Posts
60
Years of American Economic History, Told in 1 Graph
23
August, 2011
In
the 60 years after World War II, the United States built the world's
greatest middle class economy, then unbuilt it. And if you want a
single snapshot that captures the broad sweep of that transformation,
you could do much worse than this graph from a new Pew report, which
tracks how average family incomes have changed at each rung of the
economic ladder from 1950 through 2010.
Here's
the arc it captures: In the immediate postwar period, America's rapid
growth favored the middle and lower classes. The poorest fifth of all
households, in fact, fared best. Then, in the 1970s, amid two oil
crises and awful inflation, things ground to a halt. The country
backed off the postwar, center-left consensus -- captured by Richard
Nixon's comment that "we're all Keynesians now" -- and
tried Reaganism instead. We cut taxes. Technology and competition
from abroad started whittling away at blue collar jobs and pay. The
stock market took off. And so when growth returned, it favored the
investment class -- the top 20 percent, and especially the top 5
percent (and, though it's not on this chart, the top 1 percent more
than anybody).
And
then it all fell apart. The aughts were a lost decade for families,
and it's not clear how much better they'll fare in the next.
None
of this is new history.But it's helpful to have a crisp layout of
what's changed.
