The Trillion Dollare Money Pump for the 1%

[hfojvt]

33. so what happened in the mid 1970s?

The article points to a lot of things but not very many policies.

I usually point to Reaganomics. The top tax rate got cut from 70% to just 28%.

That takes away a big dis-incentive to steal.

Stealing may be a bad word becuase the "theft" is typically "perfectly legal." It's more a matter of power than it is of law. Those at the top have the power to reward themselves with extra money.

When the top tax rate is 70%, they have LESS incentive to do so. Why use your power to get another $5 million if the government is just gonna take $3.5 milliion of it away from you? (and the state government will also take away another $300,000 (at least)).

But now that I think of it more, I think I know what happened in the mid 1970s - healthcare privatization.

Back in the pre-Nixon days most hospitals were non-profits. That changed in the mid-1970s, didn't it? Put another line on that graph and look at what health-care costs did in those years.

Because in many jobs, people are not JUST paid wages. They are paid wages PLUS benefits. As the benefits become more and more expensive (because of health insurance costs) that puts a squeeze on wages.

But another thing that happened in the mid 1970s was inflation. Remember Ford with his "WIN" button - for Whip Inflation Now. In 1970 the minimum wage was $1.6 which was $9.12 in 2011 dollars. It did not get raised again until 1974, by 1973 it had fallen to $7.97 an hour. It got raised to $2 in 1974, then $2.10 in 1975 and $2.30 in 1976, $2.65 in 1978, $2.90 in 1979, $3.10 in 1980 and $3.35 in 1981 (at which point Reagan and Senate Republicans pretty much nailed it to the ground).

But even by 1981, with a 100% increase from 1970, the 2011 value of the minimum wage in 1981 had FALLEN to just $8.15 an hour from the $9.12 an hour it was in 1970.

By the time it got to 1990, before George HW Bush could be prevailed upon to allow it to be raised again, the minimum wage had fallen to just $5.98 in 2011 dollars in 1989. A lot of other wages are tied to the minimum wage.

Even after it was raised to $7.25 in 2009, it has not kept up with inflation. It should be $7.90 today if it had almost 109% of what it is now.