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Wed Apr 24, 2013, 09:05 PM

How the 40-Year 'Long Recession' Led to the Great Recession



http://www.thenation.com/article/173727/how-40-year-long-recession-led-great-recession?rel=emailNation#

Between 1971 and 2007, real hourly wages in the US rose by only 4 percent. (That’s not 4 percent a year, but 4 percent over 36 years!) During those same decades, productivity essentially doubled, increasing by 99 percent. In other words, the average worker’s productivity rose 25 times more than his or her pay.

This was, of course, a bonanza for corporations and for the richest Americans. In 1976, the top 1 percent of US families held 19 percent of the country’s wealth. By 2000, they held 40 percent of it. In those same years, 58 percent of every dollar of income growth went to the top 1 percent.

There was, however, one small problem: we Americans sell to one another more than 70 percent of what we produce. If the majority of American workers were producing more without earning more, who was going to buy all the stuff?

CEOs and financiers were desperate to answer that question, for during those years of high productivity and low wages, immense profits and “returns” kept accumulating in brokerage accounts and banks. But a bank can’t keep its money in the bank. Under the pressure of those swelling piles of capital, the answer they offered to worker-consumers like Duane was: instead of paying you enough to buy what you produce, we’ll lend you the money.

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Arrow 12 replies Author Time Post
Reply How the 40-Year 'Long Recession' Led to the Great Recession (Original post)
eridani Apr 2013 OP
Newest Reality Apr 2013 #1
Sekhmets Daughter Apr 2013 #2
Benton D Struckcheon Apr 2013 #3
markiv Apr 2013 #4
ReRe Apr 2013 #6
markiv Apr 2013 #8
golfguru Apr 2013 #12
ReRe Apr 2013 #5
fasttense Apr 2013 #10
ReRe Apr 2013 #11
Warpy Apr 2013 #7
truebluegreen Apr 2013 #9

Response to eridani (Original post)

Wed Apr 24, 2013, 09:19 PM

1. K&R

It is good to see this recent economic historical outline recounted. It should circulate often because it puts many things into perspective about our current situation.

I've come across several accounts in the past that corroborate with the article. Knowing how we came to this might be useful in finding out where to go -- only if enough people have a clear picture and agree.

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Response to eridani (Original post)

Wed Apr 24, 2013, 09:27 PM

2. The last 40 years have been a horror story of abuses....

Suppressed wages, double digit inflation, increased cost of medical care and education. When people maxed out their credit cards, the banks helped them strip the equity from their homes. I don't see a recovery for decades, if ever.

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Response to eridani (Original post)

Wed Apr 24, 2013, 09:52 PM

3. They kept finding new workers to pay nothing to,

starting with companies moving from the North to the South, then they moved to Mexico, then they moved to China, and outsourced as many of the services as they could to India. That game's pretty much done now, as the only places left to move to are Indonesia and sub-Saharan Africa, and their populations are only a fraction of the populations available in the other places.
So, this will reverse. It will take a long time, but it will.

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Response to Benton D Struckcheon (Reply #3)

Wed Apr 24, 2013, 10:09 PM

4. that's been the key - and the immigration bill will make it much worse

 

with a massive increase in 'guest workers' to compete with American workers

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Response to markiv (Reply #4)

Thu Apr 25, 2013, 12:46 AM

6. Immigrants have nothing to do with...

... the recession.

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Response to ReRe (Reply #6)

Thu Apr 25, 2013, 09:54 AM

8. tell that to somone who trained their H-1b replacement before being fired

 

they will definitely notice a link between immigration and their personal recession

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Response to markiv (Reply #8)

Sat Apr 27, 2013, 08:38 PM

12. Immigration bill has everything to do with ILLEGAL/UNDOCUMENTED immigrants

 

It will have very little effect on H1B visa's. Nost of the American workers displaced by H1B people are programmers. Programmers are easy to train and millions are available world wide. There is still a shortage of Engineers in US. But to train a good engineer is much more difficult and longer than training computer programming.

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Response to eridani (Original post)

Thu Apr 25, 2013, 12:15 AM

5. This sounds allot...

... like Economist Richard Wolff. After all, we're all searching for a logical reason for the mess this country's in. And I agree with it. Thanks for the link, eridani!

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Response to ReRe (Reply #5)

Fri Apr 26, 2013, 07:07 AM

10. I was thinking the same thing.

 

Richard Wolff can make economics sound logical. So does this article.

We have to get rid of capitalism before anything will improve in this world. But it will be a long hard fight.

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Response to fasttense (Reply #10)

Fri Apr 26, 2013, 07:27 PM

11. We could reset the whole thing...

... with a world jubilee! Start all over. Put the regulations back in, set CEO salaries, tax Wall Street transactions, outlaw giving subsidies to any Corporation, start charging Corporations for the R&D that the government does, tax corporations who pound our infrastructure into the ground, tax them for their part in endangering our effing environment, tax them for training their employees, etc., etc., etc. And if they don't like it, then set 'em all off in a boat in the pond and say "bye-bye ", making them Corps without a country. How's that for starters?

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Response to eridani (Original post)

Thu Apr 25, 2013, 01:46 AM

7. It looks like they've been reading all my old posts

about how 90% of what ails this country is due to the policy of wage suppression that took hold in the 70s when monetarists successfully blamed labor for the OPEC induced double digit inflation. Wages have never been able to recover from those years thanks to the conservative economic policy of conservatives in both parties and their foot dragging on raising the minimum wage to compensate for ongoing inflation.

And yes, they offered us easy access to debt to replace all the wages we were being cheated out of. The problem there is that there is a finite amount of debt every wage earner can assume before servicing it starts to decrease his subsistence level.

And that's where we are now. The debt tap is largely closed to most of us with only those temporarily earning fat corporate salaries able to access the full range of debt "products."

And the longer the government waits before reversing this process, the more likely this country is to have a violent revolution instead of a peaceful one.

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Response to Warpy (Reply #7)

Thu Apr 25, 2013, 08:55 PM

9. +1000 n/t

 

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