Economic History of the past 40 years of US in a graphic

The Times has this superb graphic that captures the contrasting tales of the US economy in the two halves of the post-war era.



(Click on the graphic to expand)

Robert Reich has an excellent assessment of this period, and his conclusion that sustainable economic growth is impossible with this type of concentration of wealth (and thereby political power) could not have been more accurate. The productivity boom of the past thirty years have resulted in disporportionately shared income gains, thereby concentrating wealth at the top in an unprecedented manner. Middle class consumption over the past forty years was sustained initially by the sharp increase in women working and later, more damagingly, by different forms of debt.

He laments that the Great Moderation and the economic opportunities presented during this period of stability was not used to shore up America's human resources development infrastructure and broaden and increase the quality of its social safety net. Instead, tax cuts and other enabling policies helped businesses retain and appropriate the overwhleming share of the windfall incomes.

Any visitor from outerspace, examining America's economic history of the past 40 years will readily agree with Robert Reich's assessment and conclude that American economic history of the period is a classic example of a market failure. As economic power gets concentrated, checks and balances get dismantled, and policy distortions are an inevitable concommitant.