Whether you are a have looking out or a have not looking in, it is difficult to dispute that over the past several decades a major portion of the nations wealth is accumulating to a smaller and smaller number of people. The proportion going to the wage and salary earner has leveled-off while the wealthy become richer and richer.
The chart to the left from a Slate article by Matthew Yglesias in his MoneyBox blog, depicts the phenomenon of the growth in Gross Domestic Product from 1945 to 2007, plotted against the rise in median family income over the past number of years. As is commonly known, Gross Domestic Product, usually referred to by the acronym GDP, is the sum of all the monies generated by the production of goods and services within the American economy.
It should be intuitive to readers that any deviation between the growth of median family income and the rise or fall of GDP is the definition of the transfer of wealth between labor and corporations. In other words, if the Gross Domestic Product is increasing but median family income remains static or is falling (business describes this as a productivity improvement) then wealth is being transferred upward to the corporation. Conversely, if wages remain constant or increase as GDP levels-off or declines, wealth is transferred to the workers. Workers are being paid more for their services,
As is clearly shown, the deviation between GDP and median family wages traveled in synchronization from 1945 to the recession of the early 1980's. Since that time the gap between the two has continued to grow wider and wider. Wealth is on an accelerating path of transfer from the average individual to the corporation and the wealthy few.
Is the transfer of wealth from the many to the few a good or bad thing? That, of course, depends on your perspective ...whether you are one of the few or one of the many.
In our capitalistic society much is made of the freedom of opportunity. It is said that 'anyone can make it if they try'. While that is true in theory, circumstances lessen the opportunity for many based most prominently on their heritage, the environment in which they are born into. A child born into wealth has a plethora of opportunity not available to a child born into poverty. Is it possible for the poor to overcome the challenges of environment and heritage and succeed in life? As Sarah Palin would say, "you betcha." Many have done so. Many will continue to do so in the future. Certainly, capitalism offers the best hope of any previously discovered of societal methods.
Over the past several years, the world has changed. Globalization of the means of production, the customer base, corporation ownership and other factors has shifted the corporation and labor relationship. Companies are able to increase productivity by moving labor intensive work offshore to low wage countries. Products and services that once were the exclusive domain of American producers and American labor are now routinely built and delivered from outside our borders. The car you drive is as likely to be built in Japan, South Korea, Mexico and soon to be online China and India as it is to be built by Detroit.
The support center that you call for help on your computer problems is almost always in India. The software package, from a major computer company, that I am using to compose this blog content is now headquartered in Bejing. Not so long ago, all of its developers were located in Texas. The same company is reaping the benefits of its production, yet the wages being earned for its production are now paid at a much lower rate and to Chinese nationals, not Americans. Our GDP captures the revenue of this American corporation, but the labor payment is to workers in China. Our median family income drops as the former producers and developers drop out of the labor force, move to less well paying jobs, etc.
Our economy is changing. We are in recovery as demonstrated by improvements in our GDP. Now the country must find a way to improve the financial status of our work force. Ways must be found to provide well paying jobs for Americans else we will continue to see the transfer of wealth from the populace to the corporations. People who run the corporations will be well compensated because they will have accomplished the objective of increasing the wealth of their stockholders.
The gap in remuneration between the workers of America and the wealth of corporations will continue to widen. America must decide what path it will take. Will it be a country that provides equal opportunity for all or will it be a country that increasingly is stratified into the haves and the have not's? You decide.
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