Friday, March 16, 2012

Decoupling and The End of Work

There's been a lot of talk about this chart:

Basically showing a complete decoupling of the growth of the economy and the growth of incomes. Since rougly 1980, people have not shared any benefits from the growing economy. Matt Yglesias had a good point about this. He put it in Econ-speak so I'll translate into English: The massive black hole known as the Health Care Industry is sucking up all America's income gains:
That said, while painting a very similar picture in terms of the basic divergence story I do think it's worth noting that the red and black lines tell a very different story about the past decade. According to the naive view, not only did we just have a very nasty recession but the aughts as a whole were a time of falling living standards. When you put the red line into it, the aughts look much better. They simply turn out to have been a decade in which approximately 100 percent of the value of the middle quartile's increased compensation went to in-kind health care services.
But I find this chart that Yglesias featured in his blog much more interesting:

More and more men are being pushed out of the labor force. Yglesias sort of dismisses the implications - for example, he minimizes the fact that women have displaced men from the workforce and what the implications are. Could this be what's behind the declining marriage rates? Hmmm. Somehow he thinks this is a good thing:
The trend waxes and wanes to an extent, for what I imagine are a variety of reasons. But the secular trend is clear and the reason for it seems obvious. There's more to life than work and gross domestic product. America is better at doing stuff in 2012 than it was in 1962. We've used that improved know-how in part to amass more stuff per capita than people had in 1962. But we've also used that improved know-how to enjoy much cleaner air than prevailed in 1962. And we've used that improved know-how to do less work than people did in 1962. People spend longer in school pre-working, spend longer in retirement post-working, and we take a somewhat more generous view of who counts as disabled. It's nobody's fault because it's not in any obvious way a problem. Increased labor force participation by women during this period has been an important source of social and economic empowerment and has also meant that society has managed to get by with a smaller share of its men doing paid work for market wages. And that's great!
That's great, eh Matt? Things like this make me wonder which planet Yglesias lives on, and what the weather is like there. Indeed it should be a good thing, except we know that it isn't. The last time I checked, capitalism still required people to sell their labor for the income in which to live. If that's changed, I didn't get the memo. People are in school longer because they have to be thanks to our insane system, during that time they're piling up unrepayable debt and looking to a lifetime of serfdom. Most Americans have no retirement funds whatsoever, the hallucinatory money that will pay the fancy investment vehicles that most Americans rely on will be gone, and we can expect Social Security will almost assuredly be dismantled by the elites to pay off their debts. People pushed out of the workforce are not living the glorious lives Matt imagines from his high-rise Manhattan office: they are usually poor and desperate, especially if they have no familial safety net (like me). All the benefits from that increased productivity are accruing exclusively to the one percent. No, what this chart proves is the End of Work hypothesis: more and more people are being sidelined from the money economy, and even the people still in it are getting less and less benefits, leading to an overall disintegration of the capitalist economic model.

Here's David Kay Johnston with some more info:

Saez and Piketty show that the vast majority's average adjusted gross income, of which wages are just a part, was $29,840 in 2010. That was down $127 from 2009 and down $4,842 from 2000.

Most shocking? The average income of the vast majority of taxpayers in 2010 was just a smidgen more than the $29,448 average way back in 1966.

At the top, the super-rich saw their 2010 average income grow by $4.2 million over 2009 to $23.8 million. Compared to 1966 their income was up on average by $18.7 million per taxpayer.

We should expect this pattern of concentrated gains weighted toward the very top to continue unless we change our policies.

Saez shows () that the top one percent's share of real income growth is increasing with each economic expansion and it matters not whether the president is a Democrat or Republican. The top one percent enjoyed 45 percent of Clinton-era income growth, 65 percent of Bush-era growth and 93 percent of Obama-era growth, though that is only through 2010.

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