David Kay Johnston reports in Tax Analysts that a couple of economists just finished examining and comparing income data from 1961 and 2006. to say the least, the results are striking. Since TA is pay-only, it was nice of Mark Thoma at Economists Review to copy-and-paste some of David's column for us. (Via Norwegianity)
The vast majority of Americans saw their incomes rise only modestly in those 45 years. Measured in 2006 dollars, the average income of the bottom 90 percent grew from $22,366 in 1961 to $31,642 in 2006. That is a real increase of $9,276 in average income. But it was also after 45 years, longer than the careers of most workers. ...
For the vast majority, federal income taxes declined. In 1961 these people paid on average 9.6 percent of their income to the federal government. By 2006 this burden had been cut to 7.2 percent. That tax rate reduction saved each of these taxpayers about $760...
That tiny increase in pay does not represent a real increase in wages, only total income. That is because in the middle of that 45-year era, a profound transformation took place in America. In 1961 most families lived on one income, maybe supplemented by some part-time work by the wife... Now two-income households are the norm. ...
America grew and grew during this era. GDP, adjusted for inflation and increased population, was up 227 percent. But wages and fringe benefits did not grow with the economy. For most workers, they fell. Wages peaked way back in 1972-1973, were on a mostly flat trajectory for more than two decades, rose briefly in the late 1990s, and then fell sharply in the new century. ... Millions are out of work, and the jobs they once held are ... not coming back. And even if the Great Recession is coming to an end, we face years of jobs growing more slowly than the working-age population, which could radically transform America’s culture, work ethic, and sense of progress.
To put it bluntly, we have been taking it in the neck for the sake of enriching a tiny slice of our burgeoning plutocracy. By itself, this is probably not news to many of you, though it's always nice to see hard proof for when your wingnut friends/family start whining about how the working class robbed them of money that was rightfully theirs. Or how the brave CEO's who dared to defy the unions deserve so much more and, really, they weren't paid that much were they?
Of course, Ben Bernanke claims it was Bush's fault. Sort of. There should have been more oversight. According to Mr Ben, the Fed's low interest rates - the key component of many banks' decision to enter the "new" market - had nothing whatever to do with creating the mortgage crisis.
I suppose we should be thankful that he's finally admitting that Bush's SEC, Treasury, and other oversight appointments were at best incompetent and at worst in on the fix, but he's only doing it so he can pretend he has no responsibility for what happened so I would guess we'd have to say it doesn't count. What is important to note is that unlike real economists, Mr Ben is making believe that the last 10 years happened in pristine isolation, that the previous 20 years didn't set up the scam, that what finally happened wasn't a logical extension and an inevitable result of policies followed by himself and his predecessors under conservative, pro-business, pro-corporate, pro-Wall Street presidents for 3 solid decades.
Decades during which, I need hardly say, he and his predecessors showed no interest whatever in a historically monumentally and dangerously flat growth in middle and lower class incomes except to lead the cheers and take the credit for continuing low inflation, a rate kept artificially low by an economy kept artificially booming on credit so easy Visa was sending out $3000 credit-line cards to the family pet and kids under 12. After, of course, they got conservatives in Congress to pass laws that made the parents of those kids responsible for any debt the kids racked up whether said parents knew about it or not.
Meanwhile, said corporate-owned Congress was busily shifting the burden of paying to the middle and lower classes whose wages were dead flat while shoveling bonuses and salaries rising into the stratosphere at corporate execs and the rest of the investment class, a transfer of the nation's wealth from the once-thriving middle class to the rich and powerful who never did learn what the word "enough" meant, even as they removed layer after layer of taxation so that, in Warren Buffet's immortal words, "My secretary pays more in taxes than I do."
But neither Mr Ben nor our business press is interested in the long view. They're not even interested in saving the hellish situation they've created. "Re-arranging the deck chairs on the Titanic" is the way I believe it's phrased.
Here’s what’s coming in economic news: The next employment report could show the economy adding jobs for the first time in two years. The next G.D.P. report is likely to show solid growth in late 2009. There will be lots of bullish commentary — and the calls we’re already hearing for an end to stimulus, for reversing the steps the government and the Federal Reserve took to prop up the economy, will grow even louder.
But if those calls are heeded, we’ll be repeating the great mistake of 1937, when the Fed and the Roosevelt administration decided that the Great Depression was over, that it was time for the economy to throw away its crutches. Spending was cut back, monetary policy was tightened — and the economy promptly plunged back into the depths.
They already have been heeded. Heeded? Hell, they're being trumpeted from corner-to-corner of the Empire, from sea-to-shining-with-corporate-polution-and-dead-fish-sea. The crisis is over! Y'all can go back to BAU and strip the rest of the peasantry of whatever little knick-knacks you might have missed the first 300 times you burgled them.
And it still hasn't occurred to any of them, Mr Ben included, that there's going to come a time when ain't hardly none of us left got anything worth stealing any more. Then what?
China's peasantry beckons like what glitters in the dreams of heavyweight go-getters.