From the New York Times (there’s more that’s not included here, so worth going to the original). If you can’t read the text, keep clicking to expand the images. An old story, but well worth retelling, especially like this. At no point does it say that this data is for the US economy – seems that imperial habits die hard, however bad the economy…….. [h/t Kate Raworth]
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Duncan, can you add a Facebook share button for specific posts? Thanks for highlighting this!
Duncan: No idea Lies, but will consult the blogmaster……
Duncan again: Blogmaster says ‘The share options are post specific at the moment.’
A forgotten story regarding the present bail-out of banks to counter the economic crisis in Europe and America is that of Africa in the 1970s and 80s. The rising oil prices at that time put African countries in debt to banks. The International Monetary Fund and the World Bank intervened, rescuing banks. Debt repayments from the newly independent African states had to be made to these organisations. The repayments were in dollars, although countries were strngly urged to devalue their currencies for export-driven growth, followed by stuctural adjustment, which meant cutting public spending. This policy severly impacted on Africa’s ability to grow. When African countires introduced Structural Adjustment Programmes it was greatly to their detriment! We in Africa are still reeling from the hardships of these austerity measures. Our children are not as well educated as they should be; our health services are still grossly inadequate.
Looks similar to Gabriel Palma (http://www.econ.cam.ac.uk/faculty/person.html?id=palma&group=faculty)’s work–though he’s Latin America specific.
On the same note, Bill Easterly doesnt agree with this I think. But i don’t agree with him.
Easterly is a conservative who had a choice between renouncing his conservatism and basic human decency.
He made the choice all conservatives have to make to stay conservative.
I’m guessing this is somehow supposed to reflect the destruction of the middle class by Reagan and his Republican cronies who have been systematically keeping wages down for 30 years. But is it not entirely likely that all that increase in productivity beginning in the 80’s has everything to do with the introduction of the PC? Business have increased productivity through the use of automation of processes made possible by a PC on every desk. This leads to less and less need for people to do things which necessarily drives down wages. Similarly, you have automated or robotic systems introduced into manufacturing having a similar effect. Throw in Lean systems which drive up efficiency and ultimately reduce the need for excess people.
But pay rose with productivity before the 80’s, you say? Yes, during that time productivity was driven by the workforce becoming smarter and more efficient. From the 80’s it’s not about a smarter workforce, it’s about smarter machines displacing the workforce with smarter processes. It’s easy to make this look like the fault of Conservatives when it is just as likely to be the fault of Bill Gates, IBM and Toyota.
Now overlay the decline of small business ownership and the growth of federal regulation. Oooh and aah at the coincidences you find.
The effect of computers, robots, etc, is reasonable as a contributing factor, but government policy has absolutely played a significant and intentional role in shifting wealth to a small elite over the last 30 years. For example, government policy could just as easily implemented steps to keep income inequality stable over the last 30 years, in which case all of the population would have benefited from the nation’s productivity gains rather than a tiny few. But regardless of causes, when any nation has a significantly unequal distribution of wealth, the nation has problems, e.g., news media owned by a very few and thus only news “that fits”, purchased politicians and thus public policy that benefits the few, stifled competition, military decisions with underlying profit motives that benefit the few, etc. I suspect income distribution has been the leading cause of revolutions throughout history. Income inequality is in fact one of several standards used by the U.N. each year to measure the relative health (and individual happiness) of nations around the world. At the link below is a map using CIA data to color-code all the countries of the world for income inequality. Prepare to be surprised at where the U.S. ranks. http://upload.wikimedia.org/wikipedia/commons/3/34/Gini_Coefficient_World_CIA_Report_2009.png
Seems to correspond with major mucking with the currencies: first the devaluation and gold seizures in the 30s, and the removal of the US dollar from the gold standard in the late 70s. I am not stating causation, just interesting correlation.
Mmm… on further review the correlation is stronger than I thought. The “Great Prosperity” chart highlights the change starting on 1980, but if you look at the lines, the change begins in the early 70s (~1972?) which corresponds nicely with the US coming off the gold standard in 1971.