In America, “The Great Prosperity” is roughly 1947-1977. “The Great Regression” is 1981 – currently.
What marks each?
Regarding “The Great Prosperity:”
It’s important to note that the Great Prosperity is the only time in U.S. history that the capitalist economic system produced significant income growth for all income levels. It was in fact an era of shared prosperity. This has not been the case since Friedman’s philosophy became widely adopted.
Friedman’s (Milton) philosophy took the old theory — corporations have duties not just to shareholders, but also to society and their workers — and said “Naw.”
Thus begot the “key stakeholders” problem of most jobs, whereby all any of us do all day is try to please the eight-ten people with authority. It’s also why the concept of “employee engagement” is largely a joke.
So what’s The Great Regression?
That’s what much of America is feeling now. Causes? Here’s an attempt:
The great regression has been blamed on globalisation, with staff in the advanced economies facing increased competition from much less well paid workers from the developing world.[1] Professor Robert Reich however considers the main cause to be political, with the rich better able to influence politics.[2] The great regression has largely coincided with decreasing bargaining power for workers, which itself partly results from the falling influence of unions. Especially since 2013, the adverse economic trends have been increasingly blamed on technological unemployment, and with recently increased uptake of robots and automation in the emerging economies, there are concerns that workers there too may soon suffer from the great regression.[1][4] Since 1980, under Reaganomics, there has been a decline of the progressive income tax leading to a rise in inequality.[14]
You can learn more in Reich’s post “The Truth About The American Economy.”
Economic stagnation and pay transparency
Because of the firm-size wage effect, it’s actually not good to work at big companies anymore. Your salary will be kept down, essentially.
You also need to understand this:
He cites the seminal research by economist William Lazonick, who studied S&P 500 companies from 2003 to 2012 and discovered that they routinely spend 54% of their earnings buying back their own stock (reducing the number of outstanding shares and driving up share prices) and 37% of their earnings on dividends — both of which benefit shareholders. That leaves just 9% of earnings for investment in their business and their people.
And finally, pay transparency — which would benefit minorities and women — is a farce at most companies.
So how do you make more money in the modern age?
A few ideas:
- Understand how salary is calculated. Most don’t know this, and that gives all the power back to the company.
- Learn how to negotiate.
- Job-hop.
- Get a job where you help other people make more money (finance, consulting). Those are the jobs that will never cease to earn well.
- Do your own thing.
- Breathlessly tell everyone about some product you created that’s really just a carbon copy of 13 other products, but convince some company to buy it anyway.
- Weep openly in a supermarket until someone hands you a briefcase of cash.
That’s about all I got.
While the unions argument is a little over-played, the fact is that The Great Prosperity likely isn’t coming back. Companies still largely compete on cost, and automation + globalization + stakeholder obsession = people will gradually have less and less of a role. We’ve already seen this at the micro level, and we’ll soon see it at the macro level.
Take all this together and it’s why only about 15% of the global full-time workforce reports caring about their job. It’s also why 95% of people can’t identify the strategy of where they work — because the strategy, if even set, is only communicated to “stakeholders.” There’s just some assumption that the employees will get it via osmosis.
It can all make you wonder: what the fuck is even happening at most companies?
I’m grappling with this subject too Ted. In essence I believe we must all become much more financially savvy than any previous generation. Essentially beating corporations and institutions at their own game. What this involves is for example, diversifying our income streams, leveraging our assets, building bigger personal networks, keeping borrowing low, and practicing tax avoidance (NOT evasion). Granted I spent much of my life in financial organisations, but none of this is beyond the comprehension of a reasonably educated person.