Feb. 27th, 2011

jim_p: (Default)
I've been watching events unfold in Wisconsin with some interest... both the events themselves and the reaction thereto. This has gotten me thinking about the larger issue of the state of the current economy, how we got this way, and where we go from here.

Growing up in the 70s, I remember frequent news stories about strikes and labor actions. My father had no patience with this... "Don't you see how good they've got it already? They're already pulling down $20/hour with mandatory breaks and vacations and stuff, why are they complaining?" Underneath it all was a resentment that somehow unions were using strongarm tactics to get more than "their fair share", whatever that's supposed to mean.

So what IS a "fair share" of the economy for an individual or family, anyway, and how do we achieve it? Perhaps unions were grabbing for more than their "fair share", but ever since Reagan fired the air traffic controllers the middle class share of the economy has been shrinking. Mother Jones has some interesting infographics on income inequality trends. In constant dollars, middle class income has stayed flat, while income at the top has exploded. In other words, pretty much ALL of the economic growth of the last thirty years has gone to the folks at the top, while the rest of us struggle. (In fact, a case could be made that effective income has DROPPED, since working-class folks have had to contribute increasing amounts to health insurance and retirement funds, in addition to the explosion of "nuisance fees" in both the private and public sectors).

So: along with the rise in unions came a rise in the standard of living for working-class Americans, and with their demise came a commensurate drop. And yet, in the public mind, unions are a Bad Thing. Private-sector unions are the reason jobs are being outsourced to China, and public-sector unions are the reason we're being taxed to death, right?

So: if the "free market" is siphoning all the wealth to the top of the food chain, and unions serve only to suck the life blood out of an economy, is there some elegant "third way" that can distribute the wealth such that all of society benefits? So far all I can come up with are fairly blunt-instrument approaches: either armed revolution or confiscatory taxation and, yes, redistribution.

Is there something we're missing, or are we screwed?

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