Posted on 08/27/2022 4:28:28 PM PDT by robowombat
The Long Decline in the Middle
AUGUST 1, 2022 BY TOM PIATAK
The Long Decline in the Middle
A graph making the rounds on Twitter shows that, since 1970, the share of aggregate national income held by the middle class has plummeted while the share held by the rich has skyrocketed and the share held by the lower class has barely budged. I do not know if this graph has all the particulars right, but its thrust is undoubtedly correct. The decades-long decline of the once-great American middle class is the overarching political reality that the professional conservative movement has spent decades ignoring, obfuscating, and even celebrating.
At about the same time, I came upon an illuminating interview of financial journalist David Gelles by David Leonhardt in The New York Times. Gelles has written a book about the impact of longtime General Electric Chief Executive Jack Welch on the American economy. Welch, who took the reins at GE in 1981, was held up as the model CEO for decades, and many lesser CEOs took their cues accordingly. Welch’s overall approach is neatly summed up in his quip that he wished all GE’s plants were on barges so that he could ship them at a moment’s notice to whatever dismal spot on the planet then had the lowest labor costs. He’d need just enough infrastructure to allow GE to build its goods there and then to bring them back, tariff-free, to sell to Americans.
I never understood the adulation for Welch because I thought what he was doing was, at worst, economic treason and, at best, a renunciation of all the non-economic ties that used to bind companies to communities. As the article noted, Welch “unleashed a wave of mass layoffs and factory closures that other companies followed.”
Before Welch, layoffs were seen as a last resort, a triage measure to save money in a company that was otherwise going to fail. After Welch, layoffs became an accepted way of boosting profits, even at companies that were not in distress. Plants began to close, and jobs got shipped overseas with no concern for anything other than the short-term impact on the bottom line. Most of the profits at GE went to big investors in the form of stock buybacks rather than toward increased wages for workers, improved factories and equipment, or expansion in research and development.
Leonhardt and Gelles concede that Welch made a lot of money for GE investors,
transform[ing] G.E. from an industrial company with a loyal employee base into a corporation that made much of its money from its finance division.… But in the long run, that approach doomed G.E. to failure. The company underinvested in research and development, got hooked on buying other companies to fuel its growth, and its finance division was badly exposed when the financial crisis hit.
Recently, GE announced that it was breaking itself up.
All this really hit home when I recently learned that my Polish great-grandfather and my Polish great-grandmother independently made their first residence in America a boarding house at 529 Westinghouse Avenue, in Schenectady, New York, not 10 years after General Electric had been founded in that city in 1892. Although my great-grandparents did not stay long at that location, many other Polish and Italian immigrants did, and GE brought considerable prosperity both to the European immigrants and to the old-stock Americans who worked for the company in its home city.
As John Cropley wrote in a Nov. 9 article in Schenectady’s Daily Gazette, GE employed up to 45,000 people in Schenectady during World War II, and the company still employed around 25,000 people in the city when Welch took charge. By the time Cropley wrote his article, GE employed only 4,890 workers in all of New York, and there were just 600 union members left doing production work in Schenectady. Not coincidentally, the economic neutron bomb of GE’s failure has left Schenectady, as Cropley describes it, “with a crumbing, deserted downtown, timeworn residential neighborhoods and a population that had plunged by half.”
The same sad story can be told in town after town across America, as the only people who embraced Welchism more eagerly than businessmen looking for quick profits were politicians who told themselves, and us, that dismantling America’s manufacturing base and becoming dependent on hostile, unpredictable foreign countries for everything from weapon parts to baby formula, was somehow a good thing.
Incredibly, against this backdrop, the Biden administration is rolling back some of the tariffs Trump put on Chinese goods. This is madness. We need yet higher tariffs—and quickly—before the long decline of the once-broad American middle class becomes the rapid demise of what remains.
TOM PIATAK Thomas Piatak is a contributing editor to Chronicles: A Magazine of American Culture. He writes from Cleveland, Ohio.
True. This is why I now prefer to call myself a populist or a nationalist, rather than a conservative.
Yep, we got off the gold standard in 1971.
Yep, we got off the gold standard in 1971.
Once a corporation starts being managed to maximize stock price it starts to hollow itself out until it’s an empty shell that produces mostly noise instead of products.
It’s really stupid how so many companies wreck themselves on the shoals of Wall Street.
1971 is when Nixon ended rhe dollar being tied to gold price and instituted wage/price controls of a sort. For Nixon it was another of his substantive cosmetics stunts to his poll numbers decline a year out of from the Presidential elecetion. That is pretty much RN was a pitchman and thimbelrig artist. The PUW return was a lot of that with returning POW’a being told as serving officers they would obey orders and express their undying gratitude to RN. This was done Nixon and the JCS and the Pentagon the NV’s had held back a number of pow’s as a guarantee Prince Tricky would deliver on his verbal promise of a big payoff if the norks gave most of the prisoner’s back. The NV’s never socked Tricky with this because Watergate ended the Nixon gregime and the Viets desperately wanted a detente with the US to try to get some hard dollar investment in their very strapped and poor country.
That is true.
Welch was just another corporate con artist who showed how to make large stock holders a lot of money with his quickly close, downgrade gutting operations.
That is also true.
I have family that were in various unions and the stuff they told about what the unions got away with up to and including murder (not a crime if it is part of a "labor dispute") was disgusting. Heck at GM by union contract you could have up to five no call no shows a year and management could not say anything. It was so bad that they had a pool of people sitting around every shift so that if someone decided to just blow off they would have a replacement. Let's not even talk about the organized crime partnerships and the fact that in war time the unions would deliberately try to throw spanners in the works just to flex their muscle. Or that they were run by communists.
The problem was that the management was no bunch of angels either. They had any number of politicians in their pocket and would crush any upstart little company who dared to try to break into their monopoly.
Unions should be treated like any other business and they should be broken up. One union to a company.
The conglomerates and megacorps should also be broken up. And if you are building something overseas you should have to pay the same import taxes as everyone else.
You should however, be able to bring back any money you earned overseas back into the US without paying a huge tax on it. That is one of the dumbest moves Congress ever made and it encourages companies not to bring their money back to invest in things in the US.
Don’t forget, Bill Clinton and his alphabet soup of trade deals with the CCP in the mid-90s.
The ONLY thing keeping Dayton alive is WPAFB. Don’t kid yourself. One big fat employer is nothing to build up on.
As for UD being a second rate school, maybe. Wright State on the other hand is 4th rate at best.
I agree, and Blight State has a med school/
Blight State good one. We always called it Wright High.
My middle-class existence was severely downgraded under W’s 2nd term.
And then he got even more stupid.
Of course it’s true. For the last 40+ years incomes for middle/lower class folk have NEVER kept up with the cost of living.
more along the same vein:
“Want to Kill Your Economy? Have MBA Programs Churn out Takers Not Makers.”:
https://evonomics.com/want-to-kill-your-economy-have-mba-programs/
“Why has business education failed business? Why has it fallen so much in love with finance and the ideas it espouses? It’s a problem with deep roots, which have been spreading for decades. It encompasses issues like the rise of neoliberal economic views as a challenge to the postwar threat of socialism. It’s about an academic inferiority complex that propelled business educators to try to emulate hard sciences like physics rather than take lessons from biology or the humanities.
It dovetails with the growth of computing power that enabled complex financial modeling. The bottom line, though, is that far from empowering business, MBA education has fostered the sort of short-term, balance-sheet-oriented thinking that is threatening the economic competitiveness of the country as a whole. If you wonder why most businesses still think of shareholders as their main priority or treat skilled labor as a cost rather than an asset—or why 80 percent of CEOs surveyed in one study said they’d pass up making an investment that would fuel a decade’s worth of innovation if it meant they’d miss a quarter of earnings results— it’s because that’s exactly what they are being educated to do.”
I just went to Dayton and stayed across from the convention center. Dayton is not a dying city, it is a dead city. Downtown is dead even during the day.
I think once unions became so powerful and started supporting only one political party, as far as I am concerned, unions and the workers who blindly paid dues to support those unions, became the enemy. I am glad manufacturing was destroyed by Welch and others and thus hurt the unions and their members. I have no sympathy for the mindless democrat party supporting drones since that is what they were and still are.
Nice website. Thanks.
1. World War II
2. The post-WW2 period of several decades when U.S. industry had no competition because we were the only major country whose industries and infrastructure had been unscathed during the war.
Don’t forget, Bill Clinton and his alphabet soup of trade deals with the CCP.
How much has the inflation adjusted value of national income INCREASED since 1970?
How much has the inflation adjusted value of middle class income PER CAPITA increased since 1970?
Unless we know those two numbers, the "share" of aggregate national income is completely meaningless anti-capitalist propaganda!
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