How did the American economy become a disgrace?

Posted on January 15, 2020

The question is not whether the economy is operating well, or even adequately, for the most Americans. The question is, what happened over the years to make it such an abysmal failure?

By failure, I mean the indisputable fact that average Americans – black, white and brown – are worse off than they were decades ago. As documented in this IdeaLog column, 60 percent of families are living paycheck-to-paycheck, 40 percent couldn’t pay a modest unexpected expense, and millions are saddled with a mountain of debt.

A recent study from the Brookings Institution finds that:

53 million workers ages 18 to 64—or 44% of all workers—earn barely enough to live on. Their median earnings are $10.22 per hour, and about $18,000 per year. These low-wage workers are concentrated in a relatively small number of occupations, including retail sales, cooks, food and beverage servers, janitors and housekeepers, personal care and service workers (such as child care workers and patient care assistants), and various administrative positions.

While the mainstream media fails to pay attention, progressive leaders and candidates must acknowledge and address this to have any chance in 2020. In fact, it was the scared-of-blaming-Obama Pollyannaism that destroyed electoral chances throughout 2010-2016. Because our side has failed to tell the truth about the economy, non-college-educated whites believed and continue to believe the right wing lies that blame people of color.

But again, how did we get here?

Well, it is not choices by “America” or “the market” or “Congress.” It is a wide range of tactics by rich individuals and big corporations – and their right-wing enablers in government – that have devastated average Americans’ hopes and dreams.

No doubt you are aware that ultraconservatives have vigorously and all-too-successfully attacked unions since the Reagan era. Labor union participation has plummeted and that has meant that workers have no leverage to obtain a fair share of their employers’ profits. And so they have shared in virtually none of the wealth produced since 1980.

But let’s explore some less-obvious causes:

The end of the Cold War. We all appreciate the end of the East-West arms race and its proxy wars. But another result of the collapse of communism was a lack of philosophical competition between capitalism and socialism. With no real competition, the ultra-capitalists could turn their focus on becoming oligarchs (with new allies in the former Soviet Union). And they did.

The death of shame. Prior to Ronald Reagan, there were plenty of super-rich Americans. But there was an understanding among most that overt greed was shameful, and shame (or the threat of shame) kept a lid on the worst practices. Sure, they took a big share, but they didn’t use every possible tactic to divert virtually all the wealth to themselves, as they do now.

The Supreme Court takeover.  In the 1970s, there was a consensus about the parameters of Constitutional law. No one who went to law school then could have imagined where the Supreme Court has gone since. Since the 1980s, the Court has gleefully changed the rules in order to rig both politics and the economy to benefit the rich. The Court has not been “conservative,” it has led a reactionary revolution.

The privatization of government. Think about where we’ve gone over the past 40 years: privatized prisons and schools (especially vouchers), the sell-off of turnpikes and bridges, the completely false assumption that private contractors are always cheaper, and even mercenaries “protecting” U.S. troops and diplomats overseas! Taking jobs out of the public sector drove down everyone’s wages and helped eliminate pensions for millions. Government jobs used to act as a counterweight in the jobs market, a counterweight which is virtually gone.

The financialization of the economy. The share of the U.S. GDP devoted to banking and finance has skyrocketed. This sector has gone from making business expansion and individual savings possible to acting as a giant leach, sucking the blood out of every corner of the economy. This is the sector that caused the Great Recession and, nevertheless, remains unchecked.

The decline of the mainstream media. There are now far fewer newspapers and news magazines, and those that remain are struggling. The resulting lack of competition (e.g., Washington D.C. used to be a 3-newspaper town and now there’s really only the Post) has led to he-said-she-said journalism that values “balance” over truth. At the same time, right wing interests have bought up television and radio stations across the nation, delivering propaganda instead of news.

Yes, it’s a disgrace.