Why our economy is stuck in neutral

Posted on November 4th, 2011 by ecthompson md

The great former Secretary of Labor under President Bill Clinton, Robert Reich, explains why are our economy is not going anywhere.

1. Since 1980 GDP has doubled but wages have been flat. (See graph one and graph two.)

GDP in trillions

Median Income adjusted to 2010 dollars

It took me a couple of hours to figure out how to graph median income. I don’t know why it was so hard. Anyway, here it is. What do you see?

2. Almost all of the gains have gone to the super rich.

3. The power of the wealthy has driven the top marginal tax rate down since 1979.

Top tax rate is 35% but the rich pay far less

4. Our total tax receipts are 14.9% of our GDP. The last time that our receipts were this low was 1943!

5. Consumer spending equals 60% of our GDP. In order to get our economy going we have to get the middle class feeling like they can spend money again.

Tags: Economy, Taxes // 4 Comments »

  • Scroop Moth

    These five points are so simple they might all fit in a 30-sec ad, yet each is worth a thousand words.  Thanks for this eloquent presentation.  

    No voter can make a realistic choice without knowing these basic facts.To my mind, your web site stands for everything good and it cuts to the chase cleanly and beautifully.   

  • Jon

    Ross Perot had a lot of charts and graphs to . Even at that time the press was powerfull enough to marginalize Ross . If elected I can’t imagine that he would have gotten any cooperation from Dems or the GOP .

  • Scroop Moth

    Good point. Perot’s trade policies would have crashed against the determination of lawmakers of both parties to promote globalization. I agree.

    Nevertheless, I think that Errington’s charts are far more salient and powerful than Perot’s, because they deal with economic power directly.  

    Trade policies deeply divided Democrats, unfortunately.  Some of us thought that globalization could be a good thing.  However, all real Democrats should agree with the diagnosis that Errington summarizes.  The fact that workers have lost so many protections makes it all the more important to tax the real sources of of income, which is no longer wages but profit from globalization and finance.

    Globalization produced a glut of idle capital.  People need it.  The globalizers have no intention of investing this windfall because they’re opportunists, not job creators.

  • Jon

    I agree that Dr Thompsons charts and graphs are spot on . I can almost instantly look at a chart or a graph especially a pie chart and understand the meaning .
    As a society we must be on information overload or to busy thinking about Kim Kardashian or too locked in to right wing world to not get it that all of us 99% are being led off a cliff .

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