economics: history

4The Numbers

Some History

The Winners and the Losers

Tax Cultures

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Originally posted at Reports from the Economic Front.

Defenders of capitalism in the United States often choose not to use that term when naming our system, preferring instead the phrase “market system.”  Market system sounds so much better, evoking notions of fair and mutually beneficial trades, equality, and so on.  The use of that term draws attention away from the actual workings of our system.

In brief, capitalism is a system structured by the private ownership of productive assets and driven by the actions of those who seek to maximize the private profits of the owners.  Such an understanding immediately raises questions about how some people and not others come to own productive wealth and the broader social consequences of their pursuit of profit.

Those are important questions because it is increasingly apparent that while capitalism continues to produce substantial benefits for the largest asset owners, those benefits have increasingly been secured through the promotion of policies – globalization, financialization, privatization of state services, tax cuts, attacks on social programs and unions – that have both lowered overall growth and left large numbers of people barely holding the line, if not actually worse off.

The following two figures come from a Washington Post article by Jared Bernstein in which he summarizes the work of Thomas Piketty, Emmanuel Saez and Gabriel Zucman. The first set of bars shows the significant decline in US pre-tax income growth.  In the first period (1946-1980), pre-tax income grew by 95 percent.  In the second (1980-2014), it grew by only 61 percent.

income-trends

This figure also shows that this slower pre-tax income growth has not been a problem for those at the top of the income distribution.  Those at the top more than compensated for the decline by capturing a far greater share of income growth than in the past.  In fact, those in the bottom 50 percent of the population gained almost nothing over the period 1980 to 2014.

The next figure helps us see that the growth in inequality has been far more damaging to the well-being of the bottom half than the slowdown in overall income growth.  As Bernstein explains:

The bottom [blue] line in the next figure shows actual pretax income for adults in the bottom half of the income scale. The top [red] line asks how these folks would have done if their income had grown at the average rate from the earlier, faster-growth period. The middle [green] line asks how they would have done if they experienced the slower, average growth of the post-1980 period.

The difference between the top two lines is the price these bottom-half adults paid because of slower growth. The larger gap between the middle and bottom line shows the price they paid from doing much worse than average, i.e., inequality… That explains about two-thirds of the difference in endpoints. Slower growth hurt these families’ income gains, but inequality hurt them more.

inequality-versus-growth

A New York Times analysis of pre-tax income distribution over the period 1974 to 2014 reinforces this conclusion about the importance of inequality.  As we can see in the figure below, the top 1 percent and bottom 50 percent have basically changed places in terms of their relative shares of national income.

changing-places

The steady ratcheting down in majority well-being is perhaps best captured by studies designed to estimate the probability of children making more money than their parents, an outcome that was the expectation for many decades and that underpinned the notion of “the American dream.”

Such research is quite challenging, as David Leonhardt explains in a New York Times article, “because it requires tracking individual families over time rather than (as most economic statistics do) taking one-time snapshots of the country.”  However, thanks to newly accessible tax records that go back decades, economists have been able to estimate this probability and how it has changed over time.

Leonhardt summarizes the work of one of the most important recent studies, that done by economists associated with the Equality of Opportunity Project. In summary terms, those economists found that a child born into the average American household in 1940 had a 92 percent chance of making more than their parents.  This falls to 79 percent for a child born in 1950, 62 percent for a child born in 1960, 61 percent for a child born in 1970, and only 50 percent for a child born in 1980.

The figure below provides a more detailed look at the declining fortunes of most Americans.   The horizontal access shows the income percentile a child is born into and the vertical access shows the probability of that child earning more than their parents.   The drop-off for children born in 1960 and 1970 compared to the earlier decade is significant and is likely the result of the beginning effects of the changes in capitalist economic dynamics that started gathering force in the late 1970s, for example globalization, privatization, tax cuts, union busting, etc.  The further drop-off for children born in 1980 speaks to the strengthening and consolidation of those dynamics.

american-dream

The income trends highlighted in the figures above are clear and significant, and they point to the conclusion that unless we radically transform our capitalist system, which will require building a movement capable of challenging and overcoming the power of those who own and direct our economic processes, working people in the United States face the likelihood of an ever-worsening future.

Martin Hart-Landsberg, PhD is a professor emeritus of economics at Lewis and Clark College. You can follow him at Reports from the Economic Front.

1Most Americans are either attracted to or repulsed by Donald Trump’s strong rhetoric around the “wall” between the US and Mexico. His plan is to build one taller and wider than the ones we already have, on the assumption that this will curb undocumented immigration and the number of migrants who live here.

But the idea isn’t just exciting or offensive, depending on who you’re talking to, it’s also wrong-headed. That is, there’s no evidence that building a better wall will accomplish what Trump wants and, in fact, the evidence suggests the opposite.

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The data comes from a massive 30-year study led by sociologist Douglas Massey, published last month at the American Journal of Sociology and summarized at Made in America. He and his colleagues collected the migration histories of about 150,000 Mexican nationals who had lived for at least a time in the US and compared them with border policy. They found that:

  • More border enforcement changed where migrants crossed into the US, but not whether they did. More migrants were apprehended, but this simply increased the number of times they had to try to get across. It didn’t slow the flow.
  • Border enforcement did, though, make crossing more expensive and more dangerous, which meant that migrants that made it to the US were less likely to leave. Massey and his colleagues estimate that there are about 4 million more undocumented migrants in the US today than there would have been in the absence of enforcement.
  • Those who stayed tended to disperse. So, while once migrants were likely to stay along the border and go back and forth to Mexico according to labor demands, now they are more likely to be settled all across the US.

In any case, the economic impetus to migrate has declined; for almost a decade, the flow of undocumented migrants has been zero or even negative (more leaving than coming). So, Trump would be building a wall at exactly the moment that undocumented Mexican immigration has slowed. To put it in his terms, a wall would be a bad investment.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

According to this graphic by NPR, “truck driver” is the most common occupation in most US states:

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But truck driving isn’t what it used to be. In 1980, truckers made the equivalent of $110,000 annually; today, the average trucker makes $40,000. What happened to this omnipresent American occupation?

At the Atlantic, sociologist Steve Viscelli describes his research on truckers. He took an entry level long-haul trucking job, interviewed workers, and studied its history. He found that the industry had essentially eviscerated worker pay, largely by turning truckers into independent contractors, misleading them about the benefits of this arrangement, and locking them into punitive contracts.

Viscelli argues that few truckers are fully informed as to what it means to be an independent contractor, at least at first. Trucking companies sell them on the idea that they’ll be their own boss and set their own hours, but they don’t emphasize that they will pay significantly more taxes, their own expenses, and the lease on a truck. Viscelli interviews one man who took home the equivalent of 50 cents an hour one week; another week he’d ended up owing the company $100. As independent contractors, he writes, truckers “end up working harder and earning far less than they would otherwise.”

If truckers want to get out of these contracts, the companies can hold their lease over their heads. Truckers sign a years-long contract to lease their truck along with a promise not to work for anyone else. If the contract is violated, the worker is on the hook for the entire lease. This could be tens of thousands of dollars, so the trucker can’t afford to quit. He’s no longer working, in other words, to make money; he’s just working, sometimes for years, to avoid debt.

The decimation of this once strongly middle class job is just one story among many. Add them all up — all of those occupations that no longer provide a middle class income, and the rise of lower paying jobs — and you get the shrinking of the middle class. Since 1970, fewer and fewer Americans qualify as middle income, defined as a household income that is between two-thirds of and double the median, or middle, household income.

You can see it shrink in this graphic by Deseret News using data from the Pew Research Center:

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Part of the reason is that we have transitioned to an industrial economy to one that offers jobs primarily in service (low paying) and knowledge/information (high paying), but the other part is the restructuring of work to increasingly benefit owners, operators, and investors over workers. As the middle class has been shrinking, the productivity of American workers has been climbing, but the workers haven’t been the beneficiaries of their own work. Instead, employers have just been taking a larger and larger share of the value added that workers produce.

Figure from the Wall Street Journal with data from the Economic Policy Institute:

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Between 1948 and 1973, productivity and wages increased at close to the same rate (97% and 91% respectively), but between 1973 and 2014, productivity has continued to climb (increasing by 72%), while wages have not (increasing by only 9%).

This is why so many Americans are struggling to stay afloat today. We’ve designed an economy that makes it ever more difficult to land in the middle class. Trucking isn’t the job it used to be, that is, because we aren’t the country we used to be.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Law professor and critical race scholar Kimberlé Crenshaw developed the term” intersectionality” to draw attention to the way that all of our socially salient identities work together to shape the stereotypes that apply to us. The experience of being black, for example, is shaped by gender, just as the experience of being a man is shaped by race.

Once a person has internalized an intersectional lens, the old model — epitomized by the famous phrase “all the women are white, all the blacks are men” — can be jarring. It has a way of making certain kinds of people and their experience invisible. In the above case, women of color.

At this weekend’s debate, Bernie Sanders made exactly one of these jarring statements in response to an inquiry about “racial blind spots.”

When you’re white, you don’t know what it’s like to be living in a ghetto. You don’t know what it’s like to be poor. You don’t know what it’s like to be hassled when you walk down the street or you get dragged out of a car.

I imagine poor white people, middle class blacks, and women everywhere sat up and were like “What!?”

Author Joy Ann Reid noted on twitter that Sanders was conflating race and class, making poor white and middle and upper class black people invisible. Most African Americans are not poor and most poor people are white. She noted, as well, that white immigrants have lived in what we call the “ghetto” for much of American history.

I’ll add that one doesn’t need to be black to get hassled when walking down the street, as most women of all races can attest. Or, for that matter, how about being a feminine-presenting or gender queer man? And being dragged out of a car is something that happens to black people who are being accosted by the police, but also those who are being victimized by violent boyfriends or husbands.

Ironically, Sanders was saying that his racial blind spot was not being able to fully understand the black experience, but he revealed a different blind spot: intersectionality.

The comment starts at about a minute, twenty seconds:

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

2 (1)Prior to the 1850s, writes cultural studies scholar Matthew Brower, men in America didn’t hunt. More specifically, they didn’t hunt for leisure. There was a hunting industry that employed professionals who hunted as a full time occupation, and there was a large market for wild animal products, but hunting for fun wasn’t a common pastime.

This changed in the second half of the 1800s. Americans were increasingly living in cities and being “citified.” Commenters worried that urban life was making men effeminate, effete, overly civilized, domesticated if you will. Cities were a threat to manliness and nature the salve.

Hunting trophies, taxidermied remains of wild animals, served as symbolic proof of one’s “hardiness.” Unlike the animal parts bought at market — whether for food or furs, as feathers on hats, or the then-popular elk tooth watch chain — animals a man killed himself reflected on his skill and character.

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As Theodore Roosevelt once put it:

Nothing adds more to a hall or a room than fine antlers when their owner has been shot by the hunter-displayer, but always there is an element of the absurd in a room furnished with trophies of the chase that the displayer has acquired by purchase.

New, elite recreational hunters castigated both lesser men, who purchased animal parts for display, and women who bought them purely for fashion.

This was the origin of the idea that hunting is a contest, as opposed to an occupation or necessity. To paraphrase Brower, a trophy can’t be bought, it must be earned. Thus, the notion of “sportsmanship” as applied to the hunt. If a kill is going to indicate skill, then the hunted must have a “sporting chance.” Thus, recreational hunters developed an etiquette for sportsmanlike hunting, spread through new hunting magazines and periodicals.

Not only did this allow men to claim manly cred, it allowed wealthy men to claim class cred. Brower writes:

Both subsistence and market hunters, the majority of hunters, were placed outside the purview of the sportsman’s code. Those who hunted out of necessity or for profit never could obtain the aesthetic detachment necessary to be considered sportsmen.

In fact, wealthy recreational hunters claimed that only they were “real hunters” and even organized against people who hunted for food and money. For example,

[Roosevelt himself] blamed the decline of game on market hunters, who he argued, had “no excuse of any kind” for the wanton slaughter of animals.

Trophy hunters successfully enacted statutes limiting other types of hunting, so as to preserve game for themselves.

The rarer and larger the animal, the more exquisite the specimen, and the more a man has killed, the better the animals speak to a his manliness and his elite economic and social class. This is perhaps the attraction of international trophy hunting today: the seeking of more exotic and elusive game to bring home and display. And it is perhaps why some people pay $50,000 to travel across the world, kill a lion, cut off its head, then post it on Facebook.

Photo from Wikimedia Commons.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

There is a light bulb in a fire station in Livermore, CA that has been burning since 1901. It was manufactured in the late 1890s. And, yes, there is a BulbCam.

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According to Hunter Oatman-Stanford, writing for Collectors Weekly, the first homes that had electricity were serviced entirely by electric companies. He explained:

Generally, customers would purchase entire electrical systems manufactured by a regional supplier who would handle installation and upkeep. If a bulb “burned out,” meaning the filament had deteriorated from repeated heating, someone would come and replace it for you [for free].

Given this business model, it made sense to try to develop bulbs that would burn out as infrequently as possible, and the goal was to make ones that would last forever. The one in Livermore was made by the Shelby Electric Company and, interestingly, no one remembers what they did to make their time-defying bulbs. For now, at least, their secrets are a mystery.

Only later, when electric companies turned over the job of replacing lightbulbs to homeowners, did they decide that it would be more profitable to make cheap bulbs that burned out frequently. As of around 1910, companies were charging the equivalent of $33 for a 1,500 hour lamp (which is about the same life of an incandescent bulb today). Yikes. At least the price has gone down.

We call this planned obsolescence: the practice of designing products with a predetermined expiration date aimed at forcing consumers into repeat purchases. Since the mid-1900s, more and more products have been literally designed to fail. In some cases, we seem to have fully accepted cyclic purchasing (think, for example, of the constant replacing of our electronic devices) or we are embarrassed into doing so (think fashion and the stigma of driving an old car). Other times, like with the lightbulb, we just assume that this is the best engineers can do.

Planned obsolescence is criticized for being wasteful. How many light bulbs sit in landfills today? How many natural resources have we extracted or burned up to make their replacements? How many cargo ships and semis have been filled with lightbulbs and taken around the world?

The little lightbulb in Livermore is a great reminder that just because we live in technologically advanced societies doesn’t mean we always have access to the most advanced technology. Other forces are at work.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

In this 6 minute video, Col. Ty Seidule, head of the department of history at the U.S. Military Academy at West Point, takes on the claim that the Civil War was about something other than slavery. He begins:

Was the American Civil War fought because of slavery. More than 150 years later, this remains a controversial question. Why? Because many people don’t want to believe that the citizens of the southern states were willing to fight and die to preserve a morally repugnant institution. “There has to be another reason,” we are told. Well, there isn’t.

He goes on to use strong logic and documentation — speeches, secession documents, the Emancipation Proclamation, and more — to make a convincing case that the Civil War was about “slavery and just slavery.”  He finishes:

Slavery is the great shame of America’s history. No one denies that. But it’s to America’s everlasting credit that it fought the most devastating war in its history in order to abolish slavery. As a soldier, I am proud that the United States army — my army — defeated the confederates. In its finest hour, soldiers wearing this blue uniform, almost 200,000 of them former slaves themselves, destroyed chattel slavery; freed four million men, women, and children from human bondage; and saved the United States of America.

Wow.

Watch it all:

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.