The root of inequality is income. For the vast majority of people, income has been stagnant since Reagan came to power in the 1980s. While GDP and GDP per capita has ballooned since then, the median wage for normal people has underperformed. In the last 40 years, the actual worth of people’s wages have risen only 9 per cent. Contrast that to the period between the great depression and and about 1980 when median income rose 200 per cent.
Yes, that’s right – in the age of eye-watering taxation of the rich, most people’s lives improved year on year. Good paying jobs grew steadily, and normal people saw their lives improve immeasurably. Since the Reagan-Thatcher consensus took root, that improvement stopped dead in its tracks, and now we’re at the tipping point where wages are not only stagnant, but also going backwards. Good paying jobs are rare; minimum wage jobs are the kinds of jobs which are created. And even sectors who previously enjoyed good pay are now slipping into minimum wage territory.
This has profound effects on the economy. One can categorise right-wing economics as ‘quitting the high wage job to take a minimum wage job, in order to become wealthier”. A healthy economy depend on you having enough to go out and buy nice shoes or fridges or high quality groceries. It never did depend on the ‘entrepreneurs’ and the ‘risk takers’. It depends on you handing over your cash to a local shop.
That local shop then pays consulting firms of various kinds, or specialised mechanical or electrical firms. Got to keep those pipes clean in that restaurant of yours, and the electrician needs to maintain your restaurant ovens. And the accountants need small businesses. And so on. If the shops that you hand your money to go under, then so does the consultancies and skill based contractors. If what you end up with is a Walmart to sell you cheap, minimum quality stuff and groceries, then the money that would circulate in the economy and prop up employment in electrical companies, accountancies, law firms, and local shops will be vacuumed out of your local economy and sent to the financial centres to be speculated with.
The only jobs left in your community are minimum wage jobs at WalMart. And minimum wage jobs are tax sponges. The people that get them need different kinds of help from the government. But then again, you’ll soon enough have liberals, liberarians, and right-wingers who with serious faces will claim that the Walmarts of the world needs more help, and that the minimum wage worker needs less. That’s what the “There Is No Alternative” to current economics have said for forty years, and Democrats, Republicans, Tories, and the UK Labour Party have all chimed in to agree with it. And here we are.