The Rise and Fall of the American Middle Class
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- เผยแพร่เมื่อ 17 เม.ย. 2017
- William Lazonick, professor at University of Massachusetts Lowell, explains how rationalization, marketization, and globalization characterize the U.S. economy during the past 50 years, and how the behavior of companies and fate of American workers have changed during this process.
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hallelujah. William nails it with his explanation of what happened broadly over the last 30 years or so, in my opinion. my parents used to say, "go work for IBM, and retire." i would reply with, "companies these days are not in the business of providing lifetime employment...they are in the business of paying stockholders this quarter." Also, not disclosing names, I was with one public company that was the poster child for "downside and distribute", and the company's revenue kept declining every year. as a young analyst, my intuition was saying, "this corporate governance model is not working.." The value that was being created, the little that was, was simply being harvested, and not re-invested, perpetuating the downward spiral leading to more labor 'rationalizations', and hence further loss in clients/revenue to the point where our clients had hesitation in re-signing with us. Complete total failure from the board and exec staff to see things on a broader picture and show faith in the business.
Good points. Now the question is: what's the solution for us working class people? Saving and frugality only gets us so far, and our jobs are rapidly disappearing.
We can thank NAFTA and the Democrat Party for signing NAFTA and sending your job to China. The middle class will never come back, why, corporate greed.
AJ - this is the next question of the century. I don't have a good answer. The problem with universal income is "who is going to pay for it?" Some may say, "the companies!" Ok, you can tax the heck out of companies, but they will reduce labor further and move to island nations that offer less taxes to compensate. After that happens, the buying power that they are selling into in order to generate the tax base for the universal income erodes because the consumer class erodes further. We may get to a point of having to 'create artificial consumer demand' for these companies b/c there is no one left who is employed to buy their products, due to AI/Robotics. Well, if we get there, we are no different than a planned economy with artificial supply and demand, and we know those don't survive past more than 40 years or so. More and more and more automation is going to lead to a world where consumer demand just eventually dries up.
Bravo. I agree. Let's not think of this in terms of political party, because neither has any good answers to the growing issue of a shrinking consumer/worker base for companies to sell into due to ongoing automation initiatives. Niether party has a clue. Universal Income is a temporary band-aid, eventually the tax base won't be there to pay for it, because a company like Amazon will be run by 3 people, the problem is that they used to sell, to 10,000,000 people, but because of all their automation initiatives, now, they are selling to base of 5,000,000 people, and that tax base shrinks to supply the funds for universal income. It's a perpetuating problem. Once we get our minds out of "it's the Republicans...!" or, "it's them, no, not them, them!", we can start to see the forest through the trees. Both sides are completely bought out by corp's anyways, and since senators only live to 80 yrs old, they are just "trying to get theirs" to retire on a beach before everything implodes.
Make your retirement plan one based on physical precious metals and other assets instead of stocks in 401k plans.
buy and store water, food,seeds,drugs,antibiotics and most important-gold and silver.know your neighbors and your surroundings..other than that little working class people there's not much more that you could do...currency would only be good for starting fire..
This was a very informative and useful video that I can use for my current undergraduate studies.
It's interesting. We begin our discussion post WW2. Which makes sense from a historical perspective. Yet, what few, very few, economists will acknowledge is the role of Bretton Woods had on the global landscape. Why economists are afraid of finance is bewildering.
After Bretton Woods. The U.S. was simultaneously an emerging economy, still - in terms of labor, comparatively speaking. And, had reserve currency status. What followed was a manufacturing bottleneck to rebuild Europe and build manifest destiny. Because who else could finance it?
THAT was the spoils of war.
Of course, with such power, we mismanaged it. As such, within in a generation, and because we fixed the price of the collateral at the base of the system, we had to restructure again.
France saw what was going on as early as the mid 60s. OPEC saw it as well.
We always harken back to the 70s as that strange era where it all fell apart. That was the beginning of the mean reversion that accrued under Bretton Woods. Is it any coincidence that Nixon visited China in 72, not even 6 months after we broke Bretton Woods? How can that NOT be a part of the discussion?
Before that, it was up to the individual countries to call back the collateral. That spread. Accrued to US. It's amazing to me that the critical theory crowd hasn't pounced on this......but, I digress.
Yes. It was technology. Afterall, we did do something productive with all that leverage.
Ultimately...we financed investment in technology from our trade deficits because we were able to set the price of the collateral and stave off the narrowing of that respective spread through politics. France saw it early. OPEC, not so much...but, they would get their revenge.
That's when globalization was born. We couldn't capture the spread between our trade deficits and our budget deficits and that surplus began to reverse. Naturally, that surplus, which had accrued here, and only here to labor, reversed.
From then on, the flow of funds was, for the most part, mark to market. We could not longer harvest the spread of our deficits and when a nation had to - through political machinations - recall their surpluses. Post 71', it was pretty much mark to market. That's when the inflation hit.
Excellent interview and spot on analysis. The one good role govt could play would be to create more tax incentives for corporate behavior that strengthens the economy by investing in workers. Also with policy that disallows stock buybacks entirely.
Such clear thinking.
Really good talk. Very interesting.
for decades, the middle class shopped their way straight to the unemployment line. we devoured boatloads of foreign made junk and kept chanting "it won't affect MY job." we bought stuff instead of using our money to buy companies. we let a handful of people buy every single company of every type. the owners of these companies look at them as toys to play with rather than something that is necessary for our self sufficiency, sovereignty, technological advancement and economic sustainability.
Living large.beyond their means .
Middle class isn't working class , you wouldn't be poor
Now older adults are still in jobs that used to be considered jobs kids did. Restaurant, retailer, etc. these are jobs that can’t be outsourced but they can bring in foreign workers to replace them
When I was growing up in the 1970’s, the middle-class lived in new homes that had central air and heating, 1,200-2,000 square feet, maybe a fireplace, at least 3 bedrooms and 2 bathrooms, and maybe had a swimming pool in the neighborhood or backyard if you were really well-off. I thought my grandparents were poor because they had a 2 bedroom, 1 bath home built in the 1950’s with a gas wall heater in the living room, a window unit air conditioner in a bedroom, a washer, but not dryer and a clothesline in the backyard and only one car. Dad wore a suit to work every day driving to downtown Austin as a salesman for the now defunct Burroughs Corporation and grandpa worked in the oil fields in a small Texas town as a supervisor. I’m deeply ashamed of what I thought back then.
Don't be so hard on yourself, Jon. You were too young back in the 1970's to have the perspective that we all gain from time and experience.
I’m 68 and grew up in a version of your grandparents home in Clifton New Jersey. It was a pretty good life. It was mid-Atlantic region so we didn’t have AC. Tolerable…but every summer had probably 10-20 nights when sleeping was tough. Not bad for 365 days in the year. Everybody has AC today. Lived in New England until 28 and never had AC until I moved to Nashville.
I’m an architect and am always amazed at how homes built today are bigger and bigger and amenity-laden. Meanwhile basic construction quality seems to few worse and worse except for higher-end custom and remodel sectors. My parents 900sf “tickytacky” post-war “production” home was actually very well constructed. Everything from framing to ductwork to foundation masonry was surprisingly well done.
The first guy represents the college I went to!!! UMASS LOWELL
Wow! He has a handle on it. Very, very few people do.
well said, a brilliant talk and one which should be viewed a lot more than it is.
Thanks!
Social Security does not keep up with COLA. Rents go up $100 per month every year, so your meager savings picks up the slack. I must generate an online income, since I do not beg, or move to Chiang Mai for cheaper living.
Yeah. No one backing laws that require compensation take the form of both equity and income payments so employee and company interests are aligned and not adversarial between executive owners and the chattel that works for them.
Good grasp of the big picture.
Maybe similarities with Japan. Japan suffers, in part, from a culture that promoted lifetime employment, no immigration, and low birth rates. Now it's not economically viable for lifetime employment of workers with obsolete skills and diminished productivity, versus "hiring" technology.
Seems a core conflict within corporations is they have a fiduciary responsibility to their shareholders, not their employees. Meaning, workers must be treated like any other productivity and cost component supporting their business. They must make decisions that compare workers to process and technology improvements that could make the worker obsolete. This fiduciary responsibility intentionally blinds them to the fact people must have money to buy their products. Without money from work or retirement, there is no one to buy their products. A vicious circle occurs. To attract buyers with less money to spend, and to stay competitive, companies must lower costs and prices by reducing the number of workers and replacing them with lower cost and higher productivity technology. In effect, they are competing with themselves and racing to the bottom.
I cringe saying it, but maybe a minimum income is needed to keep the economic fire from going out until a generation or two have passed and a new economy emerges where technology has made the marginal cost of production zero and the basic requirements of living are almost free.
The bottom line is companies cannot keep on growing their share of the capitalist pie at the expense of their employees, once a certain point is passed.. The ownership of stocks is not widespread enough for the increasing dividend income from them to offset the real-terms falling disposable incomes of workers. Companies need to realise that robots might save on wages but robots are not their customers, whereas their employees, and employees of other companies are.
Universal Basic Income sounds great in theory, but in reality would have a lot of unwanted and undesirable results. A lot of productive citizens, who currently work and pay taxes, would decide to simply stop working and live on the Basic Income plus any investments they own. By avoiding the costs associated with working, such as transport, and paying much less tax, many would be better off not working. Already lazy people would be paid to be lazy and productive people would also be paid to become lazy. You destroy the work ethic, and countries without a good work ethic do not achieve or maintain a high standard of living. Wherever you find the protestant work ethic in the world, living standards are relatively high. Wherever the work ethic is absent, you find high levels of corruption and low living standards for the masses.
@@johnrgm3047 People want to do meaningful work, just not repetitive tasks.
what do you think now after covid 19?
Correct Japan’s biggest issue is it’s low birth rate it has negative population growth and the country doesn’t take in enough immigrants to fill in the gap and Japan is just culturally unique
Japan failed for the same reason that the USA is failing now. Prior to the 1980s they had mastered the lifetime employment model and investments in productivity rather than finance, which led to their miracle recovery and rise to the top following WW2. It was a push for more Western-style capitalism that ultimately led to the country's collapse and lost decade.
Their low birth rate and lack of immigration did not help, obviously, but instead of looking for solutions they fell victim to US-style financialization.
pentagon's 1000 bases
=> usd is gobal currency
=> asset market profitable and production market unprofitable
> more asset trading and less production
Interesting analysis. However, very curious why he does not address the huge spending by government starting in the 1960's creating a nearly $30 trillion debt by incompetent politicians (these idiots are fiscally irresponsible), because of this they need tax money and get it from all classes of people in many forms. For example, if you take the wealth of all billionaires today in the USA of about $3.5 trillion, if the government takes all their wealth (making them poor and collapsing the economy) that would not fund the government for even one year, sad. Look at the BBB bill being proposed huge money for IRS to go after everyone to make sure they are getting every penny they demand. This clearly had a huge impact he is ignoring it and is complete insanity.
I’m not sure how class is even relevant in some areas. Take the San Francisco Bay Area. A nice middle-class home there you have in most of the rest of the U.S. runs for $1.5 million, but in neighboring Solano County, the same home would probably be about $500-600K. Yet a totally middle class occupation like a civil engineer barely makes six figures on average and couldn’t afford a home like that in either place if they’re living within their means. I know of one guy who’s brother is a young physician in the Bay Area living in a one bedroom apartment barely making ends meet.
Sorry to be distracted, just started this, but where are his eyes? NM must be that bright ass light...
As a teen who is very interested in politics and history it makes me very nervous because I know how bad the middle class is doing and I wonder if I can get a good middle class life I want to debt free etc or will I be like the rest of the middle class with hardly any disposable money and debt slaves people need to realize that it’s needs change the American dream is dying because the middle class is dying and we are about to see a entire new generation enter this economy may I remind you the oldest millennials like my mother are in there 40s my generation is the next to suffer and don’t point fingers both parties are failing to fix the problem everything gets more expensive while wages don’t heck when I get older can I afford a home? can I afford college? people wonder why the youth liked Bernie Sanders it’s because in our eyes American capitalism failed us we don’t have the promise land our grandparents did plus many Americans like the European welfare system
And I want to be a political scientist which has a average yearly salary of 100k I think that’s a pretty decent enough wage to have a stable middle class life hope
What about government taxes???
Well taxes are always gonna be there so 🤷♂️
Without capitalism there no middle class = communism
It happened to Rome I hope we can fix it for us USA we can beat it
Greedy Corporate Raiders, still siphoning away all the Money !!!...WOW
The middle class was manufactured by Corporations and Government policy. It is being dismantled by the same entities.
Free market grew middle class , the big government destroyed it
The professor is correct, but the problem can be more straightforwardly explained by the overriding of open competitive markets by pseudo markets with plutocrats in charge - see www.unendingrecovery.com
That's the nature of the free market. It will trend toward monopolization. Competition will seek to destroy competition.
If you study the tren of all civilizations and human nature it appears that its never enough once a group of people or country maximize or deplete their resources.
The will look to expand their empire at first through economic diplomatic trade and if that doesn't produce the necessary results then by war and conquest .
Is a golbal economy the only option?
China and India both have over a Billion people each, like all other nations they require work and money to exist in a golbal economy.
Obviously you need to share the economic wealth or war and conquest will result.
PROBABLY ONE OF THE MAINE REASONS NIXON WENT TO CHINA WAS TO AVERT A WAR AND PROMOTE A SHERED ECONOMY.
The facts so far show that no one single Nation can or should control the entire golbal economy .
Remember before American companies exported jobs and products overseas, they first exported and relocated their jobs and products to the cheapest labor and taxes States in America .
Anyway I would like your opinion on this analogy observation.
You still have very well in the USA people. By far USA is still the best place to live!
No actually it's not. Most Scandinavian countries are better, Canada is better, Switzerland is better, etc. To quote Arron Sorkin's character from the newsroom, "We're seventh in literacy, twenty-seventh in math, twenty-second in science, forty-ninth in life expectancy, 178th in infant mortality, third in median household income, number four in labor force, and number four in exports. We lead the world in only three categories: number of incarcerated citizens per capita, number of adults who believe angels are real, and defense spending, where we spend more than the next twenty-six countries combined, twenty-five of whom are allies. None of this is the fault of a 20-year-old college student, but you, nonetheless, are without a doubt, a member of the WORST-period-GENERATION-period-EVER-period, so when you ask what makes us the greatest country in the world, I don't know what the fuck you're talking about?! Yosemite?!!!"
Leggo My Ego how Switzerland is better if 65 percent of people can’t afford to own a house. And Canada is shit really. Canada is very expensive and they only good thing they have is affordable healthcare. Jobs pay no shit in Canada.
USA more middle class than all Europe
Europe is doing good
@@MrHistory269 working class doing well , not middle class the franchise owner
The Fed makes Americans suffer!
I agree with moist faucet. Blaming the Fed is Alex Jones level stuff. The Fed is not the problem.
@@incognitotorpedo42 . . . but it is p a r t of a BIG problem. And there is a massive problem with a l l banks - not only in this country but world wide ruining their clients via foreclosures and robbing the taxpayer - constantly
FDR's New Deal i.e. the taxing of the wealthy in the 1930's and 1940's, labor unions and government regulation of management to keep worker wages high, allowed a middle class to arise in the 1950's. But once WW2 ended in 1945, the plutocrats sought to undo all these changes and by the 1980's all of them had been undone. Then introduce technological unemployment (automation, outsourcing), real wage stagnation, trillion dollar credit card debt, the trillion dollar student loan scam, deregulation which unleashed corporate crime now unabated for 40 years, and the middle class has been eroded away and 90% of Americans are now in the lower class. Next will be the lower class becoming totally dependent on government welfare in a country ruled by trillionaires.
Big government destroyed middle class growing it bigger dickhead, left the biggest contributes to it
The middle class was a fallacy.
Blaming it on Liberals? Pfft.
it cuz of Donal Trump yo dats why we gotta vote Hillary next election yo
No he wasn’t I would argue this was pretty unbiased
Middle class is small business the left party shrunk
America doesn’t have a left party democrat are economically right wing people like Bernie Sanders and true leftist Pelosi and other Corporate democrats are not leftist
Edit: This is coming From a social democrat I will be happy to give you videos explaining why corporate democrats are ring wing and yes on Social polices democrat are left
@@MrHistory269 Social democats full of shit like you, there a left party in every country without capitalism there no middle class liar and I bet you work for Big Government
uh, uh, uh. Dude learn how to speak.