Whilst reading Naked Capitalism this morning, Ives did a synopsis of an eBook of sorts on Inequality.org. A fairly lengthy history of economic inequality in this country, with interactive charts and graphs to give even the most wonkish among us a bit of a thrill.
Concentrating on the period from 1970 to the present, Colin Gordon gives a good historical look at how and why this has occurred. His main reasoning being that rather than just happening, was in fact planned. Beginning with the post WWII era.
This shared prosperity of the postwar years was no accident or lucky combination of circumstances. A “rising tide” of robust economic growth does not necessarily lift all boats. Political struggle and policy choices determine whose boats rise. The inequality of the 20th century’s early years actually began closing before economic growth took off in the 1940s, as a consequence of the political response to the Great Depression.3
Thanks to this response, federal support for collective bargaining rights sustained a surge in labor organization that dramatically improving the bargaining power of America’s workers. Other political innovations of the New Deal—ranging from social security to the minimum wage—secured a floor for working class incomes. Postwar social movements, especially civil rights and “second wave” feminism, then girded that floor by closing off avenues for discrimination.4
The nations’ tax system. meanwhile, and new regulatory obstacles to speculative finance erected something of a ceiling for higher incomes. And substantial public investments—the GI Bill support for access to higher education, mortgage subsidies for veterans, housing projects, the interstate highway system, and the Cold War—would kept the rest of the structure in pretty good repair.5
Then onto what decisions were made to enable the collapse of this economic fortune for the middle classes.
Since then, that structure has essentially collapsed. The conventional wisdom describes this collapse as an unfortunate but necessary response to changing economic conditions. The world has become a leaner and meaner and more competitive place, so the argument goes. As a result, the policies of the New Deal—and the costs they imposed on business—had to go.
But there is little evidence to actually support this account. Indeed the initial handwringing over American economic decline came at a time when our principal competitors, Japan and Germany, boasted both higher wages and more expansive social programs than the United States.6
Political choices, not economic necessity, dismantled the New Deal. Future Supreme Court Justice Lewis Powell would first sketch out the organizational and ideological dimensions these choices in a now infamous 1971 memorandum to friends at the American Chamber of Commerce. The conservative ascendance in state and national politics then etched these choices across the political landscape. The policy consequences have been dramatic: steep cuts in social spending, the political abandonment of organized labor, deregulation and privatization, tax cuts, punitive cycles of unemployment—all justified in the name of lowering business costs, capturing economic efficiencies, and unleashing markets.
But these lofty aims camouflage the real policy goal of the pushback against the New Deal: a redistribution of income upwards via the erosion of the hard-earned bargaining power of ordinary Americans. Rising inequality was not a lamentable side effect of America’s new policy framework. Rising inequality was its intent.7
Gordon then goes on to describe why this matters and a road map of how it came about.
I do believe that to really see and understand the beginnings of the great economic divide, one needs to look back to the 1960s with the civil rights movement and the anti-war movement and those baby boomers who were part of it.
A major rift began between the blue color – mostly white – working class and the so called New Left college educated class. First over civil rights and then over the Vietnam War. Driving a wedge through what had previously been a left alliance. The blue collar crowd blamed these young New Left liberals for the loss of the Vietnam War – many of the blue collar being WWII Veterans. And these New Left liberals blamed the blue collar class for the war and the death and destruction that it brought about.
This animosity began to peek with the 1968 Democratic Convention, where they felt they were thrown to the wolves. After the election of Nixon by a landslide, followed by the killings of Kent State and Jackson State – where more than a few of these blue collar workers let it be know they felt both were justified – any positive thoughts toward these middle class workers were demolished among the New Left. Many began to despise them and when they began to acquire political power, were not just pro-business but anti-worker as well. Where Archie Bunker was seen as the epitome of blue collar America.
Concentrating their efforts on such earth shaking matters as tobacco and meat eating and guns and religion. Nearly all of which sticks it to the w0rking class and their culture. We saw this with Obama’s snark about religion and guns.
And the feelings toward what would become know as the educated elites by the working class became equally negative. This was shown by the Reagan Democrats. This animosity is still quite prevalent in these peoples children, though maybe not as strong. With these new Lefts now having economic power, as well as political power, it should not be at all surprising that they were not only very OK with shipping blue collar jobs overseas and the dismantling of the New Deal, but actually supported it.
After all they are now the ones with engineering and administrative positions bringing in high salaries. Enough for personal retirement investments. The same folks with their investments that got wiped out during the last economic/market plunge. That Washington is working to prevent along with the FED. As Mike Whitney explains here.
Well, guess what? Now Bernanke is worried. He’s worried that the real economy is still in the doldrums while bubbles are popping up everywhere in the financial markets; in stocks and bonds, CLOs, CDOs, MBS and every other dodgy debt instrument, derivative or swap. It’s all getting very frothy thanks to the Bernanke.
So, how does the Fed chair intend to “contain” the emergent asset bubble until he retires at the end of the year and returns to blissful academia?
He’s going to keep doing what he’s doing right now; cherry-picking the data so he can rattle Wall Street’s cage every so often and keep stocks from zooming too far into the stratosphere. That’s the plan. Of course, he could just tell the truth–that QE has been great for Wall Street but done jack for anyone else. But I wouldn’t count on that.
That’s right. Those same folks who were so anti-establishment and their kids are busily protecting their establishment asses and fuck those below them. They got the education and therefore they got theirs. Those who do not have those ivy covered credentials are just not worth the time and trouble.