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The Great Disparity

FIRE alarm

FIRE—financials, insurance, real estate—is the leading edge of the US economy, replacing the previous champ, manufacturing, in the 1970s. Hence, the advantage that Belmont, Massachusetts, has over Fishtown, Pennsylvania. FIRE is now our economic engine. It is speculative and prone to bubbles. We will probably go down with this economy. Manufacturing was better.

Howard Kaplan

Belmont, MA

Aug 10 2012 - 6:25pm

The Great Disparity

What you leave out

The reason that America prospered from 1947 to 1970 is that the rest of the world was devastated by WWII for that entire quarter-century. Japan and Germany did not begin competing with us in the global economy before 1970. The total lack of real global competition allowed all classes of Americans to rise. The claims that government social policy caused the boom are totally false, because those same government social policies remained in place until the late 1970s in the last part of the Carter administration. The argument that they worked from 1947 to 1970, but suddenly did not after 1970 isn’t logical.

In fact, the author ends his first paragraph in 1970 and begins his second paragraph in the early ’80s. Why would the author ignore the entire stagflation decade? I guess because it doesn’t fit well into the fabricated history of enlightened unions, the growth caused by raising the minimum wage, and the glory of blue-collar manufacturing.

The author then states that by the ’80s, “the labor movement began its downward spiral; macroeconomic policy was no longer geared to tight labor markets; and monetary policy, focused on lowering inflation above all else, became dominant.” It is no wonder that this statement comes with no explanation of what caused the downward spiral of labor in the 1970s, or the collapse of Keynesian economic policy in the 1970s, or that horrendous effects of double-digit inflation in the 1970s.

Labor began to crumble in the 1970s because the era of global competition began in 1970. The UAW and Steel Workers grew powerful and fat in the quarter-century after WWII ended. Nineteen seventy found them bloated and unable to compete with imports from Japan and Germany. The auto and steel corporations were hit with high taxation to pay for the deficits generated by Keynesian macroeconomic policy generated by the LBJ’s escalation of Vietnam and the massive spending of the misnamed Great Society.

The Great Society Keynesian macroeconomic social engineering of the 1970s spawned a tax code that made it impossible to update plant and equipment. US Steel bought up petroleum rights and ceased steel production. Globalization and crippling taxation of capital gains, dividends and protracted depreciation schedules made the industrial heartland into the Rust Belt long before the 1980s.

It’s impossible to understand the lessons of the past with giant gaps.

Dave Thomas

Los Angeles, CA

Jul 14 2012 - 12:12am

The Great Disparity

So what else is new

I started to read Mr. Wilson’s article, quickly became bored with its obvious tendentiousness, scanned it to the bottom, and realized that he’d failed to point out that this trend is universal and exists in every society and under every economic system now existing on the planet. This suggest that something far more profound is going on than the superficial critiques being offered in response to the “problem.” I would suggested a re-examination of the factors contributing to the outcomes of human efforts, and perhaps some sort of acceptance of their nature. Sadly, we humans are also prone to serious fits of envy, so there may be no solution to the conflict.

Ted Peters

Northville, MI

Jul 13 2012 - 8:28am