I’ve posted versions of the chart above several times before. It shows how American wages once grew along with growth in productivity, and how, around 1971 or so, wage-earners stopped benefitting from being more productive. This fact about the U.S. economy explains a lot.
I saw an Internet post yesterday consisting of charts showing how many more kinds of things changed for the worse in 1971. Economic inequality, the cost of living, inflation-adjusted wages—all got worse.
There are too many for me to copy and re-post, but here is a sample.
What happened in 1971? The only major event I can think of is the Nixon administration’s decision to go off the gold standard. From then, the U.S. dollar was redeemable not for gold or some other precious metal, but for U.S. Treasury bonds – in other words, IOUs.
Economist Michael Hudson has written books about how this decision allowed financiers and bankers to flourish and the U.S. military to finance its wars while the U.S. manufacturing economy faded away and living standards declined.
As much as I respect Hudson, it’s hard for me to believe that this one thing could have caused changes in so many different things so quickly. Maybe it’s a tipping point caused by a lot of different things coming together at once.
When people are faced with external threats, they need to pull together. A Canadian anthropologist named Wade Davis pointed out that this once was true of the United States.
In 1940, with Europe already ablaze, the United States had a smaller army than either Portugal or Bulgaria.
Within four years, 18 million men and women would serve in uniform, with millions more working double shifts in mines and factories that made America, as President Roosevelt promised, the arsenal of democracy.
When the Japanese within six weeks of Pearl Harbor took control of 90 percent of the world’s rubber supply, the U.S. dropped the speed limit to 35 mph to protect tires, and then, in three years, invented from scratch a synthetic-rubber industry that allowed Allied armies to roll over the Nazis.
At its peak, Henry Ford’s Willow Run Plant produced a B-24 Liberator every two hours, around the clock.
Shipyards in Long Beach and Sausalito spat out Liberty ships at a rate of two a day for four years; the record was a ship built in four days, 15 hours and 29 minutes.
A single American factory, Chrysler’s Detroit Arsenal, built more tanks than the whole of the Third Reich.
COVID-19 didn’t lay America low; it simply revealed what had long been forsaken.
As the crisis unfolded, with another American dying every minute of every day, a country that once turned out fighter planes by the hour could not manage to produce the paper masks or cotton swabs essential for tracking the disease.
The nation that defeated smallpox and polio, and led the world for generations in medical innovation and discovery, was reduced to a laughing stock as a buffoon of a president advocated the use of household disinfectants as a treatment for a disease that intellectually he could not begin to understand.
As a number of countries moved expeditiously to contain the virus, the United States stumbled along in denial, as if willfully blind.
With less than four percent of the global population, the U.S. soon accounted for more than a fifth of COVID deaths.
The percentage of American victims of the disease who died was six times the global average. Achieving the world’s highest rate of morbidity and mortality provoked not shame, but only further lies, scapegoating, and boasts of miracle cures as dubious as the claims of a carnival barker, a grifter on the make.
Davis, like many Canadian critics of the USA, is somewhat blind to the problems of his own country. An American who has lived in Davis’s Vancouver pointed out that it is far from being the semi-utopia he claims it is.
But none of this disproves Davis’s general point. U.S. industrial and governmental capacity has been unraveling for a long time. This process won’t reverse by itself. The first steps in change are for us Americans to understand our situation, pull together and stop accepting excuses for failure from our supposed leaders.
A writer named Umair Haque fears the USA is locked into a possibly irreversible spiral of decline
People who are made to live right at the edge must battle each other for self-preservation. But such people have nothing left to give one another. And that way, a society enters a death spiral of poverty — like ours have.
People who can’t make ends meet can’t even invest in themselves — let alone anyone else. Such a society has to eat through whatever public goods and social systems it has, just to survive. It never develops or expands new ones.
The result is that a whole society grows poorer and poorer. Unable to invest in themselves or one another, people’s only real way out is to fight each other for self-preservation, by taking away their neighbor’s rights, privileges, and opportunities — instead of being able to give any new ones to anyone. Why give everyone healthcare and education when you can’t even afford your own? How are you supposed to?
Society melts down into a spiral of extremism and fascism, as ever increasing poverty brings hate, violence, fear, and rage with it. Trust erodes, democracy corrodes, social bonds are torn apart, and the only norms left are Darwinian-fascist ones: the strong survive, and the weak must perish.
Let me spend a second or two on that last point. As they become poorer, people begin to distrust each other — and then hate each other. Why wouldn’t they? After all, the grim reality is that they actually are fighting each other for existence, for the basic resources of life, like medicine, money, and food.
Our politics and journalism mostly ignore fundamental problems. I don’t think this is happenstance. I think the people at the highest levels of government, business and journalism benefit from the status quo, and feel threatened by anyone who challenges it.
The headline issues of today, including the impeachment drama, are wedge issues that keep the American body politick divided and distracted.
Many of us Americans think our neighbor who believes in gun rights or abortion rights is our enemy. Those issues are important, of course, but we and our liberal or conservative neighbors are not enemies.
We need to realize we have more in common with each other than we do with those who benefit from our indebtedness and economic insecurity.
Historically, the American dream was that each generation would be better off that the generation that came before. By many measurements, this is no longer true. Click on any of the charts to enlarge them.
More American women are dying in childbirth. This is not the mark of an advanced nation..
More Americans are dying of drug overdoses. This is not a characteristic of a nation that is hopeful about the future.
More Americans are committing suicide. Neither is this the characteristic of a hopeful nation.
Labor’s share of the American economy is falling.
U.S. student loan debt
Young people are told they cannot advance without college degrees, but they risk being crushed by student debt.
The gains in the economy are going to the top 1 percent of income earners.
I think that’s true. How much should we the American people worry about this?
Paul Street wrote a savage but accurate article for Truthdig about reasons why the world in general would welcome the downfall of U.S. power. The enumeration of the death and destruction caused by U.S. military interventions, acts of war, covert action and economic sanctions makes is painful reading for an American.
And what benefit have we, the American people, gotten from it? Little or nothing, that I can see. In fact, the welfare of Americans has been sacrificed to maintaining American military power. We can’t afford to maintain decent public services, but cost is no consideration when it comes to the military.
That doesn’t mean that loss of American global power would be painless. We would have to find new ways to employ the millions of people employed by the U.S. military, the covert action agencies and their many contractors and suppliers.
Having a large number of unemployed, some highly qualified in the use of lethal force and others in covert political action, would be no small problem. Neither would being a pariah among nations, as the Germans were for a time after their defeat in World War Two.
The British and French people were better off in the long run after they lost their overseas empires. The German and Japanese people were better off in the long run after their defeats in World War Two. We Americans will be better off in the long run if we give up the quest for world domination.
An economist named Robert J. Gordon, and Erik Byrnjolfsson, director of the MIT Center for Digital Business, had an interesting debate at a TED forum on whether the days of rapid economic growth are over.
Gordon said improvements in world living standards are the result of two historical events that may not be repeated—the first industrial revolution, based on coal, iron and steam, beginning in the late 1700s in Britain, and the second industrial revolution, based on oil, electricity and the internal combustion engine, beginning in the late 1800s in the USA.
Both these revolutions have run their course, he said, and there’s no reason to think that the current technological revolution in information technology will have the same impact. The i-phone is nice, but it will not change society in the same way that Alexander Graham Bell’s telephone did.
Byrnjolfsson said computer and information technology are in their infancy, and will have as great an impact as the earlier technological revolutions. Human beings haven’t as yet learned how to work most effectively with the new technology, he said.
Much depends on which one is right. With rapid economic growth, it is possible for all classes of society, rich, middle and poor, to improve their condition without hurting the others, except maybe in relative terms. With flat or declining economic growth, the struggle for economic and political power becomes much more of a zero sum game, a sorting of society into winners and losers.
I think the videos are interesting and worth watching, but I also think both speakers fail to emphasize an important thing—that improvement in the material standard of living requires not only progress in science and technology, but public policies that make the fruits of science and technology available to the wider public.
Improvements in public health, for example, are based not only on discoveries about vaccination, antiseptics and antibiotics, but also from public water and sewerage systems, food inspections and mass vaccinations of school children. Universal telephone service is based not only on a technology, but also on a commitment by AT&T as a condition of maintaining its monopoly position.
Advances in technology don’t automatically abolish poverty. George Orwell, in The Road to Wigan Pier, which is about unemployed British coal miners in the 1930s, pointed out that every miner’s family owned a radio, a technological wonder unavailable to kings and emperors 50 years before. And yet these same miners had difficulty putting food on the table. Not having radios would not have enabled them to pay for it.
Brynjolfsson could be right. Factory automation could produce a world of leisure and well-being for everyone. But, depending on who is running things, it could produce a world like that imagined by Kurt Vonnegut Jr. in his 1952 novel Player Piano.
I can easily imagine a future USA with amazing information technology, communications technology and virtual reality entertainment technology, not to mention science-fictional war-making and surveillance technology. And along with this, growing shortages of affordable housing, medical care and higher education, and a deterioration of public services and the physical environment.
I’m neither foolish enough nor brave enough to attempt to predict the future. I don’t think decline is inevitable. But all it requires is for us to continue on our present path. We’re halfway there now.
We Americans would do better to strive for peace and prosperity than to be try to be the world’s top superpower.
Military strength is not real strength. It is a projection of the strength that comes from a united society, a strong economy and an effective government.
Germany under the Kaiser and under Hitler tried to dominate Europe by military means. On each try, the German nation wound up in ruins, and with less territory than before. After 1945, Germans forsook military means and built up their society, economy and government, and became the dominant power in Europe.
Japan in the 1930s sought to dominate eastern Asia by military means, and would up in ruins and under military occupation. After 1945, the Japanese concentrated on building up their strength at home, and became for a time the leader of a East Asia co-prosperity sphere.
China under Mao Tse-tung sought to foment world revolution. Now the Chinese leaders are trying to build up their strength at home. China is a more powerful and influential nation now than it was then.
We Americans have all the resources we need to be free and prosperous. But we can’t be free and prosperous if we try to project military power into all parts of the world. We can’t be free and prosperous so long as we consume more than we produce. We can’t be free and prosperous if we have an economy based on finance instead of manufacturing. We can’t be free and prosperous if our government and corporations are being milked by a wealthy elite for their own benefit. And the United States won’t be the world’s supreme superpower under these conditions either.
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