THE BIG SQUEEZE AND OTHER STUFF

Caption: These chickens had to scratch for a living.

(First, a correction to yesterday's post on "The Two Bums." A closer inspection of the photo reveals that there were in fact three bums in that picture. Second, a reminder that all the posts this week are loosely connected. Please click on the last few days if this is your first visit.)

Something good happened to this country between the end of World War II and the early 1970s. In that period, the US economy grew dramatically.

And, while there has always been great inequality in this country, the benefits of growth were shared among all sectors of the population.

But that positive trend came to an end in the 1970s. Contributing factors were the costs of the Vietnam War, the energy crisis, and economic stagflation that baffled many economists.

Stagflation refers to a slow economy with high unemployment accompanied by high inflation. This puzzled many economists at the time as the conventional wisdom was that you either had unemployment or inflation but not both at the same time.

Real wages for American workers began to stagnate and fall, a tendency that continued for more than a decade.

This crisis created the political opening for right wing, which had been building its political and ideological base since the mid 1960s , to gain power. They were aided in part by growing resentment among middle income Americans against “welfare queens,” unions, minorities, a backlash against the civil rights movement, etc.

The growth of the religious right enabled this movement to exploit divisive issues and “culture wars" and thus gain support from middle and lower income Americans for an agenda which would ultimately betray them.

Let them eat jihad…

Once in power, the right pursued policies that made the income gap between the very wealthy and everyone else begin to grow. As a result, when the economy grew, the benefits weren’t shared across the population as they had been in the post war period.

According to the Center on Budget and Policy Priorities (get link) after tax income for the wealthiest one percent of the population grew by 111 percent between 1979 and 2002. It grew by 48 percent for the top fifth.

If the post-war pattern had continued, there would have been similar gains across the board. Instead, the Congressional Budget Office reported that the middle fifth gained on 15 percent, while the bottom fifth gained five percent. By other measures, lower income Americans actually lost ground.

As previously noted in this blog, Census data for every year since 2000 has reported increasing poverty, stagnant wages, and a growth in the number of the uninsured for every year since 2000.

It can’t be stressed enough that this growing inequality was not the result of “market” forces acting alone but through the use of political policies to shift budget priorities, promote trade deals benefiting multinational investors at the expense of ordinary people, attacks on unions, and cuts to the safety net.

As Dean Baker, economist with the Center for Economic and Policy Research, has repeatedly pointed out, there has been a conscious and deliberate use of the powers of government for the last 25 years to redistribute wealth upward. He calls it “a right turn leading to a dead end.”

The country can no longer afford the politics of resentment and the circular firing squad it creates.

But there is some good news, about which more tomorrow…

NO COMMENT. This item appeared in the UK Guardian.

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