Harold Meyerson on "The 40-Year Slump" -- did it (does it?) have to be this way?

by Ken

The American Prospect, as part of a special feature called "The State of Work in the Age of Anxiety," has an important piece by Harold Meyerson called "The 40-Year Slump," of which I can only hit some of the highlights here.

The economic landscape of the quarter-century following World War II has become not just unfamiliar but almost unimaginable today. It constitutes what historian Vaclav Smil has termed “a remarkable singularity”: The United States came out of World War II dominating the world’s production and markets, and its unprecedented wealth was shared broadly among its citizens.

The defining practice of the day was Fordism (named after Henry Ford), under which employers paid their workers enough that they could afford to buy the goods they mass--produced. The course of Fordism never ran as smoothly as it may seem in retrospect. Winning pay increases in halcyon postwar America required a continual succession of strikes. . . .

In the three decades following World War II, the United States experienced both high levels of growth and rising levels of equality, a combination that confounded historical precedent and the theories of conservative economists. By 1973, the share of Americans living in poverty bottomed out at 11.1 percent. It has never been that low since.

By the early 1980s, the Treaty of Detroit had been unilaterally repealed. Three signal events—Federal Reserve Chairman Paul Volcker’s deliberately induced recession, President Ronald Reagan’s firing of striking air-traffic controllers, and General Electric CEO Jack Welch’s declaration that his company would reward its shareholders at the expense of its workers—made clear that the age of broadly shared prosperity was over.

There's a lot to explain, both domestically and internationally, with the rest of the world catching up to us following our postwar head start, but for Meyerson it ultimately all comes back to the evaporation of workers share of the pie, their loss of the expected share in their still steadily expanding productivity. No, the postwar economic miracle can't be re-created, but Meyerson points out that "the iconic German manufacturers"

have factories scattered across the globe. Unlike the American multinationals, however, they have kept their most remunerative and highest-value-added production jobs at home. Nineteen percent of the German workforce is employed in manufacturing, well above the 8 percent of the American workforce. German industrial workers’ wages and benefits are about one-third higher than Americans’. While the U.S. runs the world’s largest trade deficit, Germany runs a surplus second only to China’s and occasionally surpasses it.

And Meyerson rejects the notion that our situation was ordained by eonomic forces or is beyond correction.

What has vanished over the past 40 years isn’t just Americans’ rising incomes. It’s their sense of control over their lives. The young college graduates working in jobs requiring no more than a high-school degree, the middle-aged unemployed who have permanently opted out of a labor market that has no place for them, the 45- to 60-year-olds who say they will have to delay their retirement because they have insufficient savings—all these and more are leading lives that have diverged from the aspirations that Americans until recently believed they could fulfill. This May, a Pew poll asked respondents if they thought that today’s children would be better or worse off than their parents. Sixty-two percent said worse off, while 33 percent said better. Studies that document the decline of intergenerational mobility suggest that this newfound pessimism is well grounded.

The extinction of a large and vibrant American middle class isn’t ordained by the laws of either economics or physics. Many of the impediments to creating anew a broadly prosperous America are ultimately political creations that are susceptible to political remedy. Amassing the power to secure those remedies will require an extraordinary, sustained, and heroic political mobilization. Americans will have to transform their anxiety into indignation and direct that indignation to the task of reclaiming their stake in the nation’s future.