The real roots of the current crisis are structural changes in the American economy in the last generation. We continued to fuel “prosperity” from increasing consumption of the middle and upper classes. But, the during this period the middle class saw flat real incomes. To keep increasing our lifestyle, we had to borrow. Why? Because while the middle class of the last 30 years has been increasingly productive, it has not shared the benefits of that productivity. Read the full story at: Mind the Wage Gap | The American Prospect. An excerpt below the fold:
What replaces the frenzied consumer spending that gave the economy its gallop over the last 20 years? Responsible, within-your-means purchases, unaffected by the $150 billion in advertising spent annually selling us stuff?
That sounds like 1952, and, frankly, Americans are just not going to go for it, because the modern manifestation of life liberty and the pursuit of happiness is the ability to go to the mall. That was the whole point of expanding the middle class, so they could add the economic clout to the economy.
The problem, of course, is that, while they were propping up the economy over the last couple of decades, those middle class workers were not reaping their fair share of the benefits. In fact they were getting screwed by the financiers we’re now forced to rescue. Since the 1970s, American workers have become more productive without getting paid for those increases in productivity. And it was those very people who went into debt to maintain their standard of living and who kept the economy going as long as it did.