The Confiscation of American Prosperity: From Right-Wing Extremism and Economic Ideology to the Next Great Depression
Michael Perelman
Palgrave Macmillan
By Seth Sandronsky
Can a recent history of the U.S. economy read a bit like a crime story? Yes, in the hands of Michael Perelman, an author and economics professor at CSU Chico.
His new book, The Confiscation of American Prosperity, is a timely arrival this fall. The housing bubble is shrinking and harming many, and the author’s analysis puts such current affairs into a sane context. Perelman writes that the early 1970s was the end of the “Golden Age” of post-World War II prosperity. Corporate America’s rate of profits slumped in the late 1960s due to German and Japanese rivals grabbing market shares and profits. How to try and get it back? Politicians and think tanks united to weaken corporate regulation and taxation. And the two political parties targeted New Deal and Great Society policies, which protected the American people from the market economy.
What followed was a sea change for the nation’s majority. Perelman focuses on how this happened, who led the charge and to what ends.
The author details how a small but strong minority of Americans hoarded the bulk of growth from the sweat of a diverse labor force. As the nation’s gross domestic product tripled from 1970 to 2003, the “top 13,000 tax-paying households ... saw its wages and salaries increase fifteen-fold.” Meanwhile, for the bottom 99 percent of Americans, average income remained basically unchanged between 1970 ($36,008) and 2004 ($37,295). Perelman surveys a wide variety of sources, defining his and their concepts and terms. The author’s prose is jargon-free. That may startle some readers used to opaque English from economists such as Alan Greenspan, former head of the nation’s central bank.
12 comments:
"..“top 13,000 tax-paying households ... saw its wages and salaries increase fifteen-fold.” Meanwhile, for the bottom 99 percent of Americans, average income remained basically unchanged between 1970 ($36,008) and 2004 ($37,295)..
I am re-reading Alvin Toffler's 'Future Shock' again (after over 30 years). it's interesting to note that at the time he wrote the book he says that the output of goods and services in advanced economies was doubling every 15 years. He also notes that the doubling times were shrinking and that this rate of economic growth represented an astronomical and unprecedented social and physical change.
In his chapter entitled 'The Accelerative Thrust' Toffler was also describing the stepped up pace of exploitation and invention as well. This, in turn " ..accelerates the whole cycle still further. For new machines or techniques are not merely a product, but a source, of fresh creative ideas.
It appears that the incredible inequality that has taken place in the US and worldwide has occurred because of this phenomenal growth.
It appears to be about to come to an abrupt end. Many signs are pointing to the limits of planetary, human and institutional adaptability having been reached.
Brenda, the period in question when the inequality was accelerating was not a time of particularly rapid growth. Rather it was a time of stagnation for a vast majority of the population.
Michael, when you say it was not a time of 'particularly rapid growth' are you specifically referring to US GDP?
Lot's of things were 'growing' (quickly), from what I can observe. The rate of exploitation generally escalated along with human population and productivity in terms of physical output per unit of labor.
Sorry, Brenda. The book, as the title suggests, is about the US economy.
Congrats on the book, Michael! I'm behind: I just got a copy of *Railroading* -
Kevin
This gives me another book to read, which is great. I get nervous when I don't have a book in my bag. Your book sounds as if it explains a lot.
Why did the corporations and the upper class need this money? Simple, irrational greed? If money is not distributed through the economy, who buys the stuff that companies make? The early textile manfacturers made it by replacing handmade textiles with cheap machine made textiles, but you can only go so far in this direction, before you need a target market with some money. This leads me to the fable about Henry Ford and Walter Reuther, which I tell far too often, because I love it. The Henry Ford in question must be Hank the Deuce. In any case, they are walking through a factory, and Henry Ford says, "Someday all this work will be done by robots." And Walter Reuther says, "Who's going to buy the cars, Henry?"
Based on data available here [ http://www.senate.michigan.gov/sfa/Economics/USLaborMarketProductivity.PDF ] US labor productivity rose approximately 106% from 1970 to 2004. Thus you would anticipate that if family structure (number of earners) and income distribution remained the same, real wages would have grown from $36,000 to about $74,000.
Anyone have the numbers on average earners per household for the bottom 99% of US households for 1970 and 2004? I'm betting it didn't drop by 50%.
Here's my napkin math on household earners:
Total households [ http://www.census.gov/population/socdemo/hh-fam/hh5.xls ]
1970: 63,401k
2004: 112,000k
Employed (per BLS CPS Unadjusted Employed "Annual") [ can't direct link, but it's from bls.gov ]
1970: 78678k
2004: 139252k
Based on Wikipedia (yeah yeah) [ http://en.wikipedia.org/wiki/Household_income_in_the_United_States ] US household earners seems to be very near to 2 per household consistently at the higher levels of household income (sensibly), so I'll assume that that hasn't changed for the top 1% of households from 1970 to 2004 (even if it went from 1 to 2, it probably wouldn't make much impact).
1970: 78678 - (2 * 787) = 77104 / (.99 * 63401) ~= 1.228
2004: 139252 - (2 * 1393) = 136466 / (.99 * 112000 ) ~= 1.231
Hm, looks like the average number of earners per household is about the same. So the bottom 99% of the population does indeed appear to have gotten fucked.
Oh, and here's a wonderful aside:
One of my conservative friends actually suggested that the increase in productivity during that period was actually due to the top 1% of earners, and that therefore they were entitled to the fruits of their labor.
I can't make this stuff up, because you wouldn't believe it.
Brenda,
This clip from a July 2000 paper (The Case for Capital Controls) by James Crotty provides a fair picture of what I've taken to calling 'the long slowing':
"The most widely cited data on global growth rates was compiled in 1995 by Angus Maddison for the Organization for Economic Cooperation. He reports that while annual real GDP growth in the world economy averaged 4.9% in the Golden Age years from 1950 to 1973, it slowed to 3.0% in 1973-92.
Western European growth rates fell from 4.7% in the early period to 2.2% in the latter.
Latin America's growth averaged 5.3% from 1950-73, but only 2.8% from 1973-92.
Africa grew at a 4.4% pace in the first period, but at a 2.8% rate in the second one.
Asia, the last bastion of state led development, was also the only major area not to experience a significant post Golden Age slowdown, maintaining growth between 5% and 6% for the entire era.
We get the same results if we focus on the 1990s.
World GDP growth averaged but 2.2% from 1990-98, the slowest growth of the post war era.
Developed nations had an average GDP growth rate of only 2.1% from 1991-98.
Latin America growth averaged 3.2% from 1990-97, better than in the “lost decade” of the 1980s, but much lower than in the Golden Age.
Desperate Africa showed GDP growth of only 1% a year from 1990-97.
By way of contrast, the state led economies of Asia grew by 6.5% from 1990-96, prior to the outbreak of financial crisis in that region.
Other crucial performance indicators, such as average unemployment and productivity growth rates, show the same pattern.
It has been argued that at least the US, as the master of the new information technologies and the pioneer of corporate restructuring, has prospered in the current era. But the concept of US exceptionalism is not supported by the data.
US GDP growth averaged 4.2% a year from 1959-73, but only 2.6% in the Neoliberal years from 1980-98. From 1990-98, growth was only 2.5% per year. Annual growth in labor productivity fell from 3.2% from 1959-73, to under 1.3% from 1980-98; it was 1.4% in the nineties.
And the average US unemployment rate, which was 4.8% from 1950-1973, rose to 6.6% in 1980-98."
The higher rates of exploitation which you mention have certainly been real but not on any 'Tofflerian' rational. Rather, better understood as capital's attempts to raise its average rate of profit to a higher plane which, particularly through financialization, has driven progressively greater inequality, one big side of which can be seen in the present system's inability to create sufficient employment, greater migration and expanding army of informal labor.
In short, capitalism has always been a self-destructive system but may well have reached limits that it cannot overcome. Shifting from 'creative destruction' to increasingly destructive creation that, of course, it commodifies and attempts to profit from...its own demise.
Juan: ""..the present system's inability to create sufficient employment..
J Goodwin: "..US labor productivity rose approximately 106% from 1970 to 2004.
Eleanor: "..they are walking through a factory, and Henry Ford says, "Someday all this work will be done by robots." And Walter Reuther says, "Who's going to buy the cars, Henry?"
Thanks.
Put another way:
1948 - 1991:
Juliet Schor noted in her book, The Overworked American that by 1991 productivity in the US had increased steadily from the 1940s: “we could now produce our 1948 standard of living (measured in terms of marketed goods and services) in less than half the time it took in that year. We could actually have chosen the four-hour day, or a working year of six months. ...” Instead, workers work more hours now than in 1948 and consume more than twice as much.’..
Combined with loss of productivity in the use of natural resources:
80-fold increase in use of energy for food last century
“In what Homer-Dixon describes as an "astonishing statistic" he notes that the energy consumed in producing and transporting food around the world has risen 80-fold in the past century while the population has quadrupled to 6 billion over the same period.//Using a measure he called the "energy return on investment", Homer-Dixon finds the search for energy is requiring an ever-increasing amount of resources at a time when demand for it is rising rapidly…”
Fish harvest
Meanwhile, since its peak in 2000, the global wild fish harvest has begun a sharp decline despite progress in seagoing technologies and intensified fishing. So-called efficiencies in fishing have stimulated unprecedented decimation of sealife..
Global water resources
One-third of the world’s population is short of water – a situation not predicted to arrive at until 2025 –
etc
Wealth accumulation - NOT through wealth creation - but through dispossession and greater and greater exploitation.
Post a Comment