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GDP growth vs. the median wage: Sometimes a chart is worth 1,000 words

 
 
nimh
 
Reply Sun 19 Oct, 2008 04:01 pm
Quote:
Sometimes a chart is worth 1,000 words

Observationalism
October 19, 2008

This one comes via Kevin Drum at Mother Jones:

http://www.motherjones.com/kevin-drum/Blog_WSJ_Income_Inequality.gif

Yes - between the beginning of 2002 and the end of 2006, the United States GDP grew by over 15% - while the median wage flatlined, not going up by a single percent. In short, the country got ever richer - but the middle class saw nothing of that wealth.

Read on...
 
hawkeye10
 
  1  
Reply Sun 19 Oct, 2008 04:27 pm
@nimh,
exactly, the wealth went to the speculators for the most part. It went to pay the tens of millions for CEO's, went to the average comp on wall street (to include secretaries and mail room clerks) to be $1 million per year, and to assorted corporate indulgences as well.

It did not go to the people who produce things.
0 Replies
 
cicerone imposter
 
  1  
Reply Sun 19 Oct, 2008 04:28 pm
@nimh,
Most of the stats and reports I've seen recently confirms that by the chart.
That means even conservatives didn't see their income rise as our GDP grew.

Chief Executive Officers saw their salaries increase by over 125% since 2000, but conservatives think it's not fair to tax them at much higher rates.

There's something dramatically wrong with my thinking or their thinking, and I think it's their's. Maybe, it's because most conservative contributors on a2k are CEOs.
0 Replies
 
talk72000
 
  1  
Reply Sun 19 Oct, 2008 04:51 pm
Don't forget the huge tax cuts for the rich.
hawkeye10
 
  1  
Reply Sun 19 Oct, 2008 04:56 pm
@talk72000,
Quote:
Don't forget the huge tax cuts for the rich.


almost all of that money that did not go to the public sector to do good works was speculated.....for all intents and purposes that was GDP that went to the personal accounts of the speculators. It was more money to drive the markets into a frenzy, as if we needed any more.
0 Replies
 
littlek
 
  1  
Reply Sun 19 Oct, 2008 05:35 pm
@nimh,
I'm curious to see that chart extended back through the 90s.
hawkeye10
 
  1  
Reply Sun 19 Oct, 2008 05:39 pm
@littlek,
the split happened as the economy became leveraged, as we piled on the debt...Reagan onwards:
http://economistsview.typepad.com/economistsview/2008/09/gdp-per-capita.html

remember all the claims made by the "experts" during the nineties that Debt was either no problem or was good??? It was made by the very same people who profited from it, at the expense of the rest of us. We did not pay a lot then, but we will now, to fix all of the damage these speculators have done to the market system. Then we get to pay the actual debt they ran up plus the cost of fixing the problem, oh JOY!
cicerone imposter
 
  1  
Reply Sun 19 Oct, 2008 05:40 pm
@littlek,
This one goes back further:

http://img.photobucket.com/albums/v97/imposter222/slowincomegrowth-figure1-version1.png

During the Clinton years, it looks like wages kept up with GDP.
0 Replies
 
nimh
 
  1  
Reply Sun 19 Oct, 2008 05:48 pm
@hawkeye10,
hawkeye10 wrote:

the split happened as the economy became leveraged, as we piled on the debt...Reagan onwards:
http://economistsview.typepad.com/economistsview/2008/09/gdp-per-capita.html

Oh, good link! Thanks, Hawkeye!

Let's bring the chart from there over here:

http://lanekenworthy.files.wordpress.com/2008/09/slowincomegrowth-figure1-version1.png
hawkeye10
 
  1  
Reply Sun 19 Oct, 2008 05:54 pm
@nimh,
I don't know how to do the screen pic thing...But CI and now you can Embarrassed
nimh
 
  1  
Reply Sun 19 Oct, 2008 05:59 pm
@nimh,
Reflect on this for a sec... the average American's income (median income) doubled between 1948 and 1973 - so within one generation. Then between 1973 and now, it went up by 1.25 times.

How many times do you see graphs for median income? When people want to illustrate how a country is doing economically, the first reach is for GDP numbers. And a graph of GDP growth shows America doing steadily better ever since WW2, at a consistently pace. But from 1978 or so onwards, the regular middle-class American all but stopped benefiting. While GDP kept growing, he was excluded from its fruits.

In fact, looking at this graph, you see that the median income did not increase at all between around 1978 and around 1993. Much like it's stagnated between 2000 and now. That increase by 1.25 times that did occur almost entirely took place in the mid- and late nineties.

Coincidence that it was the Reagan, Bush Sr and Bush Jr administrations that was middle-class income stagnate even as GDP kept growing? Or the consequence of Reaganomics and its offspring?
cicerone imposter
 
  1  
Reply Sun 19 Oct, 2008 06:01 pm
@hawkeye10,
hawkeye, All you need to do is copy and pastes the link by clicking onto the Show BB Code Editor above the reply box. Click on URL, and paste your link between the [URL] (here) [/URL]. It's the same process for posting pictures, except you'll use the Img box.

You copy the link box that shows up as "http://xxxxxxx."
nimh
 
  1  
Reply Sun 19 Oct, 2008 06:03 pm
@hawkeye10,
Right-click on the picture you want to copy, and choose "Copy image location" -- or if you use IE rather than Firefox, click "Properties" and then select and copy the Address (URL) field. Go to the A2K post you're writing, click the "Img" button and paste in the URL you just copied.
0 Replies
 
nimh
 
  1  
Reply Sun 19 Oct, 2008 06:04 pm
@cicerone imposter,
Wow, I keep being one step behind cicerone! Razz
0 Replies
 
squinney
 
  1  
Reply Sun 19 Oct, 2008 06:08 pm
What you all seem to be missing is that this is exactly the way it is supposed to work according to Republicans. The GDP line HAS to get above us so that it can trickle down.

Get your umbrella's ready!

cicerone imposter
 
  1  
Reply Sun 19 Oct, 2008 06:15 pm
@squinney,
I also remember when Bush promised the creation of more jobs with his tax cuts a few years ago. We're still waiting. Fact: Job creation under Bush is the worst since the Great Depression. Some pundits are fearful of what they see of our economy today and the downward spiral of US wealth. Many have already lost their jobs and homes, and many others are struggling to pay for food and fuel.

Why conservatives believe in the republican doctrine is one of the greatest mystery of our day.
Blickers
 
  1  
Reply Sun 19 Oct, 2008 06:21 pm
@nimh,
With all these charts, everybody is missing something HUGE.

The US is growing. There are more people every year, more people working every year, more people of working age every year, more people buying goods and services every year. So to stand still is not normal. Growth is normal.

WWII ended in 1945, so the economy did not normalize until 1950 or so.

Average Annual Growth From 1950 - 2000: 3.4%

Averate Annual Growth From 2001 - Present: 2.3%

The normal rate of GDP growth, in chained 2000 dollars to adjust for inflation, has declined by a third since Bush took office. Ignore the cumulative effects of that for 7.5 years like everyone has been doing and what do we get?

Pretty much what you are seeing now.

I'll bet this is the first time you have seen this statistic. The "biased liberal" press has allowed the all the so-called analysts on the news and financial channels to never mention this at all.

Think this might be important?
hawkeye10
 
  1  
Reply Sun 19 Oct, 2008 06:24 pm
@cicerone imposter,
the Reagan doctrine has not only been proven wrong, it has been proven to be an unmitigated disaster for America. This is going to take time to sink in to the public consciousness CI. Very few understand yet that a fraud has been perpetrated, and don't yet realize how much has been stolen.
0 Replies
 
hawkeye10
 
  1  
Reply Sun 19 Oct, 2008 06:32 pm
@Blickers,
you are not paying attention....much of that which was counted is now gone, many trillions of dollars that were on the books are now off the books with much more to vanish in the coming couple of years...POOF!

Also, the way those trillions got to be counted at all resulted in an increase of the stratification between the classes, a problem that makes our society weaker. We will eventually need to deal with this problem, there will in short order be political hell to pay as those who have been stolen from realize what was done to them, realize that the experts and public servants sold them out. The next crisis after the financial one will be a social crisis, and then after that we will have a political crisis. Buckle, it is going to be a bumpy ride.
0 Replies
 
cicerone imposter
 
  1  
Reply Sun 19 Oct, 2008 06:35 pm
@Blickers,
What you say is true; our growth has been attained because our immigration has grown during those same periods. The advantage our country has over other developed countries is the simple fact that our demographics has a larger spread of youth vs seniors, but that will change when the baby-boomers begin to retire in a few years. We have more younger generation than other countries like Germany and Japan to grow our economy, but it'll depend on maintaining our immigration of young families.

Another major issue about the aging demographics is that the shift of workers to retirement will put a heavier burden on those working, so that the ratio of workers to retirees will decrease. This is one of the important issues for our government to correct soon.
 

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