Answea the question

Soc 305/American Society Week 4 Notes Economic History, Banking and the Attack on the Affirmative State

Chapter 9, 10 and pages 459-468 Quick Note: I am really enjoying your news articles and posts. You all are making some great points and I think we are all looking at some really important and interesting things going on in our country! Reminder that you have until Wed the week after to post additional comments for extra credit…

Notes Intro: This week, I want you to be exposed to the actual economic record in our recent history (Chapter 10 pages 216-228), how the power of the government in terms of regulation has actually been decreasing as opposed to what we often hear (pages 459- 468), explain some about how the world of finance works and offer one important example of the importance of the government in regulating markets (Chapter 9 & the 2008 recession which is discussed in the subject of the film this week), and then a bit about how corporations could be better (in terms of taking care of people/environment/economy) and some motivations for that outside of regulation (pages 228-242). These notes are brief, adding a few examples and context. The Economic Record/High Road Capitalism: p. 216-228 The first half of this chapter contains a lot of economic history that helps us know where things have been realistically and the trends over this centrury.

Here is a little additional info/summary on that section:

As is stated in the text, the 70s ushered in very important changes in our economy and lives. Please pay attention to the charts and numbers related to this change your text. When you look at income numbers, it is important to focus on charts that show changes over the years in consistent dollars. That means that in the chart you are looking at, the dollar amounts from all years have been converted to one year’s value. This number makes the years comparable, as you don’t have to wonder how much a dollar was worth 50 years ago in order to mentally compare things.

In reality, income has stalled for the majority of Americans, yet the cost of goods hasn’t

stayed consistent with inflation. Therefore, most people make almost the same in

consistent dollars as in 1970, but the price of goods has risen much more than inflation.

Here’s a meme that went around on Facebook that illustrates:

Anyway, to make sure you get the inference in the text, stagnation of wages means we are not making more money, when adjusted for inflation, than we did then.

The book ends at 2009, so here is a link to PEW research that tracks to 2018. In this, the reals average wage changed from $20.27 (1964) to $22.65 (2018). And that is for everyone..check this out:

So, the fact is that if you take out the top 20% of all income earners in our country, the rest of us 80% have not seen wages and compensation grow since the mid-1970s. If everything we have to pay for had stayed the same in price (adjusted for inflation as well), then this wouldn’t be an issue necessarily. But, they have not. The prices of goods and the number of necessities has grown. Think about one example, computers. Obviously, a computer isn’t a necessity like food or shelter, but take a moment to think about all of the effects of not having a computer. Consider all of the extra trips to find

items/information and the lack of information you would have. Also, a child raised without a computer in his/her house these days would have a very hard time finding success in the work world I imagine. So, this very expensive machine, I would argue, is very close to a necessity. An item like a computer would have been something the only very rich had 40 years ago.

Here are some good info/charts on household and family income:

https://www.thebalance.com/what-is-average-income-in-usa-family-household-history- 3306189

But, the question again is if you think we need more money. Some things are more expensive and some are cheaper. For instance, a gallon of milk was $1.15 in 1970, which would be $7.38 now, so I guess we are getting a deal on that (that shows the “advantage” of mass production I guess). On the other hand I found that the average new car was $3600 in 1970, which is $23,400 today. The actual average new car price was about $36,700 in 2019. I encourage you to check this stuff out-I find it really interesting☺

I thought some of you might be interested in further researching some of these aspects

of cost, so I am going to give you a few links here where you can do that.

Here’s one inflation calculator you can use. You just put in a dollar amount, and then

find out the conversion to today in real dollars. http://www.westegg.com/inflation/

Here are 2 links where you can look at the prices of some items over time:

Here you can look up the prices of things in various years (the first link takes you to 1970, but you can get to other years). What you can do is look up the price of something in 1970, then put it in the above inflation calculator to find out what the price would be in today’s dollars.

As an example, on this page it says a gallon of gas was .36 in 1970. When I put that into the inflation calculator, .36 is 2.37 in today’s dollars. So, gas has obviously gone up more than inflation.

http://www.1970sflashback.com/1970/economy.asp

This page has a bunch of information and links about food prices over time…… http://www.foodtimeline.org/foodfaq5.html

The American Dream, the idea that we can all move up the income ladder over our lives and over the generations of our family, was based on the economy that existed pre- 1970. If you look at the numbers, the middle class in particular and most of society overall saw steady gains in income over the years between WW2 and the mid-1970s. Then, as you move beyond those years only the wealthier Americans see that growth continue.

Productivity:

Another thing discussed in this section is productivity, and this is important as productivity has taken a huge turn. Productivity sounds like a positive thing, but for whom? We continue to be more and more productive, which is being able to squeeze out more production in smaller amounts of time. In its simplest form, it is an increase in the number of widgets made in an hour, without increasing what is spent on making them. As the text states, we continue to get more productive, but we are no longer getting more wages for it. Instead, wages stay the same and the owners of production get more profits for increased productivity. I think it is an important concept to understand in today’s world that when the economists report “increased productivity”, that can be translated into more profits for companies but nothing positive for workers. One thing to think about here is that part of what has happened is we’ve lost jobs to computers and machines. These are highly productive and not nearly as expensive as workers. Technology explains much of the growth in productivity in recent years.

Attack on the Affirmative State and Finance:

Moving forward in the text, these pages discuss many of the ways in which out government had lost power through targeted attacks. This was directly related to the rise in thinking that combined neo-liberalism and conservatism. The books explains this well on pages 459-468. This topic encourages us to think about the importance of the state/government in protecting us, and how private industry has affected the decisions and health/strength of the government. There has been a strong theme of attacking the government for not being effective in recent decades, and sometimes that isn’t exactly fair! I want to generally point out that players in the government can affect our opinions of particular government agencies by enabling them (or not) to work effectively. If an agency cannot do its job, then we are likely to have a negative opinion of that agency, and that might be less about their ability to function well, and more about being funded to do so. As one example, the IRS budget and staff has been cut a lot in recent years. Due to that, tax law enforcement and the ability to study and make effective changes to the tax code are reduced. This causes unfairness and frustration in our citizenry, and then we are apt to be upset at the government. So, that turns into a catch 22. Do you want to spend the money to have an effective IRS that would be able to, in the long run, make taxes more fair and effective, or do you just want to cut it? That may come down to whether each of us believes that the government can be effective I guess. Another great example is the EPA. The EPA has been cut a lot, leading to less enforcement of environmental laws. So then, when a company pollutes and it isn’t caught, that damage turns into something we have to pay for, rather than the company that did it. If we can’t catch them and impose penalties to pay for clean up or make them pay for it, then we spend the money to do so. The point is that not funding the EPA is going to cost us in the long run. Again, though, there has been such a strong push by (generally) more conservative and corporate interests to assert the notion that environmental controls are bad for business and ineffective.

Think about the recent cuts to the post office. It doesn’t matter whether or not it is efficient or makes money/costs money, it is absolutely essential for the functioning of our democracy. We need to have it and pay for it. I encourage you to think about where you think the balance should be in terms of government power and regulation, and the power of corporations and individuals. As well, think about how we have got to fund the state if we want it to do its job, so how should that happen? Finance/The Financial Crisis of 2008

I thought it would be really useful for many of you to read over the basic concepts and workings of the banks and finance in our society. For those of us who are not studying economics or have a penchant for following the stock market and such, these things are often a mystery.

On p. 191-200, the topic turns to the US system and discusses the financialization of the US economy. This is an important issue to be aware of, and the center focus should be that in the current economy, we have shifted from making profits directly from the sales of goods and services, to a dependence on making money through financial transactions. In other words, more money is being made by money being lent and borrowed, in the form of interests charged, etc…

Much of this change has been enabled by deregulation of the market, which is explained in the text. I wanted you to get an overview of those issues. The chapter goes on to discuss who this all came to a head in the 2008 financial crisis and is the topic of the film this week.

So, take in all of this history and explanation of how the economic market has changed over the years. We will extend this discussion to social class and poverty next week, looking more at the effect this has on people’s lives and their ability to thrive in our society. Lastly, read the last part of chapter 10, 228-242. This is meant to close out our discussion of markets, capitalism, and economy with some good ideas about how things could be improved. We will be moving on from these topics now (which might make some of you sigh in relief). We will be looking more closely at democracy now for a couple of weeks, then into the more cultural aspects of US society from there.