The historical context to the financial crisis and recession

[ttosca]

Please be examining this graph:

www.nytimes.com/imagepages/2011/09/04/opinion/04reich-graphic.html?ref=sunday

Please note the shift from 1980s onwards in:

• High worker productivity
  
  
• Stagnant wages generally
  
  
• Decreasing wages for the poorest 20%
  
  
• Greatest income gains amongst the richest
  
  
• Skyrocketing Increase in wealth accumulation amongst the top 1%
  
  
• 24% increase of women with children who work
  
  
• Household indebtness skyrocketing since the 1980s, to make up for stagnant wages, even in the case of another member of the household entering work.
  
  ---
  
  This is the context of the financial crisis we're in. Those of you who keep pretending that it is spoiled households 'living the highlife' should take note.
  
  It is most people who took on debt in order to maintain their standard of living or to survive, not because they wanted the extra car in the driveway.
  
  It is not that 'we have been living beyond our means'. It is that 'our means' have been systematically taken extracted from us by the wealthiest at the top.
  
  There is more than enough wealth in this country to provide everyone free healthcare and an excellent University education. There is more than enough wealth to provide welfare for every single person out of work looking for a job.
  
  Let the rich pay for their own financial crisis!

[Disputandum]

Here's the article to go with the graph

[ttosca]

Thanks Disputandum. It's an excellent article, too.

[BrandyAlexander]

Okay, I'll bite....

How do you define the rich? Are you talking individual or corporate level? If individual, what income level and what taxation level? If corporate, what turnover or profit level? Do you mean specific industries/sectors?

[BrandyAlexander]

Okay, I'll bite....

How do you define the rich? Are you talking individual or corporate level? If individual, what income level and what taxation level? If corporate, what turnover or profit level? Do you mean specific industries/sectors?

[chandellina]

is that wage growth in real terms, adjusted for inflation? rates and inflation have been low for the past 30 years, hence low wage growth. yet people have more disposable income and certainly consume more goods and services. yes consumption has overshot and spiked debt levels but that is more of a cultural shift of people buying on credit.

net household wealth actually increased in the period they cite as the "great regression." and women working more, which i personally consider a very good thing, is also to do with the severe breakdown of marriage in the period reviewed, with more single-parent (women) households.

overall i think that is a very skewed snapshot. Rising wages aren't much good if the price of goods and services rises at the same or higher rate.

[ttosca]

novice

How do you define the rich? Are you talking individual or corporate level? If individual, what income level and what taxation level? If corporate, what turnover or profit level? Do you mean specific industries/sectors?

It doesn't matter how I define rich. The graph shows the increase or decrease in relative wages of workers and those in non-supervisory roles.

From 1980, the wages of the top 20% increased 55%, whilst those of the bottom decreased by 4%.

Meanwhile, overall worker productivity increased 80%, but wages remained nearly stagnant, and not enough to keep up with the cost of living -- hence two-income households and households getting in to debt.

Rising wages aren't much good if the price of goods and services rises at the same or higher rate.

Well, yes, that's precisely the point. Wages have risen enormously for the top earners, but actually decreased in real terms for the lowest 20%.

[ttosca]

Chandelina-

is that wage growth in real terms, adjusted for inflation? rates and inflation have been low for the past 30 years, hence low wage growth.

Yes, real terms. The point is the relative differences in wage growth, with the lowest 20% actually having their wages decrease in real terms.

yet people have more disposable income and certainly consume more goods and services. yes consumption has overshot and spiked debt levels but that is more of a cultural shift of people buying on credit.

Well, they don't have more disposable income. We now have two-income families in order to compensate for low wages. That turned out to still not be sufficient to keep up with the cost of living, so people were forced to take on debt.

women working more, which i personally consider a very good thing, is also to do with the severe breakdown of marriage in the period reviewed, with more single-parent (women) households.

Of course women working more is a good thing, but this should be because they want financial independence and because that's what they want to do. Many women are working in two-income households (with children) because they need to in order to support the family.

[ttosca]

No comment from niceguy, then, regarding the public's alleged credit-card funded lavish lifestyle?

[glasnost]

The real historical context to the recession has one word: capitalism.

Its cyclical crises create poverty and injustice and...yep.......more recessions.

www.truth-out.org/capitalism-and-poverty/1318426007