This is the most important graph you are going to see in the next decade.
Whatever its cause – and historians and economists have much to explain – the gap between rises in productivity and hourly compensation that started in 1973 meant that an increasing proportion of national income has gone to the owners of assets, not the workers. Maybe capital needed to make more money; maybe the workers were making too much: I am unqualified to say. Certainly the Reagan regime did much to restore the profitability of capital.
Yet in that simple graph we can see why Trump found support to deal with a perceived problem. Perceived by whom, you ask? Perceived by the people who do not know or subscribe to the New York Times or the Atlantic magazine. Perceived by the people whose children don’t have jobs and who know people who have died from fentanyl overdoeses, people from towns where the mill has been shuttered for thirty years. Where they used to make things. Not perceived by people who work from desks and computers. No perceieved by people whose jobs have not been affected by COVID.
Nuxon went to China in 1972, thus splitting the Communist world and starting the process whereby jobs left the United States for China and places abroad. I am not asserting a directly causal relationship here between diplomatic recognition of China by the US and the off-shoring of US industry.
Nixon went off the gold standard in 1972, This meant we entered upon the world of fiat currencies, where government declares that money is worth something unrelated to the stock of gold. As many now understand, a consistent undervaluation of one’s currency can suck indistry towards the low cost producer. Is that the cause of US jobs bening leeched out of the United States?
Whatever the cause of the growing gap in the rates of productivity and hourly compensation – I wish I knew – its existence engenders a vast retinue of consequences