Great Regression (inequality)
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The Great Regression refers to worsening economic conditions affecting lower earning sections of the population in the United States, Western Europe and other advanced economies starting around 1981. These deteriorating conditions include rising inequality; and falling or stagnating real wages, pensions, unemployment insurance, and welfare benefits. The decline in these conditions has been by no means uniform. Specific trends vary depending on the metric being tracked, the country, and which specific demographic is being examined. For most advanced economies, the worsening economic conditions affecting the less well off accelerated sharply after the late-2000s recession.[1][2]
The Great Regression contrasts with the "Great Prosperity" or Golden Age of Capitalism, where from the late 1940s to mid 1970s, economic growth delivered benefits which were broadly shared across the earnings spectrums, with inequality falling as the poorest sections of society increased their incomes at a faster rate than the richest.[1][2]
Examples
[edit]Some of the trends making up the great regression pre-date 1981. Such as stagnating wages for production and non-supervisory workers in the U.S. private sector; real wages for these workers peaked in 1973. Or the divergence in increases of productivity and pay for such workers: these two factors tended to increase in "lock-step" until about 1973, but then diverged sharply, with productivity increasing massively over the following decades, while pay stagnated. The breakdown of Bowley's law, the apparently near fixed proportion of economic output going to workers, is another enduring change which began around the mid 1970s.[3]
Causes
[edit]Robert Reich considers the main cause to be political, with the rich better able to influence politics.[1] The great regression has largely coincided with decreasing bargaining power for workers, which itself partly results from the falling influence of unions. Especially since 2013, the adverse economic trends have been increasingly blamed on technological unemployment, and with recently increased uptake of robots and automation in the emerging economies, there are concerns that workers there too may soon suffer from the great regression.[3] Since 1980 in the United States, under Reaganomics, there has been a decline of the progressive income tax (with major federal tax cut legislation being enacted in 1981, 2001, and 2017) leading to a rise in inequality.[4]
See also
[edit]
- 2000s commodities boom
- 2007–2008 financial crisis
- Great Recession
- Great Recession in the United States
- The Great Stagnation
- Late capitalism
- Savings and loan crisis
- Share repurchase
- Stock market crash
References
[edit]- ^ a b c Robert B. Reich (September 3, 2011). "The Limping Middle Class". The New York Times. Retrieved September 6, 2011.
During periods when the very rich took home a larger proportion—as between 1918 and 1933, and in the Great Regression from 1981 to the present day—growth slowed, median wages stagnated and we suffered giant downturns. ...
- ^ a b Paul Taylor (February 7, 2011). "After the Great Recession, the Great Regression". The New York Times. Reuters. Retrieved September 6, 2011.
Wages, pensions, unemployment insurance, welfare benefits and collective bargaining are under attack in many countries as governments struggle to reduce debts swollen partly by the cost of rescuing banks during the global financial crisis.
- ^ a b Ford, Martin (2015). The Rise of the Robots: Technology and the Threat of Mass Unemployment. London: One World. pp. passim, see esp. 34–41. ISBN 9781780747491. OCLC 920676465.
- ^ Pizzigati, Sam; Collins, Chuck (February 25, 2013) [February 6, 2013 (online; later date is that of the magazine's issue)]. "The Great Regression". The Nation. Retrieved October 12, 2024.