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Growth of Real Hourly Compensation for Production/Nonsupervisory Workers and Productivity, 1948–2011


Is America in the throes of a class war?

Look at the chart and decide for yourself. It’s all there in black and white, and you don’t need to be an economist to figure it out.

But, please, take some time to study the chart, because there’s more here than meets the eye. This isn’t just about productivity and compensation. It’s a history lesson too. It pinpoints the precise moment in time when the country lost its way and began its agonizing descent into Police State USA. That’s what it really means.

It all began in the 1970s, that’s when everything started going down the plughole. Once wages detached from productivity, the rich progressively got richer. They used their wealth to reduce taxes on capital, role back critical regulations, break up the unions, install their own lapdog politicians, push through trade agreements that pitted US workers against low-paid labor in the developing world, and induce their shady Central Bank buddies to keep interest rates locked below the rate of inflation so they could cream hefty profits off gigantic asset bubbles. Now, 40 years later, they own the whole f*cking shooting match, lock, stock and barrel. And it’s all because management decided to take the lion’s share of productivity gains which threw the whole system off-kilter undermining the basic pillars of democratic government. Here’s how FDR summed it up:

“The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.” (Franklin D. Roosevelt: “Message to Congress on Curbing Monopolies.,” April 29, 1938. Online by Gerhard Peters and John T. Woolley, The American Presidency Project.

Are we there yet?

Pretty close, I’d say. The only way to preserve democracy is by keeping one hand firmly clasped around the windpipe of every rich bastard in the country. If you can’t keep your tycoons in check, you’d might as well throw in the towel and accept a life of indentured servitude now, because that’s where you’re headed anyway. Here’s a short rundown of the changes that took place in the ’70s by economist Lawrence Mishel:

“Productivity in the economy grew by 80.4 percent between 1973 and 2011 but the growth of real hourly compensation of the median worker grew by far less, just 10.7 percent…. The pattern was very different from 1948 to 1973, when the hourly compensation of a typical worker grew in tandem with productivity. Reestablishing the link between productivity and pay of the typical worker is an essential component of any effort to provide shared prosperity and, in fact, may be necessary for obtaining robust growth without relying on asset bubbles and increased household debt.

It is hard to see how reestablishing a link between productivity and pay can occur without restoring decent and improved labor standards, restoring the minimum wage to a level corresponding to half the average wage (as it was in the late 1960s), and making real the ability of workers to obtain and practice collective bargaining.” (The wedges between productivity and median compensation growth, Lawrence Mishel, EPI)

When was the last time you heard Obama talk about “improving labor standards” or “collective bargaining”?

Don’t make me laugh. It’s not even on his radar. Did you know that inequality has actually gotten worse under Obama? Much worse.

It’s true. He might proclaim his determination to “tax millionaires” in one of his blustery orations, but it’s all just rhetorical fakery. The fact is, the 1 percenters have done better under Obama than they did under Bush. Check this out from Naked Capitalism:


Yup, under Bush, the 1% captured a disproportionate share of the income gains from the Bush boom of 2002-2007. They got 65 cents of every dollar created in that boom, up 20 cents from when Clinton was President. Under Obama, the 1% got 93 cents of every dollar created in that boom. That’s not only more than under Bush, up 28 cents. In the transition from Bush to Obama, inequality got worse, faster, than under the transition from Clinton to Bush. Obama accelerated the growth of inequality.” (Growth of Income Inequality Is Worse Under Obama than Bush, Matt Stoller, Naked Capitalism)

93 cents of every buck has gone to the 1 percenters under Obama. And you wonder why Wall Street loves this guy? It’s because he’s bent over backwards to make them richer, that’s why. Just look:


Graph (4) above: the blue line across the bottom of the graph represents the wealth of the bottom 90% of U.S. households. The red line represents the wealth of the richest 0.1%. Source: Emmanuel Saez (The Climate Crisis is Capitalism, Rob Urie, CounterPunch)

The rich are making money hand over fist, and it’s all due to President Twoface and his dodgy friends at the Federal Reserve. Of course, Obama would like everyone to think that he’s really rooting for the little guy, doing his best to boost wages, create more jobs and raise living standards for ordinary working people.

Right. Check out this speech he gave in 2013:

“The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American Dream, our way of life, and what we stand for around the globe. And it is not simply a moral claim that I’m making here. There are practical consequences to rising inequality and reduced mobility.”

Got that? Obama is all about closing the gap between the rich and the poor. Just don’t look at his record or you might notice a slight discrepancy between what he says and what he does.

The fact is, stocks have surged under Obama as have corporate profits which “have doubled since he took office in 2009″. At the same time, he’s overseen the slowest recovery in the postwar era, stood idle while middle class incomes were shaved by nearly \$5,000 annually, and refused to intervene when over 700,000 public sector jobs were slashed in the early days of his administration. And we won’t even mention the health care debacle, the endless spying, the perennial warmongering, targeted assassinations or Gitmo.

But as bad as Obama may be, the problem didn’t start with him. It goes back decades as the first chart indicates. The steady erosion of workers bargaining power, changes in the tax code favoring capital, anti-worker trade agreements, deregulation, loosey-goosy monetary policy and, of course, the “biggie”, financialization, have all contributed to the evisceration of the middle class which now appears to be hanging by a thread. Check out this clip from authors John Bellamy Foster and Fred Magdoff who researched the roots of financialization and wrote about it in an article in The Monthly Review titled “Financial Implosion and Stagnation”:

“It was the reality of economic stagnation beginning in the 1970s, as heterodox economists Riccardo Bellofiore and Joseph Halevi have recently emphasized, that led to the emergence of “the new financialized capitalist regime,” a kind of “paradoxical financial Keynesianism” whereby demand in the economy was stimulated primarily “thanks to asset-bubbles.” Moreover, it was the leading role of the United States in generating such bubbles—despite (and also because of) the weakening of capital accumulation proper—together with the dollar’s reserve currency status, that made U.S. monopoly-finance capital the “catalyst of world effective demand,” beginning in the 1980s. But such a financialized growth pattern was unable to produce rapid economic advance for any length of time, and was unsustainable, leading to bigger bubbles that periodically burst, bringing stagnation more and more to the surface.

A key element in explaining this whole dynamic is to be found in the falling ratio of wages and salaries as a percentage of national income in the United States. Stagnation in the 1970s led capital to launch an accelerated class war against workers to raise profits by pushing labor costs down. The result was decades of increasing inequality.” (Financial Implosion and Stagnation, John Bellamy Foster and Fred Magdoff, Monthly Review)

Let me get this straight: Persistent stagnation paved the way for financial engineering and asset bubbles where investors could make beaucoup dough regardless of the (abysmal) condition of the underlying economy? Is that it?

Sounds a lot like today, doesn’t it; where corporations are minimizing their capital expenditures, laying off workers, and reducing revenues, but still making record profits by goosing stock prices with buybacks which add absolutely nothing to productivity. But, then again, why expand your business if you can make piles of moolah by just loading up on your own shares?

It’s madness, and it’s all the result of 6 years of zero rates and QE which has lured investors further and further out on the risk curve. The system is so deluged with liquidity that people are taking chances they never would have otherwise.

But where do we see “the falling ratio of wages and salaries as a percentage of national income in the United States” that the authors mention in their article? Is there any real proof of a class war or is it just more leftist folderol?

Graph: Compensation of Employees, Received: Wage and Salary Disbursements/Gross Domestic Product

Screen Shot 2015-01-14 at 7.45.48 PM

It sure looks like class war to me.

Foster and Magdoff make a pretty convincing case that the system has been rejiggered to overcome stagnation. Financial assets provide a place where the big wigs can grow their money during the periods when the economy is flatlining due to crappy wages, weak demand and slow growth. And that’s the name of the game, isn’t it; creating outlets for profitable investment even in the down-times?

You bet it is. That’s what QE is really all about, Bernanke even admitted as much in an op-ed in the Washington Post in 2010. He said:

“…higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

There it is from the horse’s mouth. Bernanke wanted higher stock prices, and that’s what he got. But when does all that wealth start trickling down to the worker-bees like he promised? (At present, the economy is still growing just a touch above 2 percent, not at all what one would expect after \$4 trillion in asset purchases.)

More important, who are the lucky ducks who own all those stocks and bonds that the Fed just inflated with 3 rounds of QE? It certainly isn’t Joe Sixpack who can barley scrape up enough dough to make the monthly payment on his ’99 Chevy Caprice.

Of course not. The only people who own stocks are the rich and the very, very rich Take a look:


(The Great Economic Misdirection, Rob Urie, CounterPunch)

Just think about that for a minute: Bernanke admits that the purpose of QE is to inflate asset prices but, on closer examination, we see that those very assets are owned almost exclusively by a small group of very rich investors. Does that seem like an evenhanded policy to you, dear reader, or does it seem like the former Fed chair simply used QE to transfer trillions of dollars to his shifty constituents?

QE was never intended to boost inflation, (it doesn’t), spur more lending (it hasn’t) or lower long-term rates. (Long-term rates dropped after all 3 rounds of QE, and are currently lower than during the Great Depression!) The program’s real objective which was to funnel more money to Bernanke’s moocher friends via asset inflation. In that regard, it has succeeded beyond anyone’s wildest imagination. Just look:

Average income growth in US recoveries: top 10% versus the bottom 90%. (Graph: Pavlina Tcherneva)


(Smart Charts: An Economic Recovery for the 1%, Bill Moyers)

You can see from the chart above that the bottom 90 percent have gone from treading water to sinking like a stone. And, as we all know, a growing number of these same people are rapidly slipping through the cracks, loosing their spot in the middle class, and entering a terrifying new world of economic hardship and uncertainly.

This is no accident nor is it the result of free market operations that unavoidably create winners and losers. The upward distribution of wealth is the natural corollary of decades of aggressive lobbying, government infiltration, and political arm-twisting. Ruling elites are a like-minded bunch who know what they want and will stop nothing until they get it. The system has been effectively restructured to serve their needs and those of their constituents. They alone control the levers of state power as well as the marionette politicians who do their bidding.

So, is America in the throes of a class war or not?

Indeed, it is. But only one side is fighting.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at [email protected].

(Republished from Counterpunch by permission of author or representative)
• Category: Economics • Tags: Inequality, Unemployment 
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  1. MarkinLA says:

    The boom-bust cycle is even worse for the poor saps in the middle. The bust doesn’t come until Joe Sixpack sees that what little he has in the bank is wasting away, better put it in one of those “growth” stocks. When the bust comes and Joe Sixpack can’t hold on any longer here come the guy who sold him the stock in the first place willing to buy it back for 20 cents on the dollar. The endless cycle of the world’s biggest legal con game continues.

  2. Anonymous • Disclaimer says:

    The one thing you left out of the equation is technological progress and what, for lack of a better word, I’ll call mechanization; the constant replacement of workers by automated machinery. Productivity has been going up these past forty years because at very regular intervals the work that was done by say 20 workers and some limited amount of unsophisticated equipment starts to be done by 5 more skilled workers handling significantly more sophisticated equipment. The remaining15 workers must find other work in an environment demanding increasing skills.

    If these displaced workers don’t have these skills they will be lucky to get a job flipping burgers. Meanwhile, the wages of the 5 skilled workers will have shot up along with their productivity because of the value they bring to the work. This process has been going on since the beginning of the industrial revolution. The difference now is that remunerative jobs currently require native skills and advanced training that exist in only a limited number of persons. As an example, just about anyone could learn to do basic operations on a simple lathe, it takes a fair amount of intelligence and lots of education to learn to program a programmable turret muilling machine.

    It’s easy to spin theories of massive conspiracies to impoverish the average worker. And it’s even true that some such chicanery exists. But it explains only a small fraction of the on-going disconnect between worker productivity and average wages. The really big issue is the one I’ve just outlined; the absolute inability of an increasingly large proportion of the potential labor force to perform the most needed and therefore most financially rewarding types of work. This creates a major disconnect between our current social reward system and a large minority, perhaps even majority, of those who should be integrated into society. This disconnect is growing but seldom recognized. Until folks like you address this with reasonable solutions nothing will improve.

    • Replies: @Anonymous
  3. DCThrowback says: • Website

    All you need to know:

    My pops worked for GM as welder in the 70s, 80s and 90s and retired in 2004. He made \$27/hour. In 1987.

    New workers doing the same job at the same plant get \$14/hr. In 2014.

    I get the global competition angle, but in no way does it compare to the FED servicing the wealthy like this.

    • Replies: @Jus' Sayin'...
  4. @DCThrowback

    My pops worked for GM as welder in the 70s, 80s and 90s and retired in 2004. He made \$27/hour. In 1987.
    New workers doing the same job at the same plant get \$14/hr. In 2014.

    I very much doubt the \$14/hour welders today are doing the same work as your father back then. Now all the more important welding in automobile manufacturing is done by robots. I’m surprised GM still has welders. I’d be curious what they do.

    • Replies: @donut
  5. 1970 is when the influx of foreigners consequent to the disastrous 1965 Hart-Cellers Immigration Act began to impact the supply – indeed, the oversupply – of labor.

    God forbid, Mr. Whitney, that you should mention that immigration is the elephant in the wealth inequality/gap room.

    Yes, the ending of protectionism which allowed the rich to become Globalists by shipping American industries and the jobs they provided to foreign powers hurt. Yes, computer-automation hurt. But the biggest, most harmful impact came from immigration, whose consequences include not only economic hardship for Americans, but also include the huge decline in social capital and social trust.

    Immigration also prompted the hyper-growth of the police state. Plus, the growth of public sector unions’ power (a great proportion of which comes from police state cost increases at every level of government) has added to the tax burden on Americans and has also bankrupted and thrown into debt many a municipality and has even gutted state treasuries and had massive negative impact on the national deficit and national debt.

  6. @Auntie Analogue

    Exactly – wow, what an accomplishment. It really takes great skill, and nerves of steel, to go through all this history and subject matter without once mentioning IMMIGRATION (legal and illegal) and THE 1965 IMMIGRATION ACT. I wonder if deliberately and systematically EXPLODING THE SUPPLY OF LABOR for SIXTY YEARS WITHOUT A PAUSE had ANY IMPACT on the price of labor, i.e., WAGES?

  7. Kiza says:

    Dear Mike,

    Whatever you write, some commentators here will read through their own colored lense, of race, of income etc.

    Your writing is always the most insightful, even though I may not agree with your left-wing slant. Replace the word “workers” with “the rest of us” or “the non-0.01%-ers” and I am on-board. Regardless, a truly great article.

    My 5 cents contribution is that this turn-off point happened very soon after the separation of US\$ from gold. Once the 0.01%-ers did this, they never stopped to look back. They keep escalating the rip-off because they keep getting away with it, right? First, they kept all productivity gains and, as of lately, after they outsourced the whole economy, they just print money and share it between themselves. If we complain, they will send the police and the military, the people who are prepared to terrorise us just to remain the “lesser-losers” amongst us. How long before this setup collapses?

  8. yes, there is a class war, one being waged by the upper class, the mega-corporations against the white working class majority.

    Mass immigration, combined with multiculturalism, political correctness, racial integration, affirmative action, these are the weapons of the plutocrats and the mega-corporations, the weapons being used against the white working class of the western nations.

    Mass immigration, combined with multiculturalism, political correctness, racial integration, affirmative action, etc are used to fragment the unity of the populace, thus diffusing and weakening the expressed common interest of the electorate. Thus weakened, the majority cannot unite against the plutocrats and mega-corporations.

    This is called the ‘divide et impera’ strategy, and it is the one created by the so-called founding fathers over 200 years. Madison et al used it to weaken democracy and allow the rich to rule america.

    In those days, the unity of the populace was weakened by the formation of the USA from the several states, thus enlarging the voting districts and creating more factions in the populace. Madison wrote that by enlarging the voting districts (through creation of federal voting districts, which are larger than state voting districts), the larger districts would have more factions, thus making it harder for the people to unite. This would, as madison put it, “protect the minority of the opulent against the majority.”

    The core idea was to dampen democracy. The separation of powers, and checks and balances created in the constitution would also help to dampen democracy. Less power to the people and more to rich people like madison, washington, morris etc.

    Same idea is being used today. But instead of enlarged districts to create factions and prevent electorate unity, the idea is to create factions through mass immigration combined with multiculturalism, political correctness, racial integration, affirmative action, etc.

    Same as it ever was….

  9. War for Blair Mountain [AKA "Bill Blizzard and his Men"] says:

    40 years of importing Asian and Muslim Legal Immigrant engineering computer programming scab labor…..40 years of wage and job theft…40 years of Native Born White American Engineer’s wealth being transferred to the White Liberal Greedy Cheating CEO Parasite Class…..40 years of Asian and Muslim Legal Immigrants and their “Ametican” born geneline voting enthusiastically at election time every four years to reduce Whitey to a racial minority in post-white “AMERICA”.

    From 1945 to 1973=The Golden Era of US economic Growth… an era of very few nonwhite legal immigrants…From 1973-2015(Post-1965 Immigration Reform Act)The Golden Era of massive wealth transfer to The White Liberal Greedy Cheating CEO Parasite Class=40 years of economic violence against the Native Born White American Working Class…..and 40 years of demographic violence against The Historic Native Born White American working class.

    Cause and effect:the imported nonwhite scab labor legal immigrant and it’s “American” born geneline voted to install a Narcissistic Kenyan Foriegner War Criminal who is attempting to force economic and demographic violence on The Conservative Orthodox Christian Russian Civilian population…..last time this happened Jeffrey Epstien and his very good buddy Billy Clinton had orgies on Jefffreys’ Carribean Island Getaway for billionaires and Democratic Party War Criminals using barely legal Orthodox Christian Teenage Russian Girls.

    Two economists that you all should read:Korean economist Ha Joon Chang(Kicking away the Ladder)…and Michael Hudson(Superimperialism)…Ron Unz has the good sense to start posting commentary by Michael Hudson.

  10. David says:

    I agree with Auntie Ana. And I agree that our government being in the hands of a very small and self-interested elite is the biggest part of the problem. But at this point, a feedback loop is in effect, where the safety net has removed all incentives. And no incentives means greater helplessness.

    What I find depressingly unsurprising about the calls for higher wages is that not a single one seeking them starts by asking, “How can I be more valuable to my employer?” Here in rural Vermont, we have a generation of twenty-somethings who think all of life’s necessities aught to be free. I think this generation’s lack of knowledge, ambition and integrity is a major contributor to the divergence between wages and production. Potential employers are just running off their businesses, not bothering to train their successors, who don’t care either.

  11. donut says:
    @Jus' Sayin'...

    Probably plant maintenance .

    • Replies: @Jus' Sayin'...
  12. @Auntie Analogue

    Auntie, God bless you, I was all ready to make a comment on how I did not see a single reference to immigration helping to depress wages and you had already covered all the bases. I wish I had a nickel for every article I have read on the topic of jobs and wages that leaves out any mention of the effects of immigration or the relentless effort by billionaire open border globalists to increase immigration so they may profit while passing on all the social, economic and environmental cost to the rest of us.

    Thanks for fighting!

  13. AG says:

    According to Marx, capitalism is merely a stage of historical development. It will eventually collapse under the weight of a laboring class (the proletariat) which increasingly becomes poorer and more numerous (increased gap between rich and poor).

    This is very reason why Marxism ideology refuse to go away. Ideology is wishful thinking like religion.

    In Darwin natural world, it is underclass should go away under competition and middle class downward mobility to new low. Descendants of Top 1% eventually become whole population with new 1% , middle and bottom. You wonder how human become smarter and wealthier than Chimps because our ancestors let losers die.

    No body can fight against natural law. Nature never mean to be nice.

    • Replies: @Lew
  14. Lew says:

    Janet Yellen, Jacob Lew, Antonio Weiss, Ben Bernanke, Stanley Fischer…

  15. Lew says:

    The guillotine was invented for this scenario.

    • Replies: @AG
  16. AG says:

    Finally the proletariat believe Maxism is right. Violence is the solution. When Russia and China were in cold war against corrupted capitalsim, proletariat were suscessfully brain-washed against communism.

    Never late, you can start new violence in the name of poor. Go for it.

    • Replies: @another fred
  17. @donut

    Thanks! Plant maintenanace sounds right. Rough and ready tack welds don’t require the kind of welding skills that were needed when workers and not robots welded car bodies together.

    And I’m ashamed that I forgot to mention the other big – perhaps bigger – reason for lowered wages and income in this country, mass importation of cheap labor. Socialism/communism is an internationalist ideology. It’s natural a leftist would overlook this.

    But it’s kind of shocking to me that today’s leftists are so ignorant of Marx that they also overlook the role that increased capitalization, plays in reducing the need for less skilled labor and reducing wages. It’s sad that these ideologues are no longer familiar even with the intellectual roots of their own mistaken ideas. They rely on poorly constructed conspiracy theories with little explanatory power when a quick dip into Das Kapital or The Communist Manifesto would add some intellectual heft to their bloviations. And they need a paleoconservative like me to point this out.

  18. Pete1215 says:

    No one is mentioning China opening up to the world. 800 million destitute Chinese started working for next to nothing, which made a huge difference.

    • Replies: @Auntie Analogue
  19. unit472 says:

    Anonymous in comment #2 is right. In 1970, if you made a bank deposit you had to fill out a deposit slip and physically hand your deposit to a bank teller. You may have even had to wait in line to do so despite there being half a dozen or more tellers working in a brick and mortar bank branch office. The deposit would be processed by mechanical devices with the checks being moved physically all across the nation. A massive computer array housed in an office tower would, after business hours, work through the night printing out the bank customer’s new balances as the transactions cleared. Dozens of workers would sort the printouts by bank branch and couriers would pick them up and physically deliver them to the branch banks so tellers could reference available balances against checks presented to them or to a merchant across town. Today an ATM terminal or even your cellphone can take your deposit, electronically process it and update your balance in less than a minute. Whereas before it took thousands of tellers, keyboard data entry clerks, sorters, couriers as well as early IT departments to do all this and hundreds of thousands of square feet of office space, today a bank only needs an IT department and a handful of people to service ATMs to accomplish the same banking operations.

    • Replies: @rustbeltreader
  20. Fake Name says:

    To what extent are we looking at the effect of three generations of unrestrained illegal immigration bidding wages down by oversupplying the labor market?

  21. Art says:

    “The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.” (Franklin D. Roosevelt: “Message to Congress on Curbing Monopolies.,” April 29, 1938.“The first truth is that the liberty of a democracy is not safe if the people tolerate the growth of private power to a point where it becomes stronger than their democratic state itself. That, in its essence, is Fascism—ownership of Government by an individual, by a group, or by any other controlling private power.” (Franklin D. Roosevelt: “Message to Congress on Curbing Monopolies.,” April 29, 1938.

    Progressive Zionism – 1970 – 2015

    • Replies: @Wandering Jew
  22. The Bush boom? Reading what is put out by the mainstream media, I thought his administration was one disaster after another. So he presided over an economic boom. Who’d have thunk it?

  23. phil says:

    Sorry, as a professional economist for more than 35 years, the whole post is based on phantom data. Compensation has not become detached from productivity in any serious way. First, one must properly include fringe benefits in the discussion; they are more than 30 percent of total compensation. Second, must one must carry out proper inflation-adjustments to both the productivity and compensation data. The alleged detachment then virtually disappears.

    It is certainly true that inequality has increased in various countries during the past few decades. It is also true that political power has captured by private interests as well as by public employees. The growth of a cognitive elite, technological progress biased in its favor, mass immigration and the change in American demographics, a collapse in standards of public education; there is still much to discuss.

  24. anon • Disclaimer says:

    I don’t see any solutions from the author. Just a lot of numbers and graphs and blaming people he doesn’t like.
    1. The labor supply is much larger due to women working more and mass immigration
    2. Increasing government regulation and increased taxes lower real wages. Particularly those that affect the cost of labor like payroll taxes which have gone way up. e.g. social security contributions.
    3. There is a lot of nonwage income that is not factored in. e.g. welfare and other transfer payments
    4. The standard of living is much higher than it was in 1973. Mainly due to technology and falling real prices, particularly for food. I’ll bet the \$14 worker lives better than the \$27 worker did in 1973.
    5. The working class is being destroyed by liberal culture. See “Coming Apart” by Charles Murray. The upper class preaches liberal values but lives conservatively. e.g. marriage, divorce, cohabitation and illegitimate children.

    lower taxation,
    stop the flow of illegals and slow the legal migration.
    Provide more vocational training in high school and junior college.
    Promote work over welfare, marriage over cohabitation, personal responsibility over victimhood. Fatherhood over being a bum.
    Populism and class warfare are not the answers. Certainly not statism. Look at Britain and see where they have ended up.

  25. Robt says:

    What is the basis for this productivity increase? No wealth has been created, only more money, and money depreciated by 80 or more percent since 1970. At the time the graph lines separate, the de-industrialisation of the US was beginning, due to the high cost of labor and benefits, the government began on the path to becoming the biggest employer, and many laid-off higher-paid workers found employment in the lower-wage lower-skill service industries where there is an abundance of labor more than sufficient to fill the jobs.
    Perhaps at some point, everyone will work for the government – or maybe they almost do, at least for the 40 or 50 percent of the year it takes to pay taxes.
    I suspect a large part of the productivity increase is based on the productivity of bureaucrats and their army of ‘service providers’, perhaps measured by the increase in the amount of paper they shuffle which happens to be concomitant with the new directives and laws continuously enacted.
    Certainly ‘job creation’ statistics are heavily influenced by government hiring; the hiring of people to do meaningless useless ‘work’, so why not ‘productivity’ statistics?
    I would also argue that police state USA did not begin in 1970, but 2001.

    • Replies: @phil
  26. War for Blair Mountain [AKA "Bill Blizzard and his Men"] says:

    In other words, econometrics is largely a morass of very bad mathematics. Bill Blizzard and his Men didn’t wait around for the approval of the econometricians to storm Blair Mountain. Rev Ball’s famous sermon contained 0 econometric data. Wat Tyler wasn’t quoting mind numbing econometric data.

  27. MarkinLA says:

    The issue of “productivity” and “automation” is a smoke screen to divert people from the real problems. When robots started entering the automotive industry in a big way it was initially only to do the jobs considered dangerous to your health (painting) or difficult to do consistently (spot welding). Soon other areas were taken over as the ability to make more complex robots appeared.

    Some would have you believe those that lost their jobs on the assembly line were just too stupid to keep up with the changes in technology. The reality is that the PC and semiconductor industries were finally maturing and were hiring a lot of those people. The less educated worked on the assembly lines making the PCs and their components. Those with training worked in the wafer fab facilities. In those early days the only parts of a PC not made in the US were some 8088 copies and DRAMs. Soon due to outsourcing nothing was made in the US. Were those semi-literate peasants in Mexico, China, Vietnam and other places flooding the new factories any more skilled than US workers being laid off in droves?

    As new industries automate their excess labor away new industries arise that need workers. That chain has been broken in the US as the companies now go directly to the contract manufacturing facilities outside the US for even the first generation of their products. This is political problem and nothing related to the “skills” of US workers.

  28. @Pete1215

    “No one is mentioning China opening up to the world. 800 million destitute Chinese started working for next to nothing, which made a huge difference.”

    Sorry, Pete1215, China was only able to open “up to the world” after the super-rich 1-percenter Americans used Congress to do away with protectionism and to impose free trade on the U.S. workforce, which allowed the 1-percenters to ship American industries and jobs to China (and to other foreign powers). Without the 1-percenters’ trashing of U.S. protectionism, China would still be a “revolutionary” backwater trying to make combat jets out of bamboo. China’s rise is not due to Chinese effort so much as it’s due to the Western elite, chiefly in the U.S., selling out the West’s core middle class.

    • Replies: @rustbeltreader
    , @Harold
  29. phil says:

    Don’t be silly, there has been a tremendous amount of innovation since 1970. You are using some of it right now.

  30. “Let’s pretend for a moment that work doesn’t turn people into stultified submissives. Let’s pretend, in defiance of any plausible psychology and the ideology of its boosters, that it has no effect on the formation of character. And let’s pretend that work isn’t as boring and tiring and humiliating as we all know it really is. Even then, work would *still* make a mockery of all humanistic and democratic aspirations, just because it usurps so much of our time. Socrates said that manual laborers make bad friends and bad citizens because they have no time to fulfill the responsibilities of friendship and citizenship. He was right. Because of work, no matter what we do we keep looking at out watches. The only thing “free” about so-called free time is that it doesn’t cost the boss anything. Free time is mostly devoted to getting ready for work, going to work, returning from work, and recovering from work. Free time is a euphemism for the peculiar way labor as a factor of production not only transports itself at its own expense to and from the workplace but assumes primary responsibility for its own maintenance and repair. Coal and steel don’t do that. Lathes and typewriters don’t do that. But workers do. No wonder Edward G. Robinson in one of his gangster movies exclaimed, “Work is for saps!””

    Cars to get to work are more deadly than guns. What are they trying to eliminate? Guns! All the cartoonists need to be armed because the terrorists are coming, hell they are here, and they aren’t taking prisoners. Get rid of work and you’ll be rid of debt.

  31. @Auntie Analogue

    China has workers being replaced by automation at higher rates than the US. US can produce \$1 trillion worth of product with 10 million people. China needs 100 million people to output \$1 trillion and the quality is still lower. They can’t build a competitive jet aircraft no matter how many of them go at it.

    • Replies: @MarkinLA
  32. MarkinLA says:

    They can’t build a competitive jet aircraft no matter how many of them go at it.

    Except the leaders of China have more brains that our 1%ers and our government. I read in a trade magazine that China has given notice that they will not buy any more planes of the 737 type 5 years from now. China will develop its own plane and use its own market to get the bugs out of it, sort of like the poor quality Soviet passenger aircraft that Aeroflot was forced to buy for it’s home market. Nobody in China will be able to do anything about the teething pains. Soon China will have a cheaper alternative to the 737 for poor African, South Asian, and Latin American airlines. All it takes is time and the willingness to push things through.

    I believe it took Airbus 17 years to become financially viable after the British gave up on commercial aircraft and lost a lot of that know-how. Thanks to all the stupid deals made by Boeing to get orders in China, it won’t take that long.

    • Replies: @Anonymous
  33. Harold says:
    @Auntie Analogue

    To some extent cheap foreign labour stole jobs not from Americans but from robots. The availability of cheap labour has forestalled a robotics revolution.

    • Replies: @rustbeltreader
  34. @AG

    Nature not only abhors a vacuum, Nature abhors stasis.

    A stable, “just” civilization is not possible and men will never be equal except when some are “more equal than others”.

    Take note that compassion, empathy, and a sense of fairness are also natural. Right now, because we have the luxury of material wealth (bought with ever expanding credit) these qualities are over-emphasized but that will soon come to an end.

    The idea that men control history is a delusion.

  35. War for Blair Mountain [AKA "Bill Blizzard and his Men"] says:

    The scale of nonwhite scab labor in US labor Markets=highly racialized nonwhite legal immigrants+The “American” born highly racialized geneline of highly racialized nonwhite legal immigrants.

  36. Svigor says:

    Why 40 years? Why not a chart that goes back to, say, 1900?

    I always have to ask why these charts begin and end as they do. 1945 doesn’t seem like a random choice to me. The phrases “labor shortage” and “postwar boom” spring to mind.

    Just sayin’.

  37. Svigor says:

    It’s easy to spin theories of massive conspiracies to impoverish the average worker. And it’s even true that some such chicanery exists. But it explains only a small fraction of the on-going disconnect between worker productivity and average wages.

    The race-replacement of America (inter alia) via open borders and mass immigration doesn’t need any spin, conspiracy theories, etc. It’s like a 10-ton anvil in your living room.

    “Some such chicanery exists,” lol.

  38. @Harold

    I, for one, welcome our robotic communist jobless future
    Everything will be so cheap, you won’t NEED a job

    “I am not playing definitional games with anybody. When I say I want to abolish work, I mean just what I say, but I want to say what I mean by defining my terms in non-idiosyncratic ways. My minimum definition of work is *forced* *labor*, that is, compulsory production. Both elements are essential. Work is production enforced by economic or political means, by the carrot or the stick. (The carrot is just the stick by other means.) But not all creation is work. Work is never done for its own sake, it’s done on account of some product or output that the worker (or, more often, somebody else) gets out of it. This is what work necessarily is. To define it is to despise it. But work is usually even worse than its definition decrees. The dynamic of domination intrinsic to work tends over time toward elaboration. In advanced work-riddled societies, including all industrial societies whether capitalist of “Communist,” work invariably acquires other attributes which accentuate its obnoxiousness.”

    People are actually complaining about cheap gasoline. The press is such a mess it’s calling for new taxes to make gasoline more expensive. That way you’ll need to work more and drive to work. The whole country is going to look like Detroit, one huge automobile slum with bad food fast.

  39. Anonymous • Disclaimer says:

    “A sense of desperation is palpable in Caracas, where some schools this week advised parents to pack toilet paper in their children’s backpacks and at least one executive-class hotel told guests to bring their own detergent if they want laundry services.”

    They got booze. Laundry is BYOD though!

    • Replies: @MarkinLA
  40. @unit472

    Eliminate the shelves, buildings and overhead and the library could be everywhere with postal delivery of free books. It would be cheaper and get more books in the hands of old folks. All the trucks can be bookmobiles.

  41. @Art

    Amazing how it comes down to those damn dirty Jews, eh? Maybe we need to fire up the ovens and finish the job. Then everything would be hunky dory, the world would be at peace, and wages would follow productivity!!!

    You are little better than the Islamicists. At least they come out and say what they want.

    • Replies: @Jus' Sayin'...
  42. i agree that the US is no longer a democracy if it ever was, and that neo-liberalism is 100% bullshit.

    but how is productivity measured? how is production separated into human and machine production? how is domestic production separated from production for domestic companies by subsidiaries in developing countries?

    i think what has really happened is physical and software capital has replaced labor and cheap labor overseas has replaced cheap domestic labor. the result is:

    1. the best “working-class” jobs are in technical fields or in trades. and they are paid too little.
    2. there are more managers or agents of capital. they have more capital to manage and more people too in developing countries.
    3. the remaining jobs aren’t really jobs at all. 80% of the US who are formally employed do not really do anything. they could all go on strike, and it would be hard to tell.
    4. the poor aren’t being ripped off, they’re simply being excluded. whatever the reasons for this exclusion, it doesn’t justify poverty.

    in Marx’s time the poor were exploited. today they’re excluded. economics is a pseudoscience necessarily, because technology determines the economic system. the base determines the superstructure. and now with a long dead zombie economics an enormous lie must be maintained. the education system hasn’t kept pace either. the uselessness/ redundancy/ superfluousness of so many poor people is only in small part explained by their stupidity. it is better explained by the stupidity of the political class and the stupidity of smart, rich, powerful people who have no background in physical production or anything remotely technical.

    i should be the one writing for Unz. i’m in the BGI study after all.

  43. Anonymous • Disclaimer says:

    It’s obvious you know your facts and history. Thank you for yor comments. It’s also obvious that the amount of ignorance in this world at all levels of government and academia is apauling. To fix things you must first observe and admitt the truth about the issues. I don’t see that happening short of a total collapse – but like the 2nd coming – no one knows the date. Even then I don’t know if the leaders will view reality objectively. It will be interesting to watch it all unfold. If we can remain free – then we have a chance. MY BEST TO YOU!!!!!!!!!!!!!!!!!!

  44. Joe Webb says:

    Everybody has an opinion on economics, and that is good, even when most of us are probably wrong, including myself.

    However I throw a couple things out there: 1, yes immigration has cheapened labor rates. 2, Also, third world manufacturing by quasi-slaves or serfs has eroded our working class wage rates. 3 and this is where it gets dicey but I would appreciate comments…. Money is essentially either Capital or Wages, with the liberal State now developing a third form of money….call it welfare spending .

    4, Inasmuch as all economists agree that a modern economy is driven by consumer spending and that they agree that consumer spending constitutes about 70% of any economy…5. working people, either blue collar or white, have had terrific slashes in their incomes over the last 4o years or so…starting about 1975…6, this has transferred massive amounts of money to Capital thus upsetting a Natural balance between Capital and Labor, that “balance” being only possible in a closed system, like a national economy, not an international economy. (this can be debated but suffice for now to accept that this is true) I think Adam Smith addressed this problem of international systems.

    7. An international economic system leads to imbalances per above. Capital can be accumulated in country A, and invested in country B. There is no need for a capitalist (using the term technically) to make sure that enough money is distributed in the form of Wages in the country of production, or the home country. The capitalist may care from a moral point of view, but is forced by international competition to do what every other capitalist does, cut costs, squeeze labor rates , etc.

    8. This international economy becomes perverse because there is no need to Balance Capital and Wages in a particular country, to assure (not Justice) but adequate purchasing power to drive the capitalist machine in the first place….and onto all the other places, like social peace and economic stability, which any economic system needs to guarantee future investment. and jobs.

    9. this is where the State now comes in with its New Form of Money, state spending for social welfare, infrastructure (horrible word), and whatever wars du jour are cooking. The State can ameliorate the effects of low and stagnant wages thru various welfare schemes, and it does. Meanwhile Capital Accumulation continues because ordinary working people still do not have enough money to Spend on consumer items that drive the economy.

    10, All of this Capital accumulated thus gets cheap. Too much Capital in search of investment, driving down interest rates on Capital, Capital parked waiting for improved investment conditions, and consequent more stagnation due to inadequate investment in real things, not real estate and the Stock Market. The Stock market appears to be amping up again cuz folks don’t know where else to put their extra money/wages-salaries. (those in the top 10 % of course only) Also some real estate markets are super-hot like Silicon Valley, CA.

    11. As if this was not enough, a modern economy need smart people. The national IQ in both Europe and the US is falling due to low IQ immigrants (Mexican at 90 average) and then our Blacks at 85 average IQ…who then demand Free Money from the State to keep the social peace.

    12. The productivity gains have been huge, and as this article points out very little of those gains have been passed on to workers. (one of the reasons for these gains is ever more improved industrial organization, robots, and other labor saving processes which has slashed the manufacturing jobs. (There is a fair amount of industrial production, but fewer and fewer jobs in that sector.)

    13. The individual capitalist or firm, cannot escape this international capitalist logic….compete or die.

    14. I am more or less a Keynesian, that is it makes sense to expand a money supply (or fiscal policy) when there is a bust, or bad times, and it also makes sense to cool off an over-heated economy by shrinking the money supply, and reduce gov’t spending.

    15. right now, there seems to be no end in sight of the Keynesian pump-priming with little to show for it. When is the economy going to get going real good so all that printed money can be withdrawn and literally sent to the incinerator?

    16. Europe…clearly European Social Democracy, better known as social prodigious spending, has gone way haywire. There are limits.

    17. Having set this Capital, Wages, State (somewhat funny) Money paradigm up, I welcome comment.

    18, What about confiscating a large portion of thus surplus Capital and “give” it to people who actually work so that they will rush to the mall and spend…no more welfare….and take another chunk and spend it on what all the economists are also talking about, roads, bridges, schools, etc.

    Of course this would be a Nationalist Economic Policy…heaven forbid. International Capital is a Fool’s Game but it pays off short term for the shysters and shakedown artists. Meanwhile the Country is sacrificed to crazy ideas like Internationalism, Racial Equality, One Big Market and Humanity as Consumption…which is also a pipe dream, but beloved by dummies, work refuseniks, and , my gosh…. ..capitalist pigs

    Joe Webb

  45. vxxc2014 says:

    Your Chart is extremely misleading, it ignores that exactly that moment in the 1970s when we went off the Gold Standard and began to print money backed by nothing. When we tried to have wages keep pace we had the 1970s Great Inflation. **********

    Your precious workers [I’m working class myself, from the Rust Belt wage earner] voted in all the politicians that are printing the money faster than ever. Of course the Chart goes up, the money supply is exploding so the metrics are worthless except to mislead. ******

    Your precious workers surrender their souls for welfare checks. That they surrender for corn – food stamps – is so certain as to constitute an axiomatic proof of democracy. Since Athens. *********

    Any hope of democracy being sane ended when women got the vote, and 12 years later we got Fascism under the New Deal. At first crisis the women sold us all out. ******The “Deal” is administrative government that holds elections that have no effect on the administrators by law and practice. The bureaucrats themselves are the private and interested party that captured government. Have a look at Humphrey’s Executors [1937] or APA [1946]. The New Deal government is beyond elections. That the Rich can buy them and must to preserve their riches [or add to them] is hardly a moral failing of the Rich. *********

    We lost control of the Government in the New Deal. The private and interested party that captured government are the Progressive Statists. Look at how many have their hands in the Trough. It’s at WW2 military spending levels, and most of it is *automatically spent with Automatic increases of 8% a year.* Of course workers having served their purpose were sacrificed. They’re hardly innocent, they thought to vote to rob their neighbor and instead got took.*********

    ******Your victims are guilty. They just happen to be incompetent. *******

    • Replies: @Joe Webb
  46. MarkinLA says:

    Try as I might I fail to see what the connection is between China, who has a space program, has built it’s own jet fighter, and has built components for Boeing jetliners, building it’s own low cost plane and Venezuelans having a shortage of toilet paper. Are you trying to say all “commies” are the same?

  47. Joe Webb says:


    Your thin air money ideas are incorrect. Gold standard or fiat money standard…does not make any difference in the abstract. Of course, at the practical level, fooling around with gold presents logistical problems.

    A country produces things that people want to buy, or not. If the things produced are wanted by buyers, then you have an economy.

    The overall worth of the things produced, also services, are what we call a Gross Domestic Product (with some disagreement about what should or should not be counted). The overall wealth produced determines the value of the medium of exchange, whether gold or greenbacks here in the US.

    Fiat money is completely normal and understandable where as Gold just confuses people trying to think about economics. Gold is worthless essentially, except for some obvious exceptions.

    What a country is worth in terms of production, and probably production in the future, is what determines, again, what the currency is worth.

    Then, international trading in currencies complicates matters, but the fundamental is this: Fiat money stands for what things are worth. That Worth is determined by a free market without monopoly, etc.

    If you cannot get clear on this, your thinking is useless.

    Joe Webb

  48. Joe Webb says:

    ahem…can we stay on topic and with some attempt at objectivity?

    Edsall in Jewyorktimes today has an economics piece in which he goes down my recommended road a little bit, but given the JewLIberalInternationalist Times, his leash is very short and he therefore checks himself from going whole hog and calling out the name of What’s Wrong with the economy. Its true name is International Capitalism. And it is full of Internal Contradictions, just as the marxists like to put it.

    What it does is queer the natural balance of Wages vs. Capital, which is that Capital has to pay enough Wages to keep consumer spending robust…the only way to accomplish that is to have territorial units in which an economy “clears” the Money units…Capital and Wages . And short of a national economy we need now the State to act to restore that Natural Balance. Edsall quotes a finance guy who says we need to get about 400 billion in new taxes on corporations and super rich OVER THE NEXT TEN YEARS to tap into the proabably 5 trillion dollars doing nothing right now in the US. That IS funny. We need hundreds of times that amount fed back into Wages so that people will Spend

    Right now, under internationalism, a capitalist can avoid paying wages commensurate with both productivity, and the natural dynamic of clearing, by going overseas both for labor power as well as investment.

    This is another wrinkle on Off Shoring. The whole thing is starting to die cuz ordinary workers do not get hardly a fraction of the realized value of their labor. The only people who are doing a fair amount of consuming are the top 15 to 20 percent. Starve a worker and you starve the system. You also get capitalists with no place to put their money cuz of lack of investment opportunities.

    Everybody loses in the long run, but in the short run , some get if not rich, then accumulate piles of capital that they then get to worry about cuz they are not making any money off of it.

    Is this just too boring for those of you who like to sling stones ?? Get serious folks.

    Joe webb

  49. Anonymous • Disclaimer says:

    President Nixon took us off the gold standard on August 15, 1971. This appears to be about the same time the two lines on the first chart begin to dramatically separate. I would think this phenomenon has something to do with large productivity and wage gap. No?

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