Showing posts with label prosperity. Show all posts
Showing posts with label prosperity. Show all posts

Monday, February 27, 2012

American Dreams: My Father, Karl Marx and the Man who Sold the Rope 2/2

In part one of this two-part series, I wrote of how the American dream had changed since my father's time. The promise of ever-increasing prosperity seems to belong to a shrinking minority. History had played an ironic joke on the West. While the Soviet Union was collapsing due to the pressure of union labor, the United States under Reagan was signaling to corporate America that unionized labor was to be discarded on the ''scrap heap of history.''

And Then The Slow Decline
Now let's take a look at the consequences of this policy and who actually benefited.
At one time, when the main challenge to capitalism was Communism, leaders of the free world touted rising consumption afforded by rising wages as a measure of its success.

Starting around the 1980s, however, real wages and productivity, which once went hand in hand, decoupled. No longer did harder work mean higher wages. Productivity continued to rise- adding to the wealth of corporations- while wages remained steady. This trend has continued to the present day.

Additionally, access to easy credit has allowed the American citizen to shop and shop, giving, at least, the illusion of prosperity. But buying a lifestyle built on credit is a gamble because credit assumes that tomorrow will be as good or better than today. Life could be pretty good with a high credit limit. Especially with the flood of cheaply-priced merchandise on offer, all of it made possible by non-unionized workers in Asia and elsewhere.
Consider these facts.

Before credit became so widely available, personal savings rates were rising steadily each year. In 1960, Americans were saving 5.4% of their total income, It reached a high of 14.6% in 1975, and by 1982, it leveled off at 10.9%. But all that changed in the mid-1980s under Reagan when consumer credit became more commonplace.

At that point, personal savings began dropping hitting an all-time low of just .09% in 2000 and it stayed low until the last few years. After hitting depression-era lows, it has been slowly rising again since 2008.