Depending on where you start considering millennials, but at least if you consider those born from 1980 or so as such, elder millennials could have had at least a year or two if not a few before the “great recession” of what would have seemed like a relatively functional economy. That said, the economy has been questionably functional for decades. The 1970’s was marked historically as a perdió of general economic turmoil at least in the USA. The 1980’s saw some recessions and continued economic fallout from globalization and loss of domestic production, career shifts, and of course the continued spin down of American military spending and closing of bases. The 1980’s started to REALLY show the modern pattern of wealth consolidation and inequity. Deregulation exacerbated or created mega consolidation of corporations and industries and the “new order” of big box retailers taking the retail crown from corner department store giants. Poor business decisions and other factors led for many
American companies to lose their footing or become insolvent. Household names no one would have believed could have faltered and which held up communities and even the American economy. While bankers and such had always made money in the modern day at least, the 1980’s saw a further shift to materialism and branding and “keeping up” that had started post war but was now getting increasingly expensive. These factors started to weight down less metropolitan economies as big businesses began to eat up job opportunities and business segments. Those positioned in industries well suited to accept the influx of cash from yuppies and such made out well in general. This is also the period that investment attitudes strongly shifted.
Through the 70’s suburbanites, even blue collar workers, had dabbled in investments for retirement though agencies or brokers or most often union packages. The 1970’s had been tough on unions and we’d continue to see their decline through the 80’s to where in the modern day they are relatively uncommon and lack the power and public support they once held for bargaining. These same folks might also have invested in things like stamps or coins as hobbies and through bankers or brokers played with bonds and trusts. Largely long term low risk stuff. The 80’s was the start of an increase trend in the modern age where wages are not the primary wealth of most people who are more well off.
In the 1980’s we started to see the emergence of credit culture and personal speculation in trades become a part of more everyday life. To that point, I have two young friends in their 30’s. One makes $20k more a year than the other and owns no property and has little wealth. The other owns two properties, 2 cars of $60k or more, is looking for a third property, has over $5 million in net worth, and is planning to retire at 50. The second friend makes appreciably less but was given stock and also invested a fair deal in stocks that paid off. The other does not trade stocks. The difference in lifestyle between two people has more to do with their debt and credit and any assets like stocks than their earnings. An extreme example of this is many executives who may draw a salary lower than the average American income or minimum wage but get bonuses in the forms of stock that can be worth many millions or even billions.
Those with generational wealth or connections tend to have advantages of course as do those whose parents prioritize financial education and other skills for success. So it isn’t that the economy has changed so much in its fundamentals since the 1970’s or so, it is that people got early starts and people have become very good at gaming the systems and getting rules changed to make it easier for them to hold their positions and increase their wealth.
We can’t really say what a “functioning economy” really looks like- the economy has almost always been in some state of disarray or unbalance for most of modern history. The widest prosperity could be said to be the post war period, but that makes sense. Not only had technology leaped ahead in a short time but production capacity had been catapulted for the most massive war in known history. Death and destruction and deprivation left huge demand for goods and services and the consumer base exploded as troops came home and new markets…
.. had been opened up by the logistics of a global mechanized war. Returning troops made babies like crazy- the baby boom- and those babies created demand for things which made jobs, grew up to be consumers and producers feeding the economy, and then as jobs started to ship abroad due to globalization and the need to feed the demand for cheap and abundant goods in diverse tastes, birth rates fell and the economy entered a crisis. Oil embargo’s and political unrest exacerbated that, and things led to things.
We cannot sustain exponential growth. It can’t be done but we act like it can and in the modern age always have. Consumer mentality is that we want more, we want a stream of more and more of newer and better things. The costs carry forward and we pay them retroactively.
The average person complaining they don’t make enough is almost always living better than much of the worlds population. In most developed countries we conflate want and need. No, skipping star bucks won’t likely buy you a house, in the cheapest markets in America after 30 years of $5 a day coffee you could come close to buying a house at current prices but not quite make it. Of course over 30 years placing that $5 a day into a 410k could see a return around $270,000 in 30 years in a meh market with meh investments. Of course on the right stocks you might be able to buy a house in a decade or less with that $5 a day. Or you might lose it all. So that is a bit unreasonable but in markets like Americas hottest where “starter homes” are well over a million-
The majority of legitimate buyers (not property firms or money smugglers or launderers etc) are not paying with their salaries. They are paying with stocks and doing outright deals or downs on stocks and then paying a mortgage with their salary.
So I do not disagree that we have a problem. I do not think the problem is not being paid enough. The problem lies in a few places.
A good deal of what would be called middle class or higher Americans and certain other nationalities probably do need to set our expectations lower. Yes, we’ve seen the memes and maybe done the math and some of us were alive. A $500k home was $30k in grandpa or great grandpas day and rent or mortgage was 30% or less of salary and not 50%-70% or more. But… if it was so cheap and easy… was everyone just stupid? Why were there so many people who didn’t own homes? Why weren’t people just buying homes for their kids to own when they grew up? The reality is a little different. It might be less that people were paid better and more a few other things. For one thing, there are more people today and thusly more “poor” people. What being “poor” is has changed as well. Today we have “poor” people struggling to pay rent and live on $70k+ a year living alone. Their rent might be $3k a month or more alone. Of course. We didn’t invent more land in the last 50 years or so. Same amount of space.
More people. More people wanting to live where there are economic opportunities and amenities. More people living in a place and more money tends to attract amenities and economic opportunity. It’s a whole thing. But making more money just tends to drive up prices because the problem isn’t that people don’t have money. People are spending. How do all these companies reach record profits? We had 10 years of a bubble economy. Who was buying all the shit if people don’t have money…?
The stuff costs too much. The opportunities are too guarded. Rent control is mostly gone in most places. Regulations to keep markets competitive and prevent monopolies have been gutted. A string of elected officials levied tax breaks that favored corporations and the wealthiest Americans and reduced controls on foreign goods and employment.
They said to be afraid the rich would leave if you taxed them but…. They didn’t start leaving the country with their business ant such scale until we took away the restrictions that prevented it. Property is a tool for wealth now. It isn’t a home, most Americans use property as wealth. Rentals are almost a norm now. The majority of homes being bought are being bought by people who already own property. That’s the market today.
Because the thing is… if you let people do whatever they want they will do what benefits them most generally. So who can blame unshackled business from cornering markets and pursuing aggressive and destructive cost cutting? Who can blame people for using debt as a form of wealth and gobbling Ip properties that other people will pay for to make the owner richer? Most people pinned down by that system would gladly become the one doing the pinning to get out from under it. That’s how it works. You work hard to be the one exploiting and lessen the amount you’re being exploited. But it’s always more or less been that way.
No amount of money is enough and the more you pay people the more money people will want for goods and services so it all is washed away. It is a game of managing imports and exports. When other countries want your products you get their cash flowing in. Your currency tends to gain value and that value tends to raise the price of your goods and labor in relation to their currency. That starts to make your goods uncompetitive or unaffordable which often leads to slump in demand. That tends to reduce commerce which then causes the economy to downturn. Increasing wages can have a negative impact on economics as the currency loses value. It is more complex than all this but in simple terms basic rules of scarcity suggest that the more of something there is, the less value any quantity holds. More money makes money less valuable in a broad sense.
There are wash’s to mitigate that and factors that can inflate values. We’ve been riding such a wave for awhile. In the end though the physical realities catch up with the accounting and their math isn’t good enough to actually make shit appear out of thin air so it all comes crashing down and a good leader just makes a softer crash and reverses or quicker.
All you really need to know about economics is that the economy is now and has more or less always been essentially a ponzi scheme. If we had no economy but all the laws of our current economy, if you tried to create this economy you’d go to jail. People with money tend to make rules and people who make rules tend to make the rules favor them and thusly the rules tend to favor people with money and the people who are favored by the rules tend to have the most in common with the people making them. It’s just a reality. To stay rich the rich will always fight tooth and nail to maintain their advantage. The big problem is that we now have this extreme disparity and rules that not only allow but encourage- perhaps even REQUIRE predatory and unsustainable business and financial practices. Few if anyone alive has ever seen a functional economy in any sense other than it works by a thread at keeping enough people with enough to avoid total riots and rebellion.
In 1920, the median cost of a house in the US was near $6,300, while the median household income was about $2,100 (about 33% of the cost of a home).
In 1980, the median cost of a house in the US was near $65,000, while the median family income was around $20,000 (about 31% of the cost of a home). The cost to deliver a baby was around $1,500.
Today, the median cost of a house is near $425,000, while the median family income is about $55,000 (about 13% of the cost of a home). The cost to deliver a baby is around $20,000 (with insurance).
It’s not about the rising cost, it’s about the rising disproportion. It’s not just housing, but housing is a great poignant example. When you consider that in 1920 and 1980, that family income was much likely to be generated by one person working out of home than it is today, that number seems a lot more stark.
I agree. That’s what I say above. More money doesn’t fix it. Wealth disparity is insane right now and costs are unchecked. The government forces Americans to buy insurance but then barely or inadequately controls the industry to allow fair access and comprehensive coverage for Americans. We argue against “universal” coverage on budget reasons but 71% of healthcare in the US is paid by the government with taxes. Record profits for medical corporations and execs and 71% of that is coming from taxes.
The housing industry is so mismanaged that it caused the largest financial crisis of modern times just by being ran like shit and now we are bailing out financial industries AGAIN so soon on the edge of another financial crises caused by.. surprise… mismanagement following record profitability.
We know jokes are finite. We know home ownership has been in decline and first time home ownership is in the toilet, yet property management and development are booming. While a recent surge of “high density” housing and condos costing as much or more as a home should may help SOME, it doesn’t really do much for wealth inequity as such properties don’t offer the tax and other benefits of a home in a system where property is a cornerstone of wealth and stability. They also are often quickly and poorly made and put in places where land is cheaper and infrastructure is usually not designed to handle 300+ new residents when they open- contributing to traffic congestion, low quality of life, etc etc.
with little or no regulation to force the people who profit most from them to exercise responsibility over the mess they will make.
One may feel as they like about unions, but a vital role unions did help fill was in forcing money to be spread around. They often protect obsolete or redundant jobs and workers which is a form of disguised unemployment. Their often inherent in efficiency is a natural bulwark to “do more with less” and they of course did take profits from major corporations and give to union members and union employees which helps distribute wealth. My argument is exactly pro union- but it points out how your figures coincide with the decline of unions and deregulation. Simply put corporations exist and have a LITERAL LEGAL RESPONSIBILITY to maximize profits- not to consider social impact or quality of life. They make money.
Walmart has recently anointed a plan that would eliminate around 50% of certain areas of their workforce using automation for a 20% decrease in costs in those segments. Business wise that makes sense but digest that in human terms, firing half of a LARGE work force save 20%. The cash to human value is low. They assure that their total headcount will be about the same or even larger and pay should increase- but they also mention that the new jobs will skilled jobs created by the need to service and grow their automated systems. Do you…. Do you think… that if someone could be doing development or QA or business planning etc. for systems automation that they’d be working at Walmart in retail and shipping full time…? The job count won’t change but the new hobs aren’t largely going to be ones most of the workers that are let go can do.
Sorry, I missed your point above… I was awake in the middle of the night (and I guess not on my best thinking). I promise I read it, before arguing :)
You make a really good point about unskilled labor. I very much worry for all the people (who aren’t just kids in their first job). A lot of these jobs are already insufficient and to narrow the pool even further is going to create such a difficult situation for so many families and individuals. I live in a very rural area. I know a lot of people who work very hard, but can’t make a phone call at the end of the month because they are out of minutes, can’t afford to go to the doctor, or make home or vehicle repairs. I worry a lot about what happens next. I guess I’m just rambling. But I’m worried.
No worries, and I don’t think you’re rambling. Things are tough right now and I agree, it’s not just kids but people who have lived their lives working or even retired people and more. I’m a pro capitalist, I love capitalism, but what we are lacking is an ethics or at least a humanity. Capitalism exists to serve people, some will be served better than others, but the idea is to improve and grow things through competition, and the type of wealth entrenchment and monopolizing and consolidation we have right now does not encourage competition it encourages stability for the wealthy, and people like the ones you talk about suffer. It sucks. That said, the wheels always turn. Things get worse, they get better, they get worse. Let’s hope the worst stuff isn’t that bad and the good stuff comes quickly after. It reaches a point where something has to give eventually.
We can’t really say what a “functioning economy” really looks like- the economy has almost always been in some state of disarray or unbalance for most of modern history. The widest prosperity could be said to be the post war period, but that makes sense. Not only had technology leaped ahead in a short time but production capacity had been catapulted for the most massive war in known history. Death and destruction and deprivation left huge demand for goods and services and the consumer base exploded as troops came home and new markets…
We cannot sustain exponential growth. It can’t be done but we act like it can and in the modern age always have. Consumer mentality is that we want more, we want a stream of more and more of newer and better things. The costs carry forward and we pay them retroactively.
So I do not disagree that we have a problem. I do not think the problem is not being paid enough. The problem lies in a few places.
They said to be afraid the rich would leave if you taxed them but…. They didn’t start leaving the country with their business ant such scale until we took away the restrictions that prevented it. Property is a tool for wealth now. It isn’t a home, most Americans use property as wealth. Rentals are almost a norm now. The majority of homes being bought are being bought by people who already own property. That’s the market today.
In 1980, the median cost of a house in the US was near $65,000, while the median family income was around $20,000 (about 31% of the cost of a home). The cost to deliver a baby was around $1,500.
Today, the median cost of a house is near $425,000, while the median family income is about $55,000 (about 13% of the cost of a home). The cost to deliver a baby is around $20,000 (with insurance).
It’s not about the rising cost, it’s about the rising disproportion. It’s not just housing, but housing is a great poignant example. When you consider that in 1920 and 1980, that family income was much likely to be generated by one person working out of home than it is today, that number seems a lot more stark.
The housing industry is so mismanaged that it caused the largest financial crisis of modern times just by being ran like shit and now we are bailing out financial industries AGAIN so soon on the edge of another financial crises caused by.. surprise… mismanagement following record profitability.
with little or no regulation to force the people who profit most from them to exercise responsibility over the mess they will make.
You make a really good point about unskilled labor. I very much worry for all the people (who aren’t just kids in their first job). A lot of these jobs are already insufficient and to narrow the pool even further is going to create such a difficult situation for so many families and individuals. I live in a very rural area. I know a lot of people who work very hard, but can’t make a phone call at the end of the month because they are out of minutes, can’t afford to go to the doctor, or make home or vehicle repairs. I worry a lot about what happens next. I guess I’m just rambling. But I’m worried.