Out of the Frying Pan
Last edited Fri Jul 20, 2012, 02:56 PM - Edit history (1)
In the early 1970s we hit our lowest level of income inequality. The top 5% made ten times more than average.
Around the same time, we stopped rewarding labor for productivity. I suspect that the electronic revolution added as much or more productivity as the later info-tech revolution. Productivity has been going up rather steadily. Also, a lot of women entered the workforce in the 1970s-1980s. The proportion of 25-45 years olds in the work force went up from 50% ish to 60%ish. It was a prime time for business to "bend the curve" of the wage-productivity relationship.
So, how did the people respond to their taste of working and middle class decline, and income inequality going back up for the first time since WWII?
Ronald Reagan. Out of the Frying Pan.
Needless to say, Reagan-world did not reconnect wages and productivity. Reagan-world did, however, feature an explosion in the percentage of American GDP generated by finance, and a stock market bubble, and a big increase in income inequality.
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