The Truth about the American Economy - Robert Reich

[JohnWxy]

http://robertreich.org/post/5993482080



The Great Prosperity

During three decades from 1947 to 1977, the nation implemented what might be called a basic bargain with American workers. Employers paid them enough to buy what they produced. Mass production and mass consumption proved perfect complements. Almost everyone who wanted a job could find one with good wages, or at least wages that were trending upward.

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Government enforced the basic bargain in several ways. It used Keynesian policy to achieve nearly full employment. It gave ordinary workers more bargaining power. It provided social insurance. And it expanded public investment. Consequently, the portion of total income that went to the middle class grew while the portion going to the top declined. But this was no zero-sum game. As the economy grew almost everyone came out ahead, including those at the top.

The pay of workers in the bottom fifth grew 116 percent over these years — faster than the pay of those in the top fifth (which rose 99 percent), and in the top 5 percent (86 percent).

Productivity also grew quickly. Labor productivity — average output per hour worked — doubled. So did median incomes. Expressed in 2007 dollars, the typical family’s income rose from about $25,000 to $55,000. The basic bargain was cinched.

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[MichiganVote]

1. Simple explanation w/o all the hype. But he did not include the fact that the GOP

also threw in a total of two unfunded and useless wars that have done nothing to prevent terrorism.

[Demeter]

2. It would be nice to have a real, independent press again...

maybe this is the start.

[starroute]

3. But mass production and consumption are killing the environment

Basically, the consumer economy was deliberately invented c. 1950 as a means of ensuring we didn't slip back into the Great Depression. Between that and the permanent wartime economy, there were enough jobs to go around for a generation.

But the extractable resources on which that set-up were based are running out -- and the planet is becoming polluted and overheated as they do. So there's no way of going back to that as a solution.

I suspect there's still an important lesson to be learned from the economy of the 50's and 60's -- but we can't replicate it directly. The basic idea of paying good wages for work that the average person can do may still be viable, but it can't be either assembly-line work or drone office work.

So what kinds of work still exist that are both meaningful and necessary and also demand sufficient experience and expertise to justify paying a middle class wage -- and to justify keeping on the seasoned workers instead of replacing them with a new college graduate at an entry-level salary?

It isn't just the distribution of income that's becoming hourglass-shaped -- it's the nature of the jobs themselves. And if we're ever to put this nation back to work, we have to start by figuring out new kinds of jobs for them to do.

[Bluenorthwest]

4. Why do you need to justify decent treatment of working people?

That's an odd thing.

[cprise]

5. I agree with that sentiment on one level

But I think if you look at the popular culture from the last 15 years, you will see a great deal of loathing (perhaps self-loathing) of working class and poor Americans.

You may recall the recent study which showed that poor people often voted against programs to help them out, because they were most afraid of other poor people getting ahead of them.

The country's political and financial life won't improve until we undergo a cultural change so that your question doesn't need to be asked.

And... as the other poster remarked, we have to do it without consumerism.

[starroute]

6. I meant "justify" in business terms -- not moral terms

There's never any moral justification for a society that does not provide its citizens with a decent standard of living.

But taking things one job at a time, there's also no way to justify to an individual employer why they should pay somebody $40,000 a year to flip burgers. Or pay someone $60,000 a year to do the sort of office work that used to take years of experience but now just requires running a bunch of numbers through a machine. It simply isn't going to happen.

So my point was that having devolved into a nation of burger-flippers and interchangeable plug-in parts, we have no leverage over business to obtain better wages, more job security, or any of the other things we had fifty years ago but have lost. That sort of leverage comes only when the jobs are of a type that require experience and expertise, and when even less-skilled employees return more value to the employer in a context of long-term stability, team effort, and mentoring of new hires by the old hands.

It's not essential for every job to be that way because the existence of a critical mass of good jobs out there, providing real opportunity for anyone who wants to get ahead, puts pressure on employers to offer a certain level of benefits even to people who are willing to settle for the crappy ones. It's one of those rising-tide-lifts-all-boats situations.

But you do need that core of good jobs -- and right now we don't have it. What's more, we can't get it back by hoping that the same types of jobs that used to be good and aren't any more will suddenly become "good" again. We need new kinds of work -- work that can't be done by a machine, or by someone with six weeks of training, or be outsourced to India. Work that employees will be compelled to pay good money for, because otherwise they put themselves at a competitive disadvantage.

And that was what I meant by "justify."

[raouldukelives]

7. I think your first point about the environment

is where the jobs should be coming from. We need to whittle away or eliminate positions that are harmful to us and more importantly immensely harmful to future generations. It may be that the best solution is for a large part of the population not to work. The added burden of additional fossil fuel burning so someone can travel to an office to push digital decimal points around a screen have to come to an end. The excesses of our past have to become the massive clean-up of our future and if that has to funded by heavily taxing the largest polluters to try to leave something, maybe just the chance to enjoy a tree for a few more years for some child of tomorrow it's worth every penny.

[w0nderer]

8. k&r n/t