Nice depiction of a system in decline

The implications of this chart are staggering....

This might be one:  

There is a strong line of reasoning that the USSR collapsed when the nomenklatura (bureaucratic elites, the most important people in a government run economy) decided to work against the state.  In short, the non-financial benefits of being in the bureaucracy were in decline as attempts were made to reform the Soviet system.  So, when a window of opportunity arrived (the attempt to privatize sectors of the economy to improve economic performance), they jumped at it.  A trickle of privatization turned into a flood as the nomenklatura looted the state of anything/everything of value. 

I think that this is a more plausible reason for the decline of the USSR than anything else that I've heard.

How the mechanism that collapsed the USSR (per the above) applies to the US has yet to be seen.  But, as the chart above shows us, something very, very wrong is in motion.   It goes beyond Republican/Democrat, conservative/liberal, public/private, and all of the common methods of division or debate.  It's systemic.  

Comments

[James Bowery]

The implications are significantly influenced by changes in the labor force over the period. For instance, the entry of young boomer men followed by boomer women was an early structural change. Later, immigration -- much of it illegal -- was a structural change.

Then there are changes in the real costs of middle class reproduction as described by Elizabeth Warren -- changes not reflected in CPI or inflation adjustments.

[slapout9]

Hi John, James K. Galbraith has been studing this for some time, the link below goes to his website on his Inequality papers, hope you like it. A lot papers to support you theory as fact. Slap

http://utip.gov.utexas.edu/papers.html

[dmarti]

In 1978, the US Supreme Court ruled that credit cards from out of state banks aren't subject to state usury laws: http://en.wikipedia.org/wiki/Marquette_Nat._Bank_of_Minneapolis_v._First_of_Omaha_Service_Corp.

With a hunting license on borrowers, the "nomenklatura" of the USA could stop paying people for increased productivity, and just _lend_ the money.

Adam Smith on why usury laws are necessary: http://www.nakedcapitalism.com/2009/04/adam-smith-warned-against-subprime.html

[John Robb]

Thanks guys.

In the Soviet system the storehouse of wealth to be plundered was the government. It ran the economy and owned everything.

In the US consumer economy, the storehouse of wealth is the middle class. It is the object to be plundered, the golden goose to be sundered.

Basically, as a society, we've "green lighted" looting. However, it won't just start and stop with the players in the financial system. This message was broadcast to players across the board. It's open season now.

[Max Asare]

What about Rifkin's theory that rising productivity causes jobs to be lost, as workers are replaced by computers and machines, but the new high tech jobs don't create as many as were destroyed? It has an Occam's Razor simplicity to it, and is somewhat obvious, which is why most economists will never consider it.

Krugman wrote about this in "Pop Internationalism":

http://books.google.com/books?id=17YrneuxiTgC&pg=PA40&lpg=PA41&dq=#v=onepage&q=&f=false

"shrinkage [in employment] is the result of high productivity growth"

"no one can say with certainty what has reduced demand for workers...technological change, especially increased use of computers, is a likely candidate..."

"employment is falling because companies are replacing workers with machines, and making more efficient use of those they retain"

I'm sure there are other factors too, but if you're looking for a systemic source, it doesn't get more systemic than this. Especially in the manufacturing sector.

[Rob Paterson]

Hi John
Like to use this for my pub media site - can you give me the source
Thanks Rob

[oldbogus]

One way productivity goes up, according to the US Gummint, is by offshoring! The company shows the same volume but with less labor costs since those furriners don't count as labor. It is like magic!

[www.facebook.com/profile.php?id=1032552690]

Notice the correlation breaks just after Nixon closed the gold window, and credit expansion went exponential? Coincidence? I think not.