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Those who don’t know history…

Written By: - Date published: 9:54 pm, September 6th, 2011 - 7 comments
Categories: capitalism, class war, Economy, wages - Tags: ,

Robert Reich writes about the impact of growing inequality in the United States. He has a graphic that shows the effects over the past hundred years. As the US and Europe  come closer to their Niagara fall, his logic is compelling. Edmund Burke’s saying that those who don’t know their history are destined to repeat it comes to mind.

 
Reich writes:

Look back over the last hundred years and you’ll see the pattern. During periods when the very rich took home a much smaller proportion of total income — as in the Great Prosperity between 1947 and 1977 — the nation as a whole grew faster and median wages surged. We created a virtuous cycle in which an ever growing middle class had the ability to consume more goods and services, which created more and better jobs, thereby stoking demand. The rising tide did in fact lift all boats.

During periods when the very rich took home a larger proportion — as between 1918 and 1933, and in the Great Regression from 1981 to the present day — growth slowed, median wages stagnated and we suffered giant downturns. It’s no mere coincidence that over the last century the top earners’ share of the nation’s total income peaked in 1928 and 2007 — the two years just preceding the biggest downturns.

Here our Treasury warns that while the World Cup and rebuilding Christchurch will provide a short-term stimulus, our long-term growth will be influenced by world events. As Europe and the United States come closer to their Niagara fall, National’s policy of tax cuts for the rich and asset sales so the rich can spend their cuts, coupled with a hard line forcing people on benefits to look for non-existent work means that real growth will be a way off here as well until things change.

7 comments on “Those who don’t know history… ”

  1. Pictures say 1000 words. Unfortunately my browser hides the nasty reality depicted on the right-hand side of your graphs behind pretty advertisements in the right hand column. Is this a co-incidence?

    [Fixed (and irony noted) – Ed]

    • Colonial Viper 1.1

      If you click on the graphic you can see the whole thing 🙂

      Here is the man himself explaining what is wrong with the economy, all in less than 2 1/4 minutes.

      • David Clark 1.1.1

        CV, my browser shrinks the graphic to unproductively small print if I click on it. I get the gist though.

        I just couldn’t help wondering if ‘shiny’ advertising appearing over the top of a report on the results of unfettered capitalism was intended irony or not. Pasting over the cracks?

  2. AAMC 2

    What really frustrates me, is that in New Zealand we have what I like to refer to as Antipodean hindsight. We can look at the policy of the USA and of England, who are pursuing a coarse we are emulating, and we can look at Germany and Norway and a variety of other models and see what they are doing. They’re all a little further down the track than us and so allow us hindsight with which to make our decisions.

    To emulate a model which is self destructing in front of us is the definition of insanity, to repeat the mistakes which are plainly cannibalizing these countries is proof of a religious like faith in ideology, and faith is the enemy of reason.

  3. Bill 3

    I know I’m repeating myself, but…

    The market will tend to encourage a situation where a few have everything and many have nothing. In other words, it tends towards a situation of traditional slavery. And in that situation markets disappear and surviving ones shrink. Which is what the graph illustrates.

    So it seems to me that we can either trudge endlessly around the cycle whereby for periods more people are drawn into the market through increased numbers of jobs and increased wages…a self reinforcing ‘positive’ spiral…and then expelled from the market through a decrease in wages and a drop in the number of jobs available. And all in the service of the power houses of the market who seek to maintain their positions of affluence and influence through inflicting first one scenario on us then the other.

    Or we can get our heads around the fact that slavery was never abolished but simply given a sexy make over. And that we were drawn in (with the dual aid of violent devices and shiny beads) and chewed up. We could reject the whole shebang instead of simply struggling to maintain or regain that part of the cycle that we feel benefits us more than the other.

    Or wait for the entire cycle to buckle and break for ever under the pressure of peak resources in a crapped out environment.

    Anyway. No boss seems to want to put me under their yolk today ( I just can’t understand why!) So I’m off to selfishly engage in rewarding activities on this fairly sunny day and ‘resign’ myself to the fact that the excessive squidgy fruits of consumerism just ain’t going to be on my table any time soon, if ever.

    • vto 3.1

      ha ha, but don’t fret Bill, those “excessive squidgy fruits of consumerism” aint much chop. Other than ferraris it is all just pap and froth.

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