Hedrick Smith, a Pultizer Prize–winning reporter has written a new book entitled "Who Stole the American Dream" (This is not a book review) This morning I listened to about a 20 minute interview with him about the book.
http://www.kuow.org/program.php?id=27999 (Starts about minute 32)
He argues that Corporate America engineered a take over of the reigns of power in the 1970's that has resulted in the death of the American Dream. He says some pretty amazing sorts of things. His thesis is that in 1971 a corporate attorney named Lewis Powell (later supreme court justices) wrote a memorandum that became a manifesto for Business in which he argued that they needed to take over Washington. As a result of that big business came after government and fundamentally changed the way government worked.
Some of his points... (This first one really struck me)
Between 1945 and 1973 productivity in America went up 97% and working man wages went up 95%.
Between 1973 and 2011 productivity went up 80% and working man wages went up 10%.
He calls this Wedge Economics - there was a wedge driven between working people's productivity and their compensation.
Some other pullet points.
In 1971 there were 175 Lobbying Offices. 10 years later there were 2400+
2000 different trade associations
8,000 P.R. Firms
Today Business lobbyiests outnumber members of congress 130:1
He argues that 1978 was the key year when Big business really got it's way. He points to four key legislative movements.
401k plans -- Shifting responsiblity for retirement to the workers and off the corporation.
Bankruptcy Law - Allowing management to stay in place rather than a referee. The idea being that a Ref spread the pain around, Management protects itself and puts the pain on workers. Also this opened the door to renegotiating labor contract via bankruptcy.
Tax Code - Lowering Capital Gains tax from 48% to 28% (I think it is 15% now and folks are talking like it should be eliminated) This led to shifting compensation to stock options and avoiding taxation.
Interest Rate cap law. Used to be state usury laws capped max interest rates. The federal law overrides these allowing for much higher rates making it profitable to lend to sub prime borrowers.
Interesting stuff - Wish I had the time to read the book.
What do you think?