This article was originally published by Charles Hugh Smith at Of Two Minds Blog.
If we consider the long term, it’s clear America’s economy and society have been declining for the average household for 50 years.
What if the “prosperity” of the past 50 years is mostly a statistical mirage for the bottom 80% of households? What if whatever real gains (adjusted for real-world loss of purchasing power) accrued only to the top of the wealth-power pyramid, those closest to financial and political power? What if the U.S. economy and society shifted from “everybody wins” to “winner takes all” or at best: winner takesUnited States, America, wealth, power, prosperity, political elitists, households, middle class, American dream, wages, devalued dollar, earnings, purchasing power, student loan debt, national debt, opioid drugs, stocks, capital, ownership, economic meltdown most”?
These are not “what if”, they’re a reality. The working class, which as I have recently noted, now comprises the entire working populace other than the upper-middle-class (Misplaced Pride: Most of the “Middle Class” Is Actually Working Class, June 14, 2019), has lost ground over the past 50 years, from 1969 to the present.
The keys to understanding the concealed crisis of decline are purchasing power relative to wages/earnings–how many goods and services can wages buy? For the average American household, wages have risen modestly while the purchasing power of those wages has plummeted.
Furthermore, the quality of goods and services has in many cases declined sharply, so that even if prices have dropped, what you get for your money has fallen even further, effectively reducing the purchasing power of your wages.
Case in point: appliances were once designed and built to last a generation or longer. Refrigerators, washers, and dryers lasted for decades. Now the average appliance fails within a few years, and the electronic board–costing roughly a third of the entire appliance price–fails and must be replaced. With labor, the cost of the repair is so high, consumers often send the almost-new appliance to the landfill and buy a new (and soon to fail) appliance.
Net-net, low quality reduces purchasing power even if the price has declined.
Then there are the big-ticket items: rent, housing, college, healthcare. Anecdotally, I’ve been told a young engineer in Silicon Valley could earn $20,000 a year and rent a modest apartment for $200. Now the young engineer makes $100,000 but rent for the modest flat is $2,500 per month: wages rose five-fold but rent rose 12-fold.
This is a staggering loss of purchasing power.
As for college, tens of millions of students completed their university training with zero debt–student loan debt as we understand it today simply didn’t exist because it was unnecessary.
The scarcity value of that college diploma has fallen precipitously over the decades, rendering most degrees that aren’t part of artificial scarcity schemes essentially valueless.
As for healthcare: we now have $100,000 operations that work miracles on one side and people being bankrupted by costs on the other, and tens of thousands dying of opioid drugs promoted by the status quo as “safe” and non-addictive. Where metabolic disorders (lifestyle diseases such as diabesity) were once a relative rarity, now up to a third of the entire population is at risk of chronic lifestyle diseases that are difficult and costly to manage–but oh so profitable to those delivering the meds and care.
Bottom line: how much housing, higher education, and well-being does the average wage buy now compared to decades past? Not much. The statistics are bleak: wages are basically unchanged from the high water mark 50 years ago, which coincidentally was also the high watermark of U.S. energy production until very recently. Adjusted for purchasing power and quality, the average paycheck buys far less than it did 50 years ago.
Wages’ share of the national income has plummeted since the last secular expansion of wages in the Internet boom of the late 1990s.
The average households’ ownership of productive capital, and thus of financial security, has declined. There are fewer assets within reach and those that are in reach have been reduced to a casino of booms and busts that wipes out all but the most agile gamblers.
If we consider the long term (la longue duree), it’s clear America’s economy and society have been declining for the average household for 50 years. Nobody wants to admit this because it’s politically inconvenient, to say the least. What do we make of a society in which only the top 5% have prospered in terms of their earnings buying more goods and services?
Meanwhile, everyone else has compensated for the sharp decline in purchasing power by going ever deeper into debt while the nation has decayed into a landfill economy.
America teeters on the precipice: our government is now captive to special interests and big money, twin cancers that threaten our democracy. This accelerating crisis is exacerbated by a toxic social media-fueled tribalism that has replaced “what do you think?” with “which side are you on?” Our crisis isn’t just political—it’s structural: as the pace of change explodes from gradual to non-linear, the organizations that dominate our economy—centralized corporations and government—become destined to fail. We see this failure in both the soaring inequality that has hollowed out the American Dream as well as in the rising tide of social and political disunity. –Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic, book description.
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This article is right. I moved into my retirement home here seven years ago. I’m on my second dryer and third washing machine. And I’m on my second computer and second flat panel TV.
I bought a top of the line refrigerator when I moved in and twice I’ve had a repairmen out here.
All of these were bought new. Even small items like brooms don’t last long anymore.
When I moved out on my own in the 60s as a young man I bought a used washer, dryer, and TV. Used them for many years.
I had no problem getting a job with my engineering degree. It was simple back then. If you can do the job you could keep it. Now they look at how much social credit someone has. Did someone join the right clubs, did they volunteer for the right things and so on.
I wouldn’t last long in today’s world if I were young again. I don’t understand the group think of society anymore. Too much political correctness and not enough substance.
You are definitely right. Political correctness is a curse to humanity along with social media sites. I don’t use Facebook, Twitter, or any of those other douchebag leftist social media sites. I’m sure my lack of participation and lack of reverence to the whole concept of social media concept would be penalized by an employer if I was actually looking for a job. But being retired gives me the ability to not give a shit. Thank God for that.
All true. But it is not all bleak. In that time Asia and Europe saw huge standard of living increases; they in turn are raising living standards in Russia, Eastern Europe, Central Asia, Africa and the Middle Eat. All of these places are new markets for everything.
You would be dumb to sit in the US and let yourself get fleeced by American corporations and US taxes.
Move. The women are hotter, the food is healthier, and taxes are a lot less.
The rich do it. I see wealthy Americans all the time. They are smart, with their big smiles and their nice clothes. They look so different to regular “folks”, as in not fat. They travel and do business everywhere and don’t sit on their butts letting the government clean out their pockets.
” taxes are a lot less.”
I’m unaware of taxes being less the “welfare state” Europe. It’s my understanding that they’re quite high even relative to the USA.
ft said, “taxes are a lot less.”
k2 said, “I’m unaware of taxes being less”
S hopping for countries is like s hopping for c redit c ards, and they have i ntroductory o ffers. If they want young blood / new m oney, there will be different r ates of t axation and / or f inancial b enefits, depending on your citizenship status and other particulars.
Actually taxes are generally not less. In fact, as an American you must pay taxes on your income regardless of where it is earned. This isn’t true for most of the rest of the world. But the Nazis in congress have made a claim on your very existence and you must pay for the right to exist. The only way to avoid that is to renounce your citizenship (which more and more Americans are doing every day).
Frank Thoughts
The flight of US industrial capacity was accomplished by removing tariffs that protected US workers. It’s a short term gain for a long term loss. My thoughts are echoed by the below.
“Protection of our own labor against the cheaper, ill-paid, half-fed, and pauper labor of Europe, is … a duty which the country owes to its own citizens.”
Daniel Webster
“The wealth … independence, and security of a Country, appear to be materially connected with the prosperity of manufactures. Every nation … ought to endeavor to possess within itself all the essentials of national supply. These compromise the means of subsistence, habitation, clothing, and defence.”
Alexander Hamilton
“Free trade results in our giving our money … our manufactures and our markets to other nations. … It will bring widespread discontent. It will revolutionize our values.”
William McKinley
“Open competition between high-paid American labor and poorly paid European labor will either drive out of existence American industry or lower American wages.”
William McKinley
“Furthermore, the quality of goods and services has in many cases declined sharply.”
Not across the board. Automobiles are far superior in every respect today as are electronic devices like TVs. Consumer items like washers, refrigerators and the like are far more energy efficient but do not have the life expectancy of its 50s counterpart. Generally food relative to wages is cheaper but its nutritional value is suspect.
America failed with the adoption of the 16th and 17th Amendments in 1913.
16th allowed Democrats, the low IQ majority, the ability to
tax the higher IQ producers without an end.
17th destroyed the reason for having a Senate and the idea
of states rights. Now only large cities have “rights”.
America is now ruled by a handful of cities.
rellik
Certainly Income Tax made every taxpaying American a cash cow for the other non tax paying Americans. Regardless how a US Senator is picked the disregard of not just the intent but the actual word of the 10th Amendment makes “States Rights” and by default the citizenry of said states a moot point. The “Interstate Commerce” clause was meant to give Federal Control over “Interstate Commerce” not be a vehicle to control intra state activity.
Ok after WWII we became the worlds manufacturer. and the lions share was automobiles. In the 70,s the fake gas shortage opened the door for more import vehicles . and the decline of the USA producing middle class began. and its never slowed down.
Frank Thoughts
That “fake oil shortage” just so coincidently occurred after OPEC signed on to the “oil peg” selling their crude exclusively in US dollars. In 1973 bingo the excuse occurred to triple the price of oil and thereby triple the demand for US dollars for its purchase. The preceding was in response to abandoning the 1944 Bretton Woods agreement when the gold window was closed by Nixon in August 1971. The “face oil shortage” was a pre-arranged excuse to facilitate demand for US dollars. Every party, OPEC/Arabs, Oil Companies were blamed with cries of “nude their ass and take their gas” when the guilty, the globalists who planned and facilitated it were never mentioned. It’s living proof that it pays to own the media.
Oops……should have been addressed too Old Guy. Regardless it’s factual.
“America teeters on the precipice: our government is now captive to special interests and big money, twin cancers that threaten our democracy. This accelerating crisis is exacerbated by a toxic social media-fueled tribalism that has replaced “what do you think?” with “which side are you on?”
Origin of handwriting on the wall saying —
from the Biblical book of Daniel, chapter 5:
“This is the interpretation of the thing: MENE; God hath numbered thy kingdom, and finished it. TEKEL; Thou art weighed in the balances, and art found wanting. PERES; Thy kingdom is divided, and given to the Medes and Persians.”
For worldly purposes, it is legitimate to objectify a person, ask what he has *now, and which side he is on.
Do not ever allow any employer, business interest or ally, to string you along, with touchy feelies and hopium.
was middle class then working class now working poor. corporate greed is how we arrived here. fed monetary policy keeps us down. anyone else have anything to add.
This, of course was all planned and orchestrated for the ultimate subversion of the U.S. to the NWO. . That’s what the Fed and capitulation trade deals were designed for. Trump’s working on repairing the trade deals now. Don’t think he won’t take on Ending the Fed in his 2nd term.
Suzanne L,
You think Trump will “end the Fed”?
That would change everything. There is a movement called Sovereignty that is working to get the Federal Reserve Act of 1913 repealed.
The proposed legislation is called the Monetary Reform Act.
.
Better to be old and teetering on the brink than to be young facing the obvious decline that appears unstoppable.