth of income in USA. The pendulum is about to swing the other way as clarity is brought to the problem and politicians capitalize on the dissatisfaction. Both Bernie Sanders and DOnald Trump made it clear to workers that free trade agreements are part of the problem. it is not the only cause however! Other comments in this string also have touched other causes.

  37. Women entering the workforce? More dollars chasing fewer goods.

  38. Saralara says:

    ERISA, enacted in 1974. I have long held it was the downfall of our community. The charts really illustrate that.

  39. Michael says:

    I see the point but a simpler explanation is the 1972 is the beginning of an extended period of Republican dominance of the presidency. Nixon elected in 1968, his policy favoring the wealthy go into effect. This really takes root under Reagan and Bush puts the finishing touches on it. If you keep cutting taxes on the wealthy, cutting social programs, cutting regulation, etc, this is what you get – social inequality.

  40. Darren says:

    The irony here. Morality went down and this was posted by the Huffington Post. Here’s another reality check. What happened the year before 1974 or 2 years before 1975 as the figures indicate? Roe vs Wade. That’s what? When close to 60,000,000 million babies have been killed and what about the children they could of had, don’t you think THAT has an effect on the economy? Without people, there is no economy. Now, I don’t believe in greed and I believe in giving people the right to produce and benefit from that. I believe in the economic system of Distributism. Go to distributistreview.com for more info. Don’t make assumptions on the word without investigating it further.

    And then there’s “gay marriage”. A further decay in morals. For one thing, there is no such thing as “gay”. It’s all in the head. It’s a social construct that’s purely psychological. If “climate change” is really worried about then people are concerned and believe in nature. Then what about human nature? There’s temptations to succumb to doing what is not right, not natural. If we can’t agree to what is natural in human nature then how can we agree to what is right and good. It becomes relative which is a philosophy that stands on sand. There is a Truth. Now, go be a detective as if you came to Earth as an alien from another planet and go find the Truth. Go find the one institution that hasn’t changed it’s moral teaching. There’s only one. God exists and He didn’t leave us orphans.

    The sexual revolution or sexual de-evolution as it should be called is destroying common sense and humanity.

    “When sex stops being a servant, it becomes s tyrant” – G. K. Chesterton

  41. Albert Ip says:

    It was the death of Mao in China leading to an explosion of labour supply coupled with the technology which enabled goods to be produced in another country in lower cost than in America. Of course, the greed of capitalism was there to exploit the poor workers in China. The rest is history. Capitalism has no moral. Capitalism’s driving force is greed.

  42. David Conell says:

    So according to this author we are to believe that one day in 1975 Americans woke up and collectively said “Lets change the culture”, then proceeded to do so in a uniform direction.

    I think the world’s a complicated place, there is another explanation(s), the data is bad, but you’d never know fro this partisan hack

  43. kurtzs says:

    Sorry, guys. Biology and technology trump idealism every time. Supply-demand applies to labor as well as to other markets. Population increased by around 100 million from 1974 to the present. Automation ramped up during the past 4 decades with robots and computerization making labor redundant in many cases. No value shift can alter those facts. To empower a skill ceteris paribus, it must become rarer or the need for it must rise. Independent plumbers and electricians are making 6 figures now. With a brittle water and transport infrastructure, sterile soils, droughts,…I expect growing small organic gardens to become a highly valuable skill!

  44. Dennis Tate says:

    In 1940 Canada’s P. M. Mackenzie King initiated an exceptionally good central banking system where roughly half of the nations total supply of money was created through low interest loans from our own Bank of Canada for infrastructure projects that basically all Canadians would tend to agree were necessary. In 1974 P. M. Pierre Elliott Trudeau took Canada off the gold standard, (which of course was necessary), but, he also abandoned the intelligent policy initiated in 1940 and our national debt, as well as the amount of interest owing on that debt, spiralled higher and higher.

    • Dennis Tate says:

      I really like the way that the late Jack Layton summarized the result of this policy change:
      “We never should have privatized our debt and turned it over to the
      private banks, we should have kept it in the hands of the Bank of Canada,
      at least a major part of it, because then we would have been paying
      interest back to ourselves.” (NDP Leader Jack Layton)

    • kipoca says:

      That public debt isn’t necessarily bad. That’s economic growth. You can’t send productivity through time backwards.

  45. aztekman says:

    The mid 70s was also where the “social” mores of the “hippies” generation became the “responsible adult”.
    So US started going from “the greatest generation” who “worked hard and selfishly” to “man, what happens, happens”

  46. There was a change. I think a lot of it had to do with the Harvard Business School mindset. Many large companies were run by engineers. Engineers are very focused on product. To make good products you need good and motivated people. Engineers tend to also be less greedy. The Harvard Business Schools people are only focused on profit. One of the biggest problems with maximizing profit is that the most efficient business model in the world is larceny. It requires little investment and cares little about the long term good. So instead of a focus on good products and motivating people to produce them business are just trying to steal for the guys at the top. Its obvious why that woule go bad. I think bombing HBS is a good start to fixing our economy.

  47. Nancy says:

    This was the direct result of huge increases in corporate influence over Washington…which continues to its culminating point of Citizens United….which insures total corporate control over government. The wolves are now in charge of security for the hen house.

  48. David Galiel says:

    CorruptNixon-placeholder-Ford. Brief blip (rise) in worker income during Carter, then 12 yrs of Reagan-Bush “greed is good” institutionalized the trend.

  49. Dan Rotman says:

    “Something happened here”?
    Reagan and Thatcher happened. Friedman has a lot to answer for.

  50. Aaron Hoffmeyer says:

    Actually, the graphs and the way they are portrayed ignore the obvious. The top marginal effective tax rate in the US actually went up, and your graphs reflect that workers and executives were still fairly in sync. The great divergence came with the 1981 Reagan tax cuts.

    From wikipedia: In 1981, Reagan significantly reduced the maximum tax rate, which affected the highest income earners, and lowered the top marginal tax rate from 70% to 50%; in 1986 he further reduced the rate to 28%.

    That was supposed to free up more money for investing in business. What it did was create huge deficits for the government, and enabled the most wealthy to acquire wealth much more quickly. Rather than invest or spend much of that money, acquiring additional wealth became the rallying cry. The rich were determined to get as much money as possible, as quickly as possible, because the days of higher top marginal tax rates could be just around the corner.

    Instead, they have played this game for 35 years … not content to be millionaires or multi-millionaires, they strove to keep up with their neighbors … the new goal was to be a billionaire … to acquire more wealth than they could possibly spend. And they colluded together to keep wages for their workers stagnant.

  51. CK says:

    One of the ways of looking at inequality would be to identify the components of GDP and split it into public and private. One would assume that a larger share in GDP of public goods would entail fairer distribution to the people. The more the private assets in GDP, there is likely to be more inequality. In socialistic countries with larger share of public assets, there should be less inequality, though it may only be the sharing of poverty. In free markets, the level of inequality would be higher, with sharp differences between the rich and the poor.

  52. Linda says:

    I may be on the wrong page, I’m far from an economist.
    My feeling is that it matters not the gender or color of the worker, if he / she is working, a paycheck is being issued. That check should respond to the seniority of the worker and the skill level of the work. What matters is the greed of the company and its highest paid executives. An 800% discrepancy is outrageous. 100% for the owners and 40% for CEOs in my opinion it’s fair. Everything else should be in compensation for the workforce.

    Roe v Wade didn’t devalue life, it allowed women to value themselves and their right to choose their own health and well being. It’s not morally wrong to make life decisions based on your own circumstances, it’s morally wrong to tell another person that their worth is less than yours. Or that someone else’s is greater than hers.

    Union leaders got too big and too greedy. They were looking after themselves and not their members. And some members got too cocky about time off and job performance. There didn’t seem to be a conciliatory way to get in shape and they crashed under their own weight. But there is a definite need for unions. Corporate greed has proven that.

    Regulations probably need to be controlled. You can’t broadly regulate companies. There are individual concerns at be considered.

    I watch my grandchildren struggle so hard to make ends meet. Some of them making the same money I did at their age. So afraid everyday one of their kids will get sick and they will need a day off and they will get fired.

    And investors. Everyone wants to get rich of the backs of someone else. Investing is good for everyone if you’re using it as a long term financial gain.

  53. Jim Paradis says:

    All these replies and nobody mentions one other thing that happened in the mid-70s: the Watergate scandal. I submit that the Watergate scandal and the subsequent pardoning of Richard Nixon did two things: first, it destroyed Americans’ faith in government as a force of good, and second it was the first instance of “too big to fail”. Ford reasoned that prosecuting Nixon would “tear the country apart” and so made sure that didn’t happen. You can draw a straight line from this reasoning to the “too big to fail” phenomenon that lets major players commit malfeasance with impunity.

    It was with this scandal fresh in the public’s minds, coupled with the Iran hostage crisis, that Reagan sailed into power on the idea that “government IS the problem”. Between WWII and 1975, government served as a check on corporate overreach. That started to come apart with Reagan.

  54. Leon Trotsky says:

    Capitalism is a system of accumulation. The only money which has any value in this system is that appropriate (stolen) from labor. Accumulation reduces aggregate demand, on the one hand, and politically disenfranchises the class lacking capital. The end game here is serious and stark: Continuing trends for the working class of less and less access to even basic necessities, and the gutting of democracy and even republican political structures.

  55. Entdx says:

    Illegal immigrants are damaging for economy as was outsourcing to the 3rd world and deindustrialisation(coincides with x BTW).
    Also social rights movement did not really helped. Contrary it probably fixed new layered society and provided way to manipulate society(Black Detroit happened, as transition of entire new layers like females to new jobs).
    Maybe stagflation and MMT voodoonomics trumph was indicators of problem.

  56. Stephen Kohler says:

    Also, let us not forget that two things in everyone’s monthly expenses did not exist in 1975. The internet and cell phones. These two bills alone can top out at 400 to 500 dollars. Plus the cost of a college education is probably 10 times higher than it was in 1975 and the average summer job for a student only pays about 2;5 times as much.

  57. Bill James says:

    The economy is a flywheel building momentum as labor applies energy. Three things occurred in the early 1970s to trigger the debasement of the value of labor.
    1. Nixon removed the dollars’ convertibility to gold.
    2. US Peak Oil was in 1970.
    3. Rapid expansion in dependence on foreign oil.

    The Federal government printed more money to buy foreign oil, finance Viet Name and subsequent oil-wars, and reinflate the economy after the dot.com and 2008 crisis. As money is printed, those who have assets see the value of those assets appreciate in value; the same house increases in price. Those who must exchange their labor to buy assets (the poor and young) find the value of their labor is debased.

    Government transfers wealth from the “have nots” to the “haves.”

  58. Dannyd says:

    That’s what happens when you put a Rockefeller in the white house. Coincidence? I think not.

  59. Julian says:

    It was cutting tariffs. The government stopped protecting Australian manufacturing, wages, and therefore GDP from imports from countries with slave labour, poor human rights, and little or no environmental laws. That was and still is the cause.

  60. johngarvinclark says:


    Listen to the whole talk, but pay particular attention to the part from 23:40 min to 58:00 min. The main point: In 1971, Volcker foresaw and told Kissinger that the price to be paid to maintain hegemonic control was the destruction of the standard of living for blue-collar America, the American middle class. But who decided that we should take this path. Let me know whether this information explains as much for you about what has happened over the past 50 years as it does for me. Consciously rejecting this hegemonic role may be the place to begin reclaiming/rebuilding our country. Our insistence on the necessity/desirability of US hegemonic control is the negative side of our centuries-old, country-wide, bi-partisan belief in American exceptionalism, an un-examined belief that has become cancerous to our society because it is un-examined.
    I believe that Sen. Sanders is more willing and able than Sen. Clinton to carry on the work of Pres. Obama in examining/reducing the cancerous effect of American exceptionalism on our domestic and foreign policy.

  61. Steven Giddings says:

    Computers. Computers started being able to do entire programs by the mid seventies and entire systems by the early eighties. That means that employees could be given tools that could really increase their productivity. Since pay is not, and has not been coupled with productivity, and since we’ve been getting better and better at developing productive systems, employee productivity rises and pay remains low. I’ve been in the IT industry since ’70, successfully, but the starting and normal rate for a consultant is the same now as it was them. Inflation has more than doubled the cost of living in that time, we’re better at developing solutions than we were then, I’ve got a lot of successful experience in that time, my pay is the same. The solution is for a move to more scientifically based promotions that is goal oriented toward rewarding and developing employee productivity. Scientifically based, in other words, eliminate or minimize the opinion based promotions and raises.

  62. Steven Giddings says:

    Actually, this is just highlighting a very basic issue. Business, political, and legal systems are run using an opinion based decision making methodology, (like the “good old boy” system). With the increase of knowledge, facts, and access to them, (the internet), more people can spot more problems easier than ever before, such as this. As long as the systems America depends upon rely upon opinion based decision making, progress will be slow, and random, if it happens at all. Converting business, political and legal systems to a fact based, goal oriented, decision making methodology would not solve anything, by itself. it would just give them/us the tool to solve everything.

  63. redwoodtwig says:

    Thoroughly interesting factual look at the economic landscape of the 1900’s.

    The middle 1970’s were when the huge surge of baby boomers were entering the workforce and society was reorganizing itself to adjust all sorts of shifts and changes in economic activity.

    I think the author is quite correct in saying that the basic cause of the changes since the mid 1970’s has been a major shift in our moral compass. I still remember the shock I felt when I learned that one of the key advisors to the president actually came out and said “greed is good.” This was almost exactly opposite of what I had been raised to believe. Looking back now, I realize that this way of looking at life, putting one’s own desires ahead of everyone else’s, applies not only to greed for more and more money, but also to greed for being able to satisfy oneself more and more. In other words, the hippies and the yuppies were both movements in which pleasing one’s self was the single most important thing in life.

    I think the turning point in 1975 was due to the arrival of the baby boomers in the work place. The moral values of the previous generation had been part of their early childhood, but by 1975 the vast majority of baby boomers had modified their values to be more in tune with what their culture had been teaching them in the years leading up their entering the workforce. Each of these can be seen as cultural shift points, and all of them shift emphasis from what they can do for their country to what their country can do for what they are most greedy for.

    1969: The song “My Way” released. It is certainly a song in praise of greed in the sense of having one’s own way. And became so popular that I doubt anyone over the age of 40 hasn’t heard it several times. As it happens, according to Wikipedia, his daughter later said “[Frank Sinatra] didn’t like it [because] he always thought that song was self-serving and self-indulgent.”

    1969: The movie Midnight Cowboy is released. Again, Wikipedia: “The film won three Academy Awards: Best Picture, Best Director and Best Adapted Screenplay. It was the only X-rated film ever to win Best Picture, though its rating has since been changed to R.” This marked the beginning of a major shift in how Hollywood’s huge moral influence shifted from plots with the standard heroic figure to plots with protagonists of ambiguous morality at best. It is a wonderful portrayal of greed and need as it plays out in the world of the very poor and homeless, which at that time was a miniscule percentage of the population.

    1969: Woodstock and the huge number of songs that came out of the hippie movement. Strong desire, even greed, to have personal freedom both to do whatever they most enjoyed (at the time) and freedom from interference by government. And also strong desire to change the system, though usually not very clear about how.

    1972: Title IX, gender equality in college sports. A major side effect of this was that most colleges made physical education optional rather than mandatory so that whoever wanted to join a varsity team could. I don’t have research to back me up, but my sense is that during the 1970’s university education started fragmenting more and more so that there began a flow into the workforce specialists in handling statistics who never had to take more than one or two culture related classes. Who never had any exposure to thinking about ethics and morality other than home, high school, and the songs, movies, and events in their formative years. But who quickly learned how to make corporate earnings multiply by looking only at the numbers and making decisions based on the numbers only.

    1981: Ronald Reagon elected president. He himself never said “Greed is good,” but I recall the flap when one of his advisors did. In any case there’s an excellent summary of how he changed the economic structure of this country at https://consortiumnews.com/2011/10/05/reagans-greed-is-good-folly/ and that narrative certainly matches what the graph shows.

    What can we do about it? Nothing and everything. Another cultural shift is currently happening, though at this point I don’t know what the key song, movie or events might be. The children of the baby-boomers are starting to arrive in great numbers in the workforce and soon will be in positions where they will do things that will indeed shift us to a new moral compass. I don’t know what it will be, but I do hope that greed becomes less important. And the best way for that to happen is for each of us to think about it once in a while.

    How does a cultural shift occur? By the members of the culture voting for what they want by buying songs, movies and tickets to events. Money talks, and the big guys can’t argue with what the public buys. So the coming cultural shift is essentially in charge of our cultural icons and it is up to the Lady Gagas and Justin Biebers to come up with cultural shift points that bring together the widely divergent strands of greed currently tearing our culture apart.

    • Jeff Blanks says:

      I guess there’s nothing some GenXer still fighting the Punk Wars can’t blame on Boomers. 😉 OK, maybe that’s a little unfair, since I can hardly believe what happened to them myself.

      However, Boomers had been entering the work force for years before ’75; OTOH, apparently the peak year for Boomer births was ’57, which would make those people 18 in ’75 and just entering college. (And don’t forget, Michael J. Fox played a child of Boomers–or at least War Babies–in the ’80s. By now, it’s the children of GenXers entering the work force.)

      Funny thing about the ’60s–the nub of the ’60s problem was that Peace, Love, and Understanding were running up against Freedom, and lots of people wound up choosing Freedom rather than making them all play together. Then, having surrendered most of their freedom to The Man, they wound up voting for the party that represented the loss of their freedom on the promise that it would take less of their money. And they said stuff about “freedom” that people could interpret however they wanted, thereby missing the real message. Lots of people just weren’t thinking back then–I’m not sure they’re thinking now.

  64. Bruce snider says:

    That is the same time computers came on line in a major way and began to affect overall economic and manufacturing productivity for the first time without increasing labor productivity. IBM 360/370s were sold in large numbers to all industries. Look at Moore’s law and the increase in computational power starting with semiconductor based computers in the 80s and beyond. Man has figured out how to increase productivity rough automation with less labor. As an extreme example look at what high speed networking and flash trading have done recently to redistributing money in the equity markets.

    Basically labor productivity and economic productivity are now decoupled for most economic activity because automation means less labor for more goods.

  65. What you have said is fair enough but I would simply point out that women joined the work force in droves during the 70s with the result that real wages fell through the floor. Does that imply women are at fault? Of course not. But it cannot be denied that before the mid 70’s a couple with one or two children could live reasonably comfortably from the wages of one breadwinner working at a basic skilled job where as now, even professional working couples can barely make ends meet with two salaries, let alone ordinary working people. Surely people do not actually believe that the moneyed establishment acceded to developments which first saw women win the right to vote and then relative equality in the work place because they supported the the underlying principle of equality?

    • Jeff Blanks says:

      It might be better expressed as the Big Guys using the idea of more women joining the workforce against that workforce. A two-income household ought to be able to work a four-day week, but the necessary public policy adjustments to make that happen still haven’t come about. In fact, no one’s even thinking in those terms, when before 1975 just about everyone was.

  66. Tim Swartz says:

    The conflict order changed.
    Man vs. Man, Man vs. Nature, Man vs. Society, Man vs. Self, and Man vs. Technology.

  67. Eddy Cheek says:

    I disagree somewhat. The date he points to around 75 is the Nixon recession after Watergate. Things start back up in the late 70’s with Carter and almost everyone was gaining as before. It was the Reagan recession and his policies that really started the fall of the middle class that is still going on today.

    • Kim Cooper says:

      Eddy — More than that, it was Ronald Reagan who made it okay to have contempt for the poor. An idea so opposite of what Jesus preached as to be Satanist.

  68. Interesting. However, the author, Stan Sorscher,
    EOI Board Member?, does not even mention the Vietnam War, which ripped America’s soul to shreds in the latter 1960s and early 1970s. A war America entered, not to save anyone from communism, but to replace France in Vietnam, and thus enjoy Vietnam’s rubber trees, oil and other natural resources; and that entire regions’s natural resources. A pure and simple rich white men’s U.S. military-industrial complex war for giant future American industry profits, and for giant profits produced by the war itself, using poor and middle class Americans to fight the war. The Vietnam war explains the shift in “consciousness”, the shift in perspective, the shift in values, the shift in morals, between the rich Americans and American industry, and the rest of America. That perspective remains very much alive today in the rich Americans and in American industry; seriously exacerbated by rich Americans and American industry moving their production facilities to cheap overseas labor markets, such as Vietnam, Indonesia, China, India, Pakistan, Mexico, etc.; and seriously exacerbated by rich Americans and the military-industrial complex inventing plenty more wars for poor and middle class Americans to fight for rich Americans and American industry. I doubt I needed a B.A.. in Economics, 1968, from Vanderbilt University, to figure that out. All I needed was to have been paying attention with an open mind.

  69. Ernie Ferguson says:

    I think another huge factor was allowing banks to have branches in other states. When banks were local entities, they were dependent on the local economy. They invested for.local growth.

    Another factor at this tone was that.most of the increase in production was due to computers and not workers.

    • Kim Cooper says:

      People were working at those computers. If having computers in the workplace increased production, why shouldn’t the workers take part in the increase? Really, why shouldn’t they?

  70. Steve Renshaw says:

    As one other person pointed out that when Nixon stopped the $1 to gold conversion window and truly made the DOLLAR fiat currency, this made all of this possible. Since we are not playing with real money, the rich can manipulate money supply to make themselves more and more and more and more and more wealthy because the system is rigged for them.

  71. ntguardian says:

    That’s one hell of a chart, one that I could stare at all day long pondering. I now REALLY want to know what happened there. That said, his answer is not sufficient. Even if he’s correct, I want specific examples or events indicating the shift. (I don’t necessarily disagree with him; my own thought is that in the heat of the Cold War America abandoned the egalitarian ideals that drove her forward and inspired the world and adopted a “If it’s remotely Communist then it’s bad!” ideology.)

  72. ozmirage says:

    Part of the conundrum is based on money madness, where those who acquire surplus money, and cautiously trade it, so they no longer need to labor to acquire more, and thus no longer contribute surplus goods and services, are esteemed. The poor are misled to envy and hate the rich, and are goaded to attack them and take their property from them, as if that would make everyone prosperous.

    Wealth (money, jewels, etc) is not prosperity. If it were, give everyone a billion billion quatloos and we can all be happy forever after. . . except civilization would promptly collapse. (If you’re fabulously rich, why bother working?)

    Reality is far different. Prosperity is the production, equitable trade and enjoyment of surplus usable goods and services. Doing more with less so more can enjoy is the recipe for finding happiness. Doing less with more so fewer can enjoy is the recipe for misery.

    Our civilization is warped by money madness and usury, so that we seek the abstraction (“make money”) and not the reality (“make more goods and services”). Why else would a corporate CEO be more valuable than the equivalent number of workers hired with the same personnel budget? People who can manage money madness, usury and government corruption are scarce and expensive.

    By the way, a dollar bill (Federal Reserve Note) is not a dollar. It’s a debt, denominated in dollars. No dollars have circulated since 1933. Thus it is misleading to try to account for equitable trade with a repudiated security versus lawful money. Which is but another aspect of money madness we suffer under.

    • Please research what is called Modern Money and Public Purpose it’s a heterodox view of money that has advocates from around the world. For a short introduction watch on you tube JD Alts video “The millennials Money” than after researching what is called Chartalism, than go to the video posted by Bill Mitchell from Australia called Whats new in MMT This last video will give you a chance to see the rebuttals of those opposing this what I believe correct view of modern money and it’s implications to our society

  73. dballing says:

    Here’s what changed: Intermodal transport container standardization, making it far easier (and thus cheaper) to get goods from a warehouse in the middle of south-east asia all the way to a retailer in East Nowhere, Ohio.

    Unions are the ones screwing American labor. (Well, screwed, past tense). They convinced everyone that American labor was so superior to everyone else’s, that it deserved this premium compensation rate compared to the rest of the world, etc., etc. But then, when it became easy to actually obtain goods from these other places, we learned that wasn’t really the case, and that there was literally no reason to pay an American 20X as much as someone in asia to make the same damned things. The only reason to do so would be “I hate money and so want to set a bunch of it on fire effectively.”

  74. The way in which facts and figures are being thrown about , and the way that, uncommon language and ideas, are being added to the mix. Shows me why more and more people distrust higher (?) education and well read people. This is an issue that shows how easily and destructively distortion and manipulation can happen. The over all effect on people who should be, and could be, both more aware and more knowledgeable , seems to be their withdraw from the arena where issues are discussed, debated and eventually solved. I am not as well educated or versed as many others in this discussion. Perhaps that is why I am depending too much on my “emotional read” of this issue. It bothers me I am unable to rationally and intellectually offer up a solution to this issue. This inability should not and will not diminish my belief that my “emotional read” tells me something is very, very wrong,. That the power, influence and wealth in this country have become too focused and needs to be redistributed making people more like each other, instead of putting people into more and more groups that serves only to divide them.

  75. Kathy says:

    Folks, 1978 The Revenue Act created the 401k. All us working people were incented to give our money to Wall Street so they could gamble with it and make tons of money with our savings. Created a lot of bad behavior in government and business policy ever since. Repeal the 401k.

  76. Josh says:

    Top tier tax rates were 90% during the most prosperous times of the country. This created an incentive to re-invest into their businesses, thus creating more jobs, rather than siphoning all the wealth off the top in the form of compensation.

  77. blue_Shift says:

    We’re looking for moral rather than structural causes at that point, but the cause was almost entirely structural: the end of the Viet Nam war, the end of the Apollo space program, and the end of the big build phase of interstate highway. This is a massive unwinding of substantial amounts of cash flowing through the US economy.

    There is a second force, and that is the arrival of parity from the nations demolished in WWII: Japan and Germany in particular were beginning to saturate our markets with quality manufactured goods, putting pressure on both wages and prices.

    Remember what followed? Inflation that saw mortgages at 15% and higher.

  78. David Russell says:

    The usa declared bankruptcy on August 15, 1971 and abanded the gold standard. Congress is free to spend whatever they desire since a federal reserve notes is not redeemable for anything of value. Then in 1972 Nixon went to China, a huge pool of cheap labor. Add increasing federal debt and taxes with cheap foreign labor with no accounting for the social cost and you see a country decline. Sir James Goldsmith had a lot to say on the social cost.

  79. Denise says:

    I read the article, and about 1/2 of the many comments back and forth. My conclusion is that everything boils down to this one fact: the economy, the 1%, the 99%, NAFTA/TPP, moral narratives, unions, ineffective government, etc., etc., etc. are not the underlying problem. Those many things are the symptom. The true problem is massive corruption across the board. And we are overcomplicating the description of the problem (trying to micro manage the symptoms) instead of addressing the root cause. But since the corruption is now at every level, I don’t know how we could prosecute corruption at the judicial level.

  80. I think the explanation is much simpler.

    The change in values, morals, etc argument is, as it always is, enticing, but there has always been a “greed is good” crowd and a “fair is good” crowd. You need look no further than “It’s a Wonderful Life to see their ongoing conflict play out to a Happy Ending for the “fair is good crowd” (which includes me). It is however, both too easy an answer and one that ignores the more parsimonious explanation.

    It’s too easy because its a commonplace answer. Every generation enters its dotage complaining that the younger generation has lost its moral compass and doesn’t value the things that matter. There’s lots of evidence of this in the comments above. And the “greed is good” crowd is usually the first to complain about the lack of morality and principles among the fair is good crowd. It’s a political explanation, and one that helps to explain why people often vote aganst their own interests.

    And there is a more parsimonious explanation, even if its not simple. What you should be digging for are the changes that put the “greed is good” folks in control and allowed them to treat “fair” as a burden on the bottom line. Computers, networks, reduced shipping costs, and more competitive workforces are arguably the four horseman you are looking for.

    First on the list is computers (the personal computer is invented in 1975: literally the year that Bill Gates and his college buddies start Microsoft. That’s a small thing at that point, but it’s just the latest iteration of a shift in the way work is done that started in the 1950’s and was entering its fourth major round of change with the PC. Custom built computers gave way to mass manufactured mainframes, then minicomputers, and finally personal computers (and there have been another three to five major iterations since. Computers change the way accounting is done, reduce the value of workers who work with numbers, and make the conglomerate possible. Companies got a lot bigger because of computers, and big companies are far more likely to treat employees as interchangable parts. That enables the “greed is good” crowd in important ways.

    The other three factors all happen in parallel with the growth in computerization and extend the power of “greed is good” people. If you can make something cheaper in North Carolina than you can make it in Massachusetts or Michigan you do so. It’s a small step from there to making it in Canada, Mexico, Japan, Korea, China or any of 150 or more countries that have educated workforces that will happily improve their standard of living at lower wages that U.S. workers earn. And in the process, companies that don’t adapt (that stay fair instead of greedy) are outcompeted, acquired, or put out of business, further increasing the power of “greed is good”.

    It’s not clear what the solution to this is except, perhaps, to break up conglomerates and insist that no company so big as to be a monopoly threat, but I do know that an appeal to morals and values will not be an effective solution.

    • Bill Catz says:

      Thank you. Well said!!!!

    • The solution? As a society we must focus on what is “money” The strength of our oppressors is the misguided, misinformed and sometimes ignorance of what is money. We are a nation of, by, and for the people but yet if you ask most anyone on the street they will tell you they don’t feel they have true and proper representation. How is this possible ? It’s so because we have two elections in this country one for the wealthy and once they choose who represents us than we pick from there. This has everything to do with how campaigns are financed. Instead of saying ” get money out of politics” we must as a society say give me my money so I can compete with the wealthy. Federal taxes do not fund federal spending. We as a people can have anything we want as long as we have the resources to get it. It’s never a question of how are you going to pay for it as those politicians tell us. Why would they lie to us in this way? They do this because they don’t represent you and I as common folk they represent those wealthy that put them in power. And those powerful know that once you understand how federal finance really works you will have a firm foundation in which you can fight back. There is a radical way of doing this that would cause many people to suffer I’m not talking about bloody war here. God forbid, what I’m talking about is economic war. There are more of us than there are of them. There is power in that. Once we come together and unite and fight back. For more information on our strength and their weakness research Modern Money and Public Purpose or watch a short you tube video by JD Alt “The millennials money” This is how money actually works in our federal government

  81. Nancy says:

    Great article. Nit: in Figure 1 caption, you might replace “embiggen” with “enlarge”

  82. Sonofhades says:

    First of all, you must understand that the richest of us never pay any taxes. They own companies etc. These companies charge people for their products / services. All costs – and this includes any TAXES – are added to the prices, so that the customers end up paying it all. The companies only have to deliver these taxes to the government after a set period of time. In effect, this is an interest free loan.

    In that respect, it is rather sad to hear these rich folk people complain about the high taxes that they have to pay of the money they’ve earned (someone else has actually done all the hard work as well) and how they are entitled to pocket some these taxes with certain deductions and complex schemes that are perfectly legal due to money they’ve spent on the corruption of the legislators who were supposed to protect the common interests of the entire nation.

    • Bill Catz says:

      As a business owner who has started three companies, I think your assumption is flawed. Anything used to generate business (revenue, economy, etc.) is tax deductible. So, rents, machines, etc. are either depreciated over time or a tax deduction. Because there is no tax paid, there is no tax passed on to the consumer. The consumer does pay retail sales tax (simple model) on items purchased. Some states don’t allow for the taxation of labor (service) or food (unprepared) items. The company can avoid paying sales tax on what they buy to produce goods as a sales tax is passed on to the final consumer. Most companies survive on around a 4% profit margin. Employee costs are roughly 3x the salary paid to the employee (benefits, workers comp, social security, facilities, etc. are roughly 2X and 1X being the salary paid). Start your own company and reap the rewards if you don’t like working for the other guy. Then, those horrible tax laws will benefit you also.

  83. ntguardian says:

    I have written a response to this article, exploring the data and using statistical tests to determine whether a divergence did take place in 1973. I found that there is no statistical evidence for a detachment of wages from productivity, but both did slow their growth around 1973.

    Read here: https://ntguardian.wordpress.com/2016/09/12/wages-detach-productivity-1973/

  84. Jim Pirko says:

    Remember the point during the early 1970s when the working middle class was cut out of the prosperity brought by increasing productivity?

    That coincided with the 1973 OPEC Oil Embargo, escalating global oil prices, and the acceptance of “Free Trade” deficits during the Nixon Administration.

    People are justifiably angry now, but do they realize the causes of these effects?

  85. Bill Catz says:

    This article seems to take a chart and then makes a lot of weakk assumptions and opinion on the causes surrounding it. There is nothing documented. Nothing referenced. Nothing to support all the content of the article. The ’70s through the ’90s were the most productive years of my life. I saw my earnings double year after year as did those of my peers. I watched as hundreds of new businesses were created by open innovation policy. I watch as myself and others created new things that improved the lives of others. It was a great period of being the worker and the owner. X is also when the American indoctrination system stopped teaching to work for yourself and to work for others. Let the corporation or government take care of you instead of you taking care of you. Why did VietNam immigrants do so well? Because they created their own work. They created stores, service areas, laundries, restaurants, … They didn’t take jobs — they created businesses that consumed the wages of those who had regular jobs. Drive around any city’s industrial parks and look at all the Mom & Pop shops. Thousands of them. They’re everywhere. From RV service & sales to lighting and flooring to pets supplies to upholstery to welding to …. you name it. They are there. Now, look at our failed education system. How many high school classes teach how to run your own business? How many schools still teach trades? How many still support individual thought vs. conformity? If you want a bigger piece of the pie, go get it. The world is your oyster. Whether you say you can or you cannot, you are correct. You have a choice. Work for yourself or, work for the other guy. Only one choice brings prosperity.

    • You make a lot of good points, but first I will have to point out that you were lucky enough to put yourself in one of the higher percentile groups illustrated in Figure 2 in the article. And you were able to do that, no doubt, because you were able to amass the capital needed for your business. The great majority of American workers were, and still are, not able to do that. They are lucky if they can just put food on the table and keep a roof over their head. Moreover, you can take that drive around and see many closed and shuttered former places of business.

      But, you are right to criticise the educational system. In my day, every High School offered classes in vocational training. Now there are virtually none. Young people can get such training in Community Colleges, provided such colleges are available and provided they can afford the tuition.

  86. Kim Cooper says:

    I like the article, and it does pinpoint the time things changed — but it doesn’t really say what caused the change in our values. I have heard that it actually started at the 1964 Republican Convention at the Anti-Communist Caucus, where they decided they needed to do everything they could to make Republicans the dominant party to save the world from Communism. They embarked on an ambitious program of propaganda and brainwashing involving purchase of major and minor media outlets by right wing ideologues, endowing of chairs at universities, producing talking points for politicians, starting ALEC to write laws that favor the rich, and preaching in churches. And now they have won. Are we going to wrest it back from them, or are we going to let climate change kill all but a few humans?

  87. Cyril McDermott says:

    Fascinating discussion on such an important issue. One thing I have not seen anyone mention is that the U.S. economy, especially since 1975, has transformed from primarily an industrial economy to a service-based economy. Additionally, with so much emphasis in education devoted to Bachelor/Master/Doctorate degrees in the past 40-50 years, the country is facing a looming shortage of skilled trades workers for the industrial economy that does exist. Those older Baby Boomers who went to trade schools or technical colleges in the ’70’s and ’80’s are nearing retirement age. Only in the last 1-2 years has there been serious consideration about directing high school graduates toward trades vs. professional occupations. This could be considered a marker towards another historic period of transition in our economy.

  88. You know what also changed then.
    Credit Cards became more common and globally accepted. While they existed in one form or another since the early 1900’s It wasn’t till the 1960’s they worked out the bugs. Given the time to accrue debt and then fall into financial ruin and you land in the 1970’s.

    What affect this had on businesses when their earnings were not based on cash but rather credit purchases, I can’t say.

    Perhaps we did it to ourselves – – and others took advantage of it.
    Now we are stuck on credit and shunned if we don’t used it. Banks may play a bigger role in this economic hurdle. But that doesn’t absolve us of the blame.

    • Jeff Blanks says:

      But that doesn’t explain the decrease in income relative to productivity. You might have the cart before the horse–it seems that easy credit was put forth later to make up for that loss of income so that people could have the things they could’ve afforded if wages had kept up.

      We may be living beyond our means as they are in the real world of today, but not beyond what our means would be in a truly just economy.

  89. Tracy says:

    Reagan. Reagan. Reagan. It started, full-force with Reagan! Not morals-changing, not women working (please…don’t even try that, it’s silly to say). Reagan. HE started the “rob the poor, to give to the rich” mantra. Thatcher-the-dragon just LOVED it! The evil & filthy-dirty war machine has made LOTS of bucks for the people invested in oil & munitions (guess who??? Hmm…cof, Bush’s/Cheney) since that time. Oh, & they were responsible for sending a whole lot of children off to be killed in the deserts to build their own bank account balances. On the “other side”, overseas? Whole cities & likely families blown off the face of the earth– to build wealth for these sociopaths. It’s okay, though, because “they” (those women, babies, toddlers & children) were evil or going to become evil….Wait, how do you define evil, again???

    Next came all manufacturing overseas: screw the local worker, screw the environment of the foreign country (polluted to the teeth now, baby!), screw the foreign worker (“hey, $2 an hour is waaay more than they ever got before!”), and the top dogs (& I mean DIRTY-DOGS) took ALL of the profit & off-shored it. Isn’t that a wonderful outcome?

    Fast-forward, enter the internet era & now, rather than the past, progressive marches & strikes (“what’s a strike?”) to get things back to level, we’re turned into a bunch of toothless, mewling whiners on twitter, FB, here, & everywhere.

    “Thumb’s-Up”– means squat. “Angry face”– means squat. Posting here– means squat (unless you take it out of here & further your dissatisfaction). FB has replaced true anger & rising up, with a mouse-click. How many of you actually put pen to paper & post your views to your elected officials? How many go to rally’s? How many even email with a personal, thoughtful, hand-written letter? I mean, TRUTHFULLY. I do– & I have a whole lot of attention to a current issue of mine, here in AU.

    The rich “man” now has a whole lot of on-line (planned), uneducated (planned), internet grumblers who wouldn’t know how to arrange a sit-in, march, or peaceful demonstration than the man on the moon. The dumbing-down is working (planned), the scamming/stealing from the common man via “lawfare” is working (planned), the feudal system is slowly being put into play (planned for many, many decades).

    Les Misérables is upon us all. This, is not a joke nor an over-statement. I’m sad for my two children. I’ve asked them not to have any children because I think it would be cruel, looking at the backwards progression we see. And I LOVE babies. I don’t want them in this situation. 🙁

  90. Adam Heckathorn says:

    That the Bailed out bankers thought they should receive bonuses for failure speaks volumes.

  91. Gary Leep says:

    T’he top tax rates started changing at that time. They were over 50% in the 70’s, so making more money meant you paid even more to the government. Now the top rates are 35%, so people who have the ability can earn even more money and pay a smaller percentage of their income to taxes. Perhaps you missed this in your analysis?

  92. Diane Newell Meyer says:

    Read the book Winner Take All Politics, by Hacker and Pierson, 2010-1. It talked about the Carter era, of all things, and the rise of special interest groups controlling politics, not just some vague morals changes. it still one of the best books on this subject

  93. Thomas Miller says:

    A really interesting article by Stan Sorscher. Mr. Sorscher does not mention demographics, but it is worth noting that the mid 1970’s is when the Baby-Boom generation was fully entering the workforce. The quote from the era is appropriate: “The One With the Most Toys Wins” speaks to the different value system between the Greatest Generation and the Boomers. It is also worth noting that in 1976 Gary Hart was the first candidate for president who did not embrace the New Deal. So, by 1976 pollsters and sociologists saw the “shift” that was about to happen.

  94. Jean Waller says:

    1976 the courts find that money is free speech; April 26, 1978: Supreme Court Finds Corporate Political Donation ‘Free Speech’. Do the math. http://www.historycommons.org/context.jsp?item=a042678usscbellotti

  95. splashy says:

    It ties in with civil rights and women gaining more ability to work because of birth control and women’s rights being fought for.

    Because the white men didn’t dominate the work place any more, the wealthy white men decided to work to stop sharing the wealth, and this is the result.

    Before that it was affirmative action for white men, at all times, with women and POC being in poverty if they couldn’t attach to a white man.

  96. The change in values is called neoliberalism. The question for all of us is how do we overthrow this power structure. This is difficult. In my opinion we as a society must focus on “money” For instance instead of saying get money out of politics we should be saying give us our money so we can compete dollar for dollar the wealthy and elect “our” representatives in free and fair elections. Do this first and it will fix most all the other problems we have. An article V convention might do this but how can we do this when the neoliberals have control over the media and power. This is our dilema. I have a suggestion that is way out there and radical but this is way to difficult for us to do as a nation. The suggestion is use their strength against them. They are all about gaining power through money so we should cut off the major corporations money supply. How do we do this? Unite as a people and simply not pay our mortages, car payments utiility bills as communities. Organize by communities a boycott of that which they need “money” We will still have jobs to get our money we just will not pay for those big ticket items. Now of course there will be casualties in this class war but as one famous political activist said there are more of us then there are of them. The corporations can’t reposses all the cars in a city nor can they close the houses of an entire community, and even if they did using block chain those of us that didn’t get effected by the car repo or the house rep can use our extra money to help those patriots that were casualties to get them back on their feet. But to organize such an effort would be huge. It can be done though with the proper motivation and spirit. There is not other way to get power back in my opinion. Nobody has to die in this war, much suffering yes, but no deaths at least not more than what neoliberalism has already caused with no health care, decreased ss benefits, student slavery, no jobs garauntee, and so on and so on.

  97. Charles says:

    Wasn’t it the thesis of those two Harvard students responding to an assignment: “What are the future directions of US industry” where they offered the radical suggestion that the focus would shift from social benefit to shareholder interest, an idea that was taken up by their professor and published and became an entirely new direction of economic development where shareholder interest, typically confined to those who could afford it through old, and later new money took precedence and wages were squeezed to maximise and incentivise investment and investment return?
    Or is that an urban myth?

  98. octobaron says:

    I’m a bit late to this, but *this* is what happened in the 70s: http://reclaimdemocracy.org/powell_memo_lewis/

    The Chamber of Commerce, the Kochs and others launched a concerted, coordinated campaign (plot, if you will) to destroy the power of the workers and divert all production to themselves. It was very successful. That Powell, of course, became a Supreme Court Judge. What we have now was a deliberate corporate coup, and we lost.

  99. If you carefully examine Figure 2 in the article, you will note that disparity between the 5 different percentiles really began to accelerate around 1980. Wikipedia has an article on the history of trade unions in the US:

    “By the 1980s there was a large-scale shift in employment with fewer workers in high-wage sectors and more in the low-wage sectors. Many companies closed or moved factories to Southern states (where unions were weak), countered the threat of a strike by threatening to close or move a plant, or moved their factories offshore to low-wage countries. The number of major strikes and lockouts fell by 97% from 381 in 1970 to 187 in 1980 to only 11 in 2010. On the political front, the shrinking unions lost influence in the Democratic Party, and pro-Union liberal Republicans faded away. Union membership among workers in private industry shrank dramatically, though after 1970 there was growth in employees unions of federal, state and local governments. The intellectual mood in the 1970s and 1980s favored deregulation and free competition. Numerous industries were deregulated, including airlines, trucking, railroads and telephones, over the objections of the unions involved. The climax came when President Ronald Reagan—a former union president—broke the Professional Air Traffic Controllers Organization (PATCO) strike in 1981, dealing a major blow to unions.”

    I would add that corruption in Union leadership, exemplified by Jimmy Hoffa, further weakened labor unions.

    Globalization has certainly adversely impacted wages and salaries of American workers in more recent times, but I would argue that the single most important factor was the rapid fall in influence exerted by labor unions. And the agent of that change was Ronald Reagan.

  100. James Scott says:

    This article is ridiculous and was either written by a liar or an idiot. Or maybe even both. I literally laughed out loud when I read “no change in monetary policy.” Economist of the most basic skill set will acknowledge in some capacity that the removal of the gold standard (1972), tied with fed manipulation created a gap in income equality. This article is intentionally wrong as it goes out of the way to ignore this. Pretty much every Econ 101 student has heard of the Helicopter Effect, apparently this guy has not, which makes me question whether or not he is an economist or someone that is merely pandering to a base under the guise of being an economist.

  101. marceltjoeng says:

    Like others mentioned in the comments, the significant historical occurrence in this moment in time (not mentioned in the article) was Nixon’s abandonment of the – already watered down – Bretton Woods protocol,

    after which the banking system’s moneys fiat ratio was left to banking operations where ‘financialization’ became the mode of operation, crowding out labour costs impaction real wage growth.

  102. Lisa Pasto-Crosby says:

    It would be very interesting to see those figures broken down by race…

  103. Marcia Ruf says:

    Those citing Roe v Wade as somehow a cause of this divergence have hit the tree – but completely missed the mark. It WAS a Supreme Court decisions that significantly shifted the US economy in the 1970’s. But it had NOTHING to do with a Woman’s right to body autonomy and EVERYTHING to do with a Corporation’s “right” to purchase politicians. Sadly – as an expat in Australia, I see where this path led and also where current Aussie rhetoric and policies are attempting to follow it.

    My theory – if you “dig” under that X you will find this:


    The Supreme Court decision that campaign contributions are a first amendment protected form of free speech. The author’s comments regarding loss of moral foundations are relevant – but it was IMHO a loss spurred by a concentrated rhetoric campaign that had major corporate funding.

    It infected our media (and in the 1980’s Reagan pushed through a removal of the requirement that political reporting be Fair and Balanced – not unlike what current Aussie politicos are trying to do with de-funding the ABC and SBS and deregulating media ownership restrictions).

    It infected our churches with the surge of prosperity based right wing fundamentalism and along with union busting legislation it drowned out the voices of the common people – for environmental protection, for fair and reasonable minimum wage, for ongoing civil rights.

  104. David says:

    Perhaps it has already been said, but what I believe is missing in the main article is that in the mid 70’s, Milton Friedman defined the gage of prosperity as the stock market and the price of stocks. If the price of the DOW went up, then we were moving to greater prosperity. What is wrong with this gage is that it is only the owner of the stock that profits. It is pure capitalism, where the worker doesn’t benefit in the increased production and wealth. In fact, the stock price rises if wages are lower. If the CEO really wants to raise the stock price, he/she needs only to lay off 100 or a 1000 or 5000 thousand workers (“competition”) and the stock price will rise. It is a capitalism that benefits only the capitalist, the investor, and gives only minimal benefits to workers. This is one reason that unions have fallen out of favor. They have a negative effect on the price of a company’s stock. For three decades after WWII, workers, along with consumers and society in general, benefited from increased production. (Remember that the economic power generated by the government intervention in production for WWII was the greatest stimulus in American history and produced three decades of prosperity for everyone.) Then everything changed when the stock market became the king maker and workers were left behind. Think about it. It will only change when we have a capitalism that recognizes that workers contribute to production and deserve to benefit in the prosperity that is created by their work. It is not the DOW and the stock market price alone that determines prosperity. In this equation, those who do the work, the employees, are left out of the prosperity. The stock price does determine the CEO’s salary, but not the worker’s salary. What do we need to do to return to those post war years where the CEO, the investors, the employees, and society in general all benefited in increased production that led to a prosperity shared by all? For me, we need to return to a capitalism where everyone counts!

  105. Avalanche says:

    Look closer at the graph! “The sudden change in the mid-70’s was not economic.” Yes of COURSE it was economic! In 1965, the ‘immigration’ wave was flipped to completely change the demographics of ‘who came in.’ “Suddenly” instead of having to pay an *American* family man a DECENT wage to build houses or work production lines or do lawn care (remember back when neighborhood TEENS did that to pay for college?!), the U.S. was FLOODED with uneducated single men who would work way WAY cheaper! “Suddenly” the “living wage” was historic and employers, to stay “competitive,” had to keep hiring at lower and lower wages or THEY would also go out of biz. (Ever actually TALK to the AMERICAN construction workers? They’d LOVE to keep working, but they can’t at wages that let 20-30 mexicans squat in a 3 bedroom house! But yet … it’s all psychological and ‘power relationship’! What crap!

    (Yes, it WAS and IS “immoral” to outsource jobs and bring in ‘slave’ labor to replace American labor — but you damned liberals LOVE that, don’t you?! Where is YOUR “morality” to keep American jobs American? You know MAGA?!?!)

  106. Croisan says:

    Economics cannot explain it? I remember very vividly that US manufacturers were all the buzz about *planned obsolescence* to create revenues. They intentionally started adding plastic parts that wear out in 3-5 years. Just about everything out of detroit was failing. It was enough to give the Japanese a major foothold on US manufacturing that they never let go of. We had not reinvested in our plants and at the same time the Japanese were focused on Demming’s approach to quality. They killed us. In the late 70s inflation skyrocketed and I earned 17% from a money market account. Investment was too expensive. At the same time, Japanese manufacturing was killing it. Our reputation for quality disappeared overnight and sales fell. Ford tried to combat this with the famous Quality is Job 1 program. Lee Iococca, the new chairman of Chrysler only accepted $1 in pay to show he was serious about saving Chrysler-Dodge. After WWII we were the only country with manufacturing that had not been destroyed. In the 70s and 80s, the world bounced back with new investment. And guess what happened? The major manufacturers began in earnest, for the first time, to move manufacturing overseas. I don’t buy into this culture nonsense. It was the result of multiple factors – manufacturing that hadn’t been upgraded since the 1020s and the serious flaw of producing products using planned obsolescence which gave the US a reputation for rinky-dink products, lack of reinvesting in our own manufacturing with the profits made and the resulting wave to off-shore manufacturing. This good paying jobs moved with this change. Then China cemented it with their fresh investment in manufacturing plants and extremely low cost of labor. Everything you own now was manufactured in China. It is explained through Economics. You are not looking hard enough.

    • The decision to move, en masse, to other countries, at the expense of American labor for profit, was indeed a moral one, not economic. You say globalization, I say 20th century slavery. If you can start to justify these sorts of terrible things just for the sake of profit, then I don’t really see where it stops. You say it’s economics, well then the Pyramids were economic, and the Southern Slave trade was economic. Hell, the Final Solution was sold to the German public as the end to their economic woes.

  107. Greg Ness says:

    As the Great Society and Vietnam ended, energy prices increased and globalization began. If more government programs were the answer then the once great cities of Detroit, Baltimore, Philadelphia, Chicago, etc would not have seen failing schools, increasing crime, rising taxes and shrinking employment. They would be among the world’s wealthiest cities.

    Then there is the rise of the IT economy in the 1990s which generated massive wealth in a few dozen counties while the rest of the US remained stagnant and the low wage sectors flooded with cheap labor domestically and cheaper labor abroad. Many of the IT companies offer their workers equity… a Marxist ideal.

    I think the “class war” lens and greed stereotypes are just distortions aimed at teh private sector as the source of blame. The US economy is no longer made up of smoothly defined, static classes (including “goods” workers) but dozens of different economies, some growing quickly and others stagnant. Some companies generate massive levels of revenue per employee and pay their workers more while other companies live on the razor’s edge between profits and losses.

    The Left and Right need a new vision of economics, one that takes into account the sheer diversity of the modern economy… versus tired stereotypes. Even Bernie has no idea what a socialist economy is… but sees government as a dynamic, powerful distributor of favor to address the ills of capitalism.

    I beg to disagree and predict that this kind of thinking will lead to more hardship for more people. Enough with the stereotypes. We need fresh, original thinking. Where are today’s new visions of economics? Marx saw the social ills of industrialization and Smith recognized its growing influence. They were at one time fresh voices for a new reality. Some of their ideas are still relevant… but trying to describe a modern economy in old terms is good-natured futility.

  108. Robert Barr says:

    Real minimum wage seems to fit the data perfectly

  109. Jesse Richards says:

    This argument resonates with me, but A) I have trouble believing that something as broad and vague as national values can create such a stark and discrete turning point on the chart. Was it so sudden? B) I’m interested in what caused this shift in values.

  110. Tom says:

    To state that this is the result of changing morals and not the other several things that you list is very self-serving to the point that you are trying to propose. I would counter that it is the result of ALL of these things not none of them.

  111. Josh Cryer says:

    It was 100% globalization: http://upload.wikimedia.org/wikipedia/commons/f/f3/Sectors_of_US_Economy_as_Percent_of_GDP_1947-2009.png

    The moral or ethical argument is of course there, but manufacturing took a huge hit around that time and never came back (as a part of GDP, the story of this image is not perfect because manufacturing actually went up overall, just not in respect to GDP). The US became a service economy where we simply stopped making stuff as much.

  112. JACK W SCHEIBLE JR says:

    How to lie with statistics. They are comparing Series PRS85006093 (Nonfarm Business Labor productivity (output per hour)) with Series PRS85006153 (Real hourly compensation). The productivity series is NOT inflation-adjusted, but the compensation index IS.

    If, however, you compare with Series PRS85006103 (Nonfarm Business Hourly compensation) which, like the productivity series, is not inflation-adjusted, you get exactly the OPPOSITE result!

    If fact, hourly wages have gone up by a factor of 8.9, but hourly productivity has only gone up by a factor of 2.3!

  113. Jon Ferry says:

    I have a proposal for a potential solution to the problem pointed out in this article. I propose that the tax code be realigned to significantly benefit companies where the majority of employees receive at least 25% of their compensation in the form of stock ownership, and where at least half of all shares outstanding are employee owned. At the same time, taxes should be drastically raised on non-employee (e.g. passive) investors.

    This would not only benefit workers, but it would cause companies to take more of a long-term view, rather than focus so much on quarterly reports, which would ultimately benefit the entire economy.

    • I think we should do away with income taxes and have a productivity tax that targets a company’s productivity rather than a worker’s income. This also encapsulates things like automation. This would put more wages in the individuals pocket, and fairly tax corporations that are exporting labor.

      I also think that we should break up the power of the federal government into several large industry governments that make the same decisions the federal government does now, but are only voted on by Americans that know that subject matter.

  114. Lars Negstad says:

    I found this both very helpful and deeply disturbing. The glaring flaw is the absence of a racial analysis. While the post does mention immigration, it completely misses the extent to which our economy was built on the exploitation of African Americans, and how racism has been used to justify and accelerate the accumulation of wealth and power in fewer and fewer hands. We cannot continue to promote a “color-blind” economic analysis. I believe it is both morally wrong and strategically counterproductive.

  115. Joseph Joyal says:

    If you look at the economy this came at the time of the oil embargo, it hit the auto industry very hard. The companies blamed the unions for the poor management of the companies. Companies were building big cars even though the market was leaning to smaller ones. The company put the blame on the workers and unemployment was sky high. Only an fool of an economist would not know what happened or does not know history. This happened again in 04-06 as oil prices jumped the car companies were again building SUVs and they got hit hard which had a domino effect on the nations economy. Bottom line Republican economics at work

  116. It was the proliferation of the Friedman Doctrine (https://en.wikipedia.org/wiki/Friedman_doctrine) among America’s business leaders that caused this shift. The people that learned this philosophy went on to be executives in almost every industry, including home goods, food service, the budding sector of mass media, and perhaps most crucially, finance.

  117. MJ Murray says:

    And who governed during this shift? Republicans: 1969-1977, then 1981-1993. What a coincidence.

  118. TJ Pfau says:

    We did this once before, when agricultural labor collapsed as farming mechanized and we did indeed, in part, tax our way out of that with a Constitutional Amendment establishing an Income Tax.

    Eventually, urban industrialization absorbed the displaced workforce, eventually.

    Now we are facing the same kind of of transition as the computer roboticizes production, transportation, marketing, everything really, without an outlet for the displaced workers.

    It is exactly “the robots”. That change matches the curve in the above graph, exactly, with no ambiguity. Workers are redundant. The “new aristocracy” does not live in Manhattan, London or Berne. It lives in the Silicone Valley.

    Further, this revolution, unlike the American Ag industrialization, is not an American phenomena. It is global and reaching into every life on earth, at the same time.

    And it is not one we can just dump. In 1900 there were about a billion people on earth. All of them worked but they could not produce and distribute enough for everyone to eat.

    Today the labor of 3 billion people, world-wide, feeds 6 billion people.

    The last projection I saw was that in about 10 years it will take the labor of about 2 billion to meet the material needs of ten billion. At any given time 80% of the world population will be unemployed.

    That, not greed, is the problem that needs solving. But, like the author, I have no idea of how to meet that disconnect of “labor” and “humanity”.

    The fact is that over half the world’s Capital is not in America anymore and with the best will in the world, I cannot think of a taxation policy that will bring it back. Neither, as far as I can see, can the author. “Bring the money back!” does not produce a single job; no matter if it is Bernie who says so or Trump.

    A world-wide minimum income, might do it. So might Orwell’s vision of endless war. So might labeling half the unemployed as “convicts” and the other half as “guards”.
    We are playing around with that one in our inner-cites right now.

    Maybe there is a better way. I hope so.

    But scapegoating won’t do it.

  119. JP says:

    My personal bet? The Hertiage Foundation was incepted in 1973. https://en.wikipedia.org/wiki/The_Heritage_Foundation

  120. John Konopak says:

    What happened in the mid-70s izzat the “real” Smart Money saw the IT revolutionary “writing” on the wall and decided they were NOT gonna share the proceeds from the increased productivity it portended with the workers, who were already becoming drones. So they decoupled wages from productivity, with the eager assistance of the Raygoon regime, installed the “credit economy” to sustain the domestic demand, pretended cheap credit was the same as prosperity, and indentured everyone to their banks.

  121. Joseph Bridges says:

    Not such a big mystery. A large segment of young men stood up and said no to a war and America lost that war and the draft ended. The connection between economic prosperity and the willingness to wage war is obvious. The deal between owners and workers has never been about productivity, it has always been about making war and supporting troops. You have to see this as a break in a very old set up between old men (patriarchy) with money, property, and power, and young men who are forced to defend them so they can “earn” the right to have wives and children. Two things happened. My generation of men became aware of this in the 60’s and opted out in such numbers as to cause the loss of a 20 year war. And my generation of women opted out of being the prize at the end of the stick. From that point on (1974) the rich and powerful men have felt no obligation to share and distribute their war profits, and have actually maintained a voluntary military by making sure young men are economically disadvantaged, and have been fighting women’s rights ever since. Make America Great Again is about returning to the old set up. It was two somethings: The end of the draft and Roe vs Wade.

  122. Robert McKinnie says:

    Consider a parallel pattern in religion and prosperity-driven evangelism.

  123. Gary Reber says:

    Actually, in the first period since World War II, the contribution of labor was still the primary factor of production, while in the second period productivity gains were attributed to the non-human factor of production: capital (productive assets, including job-displacing physical and informational technologies, structures, land and other natural resources, patents and copyrights — or non-human “things” contributing to the production of marketable goods and services — an evolving system that puts things above most people).

    Fundamentally, economic value is created through human and non-human contributions. NOTE, real physical productive capital isn’t money; it is measured in money (financial capital), but it is really producing power and earning power through ownership of the non-human factor of production.

    The role of physical productive capital is to do ever more of the work, which produces wealth and thus income to those who own productive capital assets.

    Full employment is not an objective of businesses nor is conducting business statically in terms of geographical location. Companies strive to achieve cost efficiencies to maximize profits for the owners, thus keeping labor input and other costs at a minimum. They strive to minimize marginal costs, the cost of producing an additional unit of a good, product or service once a business has its fixed costs in place, in order to stay competitive with other companies racing to stay competitive through technological innovation. Reducing marginal costs enables businesses to increase profits, offer goods, products and services at a lower price (which people as consumers seek), or both. Increasingly, new technologies are enabling companies to achieve near-zero cost growth without having to hire people. Thus, private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.

    The result is that the price of products and services are extremely competitive as consumers will always seek the lowest cost/quality/performance alternative, and thus for-profit companies are constantly competing with each other (on a local, national and global scale) for attracting “customers with money” to purchase their products or services in order to generate profits and thus return on investment (ROI).

    Over the past century there has been an ever-accelerating shift to productive capital — which reflects tectonic shifts in the technologies of production. The mixture of labor worker input and capital worker input has been rapidly changing at an exponential rate of increase for over 239 years in step with the Industrial Revolution (starting in 1776) and had even been changing long before that with man’s discovery of the first tools, but at a much slower rate. Up until the close of the nineteenth century, the United States remained a working democracy, with the production of products and services dependent on labor worker input. When the American Industrial Revolution began and subsequent technological advances amplified the productive power of non-human capital, plutocratic finance channeled its ownership into fewer and fewer hands, as we continue to witness today with government by the wealthy evidenced at all levels.

  124. Gary Reber says:

    People invented “tools” to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive — the core function of technological invention and innovation. Kelso attributed most changes in the productive capacity of the world since the beginning of the Industrial Revolution to technological improvements in our capital assets, and a relatively diminishing proportion to human labor. Capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, free-market forces no longer establish the “value” of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.

    Furthermore, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. If both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive, and ignore the necessity to broaden personal ownership of wealth-creating, income-producing capital assets simultaneously with the growth of the economy.

    We need to provide universal access to future ownership opportunities without redistribution. That is, reform the tax and monetary system to enable every child, woman, and man to purchase capital on credit collateralized with insurance, and pay for it out of the future earnings of the capital itself.

    Achieving universal capital ownership is a just, third way in which everyone controls his or her life, and safeguards liberty, by having private property in capital.

    What American citizens need is a Capital Homestead Act to own shares in the unlimited frontier of growth capital, what Lincoln’s 1862 Homestead Act offered to homesteaders in America’s land frontier.

    Support the Capital Homestead Act (aka Economic Democracy Act and Economic Empowerment Act) at http://www.cesj.org/learn/capital-homesteading/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/, http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/ and http://www.cesj.org/learn/capital-homesteading/ch-vehicles/.

  125. j. McCarthy says:

    Please read “VIKING ECONOMICS” by George Lakey. 2016.

  126. Kip Brown says:

    American manufacturing had already been slowly trickling away in the 1960’s, when the words “Made In Japan” became synonymous with cheap plastic crap. Ralph Nader’s impact on American manufacturing seems quaint by today’s standards but it was a real problem for American business because it brought about the concept that manufacturers should not be permitted to make products that hurt people, that worker safety mattered and they shouldn’t be allowed to just pollute the planet at will. Business saw itself as under siege from the Naderization of America. Enter Lewis Powell, whose 1971 Powell Memorandum galvanized big business against what it saw as government overreach and it was at that point the business community decided it needed to become a political force. Big Business lobbyists increased twenty fold over a ten year period. This is the turning point you are looking for.


  127. Edward W Chainey says:

    This X is where bogus Voodoo “Reaganomics” and the disproven theory of supply-side economics took hold of our tax system.
    The first thing we need to do it to treat income from work more favorably than “unearned” income from investments and inheritance- the tax laws today have it backwards, and Trump & the GOP’s plans will make that worse.

  128. Jerome Bigge says:

    What happened in 1973? 1974? 1975? Nixon leaves the White House. Jerry Ford becomes President. Inflation takes off. Arab Oil Embargo. More foreign imports. I recall that Nixon put price controls on in 1971. These came off a year or so later. Prices started rising considerably. The real flattening out of incomes comes later. Perhaps there was a political shift that increased the power of capital and at the same time reduced the power of labor. When did union power start to decline?

  129. Ken Porter says:

    What happens when you factor benefits and not just wages into your chart?


  130. Andrew says:

    What does this chart look like when isolated to black Americans? That will provide additional data to support or refute your theory.

  131. tcelliott says:

    We went off the gold standard (for good.) Isn’t that monetary policy?

  132. Marc Godard says:

    I think you are missing something big here and replacing it with garbage.

    The 70’s did change one fundamental thing about money. The removed the gold standard. This allowed an unprecedented amount of credit creation, which as we all know, the richer you are the easier your access to credit is, therefore, the richer you were the easier your access to this new credit, which allowed them to increase their margin accounts, buy bigger houses, make more investments, which all have done well since then, therefore it started dividing based on access to credit.

    Other than this, all your assumptions are only that, and not based on anything. If anything if your arguments (not good ones with evidence and logical consistency) were true, you would have seen the divergence between income levels stager as the mentality you so describe spread across classes.

    Anyway, I can’t believe anyone who has done real research into this would miss this unless they were trying to deceive.

  133. numbertwoson says:

    What about these facts?

    1. We killed two generations of working men in their primes in ww1 and ww2, which created a labor shortage driving up wages

    2. After the wars, esp 2, we opened immigration mainly to trained and educated workers from countries that had gone through a complete (Western Europe) or almost complete (Eastern Europe and Japan) industrial revolution. A consistent enough flow to steadily drive up productivity while keeping labor scarce — thus wages continued to track upward with productivity without getting behind because of a labor surplus

    Then things changed because:

    3. Births of baby boomer generation ended with my birth year: 1964.

    4. Simultaneously, the 1960’s saw us ramp up immigration of poor uneducated people from 3rd world countries, esp Mexico. (See the link below)

    From that point on, we had an increasingly sated labor market from:

    1. Boomers (continuing increased productivity)
    2. Decreasing immigration of educated immigrants (continuing increased productivity)
    3. Increasing immigration if uneducated immigrants (beginning the downward trend in wages)

    The author gets it right that there is a moral issue. But it is nevertheless expressed through changes in all the the areas he dismisses:

    1. Economics: the economic elite figured out that open borders — free trade and increased immigration would suppress wages, driving the returns into their hands

    2. Political: the economic elite used their moneyed influence to convince the political elite to promote such policies

    3. Social: the political elite went to work on their constituents, culminating in a situation never before seen in the US: no major party was opposed to open borders: free trade and immigration from nations not developed to our economic levels. Instead, both major parties had developed separate narratives that each promoted open borders:
    • Democrats – free trade and impoverished immigrants are the political-economic means by which to help people from poor countries
    • Republicans – free trade and open borders benefits everyone

    The author of that article is blind and naive

    See the table under history since 1850:


    The first thing to look for is assertions rather than an actual measurable set of facts that can be seen to correspond with explanations or assertions. He (the author) has all assertions and his narrative doesn’t consider any of what I’ve mentioned above.

    He (the author) can’t go down this road because it puts immigration at odds with labor. Ironically, this has been a major issue throughout our history. And the economic elite attempting to capitalize on it is also a consistent story: they used slaves to suppress labor costs in the south; Chinese in the west; first freed blacks to suppress factory labor in the northeast, and then Irish and finally Italians. Now you see them going to work attempting to suppress wages in the IT industry by bringing highly qualified Chinese and Indians in to Silicon Valley…

    It never ends because we never study our friggin history!

  134. R Barbour says:

    I can address one industry; pulp and paper. In 1965 the union wages jumped from less than $2 per hour to @2.65. It was the biggest increase in the history of the industry. Currently P&P workers are making about $25 an hour. The jumps pushed the price of paper up so that the news business could no longer compete with other media for advertising. Mills have closed across the country and the industry is a tiny fraction of what it used to be. The displaced workers and their potential replacements now work in other lower paying jobs such as the internet, cell phones and “alternate media” who pay much less for workers though they have to pay more for educated, experienced help. Whether there would have been as big a shift as fast if paper had remained competitive is arguable but it was part of the problem. Manual workers are not needed as much as in the past and noting wage discrepancies will not change that fact. If you think high wage earners are taking more from the businesses than the should you will have to compete with them instead of simply demanding more for people who are manual workers. If the people in charge think they can convince the country to pay people not to work they will have to find the funds. Denmark now charges employees over 50% of their salaries for thiei welfare state and the Scandinavian countries are not far behind. The problem will be that there will be few people who wish to use their brains and effort to supply others relaxation. There has to be a solution in which those who are happy with little and do not wish to make great effort accept a lower wage and those that are willing and able to extend themselves get a graded income based on their contribution. The auto industry with their robots is in the same situation though not from competition. Robots are cheaper. Society is changing fast without any consideration of workers but then workers have not responded well to change. If you think you have a solution lets hear it instead of the griping.

  135. The idea that the Trump administration is draining the swamp is an absurdly faulty premise. What is really happening is that the Trump Tax Bill was concocted to allow the 1%-ers to skim off the economic cream into off shore accounts, creating deserts where there were once economic wetlands.
    I reccommend “American Amnesia: How the War on Government Led Us to Forget What Made America Prosper,” by Jacom S. Hacker and Paul Pierson.

  136. Pacifica Advocate says:

    The Powell Memo is what happened in the mid-70s–written in late ’71, the policies began to be implemented by the US Chamber of Commerce and corporate America by the next year, and were in full swing by ’74.


  137. Mary Cole says:

    There are already a lot of comments here, so I rather doubt the visibility of what I’m writing. Having said that, I remember working during that time period and these are two things that stand out: (1) growth of computers in the economy, I worked at Digital Equipment Corporation at the inflection point, and then a Prime Computer; (2) this was just about the time when consultants ceased to be hired by management to train and improve the workforce. The consultants at the inflection point and beyond were hired to promote income inequality. Let’s establish a salary range for the CEO and management team. Oh, your competitors are making small/medium/large amounts more. Let’s tell the board your comp plan needs to be improved to keep the company competitive. Around 1981 I saw the president of Prime computer be replaced from a founder to a greedy bastard from IBM who moved his salary from $200K to $800K, added lots of stock options and perks for himself, meanwhile it was a recession and nobody else got a raise. And turn the lights out if you aren’t in the room; save a nickel for Joe. Followed by engineering worker bees being laid off pretty much in the order of their salary and seniority. And when you lay off the good engineers, the company goes down the drain. No amount of greed at the top can keep that sort of dying company alive. The graphs have given me a lot to think about. Thank you.

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