Dear Mr. Krugman,
If only you would read my book Essays for a Better World by Frank Shell. Available on Amazon as an ebook or paperback.
Then you would see there is hope for the US economy. But only if companies allow (even encourage) their employees to establish their own collaborative businesses.
PK writes: "A good guess, surely, is that the whole story is connected with the rise of modern movement conservatism, which brought with it unequalizing economic policies, retreat from antitrust, financial deregulation, and more."
I would like to object.
The assumption of modern conservatism as the cause of economic malaise for working people is not "a good guess, surely," - it's just a guess. The extent to which presidential political leanings and political party platforms translate into tangible economic results - and the time lag before results are evident is unclear at best. We must question Krugman's assumption.
There are a lot of elements to the economic equation, some of which are not fully understood. And picking the right time period for analysis is tricky. I'm unwilling to give Trump credit for the past 17 months of job creation and a strong economy. There are too many other moving parts involved other than the legislation proposed or favored by Trump and Senate/House Republicans. Similarly, there are many big (huge?) factors beyond Reagan and the Bushes that have impacted the US economy in the last 3 1/2 decades.
The presentation of data in this piece suggests more precision in this analysis than really exists.
Think about this for a moment: most of Reagan's 80s policies would place him squarely to the left of HRC in 2016.
Our economic malaise is multifactorial and complicated; it can't be placed at the feet of one party or one handful of elected officials.
The assumption is that it began then, with that/this kind of thinking. The steady road to modern conservatism. I think that's a pretty fair assumption.
Pretty big claim "most of Reagan' 80's policies would place to the left of someone who isn't even our president. Some evidence for would be nice, but what does it matter, she's not our President.
1
History of the world since the Industrial revolution has shown that there is always a struggle between those who own Capital and those that work for them. We used to call the owners, Masters, Industrialists, Robber Barons, Wealthy, Businessmen, John Galt, Prime Moves etc. (The workers are called slaves, moochers, unionists, the 47%, the little people.)
We now have a new term that fits these owners: Oligarchs. They now are in a society of their own and all know each other. Trump, Saudi princes, Putin et al, Sheldon Adelson, Murdoch, Koch bros. etc. They are all anti-democratic and use the medial to befuddle the masses while they gain control of the power of the state. What do they want to do with the power should they achieve the final goal? Ask Kim Jung Un.
2
Great column Mr. Krugman with perceptive insights as to the causes of our flailing health care system. However, it also speaks to a host of problems that manifest themselves today, namely the rise of homelessness, the disintegration of education at all levels, the collapse of unions, and the fracture of the Middle and Poor classes vs. the Upper class.
When I graduated from college in 1960, everything was possible. Indeed, I had just paid for five years of undergraduate education at an elite university by working jobs during the summer that paid for everything: tuition, board, room and transportation. No loans!
Today, the present and future are murky at best. How can young people survive when we have legislators who refuse to address the gun issue by placing guns over life. Or, assist college students in the outrageous costs for higher education.
Today, my home town is inundated by the homeless, where solutions are required at the local, state, and federal levels. Yet, our Congress takes no action. The closing of hospitals and institutions for the mentally ill by the Reagan Administration not only contributed to the rise of the homeless population but to the many killings with automatic weapons in the past 30 years.
In short, the Conservative Movement has been a total failure for this country except for enriching politicians, Wall Street, and the super wealthy. Trump and his adminstration is a good example of what Reagan and the Republicans have created.
6
The neoliberalism and conservative agenda of sunshine in America and what some commentators of the age spoke of the feel good President in Reagan did nullified the safe net and welfare state in America and Thatcher did the same in the UK. The piece of news is quite valid and has been around for some years. The fact of the matter is how conservatism and neoliberalism and neoconservatism in those 35 years have been able to transform America from a more equitable country with more social mobility into the most unequal industrial state in the world. True Progressives have to turn this conservative tide that began with Reagan to help America regain the promise that all people who work hard and are honest and virtuous will have success, there are always in History and politics conservative tides that transform a state but liberals and real progressives must work hard to turn this conservative and neoliberal tide and make America the country that has always been, an example of nations like Winthrop said centuries ago, America the shining city in the hill.
3
It was also around 1980 that I read in The Times about the growing corporatization of health care, which the author ended with the apparently sincere question "And what could be wrong with that?'
1
Yes, Reagan's presidency marked a turning point in regard to the destruction of the public square, but there is another story, of fundamentalist Christian power brokers being inserted into our government since the 1930s.
Jeff Sharlet's books, The Family and C Street, chronicle this disturbing secretive takeover that has now fully flowered into the you-can't-explain-this-kind-of-catastrophic-presidency-without-it present day debacle.
The National Prayer Breakfast is run by these people, and Reagan, who was not particularly Republican or religious in his earlier life, was a willing puppet for them. They are Dominionists who are literally trying to destroy the government in order to make America into a Christian nation that brings about the end of times and the return of Jesus.
I kid you not. Trump is their flawed King David, and their members are everywhere in his cabinet quietly tearing apart whatever department they've been given. This is the secret story underneath the Republican party, and nothing they do can be fully understood without understanding their Dominionist end-times beliefs.
The separation of church and state is crucial, and now we know why.
4
Well stated. The rise of the "moral majority" founded in '79 and dissolved in '89. "Falwell declared, "Our goal has been achieved…The religious right is solidly in place and … religious conservatives in America are now in for the duration." In Vegas no less.
"The Moral Majority's financial base seriously eroded by the time it became part of the Liberty Federation; its financial difficulties ultimately were a major factor in the decision to disband the organization." Liberty Federation "says" it is for ALL Americans, but check out the articles. It is clear they are not.
The religious so want to be say "see we are right about the end times". Yet according to their teachings they should be gone due to the rapture. By that thinking/hoping with continued support for trump, suppose trump is their anti Jesus. He does not "fit" what "they" describe him as, but he'll do.
3
Correct, Reagan was not religious; neither is Trump; one could easily question the faith or lack thereof of the Bush family. They say talking points for the religious right. Jimmy Carter is the only president in my lifetime who claimed faith and practiced it.
The religious right and the zero sum game economy -- rich CEOs take all the dough -- has decimated this country. Thanks, GOP.
2
I look at the various charts and, in almost all cases, I eyeball an inflection point that occurs earlier than 1980, although the year is not consistent. In addition, Reagan didn't become POTUS until 1981 and, even then, there would be some lag between his inauguration and the impact of his policies. Net, I agree with the premise, but I don't think the data clearly support it.
1
Reagan wasn't so much the cause of all this as a continuation of an earlier trend. His election only accelerated things that were already in progress.
2
In the past eight months I have been fortunate to have visited both Denmark and Holland. They vigorously turned toward policies that we abandoned in 1980. Their economies are thriving, as are the lives of their middle class citizens. Tuition at their universities is almost nothing (in fact in Denmark a living stipend is issued to each student for rent and food), health care is provided. Holland, while having one of the highest GDP’s in the EU, also has the shortest work week, at 30 hours.
Don’t tell me we can’t do this for ourselves: we are one of the wealthiest countries on this planet. The question is, do we want to?
15
Let's not forget the rise of the MBA. Prior to the 80s, business people were somewhat staid, buttoned up -- investors looked at its fundamentals to be sure their money wouldn't be wasted. But MBAs were rewarded for reducing everything to dollars and cents, leaving human welfare out of the equation. Jobs began disappearing ... until the digital age saved us ... and now we're losing to robots.
3
Note that it was Business School professors, notably at Harvard Business School, that first pushed the meme that CEOs were underpaid, and led the way to the C-level officers of companies pay level being pushed up at the expense of the pay of mid- and lower-level workers. That "work" began in the 1970s if memory serves.
It also happens to coincide with the invention of securitization. Lay those graphs on top of the use of securitization and you’ll find causation rather than the more superficial correlation.
1
I think Krugman doesn't go far enough back actually. He needs to really look to the 1930's following the crash in 1929. The "robber barons" of the time were very unhappy with the New Deal and worker unrest that was already going on and would lead to the rise of Worker Unions and worker rights. They brought into their homes, their drawing rooms, their clubs a variety of young men who could become future politicians. They inculcated in them their not just conservative views but their views on unbridled capitalism. One such young man was Ronnie Reagan. He was their main success story as he got the political bug to move forward and was obviously successful.
You looked at what Reagan professed and you can see he learned his lessons (or should we say lines) well. He wasn't there on his own though. Look at Lee Atwater, then leader of a merry band comprised of Cheney, Rove, DeLay, Norquist and Gingrich. Norquist.... shrink gov't to the size it can be drowned in the bathtub which trump's merry band is doing today. Gingrich who a decade ago mapped out how Republicans could gain control of gov't and keep it for the next hundred years.
Folks fail to note that part of their mission was to control the states first and they own almost two thirds today. With trump demolishing the fed gov't that ownership becomes powerful.
I hope they have unknowingly politically activated the two youngest voting generations who are now going to smack them down hard.
8
Late on this comment, but you have to add California's Proposition 13 in 1978 as the turning point in which right-wing populism had its first great success and changed the debate to government as "the problem, not the solution". Prop. 13 was a major contributor to the right-wing turn, and many Republican legislators after that time, the "Prop. 13 babies" were hard-line and intransigent, compared with the relative bi-partisanship which existed before then. Yes, Reagan mattered for sure, as did the Gingrich take-over of the house in 1994.
4
Are you serious? It took 38 years for you to figure out that it was Reagan?? I was born in 1980 and I've always known it was Reagan who wrecked the country by giving it to the wealthy. Nice to finally see you, Paul.
4
I don't know when Dr. Krugman first expressed the ideas he presents in this blog post, but he has been saying similar things since at least 1999 or so, when he first wrote for Slate and was a guest on programs such as "The Connection," hosted by Christopher Lydon on WBUR in Boston in the 2000s.
Welcome to his column and blog on The New York Times and to his current statements, which with the now available better data, making his case more explicit and understandable to even otherwise doubters.
Americans health issues aren’t the fault of any one president or political party. The health problems can squarely be tied to obesity starting with personal diet habits. No one is forcing people to eat like pigs. Stop trying to blame the other side and take responsibility for ones pie hole.
2
Exactly!
1
Reagan or no (but I think yes), 1980 is the major course shift. Republicans selling the same economic ideas for nearly 40 years, only more recently in a more savage and unrestrained manner. These ideas have simply never worked except to make the rich richer, national or state level (see Kansas and the Brownback Disaster). The neoliberalism of the Clintons and Obama hasn't helped much.
3
Professor Krugman:
I had to hold up a magnifier to read the legends in the FRED graphs, partly because the type is too small, and partly because the gray background kills the contrast. Also the vertical gray bars seem to serve more than one purpose -- to indicate the years, and also something else which is not explained. Please use more than one color, instead of just grayscale. If the designers of FRED can't do better, please use better software.
On the first graph there is a row of red dots; I am guessing that this represents the USA, but you don't say that anywhere. More importantly, the label "US in 1980" is just hanging out there, not attached to anything at all.
The graphs do not clearly and obviously support the main point of your post. On most of them the trend seems to have been underway before 1980.
I suspect that things are not as simple as you make them out to be. I look forward to a wonkier and deeper analysis, and better graphics.
3
I'll bet you're familiar with Edward Tufte's The Visual Display of Quantitative Information.
1
At the time that Reagan was in office, I thought we had taken a turn down a wrong path and wasn't sure we'd be able to find our way back.
It's funny how we've forgotten this--and with all the blame that been thrown around, St. Ronnie is rarely mentioned.
12
Dr. K you need to share these conclusions with historians and political scientists who have somehow ranked Reagan in the top ten presidents of all time. Something which has always befuddled me. If the ultimate test is whether the country has been left in better or worse shape because of his presidency I can't think of a single improvement.
12
As a political scientist, I can tell you that I don't think I've come across a single political scientist who would rank Reagan in the top ten (successful?) presidents of all-time. I think that is what you are trying to say. I would guess the same is true for historians. However, the would say his one of the most influential, if not the most. He shaped an entire ideology (neoliberalism) that we continue to live with.
2
Swagger. We got empty swagger from Ronnie. The shining city on the hill with its streets lined with the homeless.
1
Paul, unfortunately you are talking above the heads of the masses.
You should consider hiring a communicator that speaks their language, the liberal equivalent of a Sean Hannity.
Hiring a communicator to bring the facts into focus for the masses will not help. They are not interested in the facts, this is a Post Fact World.
I wish this was a snark, but I'm serious. There is an entire section of the population that only thinks in (angry) emotional terms. Facts that don't fit their view are simply rejected.
10
Maybe then we need to humanize facts by explaining, in emotional terms, the consequences of certain facts.
Use both IQ and EQ methods....
Conservatism is all about shifting as much income and wealth as possible to the top 1%, generally through tax cuts and weaker government. The good news is, we know where the money is and how to tax it, if we can just get our liberal base to vote instead of complaining about whether we get universal healthcare through the ACA expansion or Medicaid for All.
The top 1% get about $300 billion/year in tax expenditures (breaks from the rate tables), about half of which is preferential rates for dividends and capital gains.
We can tax income over $500,000 at 40% and income over $1 million at 50%.
We can tax stock buybacks, the primary upward wealth transfer mechanism, at 25%, redirecting that money into productive investment.
We can use this money to fund universal healthcare via ACA expansion and to pay for tuition to college or trade school for the population.
Or we can vote to enrich millionaires further, by sitting on the sidelines crying because we don't get exactly what we want.
What will it be in November?
P.S. Removing the cap on the Social Security tax (income above $128,000 or so) covers 70% of the funding shortfall in Social Security for 75 years; a 1 percentage point higher payroll tax substantially covers the rest.
10
As long as there is a cap on SS benefits, there must be a limit to the income that is subject to withholding, otherwise SS goes from old age insurance to just another welfare scheme.
1
Contemporary with modern movement conservatism we also have the rise of the New Democrats under Carter and the proliferation of market oriented policy, "Trade not Aid" and so on. Movement conservatism won in part because it was fighting opponents who were already in surrender mode.
2
Yes, the white lower middle-class voted away their standard of living when they voted for Ronald Reagan, and they have no regrets about it. If “…unequalizing economic policies, retreat from antitrust, financial deregulation… soaring medical costs, rising inequality, financial crises, regional decline…” is the price they must pay to defeat Hillary and elect Trump, they’ll pay it. Still, It’s necessary for the gov’t to assist even such fellow citizens as these. If things get too bad for too many people for whatever reason, whether it’s their own stupidity or the government’s, they’ll become nihilists and just vote to tear everything down. After all, that’s how Trump got elected in the first place.
11
Universal health care alone cannot determine one's health. But not having access to it, in particular those who need it yet can't afford it, makes health care far more expensive for all.
Think of health care as the Three Musketeers might: one for all and all for one. Yes, the Musketeers were socialists, though they were unaware of it. Let's say they were ahead of their time.
The best thing about having health care, even for folks who can't control their baser instincts, is that seeing a health care professional at least once in a blue moon can go a long way in preventing vastly greater and costly devastating maladies neglect will. Waiting until one's condition becomes catastrophic is way too late to wait, and financially, extremely wasteful.
Since the alternative is to let someone rot on the street until the meat wagon comes to fetch their carcass off to some Potter's field is out of the question, what does someone do? Unlike that committed (he should be) libertarian, Ron Paul, who, when posed that hypothetical question, responded: if one chooses to live an unhealthy lifestyle it's their, not society's, problem. In case it's not clear, what Dr. Paul was saying; get the meat wagon ready.
Even the most apathetic, self-centered person I have ever met, Donald Trump, said if he were to become president, people would no be dying on the streets (showing bad form, old sport). Of course, the problem with Trump? He's a pathological liar. Ya' just can't win.
DD
Manhattan
10
Krugman needs to go back to his stats and calculus books. The Gini Ratio has a more or less stepwise jump around 1980 but the slope doesn't change until around 1992.
He ignores the fact that the turn around in the ratio started long before his nemesis took office in 1980.
But back in the 1980's the Democrats used their UAW labor wing for all it was worth.
Do you recall "Out of a job yet? Keep buying foreign." or "Buy American!"?
They were hailed by Democrats and Republicans alike as the folks "who built America!".
But hey Krugman, don't let the facts stand in the way of your polemic.
I pointed out to my many autoworker friends that the job losses that started in the 1970s would continue due to imports (that were better) and automation - sound familiar? I was accused of being a heartless Republican who liked to pick on poor people.
Now imports, off-shoring and out-sourcing are planks in the Democratic Party's platform. What a world, what a world.
What I think bothers liberals the most about Reagan is that they were flabbergasted that a presidential candidate would point to the Soviet Union and Communism as a threat to the US and the West - in 1980! How dare he do that! The revolution of the 1960s taught everyone different! And then came Reagan and the nuclear clock actually got turned back and Gorby and Juruzelski were on their way out. Now that's a "Mission Accomplished!"
1
Dear jp:
I am older than dirt, but not so old and decrepit not to remember the racism which ran rampant with Reagan. In his first campaign stop, Philadelphia, Ronnie blew his racist dog whistle warnings to those good old Southern hicks. Reagan's support for "States Rights", his warnings of Chicago "welfare queens" were code words for White Supremacy. How did "forget" that, boy?
I surmise you also believe it was sheer coincidence the hostages were released at high noon as Reagan took the oath of office? Were Iranians so afraid of Ronnie "Make My Day" Raygun they immediately chose to release the hostages after 444 days of incarceration? Yeah, right.
Reagan morphed into quite the anti-Communist. Not so much as president of the Leftist actors Union. Back then, he was an avowed FDR supporter. His dad got a job with the WPA, Ronnie got a job as a lifeguard. It was "Happy Days Are Here Again".
Then Ronnie literally went Hollywood. The more he prospered the more he saw the evil socialistic ways of FDR and the Dems. I know many Dems back then who turned tail and coats, and became members of the GOP. The higher they climbed the economic ladder, the more taxes became a real burden and threat.
I agree the Dems also sold out. No longer the workers party, they became as greedy as Republicans always were. But the GOP of today is not the GOP of Reagan's day. This time I can state he didn't leave the GOP, the GOP left him. And that's a Mission Failure, Pal.
DD
Manhattan
9
I lived in Detroit from the 1950's to the late 1980s and had a welfare prince who lived next door to me. At the beginning of the month he asked if I wanted to buy some of his food stamps. Near the end he would ask for money because he was hungry. Reagan was, as they say, spot on. And there' s no do whistle to it.
In terms of the hostages, well bring forward some evidence of wrong doing then we can talk.
Reagan knew what the Soviets were all about and handled them perfectly. But don't be too upset by it. And FDR knew how to unite workers, not divide them by identity politics.
Since you brought up racism, you do know that NY City public schools are among the most racially segregated in the country. I think you're running behind Dallas and Chicago. You did know that, didn't you?
We are sinking fast. Turning point was when the so called liberals mistook Hillary as an electable politician and gave the election away to the biggest fraud and most likely the worst fairly elected man since the unnamable monster. Even GW Bush vs Al Gore was not as consequential as a determinant on the road to doom. There is a play called Romulus the Great where the greatest Swiss dramatist of the 20th century has statues of the Roman emperors lined up to show the process of decline, or decadence more likely. Little commentary is necessary. Just imagine the similar situation with Trump as the last of the series! What a pity. There is one way out: vote for left of center candidates in 2018 and Bernie Sanders for President in 2020. We have no choice. Professor K, read the book if you haven’t read it at Yale.
8
Yep. Republicans won. Democrats are too busy legalizing weed, felony votes, and claiming everyone is racist in the party who doesn’t agree. Democrats don’t have a clue that they may in fact be elitists themselves. I can’t believe Trump can win.
2
Krugman, Nobody has ever accused me a being a Republican...but I don't see any signs of these trend improving under Clinton and/or Obama. Might it be more complicated than politics. Does healthcare always have to political? I don't think the things that are killing Americans have much to do with politics mainly alcohol, prescriptions drugs, and heroin/fentanyl. Let's stop blaming and politicizing every last thing.
2
Right, Reagan was so successful politically that Clinton and Obama co-opted as much of his strategy as they could without getting kicked out of their party. But arguably Reagan bears the primary responsibility for opening the path to Plutocracy. Once legitimized it has been impossible for politicians to resist.
1
This sounds like the kind of "deep state" thinking professed by anti-liberals. As with that where "bureaucracy" is the prosaic answer; perhaps it's time to acknowledge universal U.S. problems - exceptional they may be but more likely are banal - like poor diets, a lack of exercise, and an essentially negative (social-emotional) life. These are the startling but also overwhelmingly obvious causes of this health "mystery" for anyone wandering around the U.S. from Europe and perhaps from elsewhere.
2
Interesting the myriad ways that Reagan's policies have been the root of these trends, as the comments here describe. As a Californian, I can attest, Reagan ruined California education and mental health care, before he moved to DC. But I want to make the point, Reagan himself was not a great thinker. Just as it is a mistake to think GOP power died in Nixon's nasty failures, it is a mistake to think Reagan was anything more than a cowboy football hero actor front man for a hateful underlying ideology. I think people like Roger Stone, Donald Rumsfeld, the resilient, creepy, heart of the GOP , and Murdoch, and the end of the Fairness Doctrine, all this is more the point. When I read Mr Krugman's fine description of our decline: I can't help but wonder how we ever even elected FDR and his Social Security program, or Obama and the ACA. God help us.
11
The unspoken thread running through American politics since 1980 is the attitude of republicans toward 'certain people'. Regan called them 'The Great Unwashed', back in the day. They were the civil rights protesters, the unions, the Vietnam war protesters, the hippies, and on and on.
They were losers that were ruining 'his' and his fellow republicans' country. Regan rekindled the anger many republicans felt toward these people. It had boiled over a few years earlier at Kent State when Ohio National Guard solders shot and killed four unarmed protesters. That caused everyone to stop and take a breath. But the anger was still there.
Regan's plan was, to clamp down, to get people back in line and stop all the left-wing college-union-civil rights-feminist protest nonsense and bring the country back to its senses.
What we see today is the evolution of this attitude toward other occupants of these United States - they may call themselves 'citizens' but that doesn't mean they are treated the same as Americans. Of course they don't get access to medical care; of course they can arm themselves all they want so they can shoot each other; of course they have to live on polluted land and drink polluted water; of course they don't get access to education (Republicans Love the uneducated); of course they don't get to vote.
Of course it's the Plantation System 2.0. Of course republicans deny this is the plan. Of course it's no use arguing with them about it.
11
The first government dietary guidelines came out about 1980. And fat was demonized instead of sugar, which is the biggest culprit in the standard American diet today.
2
The unspoken thread running through American politics since 1980 is the attitude of republicans toward 'certain people'. Regan called them 'The Great Unwashed', back in the day. They were the civil rights protesters, the unions, the Vietnam war protesters, the hippies, and on and on.
They were losers that were ruining 'his' and his fellow republicans' country. Regan rekindled the anger many republicans felt toward these people. It had boiled over a few years earlier at Kent State when Ohio National Guard solders shot and killed four unarmed protesters. That caused everyone to stop and take a breath. But the anger was still there.
Regan's plan was, to clamp down, to get people back in line and stop all the left-wing college-union-civil rights-feminist protest nonsense and bring the country back to its senses.
What we see today is the evolution of this attitude toward other occupants of these United States - they may call themselves 'citizens' but that doesn't mean they are treated the same as Americans. Of course they don't get access to medical care; of course they can arm themselves all they want so they can shoot each other; of course they have to live on polluted land and drink polluted water; of course they don't get access to education (Republican politicians Love the uneducated); of course they don't get to vote.
Of course it's the Plantation System 2.0 Of course they deny this is the plan. Of course it's no use arguing with them about it.
2
Just curious. What happened to SAT scores?
Reagan was only a symptom of the “Wrecking Crew” approach that Jack Abramoff unleashed upon our democracy with devastating impact that continues today: https://harpers.org/archive/2008/08/the-wrecking-crew/
Young Republicans and their vile approach to campaign finance by vilifying government for profit with the help of Rush Limbaugh remains the disgusting turning point for our once proud and happy nation. Get money out of politics, and realize that “the market” is not everything, or continue enabling idiots and scoundrels to squander our institutions and rights for their own profit. Organize, unions are an effective antidote.
9
They didn't come to save the American people in 1980, they came to destroy them.
3
Oh yeah, because the 70s was an age of complete prosperity. What was the federal funds rate in 1979 again Paul? Just south of 18%? Yeah yeah, and remind me what the US annual inflation rate was in 1979? Wasn't in the neighborhood of 12%? Ah yes...good times indeed. Lines at the gas station. 444 days of US hostages in Iran. The Munich Olympic Massacre...ahh the 70s...such memories. what was Reagan thinking trying to fix all that?
If you consider 9% to be in the "neighborhood" of 12%, then you're right, but it appears you were right about one thing - you need reminding.
But being 1/4 off on their thoughts never seemed to bother republicans that much...unless it was done by a "demcrat".
Reagan tried to "fix" the Munich Olympic massacre? Wow. He really was superhuman.
3
Welcome to Gilead.
2
What's really going on here is that the u.s. is large and diverse and really increasingly it's two different countries blue and red. The basis for this divided is really critical thinking abilities... those with them dominate the blue States and those without them dominate the red States. How will it end? I don't know other than to say course taken by the red States is ultimately not sustainable. In fact, the red states are increasingly dependent and unable to make their way independently as the information age progresses. One can only speculate on the differences 20 years down the road between Massachusetts and New York and West Virginia and Oklahoma. Education and critical thinking abilities increasingly determined fate. I think the real question is how long the 1787 Constitution can continue the face of its institutionalizing a preponderant influence for the poorer less intelligent parts of the country over those who are the opposite.
7
The notion the US can't accomplish anything of consequence did begin with Carter, but with Reagan it was put on steroids.
Republicans have managed to fool enough gullible goobers we can operate the world's most powerful empire on a shoestring budget. Republicans claim we can do this by giving paltry breaks to the Lumpen Proles while giving vast tax exceptions to the extremely wealthy. How this canard has infiltrated the American psyche for over three decades is astounding.
It's an embarrassing acknowledgement of the sheer stupidity of a large segment of the American electorate. Indeed, how could these deplorable numbskulls not notice their diminishing returns on investment? Notice how it is effecting them and their progeny? The average American talks incessantly about how their parents had it better than they. Why haven't they figured out it's because this Republican Ponzi scheme is the reason for their sorry lot in life? The vast right-wingnut propaganda machine has succeeded in fooling enough folks into believing Democrats are to blame.
When the American electorate gets a greater proportion of its "news" from the FOX, the not-too-Breitbart, right-wing White noise radio, and Facebook, instead of reliable, long-established reputable news organizations like this paper and the Wash. Post, is it any wonder almost half the voters picked a completely incompetent and utterly corrupt idiot like Trump as president? Not so preposterous at all.
DD
Manhattan
8
Correct on all counts, @DD. Well put.
1
Or could it be when Bill Clinton signed NAFTA in 1993 and then when Bill Clinton got China into the World Trade Organization in 1999? Thus, destroying well over 20 MILLION good paying jobs over the last 25 years and thousands of communities. And both policies are still active and grinding down Americans as we speak. Nah, Bill convinced us that free trade is always the best solution for all problems in America. (Free Trade: a code word for easy access to labor camps in third world countries.)
NAFTA was negotiated by Reagan and Bush. You're missing that free-trade is a bipartisan issue: the Plutocracy wants the freedom to run multinational companies unhindered by parochial squabbles between countries, and politicians of both parties are happy to do their bidding.
1
We know what happened...Reagan happened...his policies & deregulation tore the working American down to insignificance. What I don't understand is why the media & press act as if they can't see that. Every single thing the Reagan admin did HURT the average American...period!
7
Despite the rampant damage Reagan did he was deified by the wealthy. Trump however will top that because the wealthy as well as the ignorant poor will deify him.
3
Let's not forget the mark made by massive influxes of drugs into the country in the 1980s. The 1980s cocaine scourge successfully anesthetized a generation and finally killed off the spirit many Americans had had believing and practicing an ideal put forth by John F. Kennedy to "Ask not what your country can do for you but what can you do for your country."
There were, and are, folks, who didn't, and don't want, an engaged, active, citizenry and would purposefully sideline a generation or two (as the British successfully did in China).
After the influx of cocaine here 'disengagement' became much more common and one's own bottom line -- to heck with others-- greed is good-- became the 1980s credo. All that glitters is gold con-boys like Trump are the end result.
2
It would be interesting in future columns on the history of the economy to write your take on policy actions that contributed to income inequality, the decline in opportunity, stagnant wages, etc.
I am also reasonably certain that there has been a serious decline in the public's trust of our government, In a sense there has been a resurgence of the "crisis of confidence" that was discussed around the time of the dismal turning point that you cite in this piece.
I am 81 but continue to work on national policy issues. My vocation was dramatically transformed by the oil price hikes of the 1970's. Fossil fuel energy is still a big problem for the World and we have not yet figured out how avoid the certain economic catastrophe that will occur from running out of this depleting finite resource or worse to unleash irreversible warming of the climate by unleashing the methane and other global warming gasses from the melting Arctic permafrost.
I would like to see the World's energy intensive economies mobilize public capital and science and engineering resources to launch an effort to develop technologies to create energy from the sun and begin to convert the World to a new and very efficient form of electric energy.
Dr. James Powell, the inventor of superconducting Maglev and I, write about using Maglev to transform surface logistics, and launch solar energy collecting satellites to beam very cheap energy to Earth. Cheap electricity can solve lots of problems.
9
Interesting. Republican ritual in deifying Ronald Reagan while contributing to the exponential rise of inequality over the last 30 years or so is a contradiction of what it means to build a more just society. This capitalistic system does require sensible regulation for it's own good, if not survival, so to remove so much inequity, so much injustice, as capital always trumps labor, unjustifiably so in a democratic society. Oh, wait, perhaps we are it's caricature instead, a petty pluto-kleptocracy that takes from the poor...in benefit for those least needy, the corporate world. Stagnant salaries while the cost of living does rise inexorably, is a 'tribute' to greed, where prostituted politicians do the bidding for the 'rich and powerful'. And 'Citizens United' is the proof of the pudding. This is not evolution towards a more caring, solidarian society. Instead, we have devolved into a utilitarian behavior benefiting those in power, and worsened since Reagan's veering to the right, and whose effects survive him as the poor take the brunt, due to no fault of their own. As if there were any doubts, just look at Trump's systematic financial and corporate de-regulation, under the complacency of a socially distant republican party. No justice! And no prudence (doing what's right, however difficult)!
11
Liberals have created the word “inequality” to personify the natural results of the innate differences between each of us. Since we all differ in intelligence, ambition, mental acuity, motivation, physical prowess, aggressiveness, experiences, ability, education, health/genetics and interests, it is only appropriate that we also differ in wealth, opportunities, achievement, success and life.
2
You forgot differences in inherited wealth and opportunity.
I guess you're not a Christian, Jew, or Muslim. Atheist social Darwinists used to have keep a low profile. You must be glad to finally breathe free in Trump's eugenic paradise!
Yes, a title shift occurred in 1980. Surprisingly, this shift was predicted by the economist Michal Kalecki in 1943. He predicted a powerful bloc of business and rentier interests taking control. He also predicted they would probably get one or more economists to support them. i.e. Milton Friedman.
On the health care, I am somewhat skeptical that health care alone determines health. A fast food and high sugar culture do a lot more to harm health.
8
Dear Ron:
You're correct. Universal health care alone cannot determine one's health. But not having access to it, in particular those who need it yet cannot afford it, goes a long way in making health care far more expensive for all.
Think of health care as the Three Musketeers might: one for all and all for one. Yes, the Musketeers were socialists, even though they were unaware of it. They were ahead of their time.
The best thing about having access to health care, even for folks who can't control their baser instincts, is that seeing a doctor on a regular basis can go a long way in preventing the vastly greater devastating effects neglect will. Waiting until one's condition becomes catastrophic is too late to wait, and from a financial aspect, wasteful.
Since the alternative is to let someone rot on the streets until the meat wagon comes to fetch their carcass off to some Potter's field is out of the question, what to do? Unlike that committed (he should be) libertarian, Ron Paul, who responded when that hypothetical question was posed to him in debate, said: if one chooses to live an unhealthy lifestyle it's their, not society's, problem. Thus, get the meat wagon ready.
Now, even the most uncaring apathetic self-centered person I've ever met, Donald Trump, said were he to become president, he did not want to see people dying on the streets (showing bad form, old sport). Of course, the problem there is Trump is a pathological liar.
DD
Manhattan
1
Ronald Reagan won the presidency and the country bought into the idea that greed was good. The more greed there was the better. And Reagan broke the air traffic controllers union which paved the way for more corporations to refuse to allow unions on their premises. Reagan also pushed the idea that all government was bad no matter what the intentions were.
Granted Carter allowed deregulation but Reagan and the GOP went at it with no holds barred. Our country became a debtor nation because of Reagan. And, because of Reagan we now have Trump, we had the likes of Gingrich, Bush (both of them), and we have a completely dysfunctional government that responds only to the richest people and corporations among us. It's when the idea of welfare queens took hold. The idea that all plaintiffs in civil cases against business or doctors or anyone demanding monetary compensation for serious damages was popularized.
We saw falling investments in education, employees, our infrastructure, health, basic research, and in our citizens unless they were rich. America turned from being a middle class country to a oligarchic kleptocracy with a strong bias towards the richest. The 1980 presidential election was the beginning of the stagnation of the middle and working classes in America.
35
Reagan was also responsible for the elimination of the fairness doctrine of the FCC. Prior to its elimination broadcasters were required to provide balanced reporting in exchange for maintaining their licenses.
Now stations can pretty much broadcast whatever unbalanced news they want; and so we witness an increaingly polarized nation.
34
Hmm, what happened in 1980? Oh , that was the year that Reagan's people committed treason with Iran to keep the hostages in captivity until after the election and we began the long national nightmare known as the Reagan/Bush years. That was the time of the "ME" generation, when greed became good and welfare queens were invented to justify cruelty to the poor. It really has been all downhill from there.....
30
So what has the opposition party made of these horrendous policies that have hurt so many ? Nothing, as plain and easy as it might be. Because the opposition party is all tied up in identity issues and doesn’t realize that nothing can be done about the issues they care about unless they win elections on issues that matter to most people. Quit blaming Republicans, repugnant as that party is. Democrats need a “Sister Souljah” moment about every 6 months.
10
It would seem in the most basic of terms , post - 1980 American government policies shifted from being driven less and less by the moral and social principles of democracy than the crude shifts and waves of capitalism that left far too many tragically behind . It’s only when both democratic and free market systems work together in mutual reinforcement will we be able to reverse this dismal trend . It’s becoming evident that climate change is in fact the final judge of this current epoch and unfortunately , things are not looking too promising .The question is this ; can the American people summon the collective will to overcome these four decades of social dislocation and despair and
restore democracy’s inherent values or can they not ?
7
1980 was also the year when HMOs became the hottest new business scheme.
9
I have nothing to add. Bravo, Professor Krugman. I have been reading your columns for years, and I can't remember one that I had a significant disagreement with. You are sui generis, a breath of fresh air in an increasingly stale country.
10
Around 1980 the Republican Party officially became the Greedy Oligarchs' Party. In exchange for limitless funding from the country's deepest pockets, they would henceforth exclusively represent corporations and the wealthy, with an agenda of facilitating the redistribution of the nation's wealth to their constituents. That has been their sole agenda for the last 35 years, as amply demonstrated by last year's failed "health care" bill and $1.5 trillion tax cut scam.
Republicans still needed millions of the very people who would be impoverished by this agenda to consistently and enthusiastically vote against their own interests. The real GOP agenda would be very hard to sell. So they invented an ideology and alternative reality of "trickle-down," "welfare moochers," and the Reagan hagiography, and evolved a propaganda apparatus to relentlessly repeat it until a sufficient number of Believers internalized it. In their zeal to retain the loyalty of the voters they scammed, they appealed to the worst aspects of American society-- racism, bigotry, xenophobia-- unwittingly fertilizing the ground for Donald Trump when people finally started to recognize what was going on.
Along with their success in accomplishing their agenda, the Republican corruption of truth and democracy to serve themselves and their oligarch donors is surely a significant factor in the dismal economic conditions for 99% of Americans.
22
Before he started the US on the road to ruin Governor Ronald Reagan’s conservative agenda damaged California. Pundits focus on his tax increases in the state, and he did raise taxes, but he cut funding for mental health services putting thousands of people out on the street and starting California’s homeless crisis. And he slashed state funding for education setting the trend for Republican legislators to balance their budgets on the backs of children and the poor. Perhaps worst of all he brought Hollywood PR to the political arena and shifted America’s view of government in general as something evil.
16
In the 80s two things were adding to the spiralling health care costs: the for profit and managed care systems that still strangle the health system.
6
Also: In 1983, drug companies were allowed market directly to people using TV ads. The cost of drug marketing is a HUGE addition to healthcare costs. It is the single largest cost in the pharmaceutical industry.
And it has led to patients demanding the newest drugs, rather than drugs that are older, but are actually quite good.
Between changing to a for-profit system, and adding a chunk of marketing overhead, the total overhead has grown incredibly large.
8
Conservative "ideas" since Reagan have been to maintain power at all costs. So they get as much money as they can from billionaires and corporations, gerrymander, suppress the votes of minorities, use propaganda to manipulate public opinion and lie, lie, lie about everything. The more dependent they become on private money, the more they move to the right, and the more they have to lie and smear to hide the ugly truth.
Why should Republicans or conservatives come up with new ideas, since their current ones are working fine? They have all 3 branches of government at the federal level, and most state governments as well.
15
As someone familiar with Reaganism before 1980, through his governorship, his presidency was like the return of Darth Vader. He cast a shadow over the nation beginning in 1981, and reigned over the backlash to social progress achieved in the preceding decades.
12
This piece shows why it's wrong to blame boomers for the sorry state we're in.
9
Reagan demonized government and, in doing so, started to turn Americans against each other. Recall his famous quote "government is not the solution to our problem, government is the problem." Really? The CDC, NIH, FBI? How many lives have these agencies saved? Sowing mistrust against our institutions can create great speech lines, but in the long run is deeply damaging to our society, especially if the claims are thoroughly unfounded. We are now seeing Reaganism on steroids with Trump.
15
James Watt. Ronald Reagan's secretary of the interior. He was the first high level nominee who was actively opposed to the function of his department. He was the first of many nominated by Republicans to destroy the legitimate functions of the government.
17
Another factor not mentioned here is the fact that corporate PACs started setting up shop on K street in the mid-70's. A massive amount of money started flowing into our legislation. One sure sign is the failure of all the pro-union bills that mysteriously died after Carter was elected. 1980, the year I graduated HS, is indeed the year the Blue Collar started to die.
8
It's likely not at all unfair to lay a lot of this at Reagan's feet, but as far as the roots of the healthcare divergence that Frakt discusses, it's useful to look a little farther back.
Actually I'm just going go ahead and assume that this had something to do with the HMO Act of 1973 that Nixon signed, which removed non-profit stipulations regarding healthcare and health insurance.
from the Oval office tapes:
Ehrlichman: “Edgar Kaiser is running his Permanente deal for profit. And the reason that he can … the reason he can do it … I had Edgar Kaiser come in … talk to me about this and I went into it in some depth. All the incentives are toward less medical care, because …”
President Nixon: [Unclear.]
Ehrlichman: “… the less care they give them, the more money they make.”
President Nixon: “Fine.” [Unclear.]
Mr. Frakt seems obsessed with the year 1980, but if you look at the chart, it's in the years immediately after 1973 when health spending in the U.S. really starts to accelerate.
I'm somewhat surprised that an article exploring the causes for our 'a lot of extra money for no results' health care industry, wouldn't explore economic topics like the nature of demand for health care, inelasticity of demand, especially as these relate to the for profit model.
26
In 1973 Democrats controlled congress, but you go ahead and blame Nixon for a bill you don't like.
I too thought an economist might include some evidence to show his correlations had some causation, but no. And from reading the comments, why bother with facts when your audience is so easily sold.
In 1973 Democrats controlled congress, but you go ahead and blame Nixon for a bill you don't like.
I too thought an economist might include some evidence to show his correlations had some causation, but no. And from reading the comments, why bother with evidence when your audience is so easily sold.
1
You may be missing an important point. The Rowe v Wade decision legalizing abortion in 1973 followed by very conservative Pope John Paul II in 1978 and the subsequent politicization of the Supreme Court seems to have provided a vehicle that self styled economic conservatives could hijack leading in turn to the Regan Revolution and all the rest. Conservationism today seems to be much more about ideology than finances.
6
RUC committee in the early 90s is an inflection point. It's a 33 member committee of specialists and one family practice GP. The specialists have banded together to set each others hourly rates.
You can see the divergence of compensation levels around the developed world. GPs are essentially paid the same around the world.
So you can read the NYT's story on gastro guys working 27 hours a day by hourly rate. So in other words they do the work in 8-9 hours and bill for 27. Happens across the board.
Pharma & hospitals have the same silly deals on drugs and stays. We actually go less often, stay fewer days and pay way more than anywhere else.
Modern healthcare in the US is rent seeking by all parties.
7
Agree that Republicans/conservatives haven't changed their views since 1980--but neither have Democrats/progressives. While I tend to support progressive ideas, unless we have some new, reasonable ones that can shake up the Dem party leadership, nothing is going to change in the R v. D Mexican standoff.
The difference is that failed conservative policies have been tried over and over, while far too few progressive ideas were ever given the chance to succeed or fail. Progressivism does not so much need new ideas as a fair chance for the old ones.
7
I'm old enough to remember the rise of Saint Ronnie. At the time, he was viewed by the small number of people who were smarter than average as a puppet set up as a talking doll for his masters who were a group pursuing their own immediate economic gain. And to my horror, the lies were believed, the myth of Saint Ronnie became a truth, and the economic policies of the "all for me" crowd became national policy.
Now a short time later (historically speaking) the consequences are coming home "to roost"
Didn't think at the time it would end well, and it hasn't.
Meanwhile, the mindless mob continues their mindless self destruction.
It occurs to me that as a species, humans do not have the characteristics necessary for species survival
And we may just be about to prove it.
13
I'm guessing that corporate medicine/insurance learned how to game the system once enough of us had insurance - they gamed the political system (acquiescent government medical providers) as well as private medical providers. The corporate overlords were well-compensated as a result. I had a 50 year old medication quintuple in price (they went to a long-lasting formula) - not a peep. There's that $92000 hep c medication - there were peeps but not much good it did. We could go on and on. We've been had.
5
One of the reasons for high cost is technology. We've gone xrays to cat scans to MRIs, etc. Surgery went from scalpel and forceps to laparoscopy to robotics. The demand that doctors use electronic charting cost a lot. When the government decides to change diagnostic codes, it is costly. One multi specialty group in DC had to spend $250,00 to comply with all of the electronic demands. Malpractice insurance in some states cost around $200,000. But there have been other changes. At one time our charts were in the hands of our doctors and they were private. Today our charts are digital and the government and others can pry at will. In the eighties and before, doctors owned their own practices. Today most doctors work for one corporate entity. When I first went to my doctor , he spent his time learning about my health concerns and then physically examining. The last time I went he spent 20 minutes staring into a monitor while tapping keys and 2 minutes for examination. One of those two minutes included getting up and sitting down. There are still doctors who love medicine. You find them in free clinics. But in practice if it is found out that he/she changed a poor person little or nothing, there is trouble. It is a different world today and medicine and health care saves live that would have been, lost in the past. But it has also brought cost and barriers between us and our doctor that were not there prior to the eighties.
5
There is something else that happened around 1980 which was even more important than the arrival of Ronald Reagan's conservative emergence. The beginning of the end of the cold war and the fall of the Soviet Union along with the beginning of the emergence of China into the modern world. While things got tougher for many in the developed world, they got better for billions in the emerging countries who were lifted out of poverty.
3
add to republicans' ideological "de-regulatory" push, including their undermining of antitrust law and policy, the "litmus-testing" of federal judicial appointees and strong rightward move of the federal courts. republican federal judges protect business and the wealthy. period.
it can be shown easily that republican support of the ultra-wealthy meant allowance of what would have been antitrust violations; mergers and unchecked private equity promoted market concentration. our industrial heartland has been decimated by leveraged buy-outs and short term "wealth maximization", etc.
unfortunately, though, the clinton and obama administrations did little to push back, even when they had the opportunity, through judicial and other appointments. why? money always talked.
that's why we need a thorough change in assumptions among our leaders. although i voted for hillary in 2016 and obama twice before, i now realize that was a mistake. hereafter, i will support the most progressive candidates running for office.
2
We now know WHEN. With numerous associated WHYs- interacting or not.HOWs are a bit problematic to understand, even as we learn to know. Information, factual or not, doesn’t easily transmute into necessary insights which become sustainable, effective interventions. When and if needed.Two types of knowledge and understanding are missing, for me, from this descriptive column. What are the needed positive events associated with this temporal blip in human history, if any? What can we do about effectively overcoming that WE don’t know that we don’t know...?
When did the Federalist Society bubble up out of the swamp? The damn 80s. Now, every unqualified right-wing legal hack nominated bye Don the Con and confirmed by the morally bankrupt Republican Senate is a Federalist Society member. New illegitimate member of the Supremely Corporate Court, Justice Gorsucks, of course a Federalist member, distinguished himself from the others by ruling just a few months before his nomination that a long-haul truck driver who was freezing to death in a snowstorm in the Rocky Mountains was legally required to stay and perhaps freeze in his broken down 18 wheeler instead of seeking heat and life, which is what he did. Mafia Don of course wanted the most cruel toady to right-wing billionaires that he could find, so Gorsucks got the nod. Here in Arizona, Koch brothers stooge and hireling Governor Doug Douchey actually packed the previously well-respected Arizona Supreme Court by forcing off moderates, appointing Federalists, and actually adding extra, uneeded seats to the court in order to obtain absolute control. Now they validate ever-more-onerous restrictions on voting and uniform public school funding as they shift the court in the hard right direction. And in the federal court system, white male Catholic judges have practically reinstated feudalism, bestowing extreme power on large rich corporations granted individual human rights (a ludicrous concept) while stifling the voices and power of real breathing humans.
17
In 1976 the Supreme Court decided Buckley vs Valeo, which allowed unlimited spending on political campaigns. The average cost of running for a house seat went from $150,000 in today's dollars up into the stratosphere - and voila, rich people started owning politicians at a rate they never had for most of a century. Conservatives have more money, and were able to buy more politicians. To try and keep up, Democrats started sucking up to Wall Street. Things started going south in just about every sector... the Citizens United decision made it a lot worse, but the Slow Burn was started by the Supreme Court in 1976
14
The Left simply cannot tolerate a prosperous and strong America. The Left thinks all Americans must be dirt poor, starving slaves who must beg Big Government for even the tiniest crumb
2
May I remind you that the nation is in the control of the Right, not the Left, and that income inequality has never been more grossly entrenched.
I don't see a prosperous America, except for the rich.
Are you one of them?
11
Conservatives never change their tune no matter how wrong they have been proven to be. The Left wants an America where everyone has a chance, not the crony-corporate-capitalist take-all system we have now. You want to know why Liberals think they are so smart? Compared to conservatives who can't make a valid argument for any of their economic policies, we are geniuses.
2
No, we believe that in a moral country with great wealth, we have a collective responsibility to care for those you call “dirt poor”. Not everyone has the possibility of earning enough money for things most of us take for granted. Pray that you are never disabled— you will be shocked if you ever need public assistance, Medicaid, etc.
2
Nineteen-eighty also saw the rise of the false deification of money in popular culture. After the late Sixties, where "liberation" gave way to license rather than responsibility, President Carter and the Democrats wanted to be the party of responsible growth for a better future. Unfortunately, Americans were told to want it, and get it, now instead of delayed gratification.
While there were warnings in the satiric "The Peter Principle" (1969), which explained why incompetence is rampant and often triumphs, Americans were fed the glitz of "Dynasty" (1981), a series where corporate management seemed based on Pharoah's dictate, "So it shall be written, so it shall be done!" ("The Ten Commandments"--Cecil B. DeMille, 1956). Appearances counted more than performance, from the appealing-sounding "going private" where businesses bought up their own stock rather than using the money to develop their employees' talents and grow, to the excesses of Brett Easton Ellis's "American Psycho" and the late Tom Wolfe's masterful "The Bonfire of the Vanities" (1984 serialization--fiction in "real time" published in Rolling Stone).
In the words of the psychotic Blanche DuBois in "A Streetcar Named Desire" (1947), "I don't want reality; I want magic!" Americans didn't get magic, they got the institutional crap of propaganda, and the ensuing crashes of 1987 and 2007 did not wake them.
It's funny how literature, whether fiction or science fiction, tells a tale that is either true or becomes true.
9
One of the worst things going on is that a college education, once seen as investing in America's youth, is now seen as a profit center. Combine that with the elimination of many middle class jobs by IT and outsourcing, and it's a big problem. I graduated from college in 1964, with a B.S. in liberal arts, and my first four jobs were with Fortune 500 companies. I graduated without debt, because on a 3 month summer vacation, working in a factory, I could pay for 1 year at a state land-grant college.
18
Reagan, like Dorothy's Wizard, seems to be all powerful in this story. Thank goodness he had his Democratic majority in the House of Representatives for his entire tenure in office or he would not have been able to do so much harm.
2
Has anyone figured out what the last graph means? What is "Distance" and how is it quantified?
Also, regarding the income gap between Massachusetts and Mississippi -- I'm sure it's real, but cost of living is much different in the two states. Comparing ratios of income/COL would be enlightening.
1
There have been some attempts to compare cost of living with median incomes and see if people in low cost of living states (like Mississippi) come out ahead. From what I've seen, the low income states still look worse.
http://time.com/money/5177566/average-income-every-state-real-value/
"We pulled average pay for each state, based on 2015 median household income from the Census Bureau’s American Community Survey. Then we adjusted those figures based on each state’s 2015 “regional price parity”—a calculation by the U.S. Bureau of Economic Analysis that shows how much a certain amount of cash will buy you in a given place."
In Miss. the "real income" was $47,092, meaning the median income of $40,593 was worth more there.
But in Mass. the "real income" was $66,069. So, even though cost of living is higher the difference is more than offset by higher income for the median household.
1
Having practiced medicine for more than forty years and having tried to help literally countless
friends and patients navigate our healthcare
system the findings cited in the article are no surprise to me. Our system is driven by consumption of product and procedure. For an everyday person especially a person with an illness or who is old,alone,disabled, or poor the
system is impossible to use. At some point, like
now, that should change.
16
Not only the neo-con disdain for the poor and the fallacy of trickle down became the marked features of Reagan era that had reversed the four decades of the New Deal welfarism but the same had become a policy template for the future specially during the Bush and the Trump presidencies, hence the 1980s could rightly be described as the inflection point in modern American history.
11
One wonders if there is any measurable correlation (negative?) between those who served in the Vietnam military and those who did not serve. What advantage, if any, accrued to those who did not expend service time but rather were able to concentrate on their civilian careers?
2
The majority of draftees who were inducted during the Vietnam War were working class, while many college students were deferred.
However, whether that made a difference in their future careers is debatable, since the job base for each group was different, even without the war.
1
Another development in 1980s was the rupture
of contract between the workers and
the management. Layoffs at all levels
became common confirming the loyalty
to profit and shareholders value. Jack Welsh,
ex CEO of GE, made continuous layoff
fashionable: reduce labor cost and increase
bonuses to top management. Top management
compensation shot up from 25 times the
average worker to 350 times, enhancing
the inequality. Sadly American voters don't
see the problem and continue to put
republicans in charge who perpetuate these
policies.
31
The other thing that changed around 1980 was the emergence of the junk bond market. Michael Milken began his assault on American companies through leveraged buyouts. This was also the period of time where corporations shifted investment in research and development and began insisting on short term profit making instead.
19
The year 1980 was a dismal turning point for most everything related to political and business policy, and it was indeed Ronald Reagan who couched the "greed is good" mentality in comforting canards like, "Why should people who work hard have to support those who refuse to work?" Reagan and his administration knew to play into the egos of working people and he could steal the very shirts off their backs...and they would thank him!
I graduated from college in 1988, into an economy that was in freefall. College degrees had been devalued and entry level jobs were gone. The new model was to use temp agencies or short term work, which circumvented giving benefits and raises. Many of us worked this way for a decade before getting into career positions. And nothing has changed. Millennials face this same sort of job crisis and have excessive student loans to boot.
Add to that the changes in trade and technology that turned the Industrial Belt into the Rust Belt, and you have a sector of this nation that lives in a constant state of flux.
One would think there could be some sort of revolution but most Democrats are moderate and Republicans manage to win the cultural wars that beset this nation. We have a large, single-issue voting part of the populace that would readily dismantle the nation just to end abortion.
Yes, 1980 was when Americans were convinced they could have everything they wanted by a president who devised a system that would withhold everything from us.
31
Excellent note, but it omitted a crucial development that also took place about 40 years ago -- an unbroken chain of US trade deficits.
By definition, these deficits were driven by the seriously overvalued US dollar - an overvaluation closely tied to the free-market obsession with a so-called "strong" dollar.
By making US products too expensive to compete with foreign goods in both domestic and foreign markets, America's bloated dollar has killed profit margins, eroded government revenues, closed thousands of US factories, destroyed millions of jobs, and left America with trillions of dollars of foreign debt.
If America wants to restore jobs, improve income distribution, increase health by increasing the availability of medical care at more reasonable costs to more Americans, reduce our excessive dependence on borrowing and debt (including foreign debt), and reduce our debilitating political polarization, it is high time to abandon America's obsession with the so-called "strong" dollar.
In short, it is high time to approve the "Competitive Dollar for Jobs and Prosperity Act."
This legislation will create a strongly competitive dollar, one that makes it possible for Americans to earn as much producing exports as they spend on imports!
2
Dollar is also the reserve currency.
If the dollar weakens the confidence in
dollar will erode. This will result in the
loss of many policy options to the
disadvantage of USA.
2
s.kahn
After the USA has sold all of the privately owned national wealth and other assets located in the USA to mortgage and/or redeem our US currency and our freshly printed paper “Sovereign Issued” US Treasury Bonds, foreigners will then stop buying any of our freshly printed paper US Treasury Bonds, and then the value of the US Dollar will approach the value of monopoly money, toilet paper and/or Bitcoins.
If the US dollar value diminishes to zero at the future Federal Reserve Auctions, the Chinese Yuan might be the "last man standing" with a stable value for use in international trade.
The 40-year US government deficit spending spree could go on forever if we in the USA were earning money and not borrowing the money (from people in foreign BRIC nations that have a positive balance of trade) that we are spending on government activities.
It does not matter how we reverse the balance of trade as long as we stop the flow of gold, dollars, T-bills, Government Bonds, title to US located property, and other US assets from this country to other countries in payment for the things that they make and we consume.
I want to point out that these US Dollars and the freshly printed paper US Treasury Bonds that the US government sells to people in industrialized nations in return for the US dollars that we paid them to manufacture the things that we consume have absolutely no value, except that they are redeemable for title to privately owned businesses, factories, casinos, hotels, farms, land, ports, breweries, refineries, forests, ports, breweries, refineries, and other privately owned assets located in the USA that were created by previous productive US generations, instead of Gold from Ft. Knox (of the NY FED).
Starting in the 1960's, the US Treasury has spent all of our gold reserves to provide both "Guns and Butter".
In 1972 President Nixon declared that the US dollar would no longer be redeemable for gold from Ft. Knox, and stated the US dollar and these freshly printed paper US Treasury Bonds, and etc. are now backed by the "full faith and credit of the USA" (aka Junk Bonds) instead of gold.
This allows US citizens to sell their US located privately owned assets that were created by previous US generations to foreigners in return for US dollars earned (created) by foreigners, in lieu of US citizens having to work to produce the things that US citizens consume and to pay for increased US federal government activities.
The USA will soon run out of various assets created by previous generations that we can to sell to foreigners.
2
1980 may have been the start of the hi-jacking of conservatism. The planning may have started earlier, maybe as early as the Goldwater fiasco, but it was the Reagan fiasco that enabled outside financial interests to take over. And take over purely for financial gain. Being conservative is not bad, being in a conservative state of mind as a mindset is bad. Take a wagon train as it progresses to it`s goal. It advances, it progresses. An outside force attacks the train, whether it is an enemy or a sickness you circle the wagons, a conservative move and a good one. Now once the enemy has been vanquished, hopefully, what do they do? Progress on? Or do they let the fear mongers convince them to stay in a conservative formation and never move? Progress is natural and nutritional. We start our progression in life at birth and grow. To hide in the conservative mindset is to stagnate.
10
Wealth tax ... no more foundations...Tax Musk, Tax Bezos Tax Buffett Tax Soros Tax the net worth of anyone who CNBC flashes on my screen with there net worth. Then and only then will be having a real discussion on wealth. All you talk about Mr. Krugman is a waste of time. Wait... no not for you, you get paid to keep this going.
4
This liberal agrees wholeheartedly with that recommendation. Tax them all. Use the money to create the country we should have, not the dystopia that the Republicans have inflicted on us. Oh, and let's put the marginal rate back to Eisenhower levels......
2
1980 was marked by the election of Ronald Reagan and the resurrection of the Republican party after its justified demise due to Nixon. This sowed the seeds political power enjoyed by the 'Christian' (more accurately 'anti-Christian') evangelicals that plagues us today. Vermin like Jerry Falwell (his son plays a big role today), Pat Robertson, Oral Roberts and others of their ilk unashamedly mouthing hatred and hypocrisy while assuming the moral high ground made major contributions bringing us to the morass we find ourselves today.
11
Conservatives - "Cold Hearts, Closed Minds," David P. Manning
6
John Hughes movies must be banned! The nation has gone downhill since he began writing movies in 1980
If this guy got a Nobel for being wrong about everything he has ever prognosticated, then maybe Trump DOES deserve one just for getting our hopes up before Kim bails on the NoKo deal.
Funny there's another column on the NEW massive spike in Obamacare premiums coming for 2019 out today. How's that call looking??
Spike in Obamacare premiums are because GOP has cancelled individual mandate,so healthy young Americans don’t have to have healthcare. It was all planned by GOP.
4
Trump says Obamacare is dead. We now have Trumpcare (how's that for an oxymoron). Premium levels in 2019 are the direct, predictable and in fact intended result of Republican policies throughout the Obama years, but greatly intensifying their malign effects since the 2016 election.
Your internet handle really ought to be "Laughee."
1
Spot on Paul.
3
Uh....Paul, the increase in income inequalty started in 1967, according to the graph you included.
That's not "about 1980".
3
Uh... correct in an absolute sense, but if you look closer at that chart, the Gini ratio rises and falls within a certain range - up until 1980, that is. That's when it 'breaks out' of that range, rising above the highest level it had been at since 1950. Then it keeps on going.
6
What the heck happened around 1980?
If your immediate response is to hump your desk, wave your arms in the air, and say “I know! I know! REAGAN!! Reagan!!”, you should sit down and think a bit more. Reagan was, like trimp is, a glorified poster boy for a semi idiot consensus among investors and institutional elite. (See “liberalism, Neo” for the forces that animated the “Reagan Revolution” which actually began under Carter and was supported to a large extant by mainstream Dems. Or google “New Deal, Attack upon”. The trimp phenomenon is probably best understood a pot-stirred populist reaction to the decline in living standards and optimism that was an inevitable result of the economic redistribution of wealth levered by neoliberal policies in the West. )
Paul Krugman knows this very well, but for understandable (2018 election) reasons, here he is masterfully re-enacting Marlon Brando’s performance in The Godfather when he delivered the bullet splattered body of his first born to the undertaker. “Look how they massacred my boy!”
1
gee...... who got elected president in 1980??
1
1980 - It's mourning in America.
58
An NYTimes ombudsman once asserted that Mr. Krugman never let facts get in the way of politics, and this just another example.
1980 -- first owned several PCs (Apple II and IBM PC). The PC changed a lot of things -- IPOs, offices, lifestyles.
1980 -- Jimmy Carter thrown out of office after the prime rate hit 18%, thanks to the economic messes started by LBJ.
Just proves all the jokes Woody Allen made about psuedo-intellectualism -- talking rather than doing/thinking.
Among those already mentioned, another 1980-ish milestone was when both working class & middle class families quickly went from possibly needing two incomes to definitely needing both. Wasn't it, correctly, called "Voodoo Economics" at the time?
7
Yes! I remember this well. Everyone on board in the household to float it. And back then, the child care available was horrendous.
I think it started earlier, around 1973 or so. The Powell Memorandum dates to 1971, the Trilateral Commission was founded in 1973, these are the seeds of modern Reactionary politics in America. Much of Reagan's policies had antecedents in Jimmy Carter's policies, but after 1980 things accelerated.
9
I recently downloaded the crude and adjusted death rates for the USA, DC, and all the states from 1999 to 2016. Since the adjusted measure is designed to control for things like age structure, the relationship between the crude and adjusted rates should be the close to the same from year to year. The national data showed this pattern up to 2009, r=.988. But the correlation of these two measures of the same thing from 2009 to 2015 is -.874. That minus sign is provided by the data, not me. In the later years the correlation, simple r, between the crude death rate and the number of deaths is .996. The correlation for the same years between the adjusted death rate and the number of deaths is -.881. That minus sign is also real. If you don't know statistics, this is a real problem. When the number of deaths increase, the adjusted measure of mortality goes down and when the number of deaths goes down, the adjusted rate goes up,
I called the bureau of vital statistics about this data problem and was told that I had to talk to the director about this problem and that he was away on a two week leave. I called two weeks later and described the data problem to him and he told me I did not know what I was talking about. I tried to tell him I had taught statistics for 32 years but he hung up on me.
My analysis of DC and the 50 states found that this problem showed up for all the states during different years but not DC.
It's just business in America. It a trillion dollar business, but it is just business. The harder we try to regulate it the worse it becomes and now we reap the benefits of our intervention.
Look toward any compass point for the answer or for ideas taking the best alternatives and creating a world-class system, but keep the big-pharma folks and the medi-biz and the insurance companies out - out - out of the process. We constantly squander the power we have as a collective relinquishing our control to the body-politic. Pick a topic from the news and look at who is served by these decisions. It's not us...
We have so many opportunities to change our America, and we lazily hand it over to self-serving politicians who do exactly what we expect them to do, and then scream and rant and rave about their decisions that pander to their constituents.
How stupid are we? Apparently... very!
5
Maybe journalists don't look for new ideas from conservatives because they know it would be futile. After all, by definition conservatives are....... conservative
Maybe that would be giving them far too much credit. Shouldn't they be going after the party that has no reasonable policy ideas, old or new? Yes, the Republicans are a lot worse in this regard than the Dems. THAT'S how bad they are.
This is a great column. What happened in my business in 1980 was seen in many other areas. In medicine prior to 1980 with the 70% tax rates doctors took Wednesday off to play golf. My wife`s ex-husband, a dentist, would take flying lessons on Wednesday afternoon. Our lawyer friends would take afternoons off for the same reasons. Our business friends would do the same thing. The reason was simple...who is going to struggle for more money with a 70% tax rate? We all lived comfortable lives that were upper middle class. What changed? Well when the tax rates dropped all of a sudden working more meant you would get to keep more. It meant that all of a sudden there was a financial reward for doing more dental crowns at a higher price or more surgeries with questionable outcomes, or more litigation with questionable outcomes. In the financial sector with a 70% tax rate cheating and insider trading was immoral, might land you in jail and was not going to make you dynasty creating money unlike today. Same with CEOS and business Now with the potential to make dynasty creating money our financial geniuses know that this activity is rewarding and subject to low tax....it is worth cutting moral corners to make that kind of money. We have felt since the 1980s that taxes should be raised back to the 70% level. People need to have a stake in the system and poor people should be paying taxes too...they just might vote against endless war.
10
Reagan bought the con of "supply side" and the
GOP has been pushing this nonsense since then.
Tax cuts do not pay for themselves. It was and has
always been a wealth transfer scheme upwards.
The point was to run up the debt to justify gutting
Social Security and Medicare and just about everything
people think constitutes government.
Word
6
Reagan was a reaction to the 1970's when Democrats dominated in the aftermath of Watergate. Anti-blacks, anti-hippies, anti-unions, anti-environmentalists emerged, with a demand for "simple" solutions which translated into "simple-minded" solutions. But, I contend a broader trend of U.S. uncompetitiveness was already at work. American businessmen decided they could not compete without: 1. government handouts through lobbying bribes, 2. outsourcing labor to corrupted foreign soils, and 3. unchecked financial engineering. They called Reagan the great communicator. Really? Does speaking to people as children, with childlike solutions, constitute greatness? If American business and industry outsourced leadership, it was to give credence to a lesser nation.
8
We will be getting the bill in the mail for this latest Republican tax law.
The 2018 deficit is going up after the Trump tax cut by almost double - $600 Billion is going to around $1 Trillion.
Most people I know will be getting about $1,000 a year for 7 years.
That's about $20 a week.
But after ten years, we will have added $10 Trillion to the national debt or about $67,000 for each tax payer.
I wouldn't mind if Trump voters got fleeced. But I am getting fleeced, too.
Reagan cut taxes and got 16 Million jobs and a huge increase in the deficit / debt. It’s the reason they put the debt clock in Manhattan.
Clinton raised taxes and got 23 Million jobs, almost 50% more than Reagan and balanced the budget, zero deficit.
W Bush gave us two "tax cuts for the job creators" and we got 3 Million jobs. He took Clinton's zero deficit and gave Obama a whopping $1.4 Trillion deficit. And he also gave Obama the worst recession since the Great Depression.
Obama got us through the Great Recession and cut the deficit by almost 2/3 to $550 Billion. He gave us the "jobs killing" Obama-care and we got 11.5 Million jobs, almost 400% more than W Bush. And 20 Million people got healthcare.
And now with Trump, Republicans have done it again, cut taxes and increased the deficit / debt. And I expect worse job creation than Obama.
Already the 2.06 Million jobs in 2017 was the lowest since 2010 when the recession ended.
But some people never learn.
14
Don't tell this to the conservatives - they might have to change their ideology or at least stop lying about the economy. Yeah.
1
it is amazing how well Reagan is thought of by presidential historians. Not only did the US start going off the track starting in 1980 but he poisoned our politics. Reagan began the politics of racial divisiveness. What was wrong with America were "young bucks who didn't work" and "welfare queens".Republicans have used that theme ever since. He preached hatred of the Federal government and disdain for the environment. He piled on Federal debt for the benefit of the wealthy.
He didn't win the cold war. The USSR collapsed of its own accord.He was a disengaged intellectually challenged lightweight.
His sole achievement was twice being elected president.
18
I totally agree. He never even made a decent movie.
2
Democrats should say tax cuts are good for rich and tax increase are good for working class people!!!
4
Oh come on...perhaps one of the weakest columns by Mr. Krugman....lest we forget the idyllic years of that disaster Jimmy Carter and the I’ll effects that came home to roost after the liberal wackiness of the late 60s and early 70s. Reagan remains among the top of our most popular Presidents and his accomplishments have stood the test of time. Nice try Professor..back to the drawing board.
Whitewash at your own risk. Conservative economics have been a proven drain on the country. Unfortunately, conservatives continue to lie about it and their undereducated minions continue to vote for their lies.
2
Amen - decline began with Ronnie's claim that the war on poverty was lost to Poverty's twin non-married parents the welfare queen and the strapping young buck. Mix general resentment with ignorance and evangelical intolerance and voila - it's downhill from there despite Clinton and Obama. Frames are inescapable
10
Excellent column and 100% correct.
3
Sorry, you can’t distract us from the fact that ObamaCare has been a complete and total disaster
1
Sure the Republicans can, by sabotaging it, attempting 57 times to repeal it, defunding it, repealing it by a thousand (tax) cuts. Conservatives certainly have distracted you from reality.
2
I list Reagan among the worst of presidents.
Why? Because he fed the myth of individualism and fundamentally denigrated government, paving the way for its ultimate debasement, by the likes of his twisted heir, Trump.
12
The late John Hughes began writing movies in 1980. Is that the turning point Krugman laments?
More great thoughts from Chairman Krugman... The same guy who predicted a recession on November 8th/16 ... A recession that the US would "Never" recover from... It's Not that he was Wrong, but he was Wrong for the Wrong Reasons - Pure Animus and Bias against both Trump and the Republican Party - which affected his Professionalism and Objectivity; continuing Sadly, to this day❗
1
"It would be nice if commentators who accuse Democrats of lacking new ideas knew something about this history."
It would be nicer = more ethical, just, democratic etc. if they cared.
But their ideology is precisely that the rich should be richer and the poor poorer--dependent, obedient, supplicants.
The commentators are knights of the money-lords--jousting for tips and party favors.
Their goal is feudalism--camouflaged by mythology--
1) the freedom mythology (but one person's freedom means the unfreedom of everyone else--duties not to interfere);
2) God story realism (Trump couldn't survive without the Evangelicals)
3) An attack on academia, logic, evidence--reason itself.
4
Also, it was after 1980 that people began to get fat.
3
But the 1960s and 1970s were soooooo bad. Things must be better now, right?
Ronald Reagan effectively ended the government's obligation to ensure the common good.
11
Ockham's razor is a principle from philosophy. Suppose there exist two explanations for an occurrence. In this case the simpler one is usually better. It's not economics its obesity and lifestyle folks. Just ask your doctor to be honest about it or watch 10 people order at McDonalds or Starbucks! In 1980, 4.8 percent of men and 7.9 percent of women were obese. According to recent findings from the Centers for Disease Control and Prevention, nearly 4 in 10 U.S. adults have a body mass index classifying them as obese. Adult obesity rates have continued to increase steadily since the turn of the century, rising from 30.5 percent in 1999-2000 to 39.6 percent in 2015-2016, a record high. Just over 70 percent of all Americans are either overweight or obese, meaning people with normal weight levels are now a minority. Obesity and type 2 diabetes are diseases that can substantially decrease life expectancy, diminish quality of life and increase healthcare costs. According to the American Diabetes Association, in 2002 18.2 million people, or 6.3 percent of the population, had diabetes. Diabetes was the sixth leading cause of death listed on U.S. death certificates in 2000. The direct and indirect cost of diabetes in the U.S. in 2002 was estimated at $132 billion. It has been estimated that the annual cost of overweight and obesity in the U.S. is $122.9 billion. This estimate accounts for $64.1 billion in direct costs and $58.8 billion in indirect costs.
1
1980, the first year America voted someone 'playing ' a politician got elected President.
6
Reagan’s disastrous “government is the problem” was the polarizing point in my lifetime.
This feeling on the Right may not have been born during the Civil Rights era (1954-1968) but the repressive and discriminatory practices that gave rise to government “guarantees and protections” for minority (read: non-white) citizens angered even “mild-mannered” Republicans who interpreted a federal hands-on for discrimination victims a government over-reach.
They didn’t understand (or didn’t want to understand) that civil protections by the federal government were necessary and interpreted—conveniently, for them)—that government was intrusive and tyrannical. Richard Nixon took full electoral advantage of this in 1968, a white resentment groundswell based upon a zero-sum dynamic in which they were forced to acknowledge wholeheartedly the lie and hypocrisy underlying their belief system.
Watergate was a mere stop on the road to a right-wing bend in which “liberalism” was routed. That Reagan spoke deeply to the angry majority laid the groundwork for later inroads of hate:
1. Contract With America (1994);
2. W’s election (2000);
3. the Republican obstruction of President Obama (2009-2017);
4.Donald Trump’s election (2016).
Even the white workers who elevated Reagan and Trump to the White House didn’t realize how thoroughly they were fooled by the diverting dog-whistles while labor was de-fanged and they blamed it on affirmative action. This while CEO pay left them behind.
5
Why does the “life expectancy at birth” chart resemble Manhattan?
I bet Alex Jones has an answer for that!!
Seriously, the deregulation aspect of the Reagan years dramatically changed America.
Banks, airlines, TV, etc were all allowed to consolidate. Those industries today take a toll out of us.
But the changes brought by Trump, Pruitt, DeVos etc will in the long run b even more devastating. Morals, education, air and water quality are all headed for a significant downturn.
In 35 years some columnist for the Times ( if it exists) will write something eerily similar to Krugman piece about how we changed starting in 2016.
4
"It would be nice if commentators who accuse Democrats of lacking new ideas knew something about this history."
Greed and exploitation are not necessarily exclusive traits of Republicans (though Republicans boast about it). Democrats have not been very interested in their non-rich constituents either.
In such a Tweedledum-Tweedledee political world, cheap tricks like Gerrymandering and buying elections are enabled. Blaming the other guy for values you embrace yourself appeals because, to many Americans, their sense of being swindled is satisfied. They/we ARE being swindled and worse, have no one to lead us out of this mess.
1
Around 1980 "greed is good" and extravagant CEO and banker pay/bonuses started the steady decline of the US as a civilised country. (Britain took its up a little later with Thatcher with predictable results). The upshot is political polarisation, glaring inequality and the politics of resentment. Thanks to the columnist for this piece.
4
I agree. Junk bonds became king and pocketing short term profits overtook spending on research and development as a prime goal for many American companies.
3
Used to be you could buy stock in GM and if they sold more cars you made a little money too. Now in today's Wall St casino you can make as much money betting on GM to fail. How does this improve America?
1
Healthcare costs are an inscrutable black hole. It seems this topic, here, is used for a proxy for something else. This one metric, life expectancy, very common, is alarming but, we need to drill down.
Where exactly, if thats possible, are the healthcare dollars going, New knees, liposuction, cancer drugs or primary care?
Remember this is the USA and Profit above all else.
The healthcare in US includes three type of cares - (1) Truma, (2) infections and (3) chronic care like blood pressure, diabetics. The modern medicine does miracles on Trauma care and infection care and complete failure in chronic care. More and more doctors started believing that chronic care based on modern medicine is a digester as it is based on the understanding of human system a static and separate systems where as in reality human system is a complex self organizing system without any normal state. The American healthcare system is the experimental test ground of this failed chronic care system under under free market force. This is nothing but a swindlers paradise. The American drug companies know about this situation but because of profit it will not stop the practice. People from all over the world comes to America for Trauma and infection care, but how many cases you have heard about patient from world coming to America for treating blood pressure or diabetics. Americans go to India and China and other third world countries to treat those problems. The regulations worked well in other countries to keep the cost down on this area. Let us separate the insurance costs on this line and restrict the payment for chronic problems. The life style problems are not chemical issue it is a holistic problem of food, exercise, environment, mental and many more.
1
Over the past 40 years, the very Rich are living a lot longer, the Rich are living longer, and the middle class are living a little longer. Most of the Poor are not living longer, and the very Poor are not living as long. USA life expectancy, as a whole, has not improved as much compared to other countries because more of our population is poor now than 40 years ago.
....men in the top 1% of the income distribution lived 14.6
years longer than men in the bottom 1% (averaged across years and ages), and life expectancy gaps increased over time.
Raj Chetty, Michael Stepner, and Sarah Abraham, et al., “The Association between Income and Life Expectancy in
the United States, 2001-2014,” Journal of the American Medical Association, vol. 315, no. 16 (2016), pp. 1750-1766.
2
The Republicans, with all their think tanks, focus groups, dirty campaign managers, and ideologues who lended support, shifted the political landscape around the time of Reagan.
The critical mass of ideas and institutions came together to provide a platform for meanness, re-interpreted as a valid ideology, like self-sufficiency. The "evil" liberals wanted welfare for everyone, massive benefits for social programs, and an end to war: "how DARE they," thought the right wing.
The Republicans won the battle of fear and greed over rationality and compassion. The enlisted the common man to vote against their own interests by winning the popularity contest that elections often decide.
4
If you are a communist like Krugman you will point to the trend line on income inequality. There are other trends that he ignores, of course. If people had kept some old fashioned morality, we would not have had exploding health care costs and shortened mortality caused by AIDS, which did not exist until the early 1980's. Similarly, rises in violent crime and illicit drug use contributed to increases in medical costs and shortened lifespans.
1
Why brand someone a communist? That is so reactionary.
Good column ! Saint Ronnie was as morally and politically destructive to the country as Bush II and Trump yet even Democrats like Obama pay him mindless deference. He often is viewed as beyond criticism much like our bloated and highly overrated military. Indeed, Saint Ronnie and his minions and manipulators paved the way for Bush II and Trump. Let the looting and moral decline continue!
3
How this can still be considered a mystery is beyond me.
Baby boomers! In 1980, those born between 1945 to 1963 would be 35 to 18, respectively. This block of voters started their rapacious hold on America, embracing a selfish form of conservatism, a ‘what is is mine is mine, what is yours is mine’ mentality, demanding tax cuts that killed state services and drove people to expensive market solutions, while unwinding financial regulation in guise of liberating the market, which really meant pouring gas on a fire. Create a chart when financial boomer wizards started tying Mortgage Backed Securities dynamite sticks to the bridge of US economy which blew in 2008, and you will see it hockey sticks in 1980.
They were generation sociopath; Trump was born in 1945. Need more proof than that??
1
I agree - being a "late" boomer - I was more of a latch key kid. Not coddled or "babied" - Always resented being lumped in with a generation who had benefits that were denied to me and my peers.
They know Democrats have ideas, they just can't say it. Conservatives, Republicans and Trump supporters will always put their party over their country.
3
Thank you, Paul Krugman.
I'm 66, and the "America" I grew up in was a country in which there was a general consensus of respect for science, knowledge and learning; a broad and growing awareness of the fragility of the planetary ecosystem and a recognition of the vital necessity to care for the environment; a recognition of the toxic nature of institutional racism and sexism and a strong determination to move toward a more just and open society, in which the dreams of our forefathers "for liberty and justice for ALL" might, someday, be achieved. . and a strong and thriving middle class.
Then came the "Reagan Revolution", and here we are, in the dystopian nightmare of "The Trump Era": plagued by obscenely metastasizing economic inequality, rampant racism and a growing tendency toward fascism. We have an admitted sexual predator in the Oval Office, a man whose lies and scandals pour forth in such profusion that we have become numb to the barrage. We have a government inhabited by bizarrely incompetent cretins whose only qualifications seem to be that they despise the existence of the agencies they are in charge of. We are witness to governmental corruption on an unprecedented scale and a generalized culture of coarseness, intolerance, ignorance and crudity.
When did things go off track?
Paul Krugman has it exactly right: 1980.
9
I’m 67 and your sentiments are pretty much the same as mine. 1970s America had problems but not anywhere near the magnitude of the problems spawned by Reagan , his minions and his handlers. Moreover, don’t anticipate a “blue wave” coming to save us. The majority of voting Americans subscribe to most or all of the Reagan doctrines: America is exceptional, government except for the military is always the problem, unions are bad, poor people are takers, brown and black people are more often than not criminals, the military and the police are to be honored no matter what atrocities or mistakes they commit, private property and wealth are more important and deserve more respect than human dignity and the environment, science and knowledge are only worthwhile to the extent they can be monetized for the benefit of the upper 2-3 percent or used for military purposes, God is an American etc.
5
What changed in 1980? Reagan was elected POTUS. The post WWII propserity of the 1950's-1970's began its downward spiral. Reagan snookered millions of Americans into voting for him, my longtime Democratic parents included. It's taken 38 years of Republican policies and lies to get to Trumps's 2018 MAGA parallel universe of alternate facts & reality, the ultimate Republican con.
3
I'd also suggest that 1979 was the year that CSPAN went live and is when members of Congress stopped talking and negotiating with each other and started talking directly to their partisan bases. Why negotiate when you can attack your coworkers in the press or in social media and call them communists, pinko liberals or fascists. Reasonable negotiation doesn't make for exciting television and doesn't generate "Likes", screaming does.
3
This analysis is like the rooster who thinks he causes the sun to come up. He crows and the sun comes up. Therefore he causes the sun to come up. But, its fun to do, so I'll give it a try.
The Speaker of the House of Representatives has at least as much power to get laws passed as the President. "Tip" O'Neill was Speaker from 1977 to 1987. If he had been from Mississippi rather than Massachesetts then the incomes in Mississippi relative to Massachusetts chart would not start bending back down in 1977. If all of that pork, such as the Thomas P. O'Neill Jr. Tunnel and the Ted Williams Tunnel, was sent south, then Massachusetts and Mississippi would have exactly the same per capita imcomes now.
1
The axis of evil: Nixon - Reagan - Trump.
5
I think two things are behind the current trends being discussed: 1) the exorbitant cost of higher education coupled with the increased availability of funds that can be borrowed to finance it. Universities increase tuition in response to declines in state funding and also try to make it up with research grants that require massive infrastructure but offer the typical undergraduate little in future salaries. Students borrow heavily to afford the modern university and then fail to find jobs that will allow them to pay back the debt which cannot be absolved by bankruptcy. 2) Increased healthcare costs due to over devotion to end-of-life care (50% of healthcare is spent on it), drug advertising to promote the pill du jour and lack of access to affordable healthcare plans that provide basic care. People get sicker and cannot afford the bill to get better. No wonder opioid drug addiction is spiking.
3
Reagan set the tone but Newt Gingrich‘s contract with America set it in stone. Together with litmus tests, gerrymandering and dark money we may have come to a division in American politics from which we cannot recover.
9
Changing attitudes toward debt had a lot to do with it.
Growing up following the Great Depression and WWII, I well recall that borrowing or going into debt for any purpose was frowned upon. Debt was dangerous. My parents admonished me, "Always pay cash!"
It was only gradually, in the later 50's and 60's, as the trend setters and early adopters showed that debt could be taken on safely and profitably, that the mass of the rest of us became accustomed to finance everything on credit.
By the 80's, credit was fully acceptable, but what made it so dangerous was that incomes stopped growing. Consumers ended up borrowing more and more to maintain their standard of living.
6
The development of credit cards around the same time certainly has something to do with it. Now in my 80s, I grew up without credit cards. All was cash. Credit cards provided instant loans and the banks took advantage of those loans, charging high interest rates to people on marginal budgets who did not know well how to handle those budgets.
1
Well said!
I find totally ironic that most regions/states that benefit from the prosperity and income gap are solid blue, while the poorer states are solid red. I suggest that social scientists examine this phenomenon where by both groups vote against their won interest.
5
Easy - liberals are willing to share for the good of all, conservatives aren't. It's simple Reagonomics.
2
The Repubs are the party of the Overdog. They view all of these confluences of the inflection point as a good result. Less Unions check. Stagnant wages check. (Betsy DeVoid would remark during her reign of error in MI, as her Hubby ran for Gov. of MI, that MI workers are paid too much (Much better to resemble Mississippi), echoing what the financial elite have always felt about us common wage earners since the time of Ronnie Rayguns. The more low paid, uneducated workers, the more easily manipulated voters, hence tRump as the final natural result of their grand plan for America.
10
I saw Ronald Reagan at work as governor when I went back to school in the 70s in California. Rising attacks on tacks on education were apparent. Certainly I could not afford my own education today, and at the time I had the very clear thought that there was an element in his administration that didn't want the middle class to be too educated. We were supposed to be smart enough to put widgets in gadgets but not smart enough to analyze what was happening to us. And then of course there was his welfare queen catchphrase. Donald Trump is the end result of Ronald Reagan's work.
12
Capitalism, by its nature, is a system that demands economic growth incessantly. As such, it sustained an economy of relatively healthy growth, at least materially, for a period, for many in the industrialized world. Such a system will, however, eventually shows its foundational destructiveness. It is hard for people to understand how an economic system that seemed so successful was destined to fail. I don't know if Mr Krugman understands that.
Democracy is only possible where wealth and power are dispersed broadly in the population. When population growth, and income growth destroy the ecosystem, capitalism has moved from growth to malignancy, and eventually, the body politic dies. The investors and workers diverge in the face of resource depletion. Capitalism is revealed to be an authoritarian economic system. Here we are. No, Democracy cannot survive global capitalism.
5
[quote]
DEFINITION of 'Nixon Shock'
A term used to describe the actions taken by former U.S. President Richard Nixon in 1971 that eventually led to the collapse of the Bretton Woods system. The policies imposed and the actions taken by President Nixon included imposing a 90-day wage and price freeze in America, a 10% import surcharge and, most notably, closing the gold window, effectively making the U.S. dollar inconvertible to gold.
2
I recall standing in a Hudson River bookstore in 1981, chatting with the owner, when a crusty old gentleman came in, got a whiff of our conversation about the new president, and emphatically declared that if we listened, we could hear the rush of money flowing to the already rich in torrents that we could not fully understand since we hadn't lived through the Gilded Age as he had. In the ensuing years, that moment has come back to me so many times.
31
In 1985 direct advertising of drugs was made legal and big pharma got the green light to “educate” Americans about caring for ourselves by taking a pill, or two or three. Good health is related to 4 specific components: good genes, good diet, good exercise and good sleep. Everyday we’re bombarded with advertisements designed to convince us a simple solution is at hand and we, too, can have the beautiful life the actors portray. All the issues noted by other commenters are relevant as well.
14
Inflection points are often in the eye of the beholder.
I could just as easily make a strong case that income inequality as measured by the Gini ratio began its strong upward run beginning in late 1960's instead of 1980. I see the regional convergence reversing course during the last years of the Carter administration before the 1980 election
Also that financial leverage for households from post-WWII continued to increase at a relatively constant rate until 2000 where it truly accelerated.
Its and interesting premise but 1980 and the election of Reagan as some turning point on a number of these measures is nebulous at best.
3
The 1980s were the period when the baby boomers came of age. Although they had been hippies and anti-war protesters, they started serious careers in the Carter era and decided it would be nice to live well. While the House and Senate remained under control of the Democrats, the country started to move in a different direction.
The high levels of education of the baby boomers, combined with an increasingly complex society and new technology, made it possible for a large group to dramatically increase their incomes. Lower tax rates made it worthwhile. The result? In 2016, a full 20% of households had an AGI over $112K, and 10% were over $165K. That's a huge number of very well-off people.
The medical sector is full of people with high incomes. Every job - doctor, nurse, drug salesman, hospital administrator - pays better than in other sectors. Hospital lobbies have marble floors and free wi-fi. Yes, it's a paradise for aging yuppies. But what do we do now? The millennial generation will have to take the lead, and remake society to better suit their needs. A lot of this will involve undoing what the baby boomers did.
Well, it seemed like a good idea at the time....
8
Many of the ills of today started with a unleashed and aggressive Wall Street. I know, I was there. Healthcare costs soared after and housing has soared as many companies that were private, regional, "neighborhoody" became national and run by a business school CEO.
Your insurance company was no longer the Mutual Benefit company but a unending rate increasing behemoth . This all started when Reagan put Regan in charge of the treasury and Wall Street discovered what deep pocket client the US government could be. Sad for all the rest of us.
16
One reason Wall street took off was because of Reagan's tax policies. Prior to the 80s, earning a lot of money didn't matter because almost all of it would be lost to taxes. By capping the tax brackets as he did, Reagan made it worthwhile to earn big.
5
Reagan was more likely a result than a cause. His election was likely the end result of the descent of Americans into a worldview of self-interest, an atmosphere so radically different from the civil and human rights movements of the 60's. Trump then becomes the ultimate maturation of that commitment to self, and the national revulsion at Trumpism is ground for hope that we will turn back to the worldview of mutual responsibility upon which the country was founded.
14
Reagan was damaged goods with a congenial act. The thickness of the false self is directly proportional to the injury of the authentic self. Reagan's appeal was that he gave millions of his fellow sufferers a peerless example of plausible denial of what happened to them. Obliviousness is always preferable to facing the obviation of the true self.
15
I submit that a strong factor for the health care inflection point in 1980 is that this was the year at which the median boomer age was over 30 years.
This wave of adults increased demand for everything: housing, energy, jobs, cars, ..., and health care. As a country, we had faith in the free market to provide increased supply; but, more $-per-patient did not translate into better health since the insurance market created haves and have-nots that reverberated through subsequent generations, X-, Y-, and now Millenials.
12
This is also the point at which the obesity epidemic began. It coincides with the introduction of governmental guidelines recommending a low-fat diet.
10
Another unmentioned and often overlooked turning point starting in the Reagan era was the destruction of trade unions in the private sector. Beginning with the wholesale firing of the Air Controlers and the jailing of their leaders, an era of union busting opened. Every labor struggle was met with mass firings, backed by the courts and often aided by heavily armed police, many once powerful unions were reduced to a mere shell. The loss of collective bargaining has reduced wages and benefits that has impoverished entire regions ever since. Coupled with de-industrialization and plant closings, huge numbers of once well-paid workers have been thrown on the scrap heap. It is no wonder then, that masses of desperate people might become easy prey for hucksters and con men of every possible variety.
65
Let's look at econmic history since WWII.
1. The Great Prosperity: 1946 - 1973
First let's dispose of the "Europe was Rubble Myth." Look at http://piketty.pse.ens.fr/files/capital21c/en/pdf/F1.1.pdf which shows that the output of Europe was about the same as the US during this period.
We had deficits for 21 of these 27 years, and the debt grew 75%. The gov thus supplied money to a growing economy. Inequality was low consequently this money had high velocity, i.e. it changed hands in domestic commerce frequently. Also low inequality depressed financial speculation. The deficit spending sent money to the people who needed it and spent it. As a side effect we got good stuff like interstate highways, startup costs for Medicare, etc. Because we were producing so much, inflation was not excessive.
2. The Great Inflation: 1973 - 1981
The period of prosperity was brought to an end by external events. Due to the 1972 El Nino , the anchovy harvest failed which raised the prices of livestock feed and fertilizer and consequently food prices, This was followed by the oil embargo which raised prices on all goods that were transported. These shortages caused the Great Inflation.
Also during this period wages and productivity which had formerly moved in lockstep began to diverge causing an increase in inequalty.
(cont.)
10
You don't mention that President Lynden Johnson insisted on pursuing a "guns AND butter" fiscal policy during the Vietnam War. Unlike government policy during WWII, when war bonds and taxes strove to soak up the excess liquidity from war-driven employment, Johnson, fearing citizen unrest and opposition to the war, rejected raising taxes or curtailing war aims.
The inflationary impetus was later aggravated by the items you mention.
2
LVeA - Well the inflation rate under Johnson was never over 5.5%. If you are trying to say he added too much money to the private sector, that is measured by the deficit which averaged $6.7 Billion or 0.75% as a percent of GDP during his administration. Doesn't seem like a strong inflationary impetus to me.
3
(cont.)
6. Obama Administration: 2009 - 2017
Obama tried to replace some of the money sucked out of the private sector with a stimulus, but although it helped a bit, it was too small to promote a V shaped recovery. In addition, too much of the stimulus was tax cuts and the largest one, the AMT repeal, went to the upper middle class and the Rich. He tried to help the economy with jobs bills, but they never were even considered by the Republican Congress. As a result the deficit was cut 75% by 2015. This has been responsible for a glacial recovery and our labor participation rate has barely budged from its bottom.
The problem is, of course, that most people and politicians in particular rely on kitchen table economics that tells them that that debt and deficits are a priori bad for the economy when almost the exact opposite is true.
7. The Ongoing Trump Disaster: 2017 -
Trump is increasing the deficit, but in the worst possible way. Not only is he doing it with tax cuts which get us nothing for our money, but they are mainly tax cuts which benefit the Rich and increase inequality which we have seen have been bad for the economy, but also he is rolling back regulations on speculation as though he wants a repeat of 1929 and 2008,
There are a number of policies we should be pursuing, but that's a topic for a different time.
3
On the first day of classes at the University of Colorado I was directing a large program of more than 2000 students and half a hundred faculty when I noticed bulging mail slots against our big green wall. What’s this? I asked my secretary who informed me that every grad student had received a half dozen credit cards inviting them to indebtedness at about 19%. I brought scissors to our first large gathering that day and urged with vehemence that they cut these opportunities in half. This was the first signal to me of unscrupulous predatory banking practices that have repeatedly broken both institutional cultures and personal lives. In 1988 Goldman created the labyrinthine products that twenty years later crashed the world’s economy by two-thirds and across the vast rainbow of this trajectory Reagan broke unions so that while 40% of workers were unionized then only 7% are today. Clinton outsourced manufacturing and so continued not only the crushing of a middle class but any prospect of renewing it in the future. Capitalism is based on lending and lending is based on transparency. What we have witnessed is the opposite and so what is called Late Capitalism wherein government exists solely to create greater wealth for the wealthy and greater debt for everyone else. When nobody went to prison for the collapse of 2008 the future corruption was made certain. And we elected the self-proclaimed King of Debt to prove it. Well played Wall Street!
30
Reagan was a symptom and a catalyst, but not the cause. Reagan took office in 1981, not 1980, and he won the office in a landslide. The Carter administration began the push for deregulation in about 1978. I lived through that era. I remember gas line, stagflation, military impotence, losing the Vietnam war, Iranian hostage taking, Desert 1, and malaise. We’d reached the end of our national innocence, Democrats had run out of ideas, and the country wanted something new. People had reason to believe Reagan when he told us that government is not the solution to our problems, but rather, it was the problem. Poor Mr. Reagan was a true believer in individual freedom, but he wasn’t smart enough to realize that he was being used by the Gordon Gekkos on Wall Street. It turns out that the problem wasn’t government. It was government corruption and capture by the few.
It could be that we’ve reached another inflection point. Republicans are out of ideas, and the President is the embodiment of corruption. Our current system is unsustainable, and more and more people see that. Even the kids see it. That’s what the Woman’s March was all about. That’s what the science march was all about. That’s what the gun control demonstrations and marches were all about. That’s why Democrats are energized, and that’s why there is a Blue Wave coming.
22
I disagree. Reagan changed the tax laws to funnel money to the rich. He broke the unions to block bargaining power for the less well off. He ignored the HIV epidemic. He increased the debt while cutting social programs. Life may have seemed good under Reagan because if you borrow enough money, you can live well. But in the long term, his policies were a disaster.
7
Of course correlation is not necessarily causation but there is quite a lot of evidence (some adduced here) that the Reagan era was when it all started go off the rails and it was at the end of the 80's that we had the first big financial crash brought about by lax regulation (remember the savings and loan fiasco?).
17
Snap!
2
In took a decade for (later Supreme Justice) Lewis Powell's 1971 memo to the US Chamber to find sea-legs: his coordinated manifesto and action plan was comprehensive in strategy and tactics, but is still relatively unknown as the template that drove corporate and wealth conservatives to put into motion the effects Paul aptly describes. The memo's thrust was to reduce resistance to corporate capitalism by forcing workers to abandon activism and their demands for wages, liberty, opportunity, safety nets; their independent faith in an American dream.
The memo directed conservatives to create narratives that blamed others for America's fallings and failings as a way of protecting power and privilege: to put into service scapegoats and stereotypes of undeserving cheats--lazy, depraved, dangerous. (Witness the recent NYC lunch-time rant by a lawyer because workers and customers around him were speaking Spanish; claiming he paid for “their” welfare. They were working, dude! It's NY!)
In contrast to Mao's 1934 march in China, the long march of conservatives cemented their hold on power and narratives by flipping the South, inextricably merging conservative principles with racial inequality. With this tie, Trump emboldened a new mainstream white supremacy, with conservative politics as its political principles.
(Part 2 below.)
5
(Part 2)
Justice Powell would be proud! He achieved what the Supreme Court's greatest white supremacist Chief Justice Taney was not able to do with Dred Scott, to anchor white supremacy to mainstream politics and American life, turning it into mandated reality through executive power.
Doubts? Witness the new internment camps—for children: brown children separated from their parents, warehoused in closed, isolated Army facilities; the Obama fears enacted quietly by Trump--without resistance by the NRA, which doesn't protect equal rights or due process, especially not for brown children who are the new chattel being discarded as waste because that is “the law.”
Doubts? Witness Trump's silence on domestic and global violence, the interior violence which caused the deaths of unarmed infants after his Israeli embassy move. Witness his deal with China, after a $500 million outlay, as US jobs leave and wages do not rise. Witness the impotency of his tax cuts in paychecks. Witness the lack of plans for progress as he benefits from China's One Belt, One Road, billion dollar global infrastructure project. Trade shifts goods, it does not increase production of innovation, both vital to growth. Trump's fiat pricing and quotas preserve profits at workers expense!
Trump's attention is to the current balance sheet; he uses its ledger of wealth and waste to give the lumpen, those dispossessed, uprooted, and cut off from the future at Powell's behest, false hope.
3
There was a regulatory mechanism, Health Systems Agencies that went away in the Reagan administration. These had to authorize new hospital beds. When the regulatory mechanism went away the lid came off. Health care shouldn't be a competitive business.
9
I would like to see some other indicators such as the amount of money the wealthy plied senators and legislators with and the amount of time our federal representatives spent begging for money.
5
I was in medical school in 1980. Soon after, Mr. Reagan and his Republican minions cut Federal support for medical education. My tuition tripled.
The trend on the cost for a medical education has not been positive and, and this distorts healthcare. Students must consider the return on their investment in their education.
This was the death knell for primary care medicine - a component which every rational health care delivery system promotes, but we in America do not. We've walked almost 40 years into these dismal woods; it will be a long walk out.
35
"most people would agree that soaring medical costs, rising inequality, financial crises, regional decline, etc., are bad things;"
I don't know. While there are many bad things in the world, it's easy to argue that these are good things. Soaring medical costs, for example, just reflect that we're getting more medical care. There's more of everything from research on new drugs to more nurses to nicer hospitals etc. Yes, there are a few rich doctors, but by and large it's the amount of care that's soaring. (Now, arguing about whether we're getting the right kind of care is a different debate...)
Regional decline is also relative. People are jamming themselves into the cities because they want to live there. They could have a huge house in flyover country, but more and more people want the urban lifestyle. It's a free country and people are choosing this option. In other words, more people are getting what they want. Is that bad?
The income inequality would be more worrisome if it weren't largely a mirage caused by illiquid stock and equity. It's not like Jeff Bezos can just buy 100 billion items from the dollar menu at McDonalds. It's all dividend-free stock. The same goes for the real estate bubble and other numerical illusions.
As for financial crises, the markets are more stable than any other time in US history. Would anyone rather go back to the days of William Jennings Bryan?
As John Prine said, this is wishing for bad luck and knocking on wood.
@No Name Please
Financial markets are more stable than at any time in US history? Are you serious? We're just 10 years out of the worst crash since the 30's and any stability has been largely brought about because of the increase in regulation that Republicans are eagerly trying to roll back. We don't need to go to back William Jennings Bryan we just go back G. W. Bush or is your memory really that short?
29
"Soaring medical costs" do NOT reflect that we are getting more medical care! They are a bad thing when the main reasons they're soaring are the insurance and drug industries. We pay far too much for what we get for those big bucks!
5
No I could not have a big house in fly-over country. In 1987 I moved from Cleveland, Ohio to New York City. My New York job paid about $10K more than a better job in Cleveland did, but my New York apartment was a studio that was a bit over 2 1/2 times what I paid for a one bedroom in Cleveland (both were in the 'hood). I could probably get an apartment in Cleveland for what I pay now for my rent stabilized apartment on the same street I moved to in 1987 (not the same building) but I'd be very lucky to make half the salary. For working class people, it isn't that simple.
Never, ever, regretted moving here, though.
3
You could also make a quite different case that it was not the Republican agenda but rather the rise of globalization that was the impetus for many of these problems -- certainly for the yawning gap between rich and poor, but maybe also for a distortion in the relative pricing of goods versus services. The US is possibly more exposed to a flood of imports than any other nation.
1
If globalization was the cause, then you’d expect similar effects elsewhere in the world. But we don’t see anything like the level of inequality we have here in other countries.
21
Except that European countries in our globalised system provide much better social supports-- free or very cheap college or training school, free state-funded and excellent health care, large sectors still unionized with much higher wages, and much less income inequality (CEO pay "only" 30 or 40 times the average wage, not 450 times like here).
21
You could make that case but you'd be wrong. Republicans embrace globalization when it results in cheaper labor, cheaper resources, and bigger profits, higher share prices, and fatter bonuses for the bosses.
1
Krugman's excellent piece does bring me back to 1980 when I was a newly-minted college graduate. Stagflation and the Iran hostage crisis were big issues of that year and Reagan was seen as the aggressive 'savior' of American 'ideals'. His theme was 'bringing America back'. But I did see the handwriting on the wall and thus Reagan never got my vote in 1980 and 1984. Reagan may have been far more of a gentleman than is Trump and inflation was smashed by his policies. But Reagan also did smash unions and the union movement, which brought living wages to our nation's workers. Reagan was also the puppet of the religious right and the right-wing sector of the Republican Party. His terrible denial of the AIDS crisis would be a terrible burden to our nation's gay community. So Krugman's thesis of 1980 as an inflection point of our nation's history is spot on.
61
Except that Reagan ranks among the top of our greatest Presidents
Says who?
Compared to Trump, even Reagan almost looks good.
This is a pretty weak analysis by Paul. Hopefully can do better in the future. 1980 also marked the beginning of the huge hallowing out of american manufacturing (Steel and Auto companies start their huge slide down and Japan Rises). China starts in the 1990s.
1980 is also when half the baby boomers started entering the workforce. So we have a large increase in labor supply happening while US Mfg is being outsourced. The labor supply is expensive US boomers and cheap Japanese and Chinese workers.
The rest is history
2
U.S. manufacturing actually INCREASED during that time though. Development of technology and increase efficiency had taken twice as many jobs as outsourcing. It used to take at least 27 jobs to create $5 million dollars worth of goods. Now it takes 5.
5
Yes ... issue is the jobs lost, with nothing better to replace them. I should have said Mfg Jobs. Ownership in Mfg companies was and is profitable as they globalize - but this only benefits the owners not the workers.
1
Right on and lest we forget the buildup into 1980 of the Jimmy Carter disaster
Bless you, Paul Krugman. I’ve been saying this for years. 1980 was my first presidential election and I watched in dismay as Reagan was elected.
And at least in Reagan’s day, being a well known performer was not enough to get one elected president. Reagan was president of SAG, then governor of California. And as odious as his policies were, he was polite.
11
1980 may have been the inflection point because Ronald Reagan was president. But everyone attending the University California from 1964-1968 when Reagan was governor of California, as I was, saw it coming. No one who saw his smarmy smile and charming manner when he was president would have been fooled if they had seen and felt his divisive, venemous attack on the University, university students in general, so-called “welfare queens” allegedly driving cadillacs and the many other enemies he vilified, just as Trump is doing now. When I attended Cal, there was no tuition, just an “incidental fee” of $38. Reagan started the spiraling tuition fees that have continued to this day and began reductions in college funding, leading to the outrageous student debts of today that are non-dischargeable in bankruptcy and literally hound people to their graves. For those who bore the brunt of Reagan’s hatred it is very hard to understand the adoration so many people have for him now. We definitely turned a corner when he came along—and not for the better. A B-actor with no record of public service, he followed a popular governor, Pat Brown, who had built the California Master Plan for Education and the State Watet Project, a man who truly cared about his fellow man. But Californians were ready for an outsider, just as Americans were for Trump. Paul Krugman is right about Reagan. There is a straight line from him to Donald Trump.
134
I think the problem is not that Reagan was elected in 1980, it is that he was re-elected in 1984 by a landslide and was succeeded by his "read my lips" VP in 1988, who also won by a landslide. What could and should have been a temporary and modest four-year detour became an entirely new direction toward a different destination, as Krugman's charts illustrate.
3
And let's not forget high-fructose corn syrup, which had completely replaced cane sugar as the sweetener in American soft drinks by 1980!
14
my idea too - you beat me to it.
An excellent column, Prof. Krugman, but I'd make a similar case for an inflection point in early 1965, beginning with Pres. Johnson's escalation of the war in Viet Nam and continuing with his economically damaging attempt to finance that war on the sly. In the years following early 1965, we saw the decline of support for Black equality (a movement which probably reached its peak with the Selma March in -- early 1965) and the "White Backlash" that would eventually elect Richard Nixon.
I commend to your attention the remarkable book by James T. Patterson "The Eve of Destruction: How 1965 Transformed America".
7
Productivity growth tracked wage growth until the mid 70s. By 1980, they split.
9
"But none of this explains the timing of the spending divergence. Why did it start around 1980?"
This is a complex topic, but it useful to look at this graph
"https://www.epi.org/productivity-pay-gap/"
That shows that around that ~ 1980 the classical macro economic connection between productivity failedl.
Productivity increased, but pay stayed flat. Since ~ 1980 productivity of American workers increased by 242%. Wages by 115%.
The divergence is a distributive effect of globalization (outsourcing, immigration of workers willing for less, moving manufacturing to Mexico in response to request to wage increases) that hit most sectors, but NOT the medical profession.
In 1998 the mean annual wage of Physicians and Surgeons was $ 102 020. By 2017 it reached $238,540.
Why so?
The medical profession is largely shielded from international competitions . Regulations (sponsored by the AMA) makes it nearly impossible to import physicians and surgeons willing to work for less - unlike , say IT workers on H1B visas. Add to this that fact that medicare will not pay for services carried out in Mexico or Canada , and that the elderly consume a disproportional section of health care costs.
We see here yet another example of a bifurcation in US inflation : Services and goods not exposed to global competition have a comparable high inflation rate, services and goods exposed to global competition a comparatively low one.
Mr. Krugman does not consider this most basic explanation.
15
Reagan offered confidence and promises that people wanted to believe. It was all theater, of course, but it mesmerized nearly the whole country with the sweet feelings of good times after years of poor economic performance, worry about international terrorism, warnings about the problems of polluting the environment with the existing technologies, and the grim reality that much needed to be changed with much sacrifice to make it right. Nothing that Reagan did helped except for changing people’s mood to be more optimistic. Otherwise, his policies just made it all worse.
He did not invent the poor policies and he really wanted to believe that they would work. But he never would give up on an idea he liked, even if it did produce the results expected. Tax cuts reduce revenues. Regulations mitigate well known problems that those regulated already had caused. Government serves the needs of society. Selfishness is not the same as enlightened self interest. Wealth in private hands serves private needs. Reagan claimed that all of these were false and he was wrong.
17
Reagan certainly started us on this journey. many good points here and in the reader's comments.
So far I see little emphasis on Citizens United, although that was arguably a second order effect, it sure kept the ball rolling.
Also, at the beginning was the catering to racial prejudice. Remember Reagan made his announcement speech in Philadelphia, Mississippi. I think this started the downfall of unions.
11
Conservatives seem to be against any policy that makes life more gentle or easy for people. Look at the real consequences on the ground of what they want, and you will see more difficulty, stress, and hardship for most people.
15
agreed - I'd like to see an analysis of conservatism associated with psychopathy - those who may actually enjoy hurting others.
Given what you say - conservatives continual push for cruel policies that cause hardship for many people, I'm wondering ...
3
It’s occurred to me that they want Dickensian Times to return.
3
As I read it, I was hearing in my mind Ross Douthat saying that it's not the money, it's the fact that they don't go to church and they get divorces. And David Brooks saying that he sees the data but disagrees with changing things on policy grounds. And Bret Stephens saying that regardless, he still loves good tax cut.
It will be interesting to read what they say.
31
Actually many important things started changing before that - especially, real wages quit keeping up with GDP/capita or productivity starting in the late 60's and by the late 70's were going downhill:
http://www.skeptometrics.org/BLSB8.PNG
Inflation itself was certainly a major cause of this but it was the deliberate objective of the Fed to quash wage increases on the absurd assumption that wages were driving inflation. The idea that the Fed could and should control the economy was something that gained popularity among economists in the 60's.
The first big Reagan tax cut was in 1981, but Democrats had passed one in 1964. Certain types of financial deregulation had already started well before 1980. The changes around this time can certainly be correlated with the ascendancy of conservatism, but not everything can be blamed on Ronald Reagan.
1
Reagan's firing of the air traffic controllers in 1981 placed the thumb of government firmly on the side of Capital. Labor rights in America have steadily deteriorated ever since causing wage stagnation except at the top.
But by far the biggest and most insidious change has been the No New Taxes ideology that became a litmus test for Republicans and has starved good government programs at all levels, driving inequality and misery.
31
Mr. Salzberg's first paragraph points to a huge cultural change. Labor didn't just have legal rights before 1980. Work was respected. I think this was itself, unfortunately, a fleeting aberration, the result of the respect America had for the generation that fought in World War II. But once even politicians ("When the people lead, the leaders will follow") talked about Joe Sixpack as "the salt of the earth." There was respect for labor.
Since the time of Ronald Reagan (and Dick Armey and Paul Weyrich and Jerry Falwell) working stiffs are thought of as "losers," in our current President's patois. The genius of the Civil War was rich whites convincing poor whites to fight and die to keep someone else lower on the economic ladder, so they had someone to look down on. Ronald Reagan, who kicked off his push to the White House by going to Mississippi and endorsing states rights, knew what he was doing. Like Martin Luther King, Reagan was telling his audience, your time has come. But King intended to deliver, and Reagan was lying. Infinite credit is not wealth.
Donald Trump has not the gift of subtlety. He has taken the wrapping off Ronald Reagan's package and presents it in all its naked ugliness. He daily promises things he can't deliver and doesn't intend to. That is what his empire has been built on. "I'm the king of debt."
It is bad enough that we have elected this man. What will happen when we collectively realize how we have starved ourselves for the last forty years?
2
Medical costs have skyrocketed also due to the introduction of expensive medical technologies such as CT and MRI scans and advances in surgeries like coronary bypass, hip and knee replacement and many other major, but expensive, procedures. The U.S. stands out as a country where access is relatively unregulated and where "defensive medicine" to avoid malpractice suits leads to massive over use of radiology and other expensive, but often unnecessary, tests. Most of these advances became widely available in the 1980s. In addition, many ineffective procedures also go unregulated here also adding billions to health care costs. So, it may be just a coincidence that both availability and access occurred at the time of the Reagan administration. What is not a coincidence is that Reagan and other Republicans have worked to deregulate and defund medical effectiveness studies and criteria for a procedure, and have actually abolished agencies like the Congressional Office of Technology Assessment, the GAO Program on Evaluating Medical Devices, and NIH consensus reviews that reported on the effectiveness and ineffectiveness of medical procedures like back surgery and fetal monitoring.
15
IIRC Hacker and Pierson in “Winner Take All Politics” noted that it was in the seventies that corporations, in response to EPA and OSHA, began to spend significantly on politics. Perhaps the root of the inflection point in the eighties?
3
Since you're into contemporary singer-songwriters perhaps you'll be interested (if you weren't already aware of it) in this blast from the past: Bob Franke (one of the songwriting greats, still very much with us but nowadays far too little-recognized ) wrote a song at the time about the 1980 inflection point and it's convergence of degenerative influences: "Invasion of the Money Snatchers."
7
Reagan also introduced the country to the belief that we need not worry as we recklessly run up the debt on the theory that by lowering tax rates, people work harder and will make up the lost revenue. But there is no reason to believe that top rate cuts will increase work. The backward bending supply curve of labor indicates that if you cut taxes on top incomes, the wealthy will work less. They will take more vacations, do more yachting and spend more leisure time because of the marginal utility of a dollar as they receive more money. If you pay people more at lower incomes, they work more, but if you pay people more and more at higher incomes, eventually they work less. And, at the highest incomes, where innovators are making billions, only a fool would believe it was because of a lower tax rate on dividends or capital gains.
That is Reagan's legacy.
27
In 1977 dietary guidelines making grains the basis for our diet and demonizing saturated fat were published. Over the years Americans have responded by increasing carbohydrate consumption, decreasing saturated fats and increasing vegetable oils in their diet. Result: huge increase in obesity, diabetes & pre-diabetes and all of the consequent illnesses.
8
You overlooked the corrupt "expert studies" on behalf of the sugar industry (see PepsiCo, the extended Bush family, and Marco Rubio's pals in Florida, among many others) that absolved sugar of any role in obesity and diabetes.
1
Society as a whole cannot expect to survive extinction, unless all of individual parts work together collectively in all facets. That certainly includes health care.
Republicans/conservatives have charted a course for America that everyone has the potential to buy their own bootstraps and then pull themselves up by them. Everyone is on their own, unless you are a corporation or rich person. Then the government of the people are to enrich you with their taxes, because you get to pay less than everyone else.
A some point the government runs out of money, or it simply borrows/prints more. Of course as well, this cannot sustain itself.
Which brings us to health care. We might triage everyone through the hospital emergency room, but we are doing it in the most inefficient and costly way possible. That cannot sustain itself as well and something needs to be done.
Single Payer.
14
High costs and increased spending arre only two factors in this correlational study.. What is needed is a partial correletional study to determine if other factors effect this outcome.
What percentage of working conditions such as time spent going to and from work, diet, packaged foods vs. fresh foods, air pollution, working hours, preventative medical treatment particularly for children.
What part does childhood illness contribute to lower life spans? Also the quality of the resentment, and access to medical insurance. And where does the money go? does it go to the health care insurance companies or thee providers.
There are so many variables here using just two of them does not provide any quantifiable results.
4
What me worry? America's Great White Hope and stable genius will ensure that Mississippi catches up to Massachusetts and that income inequality becomes a relic of the past. He'll reopen Trump University and share all the secrets that allowed him to inherit a successful business and then use his family name to avoid a series of bankruptcies. Will everyone who's earning less than a half million per year please write in and tell us how much better you've been doing during this upturn in the nation's economy?
15
Thank you, Mr. Freeman, and if would be helpful and healthy if this could be a New York Times choice for its readership.
2
Yes, I earn less and no I am not doing better. In fact, with the Republican tax plan, next year I will pay MORE in taxes. More taxes to give to the likes of the Koch brothers. I am not happy about this.
3
1980....when a B movie actor hoodwinked Americans to "slip the surly bonds of truth" to "touch the face of fraud."
1980...when fake-Christian Ronald Reagan duped the faux Religious Right to defeat the most Christian and most ethical President in modern history.
1980...when greed became good.
1980....when Reagan's campaign staff back-channeled to Iran behind President Carter's back to delay hostage negotiations and stage the hostage release until Jan 20 1981.
1980...when Reagan's Make America Great Again campaign slogan turned out to be the most fraudulent four words in American history and that ultimately helped flush America down a GOP drain on two separate occasions.
What a horrible year in American history.
It'll take a long time to recover from the twin horror shows of 1980 Make American Great Again and 2016 Make American Great Again.
There's a sucker born every minute....and Republican TV hucksters sure know how to exploit them for maximum national and international destruction.
237
You neglected to cite Reagan's resumption of the Southern Strategy by opening his general election campaign at the Neshoba County Fairgrounds in Philadelphia, Mississippi, where the three civil rights workers disappeared in 1964, and were found later to have been murdered by the Klan and policemen. Reagan gave a speech trumpeting the code words "states' rights," a more cynical ploy I can't imagine.
17
Socrates Let's not forget 1981 when a B movie actor and former faux labor leader attacked PATCO and fired all the air traffic controllers Unfortunately the rest of organized labor specifically the aviation industry stood by and did nothing. A tremendous step towards the inequality we are now experiencing For autocrats to succeed all the rest of us just need to continue to do nothing. I often fantasize that these brave PATCO members would have returned to work and a week or so later walk out en masse and tell this wannabe cowboy President you can take our deal or start landing these jetliners by yourself.
12
" .. There's a sucker born every minute .."
And HRC lost the country, in 2016. Thanks, God, for so many smart people with common sense.
http://www.nytimes.com/2004/09/06/books/06masl.html
September 6, 2004
Indicting the Drug Industry's Practices
By JANET MASLIN
THE TRUTH ABOUT THE DRUG COMPANIES
How They Deceive Us and What to Do About It
By Marcia Angell, M.D.
Dr. Angell's case is tough, persuasive and troubling. Arguing that in 1980 drug manufacturing changed from a good business into "a stupendous one," thanks to changes in government regulations. She adds, "Of the many events that contributed to their sudden great and good fortune, none had to do with the quality of the drugs the companies were selling."
In the past, drug discoveries made through government research remained in the public domain. Beginning in 1980 those breakthroughs could be patented, even if their research was sponsored by the National Institutes of Health. As a consequence, Dr. Angell says, patent shenanigans have reshaped the drug business, as have the recent government regulations that expedite direct-to-consumer drug advertising. "Once upon a time, drug companies promoted drugs to treat diseases," Dr. Angell writes. "Now it is often the opposite. They promote diseases to fit their drugs."
11
Krugman is a … glass half-empty kinda guy, isn’t he?
Oh, Paul, it’s MUCH worse than you describe. The upward tick in healthcare cost relative to outcomes may have started after 1980, but it was only with ObamaCare, passed in 2010, that the cost side of the equation didn’t JUST go through the stratosphere but actually landed on Mars. The typical liberal response to a need that affected perhaps 15%-20% of our people, to one degree or another: throw gobs and GOBS of money at it. After the ACA, outcomes haven’t generally dropped – in some areas they’ve improved, although not in live births. What’s changed is the COST of delivering those outcomes, which makes the payback for the money spent, directly by the people and indirectly through higher taxes and debt, a dreadful return on the money spent.
And conservatives DID come up with ONE new idea since 1980: how to spell the word “YUGE”!
It also was after 1980 that we began to feel the creeping effects of automation obsolescing human labor – an effect that by Obama’s time was pretty evident. It might also be noted that in the 36 years from Reagan’s inauguration to Trump’s, 16 of those years were presided over by Democratic presidents, who drove the intrusiveness and cost of government through the roof, and transformed our income tax from a progressive but balanced framework to one where half the country doesn’t pay federal income tax yet the highest 20% of our earners basically pay to keep the trains running.
3
Richard, do you have a source for your claim that medical costs ballooned after the ACA? My understanding is that the ACA reduced the cost curve of medical inflation. My understanding is also that the ACA pays for itself since new costs are covered by new revenues. Sorry, but the ACA isn't the boogeyman you'd like it to be, and it does help tens of millions of your fellow Americans.
12
"it was only with ObamaCare, passed in 2010, that the cost side of the equation didn’t JUST go through the stratosphere but actually landed on Mars."
As Wikipedia likes to label dubious statements: [Citation needed]
1
1. If you worried about costs during the ACA, just wait. Costs were kept LOW by the ACA and are now set to rise, sometimes by 100% by the Republicans gutting healthcare.
2. Unemployment is below 5% thanks to Obama era policies. So automation isn't the problem. Salaries are. Did you know that CEO pay is on average 300x of its median work pay? And sometimes it's over 1000x. THAT"s the problem.
3. The democrats have lowered federal debt repeatedly, only to have the Republicans blow the budget up again and again.
4. The 1% pay a lower rate than you do. If you don't make any money then, no, you don't pay taxes. But if you make Billions, don't you think you should pay your fair share?
Before you rant (and vote) against your own interests, find out the facts.
3
What the article forgot is the migration of US industry to foreign countries aided by the US investments in those countries, especially Japan and even more, China, accompanied by loss of jobs, and ballooning trade deficits. This trend started in the 1960s and was already in full steam in the 1980.
4
And growing even worse under The Donald despite the tariffs that will hurt U.S. consumers far more than they'll help our blue-collar workers.
6
Life expectancy at birth is above 82 years in 20+ countries. Top 3 countries/regions are far eastern countries/regions. This indicator always fascinated me. America must be around 79, 3 years below the mentioned countries despite compared very high health expenditures. So if health expenditure and technology only partly explains the phenomenon, there should be a more decisive one which does...Hong Kong, Japan, Macao, Switzerland, Spain, Singapore...etc. can it be that life in such countries is sort of more "sacred"? On the other hand, the last four data round 79 years for the US look sort of dense, this seems very interesting...maybe more than the data divergence at 1980. The lowest life expectancy on earth is 52 years and there are 40+ countries (most of such in Sub-Saharan Africa.) where this indicator is below or equal 65 years. Hypothetically if retirement age was 65 years in such countries there wouldn't have been virtually retirement anyway. (all funds collected would remain in treasury.) Latin America & Caribbean : 76, European Union :81. (lump average 78,5, interesting number.)
1
(Data from World Bank.)
clue - check for individual selfishness as a ruling ethos of compared societies ... ?
In the early 80s, I worked for a large US corporation. Travelled much and attended meetings with other large corporations allowing me to meet hundreds of engineers. At one meeting I had this crazy thought - where are the engineers from Ivy League schools? Never met a single one.
In the 90s I got my answer. While I worked to build things, the Ivy League engineers were building computer programs which were responsible in part for the financialization of our economy.
So, the 80s were a turning point during which the seeds of a new, less inclusive economy were sown. I blame Republicans mostly, but Democrats are not completely innocent.
12
Not just engineers, but physicists and mathematicians followed the golden brick road to Wall Street. STEM, everyone!
Often overlooked is the implementation in the DRG (Diagnostic Related Group) Federal payment guidelines in the 80' and continuing today. The reaction to this attempt to control costs by fixing payments to a diagnosis set off the reaction to delay making any diagnosis at all costs. It explains both the explosion in testing and therefore treatment costs and the continuation of doctor practice privatization, where physician groups can own their own MRI and CT scanning equipment to maximize profits.
4
It's much harder to quantify, and therefore put into a chart, but I think we'd maybe find something similar with race. Things were hardly great on that front in the late 70s, but it seemed like we were making progress. To all the crimes of the Reagan administration I would add the fact that he made it OK to be racist again. Before then at least we paid lip service to improving relations but then he launched his campaign talking about "states rights" in Philadelphia, Mississippi while decrying "strapping young bucks" and "welfare queens" which signaled to a good number of Americans that thinly veiled racism was not just OK, but a road to political success.
16
First off, it has always been OK to be racist in America. Just not against the same people all the time. Back in the 40s it was the Japanese and Asians, In the 50s and 60s it was OK to demonize blacks. Then it shifted to the Japanese (again). Then the Muslims. Now it's white folks. Oh, it IS always OK to hate the Jews. But anyone living in America as a working adult through the Nixon-Ford-Carter years who would say that Reagan didn't single-handedly make the United States turn positive again, didn't revitalize the economy, national pride, the incentive to work (lower taxes), and crack the back of the Soviet empire has to be delusional. Reagan was the first MAGA President, and he may be the last. He was inspirational, daring, and effective. Carter had single-handedly undermined every aspect of American life, and we were lost as a nation. It is the growth of non-discretionary spending that has hamstrung the nation, Paul. So cut the crap. Literally.
Before the 1970s corporate money lobbying had not bought Congress, in the1980s corporate lobbying began the process of buying Congress. Add on top of this the revolving door from Congress to lobbyist, our representatives did not want to bite the hand that would feed them in the future. Then the Supreme Court said corporations are people, the deed was done, we have a Corporatocracy. Soon to have a Plutocracy.
25
It wasn't just the US. It was all developed countries.
The nadir of inequality occurred some 40 years ago just as the industrial economy was giving way to the services economy.
The industrial era saw human physical power and human physical dexterity replaced by machines, while humans themselves retained cognitive superiority. Indeed, industrialisation made workers’ cognitive superiority relatively more valuable since a properly trained human could control a much greater value of production. By striking they could quickly impose on owners of capital greater pain they they themselves suffered.
Labour's bargaining power didn't arise because of unionism. Unionism flourished because labour's bargaining power made it impossible to resist, at least for a brief period.
Such anomalies have occurred before. The Peasants’ Revolts of 14th Century Europe arose from the acute labour shortages caused by the Black Death.
But just as the 14th Century revolts were crushed as soon as conditions permitted, so the industrial era “revolt” has been crushed. Farm wages in England doubled between 1350 and 1450 but then remained unchanged for 400 years until the coming of industrialisation.
The services economy restored the pre-industrial balance of power. And with AI and robotics now removing the cognitive superiority of human workers, there's absolutely no reason to expect any end to the current restoration of inequality and the power of propertied interests.
The 20th Century was an anomaly.
8
thanks mate - I need another beer now ...
There were no post-1930s US financial crises up until the S&L crisis of the late 1980s and that came about as a direct result of the deregulation of that industry in the early 1980s. The S&L financial crisis is now long forgotten but it was the first real financial crisis since the 1930s. It only looks small and insignificant now when compared to the 2008 global financial crisis but it was a big deal at the time and had real and long lasting economic consequences. The S&L crisis required a very costly federal bailout and led to the 1990-91 recession.
The conventional wisdom today is that the 2008 financial crisis was the a result of an unregulated shadow banking system that was unrelated to financial deregulation. The fact is that the shadow banking system grew exponentially because its securities were deemed safe investments suitable for the regulated banking sector. These securities were rated AAA by private rating agencies largely freed from regulatory oversight by financial deregulation. But more important was the climate that deregulation created in the banking system. Regulation was no longer thought necessary with the advent of Credit Default Swaps and other derivatives that did not exist in the 1930s. These were thought to act as insurance against defaults on securities held by the regulated banks. But in the end these unregulated derivatives played a major role in precipitating the 2008 global financial crisis.
13
"It would be nice if commentators who accuse Democrats of lacking new ideas knew something about this history."
Natural experiments are inherently messy but are well grounded in reality. For the conservative vs progressive models of society we have two natural experiments. One is serial - the US from the 1890s to present. Our country as a whole has done much better under the progressive model. The other is parallel, comparing our current well being with other more progressive rich countries. Again, the progressive model wins.
So, yes, Krugman is right. We don't need yet another theory about what works. We already know. Changing course will be difficult but necessary if our society is to survive. Vested interests will use everything they have to prevent change. The only thing the rest of us have is our numbers and the vote.
51
"Vested interests will use everything they have to prevent change."
The very definition of conservative.
1
If I had to come up with high points in the 1980s that marked the beginning of the end of the middle class, some of them would:
The surge in leveraged buyouts
The idea that corporations were only responsible to shareholders (and the mistaken belief that this was a legal requirement)
The focus on quarterly earnings
Gordon Gekko in Wall Street, saying "Greed is good." This was meant to be seen as a fault in Gekko's character. But thousans of young people took it as Truth--and as an inspiration to a career on Wall Street.
The rise of management consultants, and the astounding amounts of money they made by applying the above.
Reagan was a stupid, greedy man. As such he exemplified the era.
99
You touched on something I've wondered about for a long time: the excessive weight that shareholders seem to have now. Recently I saw a quote from some corporation saying 'we work for our shareholders' and I thought, 'what? I thought you worked for your customers?!'
My sort of 6th-grade view of how capitalism works is that there should be some sort of balance between management, workers, customers, and shareholders, where everybody gets something, though maybe not everything they want. But now the shareholders seem to be in charge of the whole program, everything is by, for, and about them.
Is that correct? is it right? What's up with that???
18
Businesses exist to make money, anything else is just an occasional crumb from the table.
And don’t forget the sharp drop in high income tax rates. The flattening of tax rates made possible an era where chief execs routinely earn 150x the pay of the firm’s entry level workers. Prior to 1980 this was more like 25x.
4
Don't buy the "exploding inequality" propaganda. If you look at US Gini coefficient statistics you will see that the individual Gini figure in the US has been constant for decades. Where we've seen a sharp rise in the US Gini coefficient in in the measure of family income inequality. So the distribution of incomes is completely unchanged. What has changed is family composition; specifically an explosion of unwed mothers. The illegitimacy rate is what has exploded, not income inequality.
2
Perhaps, given the high rate at which men beat and abuse their wives (statistically speaking), perhaps women finally got fed up enough to raise their children on their own. They may be poorer, but mostly like safer.
2
from wikipedia:
A Gini index does not contain information about absolute national or personal incomes. Populations can have very low income Gini indices, yet simultaneously very high wealth Gini index. By measuring inequality in income, the Gini ignores the differential efficiency of use of household income. By ignoring wealth (except as it contributes to income) the Gini can create the appearance of inequality when the people compared are at different stages in their life. Wealthy countries such as Sweden can show a low Gini coefficient for disposable income of 0.31 thereby appearing equal, yet have very high Gini coefficient for wealth of 0.79 to 0.86 thereby suggesting an extremely unequal wealth distribution in its society.[57][58] These factors are not assessed in income-based Gini.
A single measure such as gini fails to take into account
the numerous variants designed to incorporate
various structural issues smoothed over by this number.
Why the author puts such weight upon just this coefficient is very unclear and requires significant supporting argumentation.
Beating up on single income households by equating
them with high a "illegitimacy rate" is misleading as well. The single parent household is not the same. Divorce
and "delinquent dads" contribute to single parent
(near) poverty issues.
1
The rise of the Religious Right brought us the demonization of birth control and the promotion of "abstinence-only" sex education in the schools.
Ask Bristol Palin how well that worked out.
2
The "new ideas" manifest in the legislation of the New Deal held sway from 1933 to 1976. Neither Eisenhower nor Nixon attempted to attenuate their effects in creating the American social safety net, reigning in corporate power and providing for food, drug and environmental protection. Wasn't the EPA passed with Nixon's signature?
People obviously can't stand too much of a good thing and the set of new ideas brought in with Reagan seemed to offer a fresh perspective on how to manage an economy after the turmoil of the latter 1970s. Th fact that these ideas were specious and the results of implementing them far from what had been promised for most Americans is clear. However, the "left," - liberals, progressives, whatever - have not attempted to renew or enhance the safety net or to enhance the strength of workers. Instead, the left has continued to agitate for greater "inclusion" for various groups. Inclusion in what?. Is it in the economic structure that Krugman laments, the one in which the rules are set by the rich and well connected, the one in which the overall tax structure is regressive, the one in which only a few get to start at the starting line?
Many new ideas have been provided by the left, but they are oriented toward sociocultural, not economic issues. Little has been provided that address the basic inequalities and imbalances in the economic structure because a great many liberal voters are beneficiaries of economic outcomes enabled by neoliberalism.
5
Totally agree. Obama was cringe-worthy when he allowed the catfood comission to invade his white house and talk about the need to cut SS and medicare. no self respecting democrat would have done this. Unless and until the dems change their tune, they will not win big. People like me who care about social justice issues will always vote democratic, but I am not the norm. A better and fairer lifestyle for the many is something everyone can grab on to, and then vote for dems!
"It would be nice if commentators who accuse Democrats of lacking new ideas knew something about this history."
I would like to add one more comment to this. You don't need new ideas if your old ideas are good. Where as if your old ideas are bad...
20
Funny, that date, 1980. If I had to pick a year when my life turned for the better it was precisely that year. It was a year when I turned away from the fashionable alienation of my generation and began to construct an adult life for myself. As I read a lot of history, I would be hard pressed to think of a better time in this nation or anywhere else on earth than the past 38 years right here. I laugh at Paul Krugman, yet another of the endless stream of commenters who for reasons that escape me loves to wallow in trivial concerns and wastes time missing the wonders and miracles of life flowing all around him.
3
Life expectancy and health costs are a trivial concern? Lucky you.
3
Given that Krugman is, in fact, an award-winning economist and not just a "commenter", you might want to give a little more of your time to his and other professional people's theories and concerns. I'm glad your life worked out. Not everyone is like you.
2
Look at the graphs, Jon. Krugman is looking at all Americans. You are looking at an n=1.
1
So we have a 35 year trend that gets blamed entirely on conservatism and conservative ideas. Yet for about half that time, democrat presidents were in office (16 of 35 years).
Something smells fishy here.
1
As of 2020, conservatives will have been in charge of at least one branch of government (presidency, House and/or Senate) for 36 of the previous 40 years. Since liberal ideas like healthcare reform require liberals in charge of all branches to pass, and in many cases require at least 60 Democratic senators (which has happened for six months of the past 40 years), yes, it is conservatism that has held sway, even for the last 6 years of the Clinton and Obama presidencies.
91
Bill Clinton is a liberal????
so - it's not me - it's YOU ... ?
Although Reagan himself was only the public face of his Administration -- the real shot-callers behind the scenes were a combination of wealthy donors and ideologue-enforcers like Rumsfeld and Cheney.
35
Re "It would be nice if commentators who accuse Democrats of lacking new ideas knew something about this history."
It would have been even better if Democrats had had a clue how to communicate effectively the sad litany of facts embedded within these graphs to the people who don't know how to read graphs, have deserted them in droves, and are now willfully and proudly
imprisoned behind the wall Murdoch - Sinclair built of alt-right, talk radio, F-x faux etc. with the bricks and mortar of endless encoding/recycling of ethnic-racial animosities /antagonisms, not to mention of elite liberal baiting.
The party has had a year+ to learn how to do this post 2016 debacle but has been thoroughly outmaneuvered by a concoction of media events (aka tweets that take on lives of their own) that has completely destabilized and distracted it. They seem to be speaking to their own tribal constituencies without any coherent broad based plan being presented to the country at large about what they would do with power were they to somehow get it.
7
But then there's the other side of this argument; about 40 years ago, the Right started their anti-government media campaign. And if all your many resources can go 100% into making the other side look bad to people who have little eduction or interest in the complexities of governing, you can, indeed, put Donald Trump into the highest office.
20
And the democratic party has therefore had
40 years+ to work out rhetorical, governing, and media strategies to short circuit these iterated tsunamis of expensive soundbytes etc...short of an exceptional communicator like Clinton or Obama it has been unable to stay on message and focus upon
a few essential programmatic points that have
broad appeal and are expressed in succinct
and accessible language. What is the point
of ignoring or downplaying these basic points?
ACA had broad appeal but its
complexity neutralized it, its compromises undercut it, and its rollout disaster
contradicted the idea that government when run by that party, was capable
at efficiently helping people deal with their
daily difficulties in just getting by.
Unfortunately the GOP figured out decades ago how to string together their unlikely coalition of plutocrats and resentful low-information voters, and the Democrats have struggled to respond.
1
when you have a country with 50 states, possibly 10 different ways of thinking, with some states using terxtbooks in classrooms that describe our history's worst moments in interesting but inaccurate language, technology and mediums allowing every person a moment to speak some foolishness, you have problems. There are only so many ways to lead a country. What do Americans want? Is it the same things? Is it aspects of life that may be impossible due to money or education? What do we want?
1
The Reagan Restoration let slip the dogs of greed and the return of robber baronism. And a lot of Democrats, both Reagan Democrats and "Democratic" centrists, were and have been complicit in it: Reaganism begat W, son of Reagan, and Trump, the illegitimate stepchild, but also half-converts and willing go-alongs like the Clintons and Obama.
The pending dissolution of the UK, the devolution of US politics and the decline of Western democracy are the denouement of Reagan/Thatcherism. Death by a thousand cuts of inattention, manipulation and co-optation. Death by a lack of democracy.
24
How is Obama a half-convert to Reaganism (or Clinton for that matter)? I thought he was supposed to be a full-bore Kenyan socialist. The problem with democracy is that all real progress is always made incrementally, unless there's violent revolution. For example, like most Americans I support a single-payer healthcare system, but I realize that when you have a system where a supermajority in the Senate is required to pass legislation--and where a state like Wyoming has as many senators as a state like California--you are going to achieve much slower progress.
6
Naomi Klein covered this quite nicely in her book "The Shock Doctrine".
Reagan and Thatcher used it against 3rd world countries. Subsequent Republican politicians have been using it against American citizens.
39
@SandraH
Pres. Obama never pretended to be an FDR style Progressive, which is who we need now as President with a supporting cast in Congress to correct the extreme inequality, slow or stop the consolidation in the Healthcare, media and broadcast industries. Then take the initiative the question of how to seriously address the privatized prison industry and the unseemly number of minority men and women in jail for non violent crimes.
He would have pursued the Wall Street Titans who massively damaged our financial infrastructure before, during and it looks like are doing again. He would also have not recruited Fox to watch the henhouses in his administration an example being the Treasury Secretary.
I am not suggesting he did not do good, he did a lot. He was also one of our smartest and compassionate Presidents, but he was no Progressive.
A lot started going wrong in the .... 1980s ??? Not 1963, when Kennedy was assassinated? Not 1968 when his brother and Reverend King were assassinated? Not the Chicago convention and riots, or America sinking deeper and deeper into Vietnam year by year under Johnson? Things didn't go badly with Watergate or with the Iran hostage crisis and Ted Koppel's nightly count of days? 1980, seriously?
2
As bad as those things were, and I am old enough to remember them, there was a turning point in 1980 that felt like a giant slide backward, and the graphs show that it was caused by a sharp rise in inequality that has eroded the lives of working Americans ever since. The cause of the rise in inequality was supply-side economics and the takeover of the Republican Party by the radical right.
11
Pointless writing!
Please provide DATA.
Tell us which specific part of health care spending has increased in the US relative to the rest of the world.
Please provide facts as to what medical procedures the US will pay for & the rest of the world does not.
Provide facts on average wages for doctors & medical professionals.
This way we can figure out a way to spend less money of health care!!
Otherwise the NY Times is a useless opinionator.
1
That sounds like and excuse?
Without specifics, we do know for sure that we spend almost twice as much per capita than the rest of the first world country.
They have universal healthcare, we don't.
And we have parts of America with infant mortality rates worse than Botswana.
How do we explain that?
7
Quick, muddy the waters!
If you go and read the original Upshot article, if you go to FRED and look at their data sources, if you put a little effort into your reading instead of expecting every opinion piece (Krugman is an op-ed writer) to be chalk full of charts of data, perhaps you wouldn't engage in "pointless writing".
3
Why does he need to add the facts you think are pertinent ?
This is an opinion piece based on some facts. The article has several graphs with data to back up his supposition.
Just because your data points aren't included, doesn't mean the NYT is a "useless opinionator (sic)."
"...This way we can figure out a way to spend less money of (sic) health care!!"
We know how to spend less money on healthcare. Every first world country in the world already does it. All we have to do is copy one of the many different ways they have done it.
The facts you are requesting about the cost of procedures and wages, will not help you find a way to reduce costs. This is not a competitive market and you don't have a choice if you need surgery for cancer, you need surgery for cancer.
2
It would be nice if commentators like Krugman knew something of history. Did medical spending start an up swing in 1980? Most definitely. But what Krugman fails to tell you, he knows but doesn't tell you, is that an expansion in technology(the computer) and the bio-sciences began a huge climb. More treatments available. More data available to make advancements. Let's be honest, who here would like to receive only treatment that predates 1980? There has been more advancement in medical science from 1980 to today then from Jesus's birth to 1980. He fails to include that information because you would realize more is available to spend money on than before. Secondly, whole industries grew from the growth of home computers around - you guessed it: 1980. So he is either uniformed or lying. There is no problem here. The longevity curve was never going to be a straight line, it was always going to be less than linear.
2
So computers and advances in medical science only affected the U.S. in the way you propose?? Dr. Krugman's chart shows that increased spending on these things didn't lead to better outcomes in America but did elsewhere; that's the point. Some other factors must have been behind this divergence.
33
That sounds like and excuse?
Without specifics, we do know for sure that we spend almost twice as much per capita than the rest of the first world country.
They have universal healthcare, we don't.
And we have parts of America with infant mortality rates worse than Botswana.
And our average life span is going down for the first time in decades.
How do we explain these things?
1
you're right - I just flew from Australia to Taiwan to get one tooth fixed (molar root canal & crown) as the dollar saving more than paid for 2 return airfares for us as a couple. And I feel more confident about the skill and experience of the always-busy Taiwan dentist compared to the empty-appointment book young dentist I saw in Australia.
I remember previously seeing a specialist in a clinic in Taiwan - accompanied by junior doctors, he checked my throat and prescribed tablets which were dispensed and ready and handed across the counter to me as soon as I walked down the stairs for a total of about US$30.
My current heart checkup in Australia cost me $1000 for the first visit to a cardiologist and there's a whole regimen of more tests ordered that I haven't paid for yet ...
A lot of difference between costs between countries.
If Conservatism were given credit for the changes in economics and healthcare that have occurred between 1979 and now, it would be considered the greatest political movement the world has ever seen.
3
If by "greatest" you mean "most impactful" and by "most impactful" I mean "most immiserating".
2
No, the two great evil political movements of the 20th century, Communism and Nazism still have American Conservatism beat as far as their destructive effect on millions of human lives. But I am sure that Conservatism is trying very hard to catch up.
1
For the most part, Conservatives want every person in the country to have the same level of social mobility, opportunity, respect and human dignity, that the average white guy experienced in the 1940's regardless or your identity group.
Reasonable, moderate liberals generally want the same. They only differ with mainstream conservatives on how best to approach those goals. Conservatives prefer creating opportunity by getting government out of the way, while Liberals see a more direct approach, preferring positive actions taken to induce the outcomes directly.
Both of these approaches have merits. We can create programs that help people invest in themselves to advance. I personally have used programs like FAFSA to get my electrical engineering degree. At the same time, equality cannot create it's self, because some people will always be more willing to use the resources available to them to advance themselves in society.
However, the far left seeks to impose "equality" by force, intimidation, manipulation, hate and fear. They seek favor among minority groups by pointing out every instance of real or perceived racism in society, to paint a false narrative that the incidents committed by one out of every million conservative whites in our society is representative of the whole, in order to alienate conservatives from the minorities the left seeks to control
In this way, the far left wants everyone treated the way blacks were treated in the 1940's. That's "equality" to them.
6
Fifteen hundred characters isn't enough to respond fully to all the revisionist history, innuendos and misstatements here. I think perhaps the most telling statement is the reference to the FAFSA as a "program." The FAFSA is, of course, simply a financial statement and application that is used to determine eligibility for certain kinds of student aid, including loans that are a federally administered "program." And guess what -- we are learning that ballooning student loan debt is becoming a huge millstone dragging down our economy. making it impossible for many younger adults to buy homes, start families, save for retirement or even marry.
Who pushed the changes to the bankruptcy law that made it almost impossible to ever discharge student loan debt? Conservatives.
And what are the current Republican administration and ultra-conservative Education Secretary DeVos doing about student loan debt? They are terminating investigations of unscrupulous for-profit schools that leave their students with worthless degrees to go along with their huge loan balances. They are threatening to terminate public service loan forgiveness and other debt forgiveness programs.
Conservativism, as practiced in this century, is not about creating opportunity for anyone who isn't already privileged.
60
I think you have some things amiss.
First, both the far left and the far right are both idealogues. This has unfortunately always been the case.
Second, it is the far right that has caused the most violence, to the point where national security agencies point to the far right as being a danger to the national security. While the far left is bad, the far right is orders of magnitude worse. Unless you believe that the KKK has some very fine people. Unless you intend to ignore that it is the far right that has bombed mosques, killed people because they looked like Muslims, and has subjected people going about their business to harassment and invective because of their dress, language, or skin color.
Third, it is the far right that is in control of the 3 branches of the government now, and has been since about 2010. This has been accomplished by the unholy alliance of big far right donors (like Mercers, Kochs, and the cabal they have established) with the propaganda arm called Fox.
The wave of bigotry finds its victims as members of various minorities, all Americans, whether they be Africa, Latino, Muslim.
2
Looking at the charts, it appears to me that the actual turning point was more like 1975 and that Reagan may have been a consequence rather than a cause. So I'd be inclined to look for a more fundamental cause...stagflation, oil shock, ???
3
It occurs to me that you can divide the country into two kinds of states, those states where life expectancy is declining, and the remainder.
Why this distinction?
Because the states were life expectancy is declining are actually calling the shots.
And, with little pushback, they're actually telling the other states that their governance is poor.
14
The adjusted death rates are FAKE. The only area where the crude and real death rates are not up in is DC. The real increase in the death rate hit Hawaii, the state with the highest life expectancy and percent with health insurance first. Go download and look at the crude and adjusted death rates with the number of deaths for each state and DC for each year since 1999 from NIH.
Excellent summary. This is virtually impossible to refute, so conservatives will just ignore it. What else is new?
34
Raw numbers are meaningless. When everything is lumped together and presented as evidence they are at best suspect. So what happened in the US population during that time frame. Large influx of poor, unhealthy immigrants from around the world as US changes it's immigration focus. Europe did not do this. Lets look at Europe a decade from now and see how the middle east influx affects them. This is just one item that when removed from the equation could dramatically impact this number. But hey, a simple answer is what the left wants and that is exactly what Mr. Krugman gave them. Only problem is that the " Well education" base that dwells in Detroit, Chicago, Atlanta, LA, NY, Memphis, Indy, and other major cities will believe that these figures are gospel.
4
What makes you think that it is the immigrants who are unhealthy? There are plenty of native-born Americans who can't or won't take care of their health. Drinking, smoking, drugging and eating junk food is not confined to immigrants.
These are problems that filter through every level of society in the US.
It looks like right-wingers like you are the ones looking for simple answers or simply someone to blame.
If I recall correctly, the National Debt at the end of the Carter years was $30B. At the end of Reagan years, it was $4T. This was also the era whose military spending caused the USSR to bankrupt itself. So, neglect of the economy for the sake of the military (costed further by invasion of Kuwait) left the U.S. unable to intervene constructively in the recession of 1991, which continued a debt-increase spiral, and that left economic regions without supports, while international Capitalism reveled in debt servicing. Now, we have a national debt so large that China can happily subsidize its competition with the U.S., and the U.S. can let the little people eat 'trickle down."
15
In 1980 you got 6 TV channels; now you have 1,0000 and DVR's???
In 1980 you had a few books in a library; now you have all the worlds knowledge at your finger tips.
Cars are far better than they were in 1980.
What was better in 1980 ???
1
What was better in 1980 was that the average working man could afford to buy a house and a car. His kids could go to college without taking on a mountain of debt.
Although I support your hypothesis, there is an important issue you did not address. The Democrats have held political power, either the Presidency or congress, through many of the years subsequent to Reagan's election. Therefore you have to make a corollary argument that the Democrats either lost their power to do anything, despite their political success, or that they failed to do so. The latter was Bernie Sanders argument. The former may have been Clinton's perspective, but she (nor anyone else) has come up with a solution to fix it.
6
Neoliberals ruled supreme. NAFTA, destruction of unions, fraying and destruction of the social safety net, financial and banking deregulation and non-enforcement, gigantism, mergers and monopolies permitted to grow and flourish, all during President Clinton’s Administration.
6
Reagan was the beginning, of the dumbing down of America. An average mind, a second or even third tier actor, BUT exquisitely stage managed and promoted. The rise of AM right wing Radio, the merging of the GOP with the Evangelicals, The real advent of home schooling, and, especially, the consequences of fully implementing the Southern Strategy. Basically, giving permission and encouragement for hating " those people ", in exchange for allowing the Rich to pick the pockets, and blight the futures, of everyone else. A smiling, supposedly genial Man, leading us all down the yellow brick road to Trump. His best acting Job, EVER.
313
You throw in home schooling as one item among many; I actually believe it's one of the big causes of the mess we are in. Public schools used to teach critical thinking, the importance of facts and science, how to think independently. Home schoolers learn none of this; to the contrary one of the primary motivations of home schoolers is to shield their children from these "corrupting" influence and instead teach primarily from the bible. We now have several generations that believe the bible literally, and question anything that challenges those beliefs.
12
" .. Public schools used to teach critical thinking .."
.. also how to non-stop threaten to strike, over constantly rising demands.
Thank God for private schools. Privatize, now.
Another inflection point in the 80s was the rise of Talk Radio.
"Conservative talk radio did not experience its significant growth until 1987, when the Federal Communications Commission (FCC) stopped enforcing the Fairness Doctrine" (Wikipedia)
Rush Limbaugh syndicated his talk show in 1988. Once Rush showed how easy it was to monetize hate and become extraordinary wealthy treating government as the enemy the floodgates were open.
Republicans doubled down on Reagan's anti-government message to the point where decades later millions of American's somehow actually trust the likes of Trump and Hannity more than facts they can see with their own two eyes. I don't know if there is any treatment for that kind of blindness.
347
LT:
The degree to which this strategy has succeeded has really made me sad about the instincts of many of my fellow Americans.
67
Clearly, there isn't.
2
Hey, the Democrats tried "Air America" radio, with Al Franken. It failed miserably, few enjoy constant complaining. Just like HRC in 2016.
Go ahead, insult 50% of the voters like HRC in 2016. How'd that turn out?
Yep... From 1980 till now you can observe a thousands statistics that reflect what movement conservatism has done to this country, and all of them are negative. Movement conservatism is the source of quite all of our major issues as a nation right now, and they and their voters could care less, apparently.
17
Lots of blame to go around. We'd rather cross the ocean to 'fight for democracy' than cross the street to vote. America has rested on its self-awarded laurels for far too long under the illusion of 'American Exceptionalism'. We wave our flags and get all bent of our shape on patriotic symbolism and yet our behavior indicates that we see fellow citizens as just an obstacle, stupid, someone else to swindle or blame for their dire predicament. We need to become a nation that cares more about each other (and not just during wartime either).
21
Medical equipment for testing patients is more widespread here and probably overused for liability reasons due to increases in malpractice litigation and cautionary interventions by doctors, and as a result, more is spent for lower outcomes in terms of life expectancy.
8
But the fact that the equipment exists or is even used is lost on most people. They seem to take for granted that the equipment and all that goes into making it and using it takes time and money. They wish to receive care, not pay for it.
Reagan was a proto-Trump. Mission complete.
7
This is an interesting perspective and one that Mr. Krugman is well-versed to provide. I doubt this change was solely due to economic or political policies (nor do I think he would claim that). We also had the coming-of-age of 70 million Baby Boomers--nearly all pushing the limits of the system in place, a change in moral values and leadership, the devastating impact of Vietnam, the birth of environmentalism, the rising independence of women, the emergence of consumer technology and the beginnings of a global society. It's really no surprise that some aspects of this are not going well.
2
We all who are old enough must remember that we had blown all our global competition to kingdom come in WW2, and Japan and Western Europe did not finish rebuilding until about 1980. That is why all those good ole memories of the 50's and 60's and being able to do any social program we wanted without repercussions is just a misreading of the historical situation.
16
This is a classic example of using the wrong metrics to reach a valid conclusion.
Yes, American healthcare has declined from the point of view of delivering the highest quality health care to the greatest number for the best price.
Yes, longevity in America may well have declined, at least in some groups.
But one has little to do with the other.
The desire to illustrate your point with an eye catching graph is apparently endemic among economists. Bloomberg News is deep into that.
But real understanding requires more than a graph.
We are told the private enterprise system, the profit motive drives innovation in American medicine and makes our system the best in the world.
Consider this: the MRI and the CT scan were developed in England under a National Health Service. The big revolution in surgery has been laparoscopy, which was developed, in large part, in the one part of American medicine which is socialized: The military medical corps.
The greatest advance in the past decade in coronary arteriography in the United States has been the technique which uses the wrist rather than the femoral artery; that technique was well established in England 40 years ago. Treatment of gastrointestinal bleeding in the United States is now done by an approach pioneered in England 40 years ago. The list goes on.
The fact is, the profit motive has poisoned the well of medical care in the United States.
Do you see that in any of those charts you show?
135
Which is why I always roll my eyes whenever I see a 'revolutionary', usually diagnostic, procedure announced on the news. No one, except perhaps the extremely wealthy will ever see it, even if it might save countless lives and dollars. Unless it can be monetized into the stratosphere, it's not worth pursing.
In my doctor's office the only technological advance seems to be the omnipresent screens for data entry, which absorb the majority of everyone's time and attention.
7
And 90% of Americans would be better served by the health care system practiced in a couple dozen developed countries. Rolls Royce may be a very high quaint automobile, but most Brits cannot afford one.
3
Add the essential elimination of ulcer surgery due to the discovery of H. Pylori in Australia. US medical doctors reacted with dramatic skepticism at first.....the intraocular lens.....Russia.....Coronary stents......Germany etc. etc.
4
Hindsight is a terrible thing. We now have a comparison of whose policies benefit our country. If you compare our productivity for the decades after the new deal and the decades after Reaganomics you can clearly see that our country does better under the Democrats policies. When you are barely hanging on you're not going to be very productive because you can't afford to take risks. The new deal and great society policies gave every day Americans the sense of security they needed to take risks and create new technology.
But without the Fairness Doctrine, getting through the propaganda bubble and convincing people not to vote against their best interests is nearly impossible. Add in a healthy dose of of gerrymandering districts and dark money invading our politics and the average American who isn't going to do a lot of research and instead rely on the likability factor means that it's highly unlikely that we'll stop this trainwreck we're heading into. We're fast becoming a failed republic and Trump is our moment to decide what comes next.
We've identified the problem and we've identified when our country lost its way. The question is how do we move forward and are we willing to make the sacrifices that our country demands to create more opportunities by addressing inequality. The path we're now on isn't sustainable and we're one crisis away from total collapse.
73
Trump pretending to be POTUS means we are a failed state. We have collapsed. I see it in the many homeless I never used to see on the streets. I hear it in my church where members complain that the homeless are bringing down their property values rather than that the wealthy have stolen the worth of peoples work among other thefts, plunging people into homelessness. I see it in a 50% rise in my rent two years ago followed by a 10% rise in my rent this year. My income rises by 4%, or less per year. I am being pushed towards homelessness by these callous, mindless, greedy actions. I see it in the increase in acuity of the patients I try to help, here, in our hollowed out nation.
3
So all of our problems starting with our broken healthcare system can be laid at Reagan's feet? What a shallow piece of "analysis"! Throw up a few graphs and infer some kind of causal relationship exists stretching back 10 Presidential elections. Correct me if I am wrong, but didn't Democrats control the White House during 16 of the last 25 years?
And how about some full disclosure? Didn't Paul Krugman work in Reagan's Council of Economic Advisers under then-Chairman Martin Feldstein? Ouch!
3
From Krugman's personal writings:
Krugman worked for Martin Feldstein when the latter was appointed chairman of the Council of Economic Advisers and chief economic advisor to President Ronald Reagan. He later wrote in an autobiographical essay, "It was, in a way, strange for me to be part of the Reagan Administration. I was then and still am an unabashed defender of the welfare state, which I regard as the most decent social arrangement yet devised." Krugman found the time "thrilling, then disillusioning". He did not fit into the Washington political environment, and was not tempted to stay on.
He spent barely a year in that position and has not held a similar position since. Seems like hardly a blip to me and certainly not worthy of mention here. That said, I'm totally on board with your "correlation doesn't equal causation" criticism here though he was careful not to extrapolate sweeping conclusions from his analysis here.
5
Bullseye! And by skillfully employing tactics developed for Nixon's "Southern Strategy," you know, guns, God, gays, and abortion overlaying a foundation of racism, movement conservatism has blinded much of America to the simple fact that they -- and we -- have been had. Oh, and let's not forget the Republican Party's 50-year war on voting rights, beginning with William Rehnquist and Operation Eagle Eye. Look it up.
49
A regrettably shallow attempt to correlate health care spending vs life expectancy with things that have little or nothing to do with at least one axis (health care spending). You can do better than this, Paul!
6
The 80's were the beginning of the Republican institutionalization of "penny wise, pound foolish" government. Regan deregulated the Work Incentive Program (welfare to work) enabling states to shift the program from state departments of labor. In Michigan that shift was from Michigan Employment Security Commission to the Department of Social Services. (It saved on Unemployment costs as MESC was federally funded at a higher rate than DSS) The results? Cost per placement went from $600 to $3000. The results, more people on welfare than there would have been. They are still at it.
6
Funny thing about that, isn't it?
Behold the "Reagan Revolution" and what it has wrought.
The most awful thing is not that the big business moguls, and the right wing ideologues, propagandists, illiberals, and religious fundamentalists who were behind them profited from Reagan's terrible policies, economic and social, but that so many in the rest of the country hurt by them *still* buy into the scam that keeps Republicans in power to keep pushing them.
75
Spot on. Should be said loudly, and OFTEN. The "right" isn't the "right" -- it is the corporate, moneyed, class interests that spent decades dismantling the Franklin Roosevelt gains for the middle class. St. Ronnie was the thin end of the wedge and we've fallen off a cliff from where decades of postwar liberal economic and social policy taken us -- to being the post prosperous, capable superpower in the world. Obama, without a Democratic congress, was unable to turn around the inevitable economic horror these racist plutocrats caused; just stem the gushing of the blood; the next disaster they cause will end in every single American impoverished and enslaved to the tiny handful of moneyed interests that conducted this war on Americans to line their pockets.
40
One of the first things we teach our students is that correlation does not imply causation. Why is that caution dispensed with here?
Especially since 1980 was the year Ronald Reagan got ELECTED, so for convenience we mark that as the beginning of a new era. But Ronald Reagan took his oath of office on January 20, 1981. Not only that, but his policies did not begin to have any impact for at least one year, or likely several years. So any theory that Reagan's policies caused x or y needs to be scrutinized with more care than Paul Krugman affords.
Then there is a lot of loose talk about inflection points. On closer inspection, many so-called major inflection points aren't, or they are one of several inflection points. The major inflection point for inequality is the late 1960s. Debt increased as rapidly in the 1950s as it did before the Great Recession. The Great Inflection in political polarization was around 1943, not 1980.
Then there are the missing charts. Why no chart for drug overdose deaths? 2015 was the worst year for drug overdose deaths in US history, and 2016 was on course to overtake that. (Can we place the blame at Pres. Obama's doorstep?).
Quick and dirty charts like these are cherrypicked to entertain or make a political point, not to instruct or inform.
9
Absolutely right. 1980 was the turning point. When Reagan got elected, I made the decision there and then to drop my being a Republican and become a Democrat. I sold my smallish house and risked on a bigger one seeing the Bonfires of the Vanities on the horizon. I figured the fence was going to get higher and I wanted to be on the right side of it at least practically if not philosophically. I saw the masters of the universe on the horizon, the rise of Millikan, Trump and ultimately Madoff. We are now living in Pottersville from It's A Wonderful Life, because Jimmy Stewart was never born.
20
There are three books that can put some real flesh on Dr. Krugman's charts.
1. Capital in the 21st Century by Thomas Piketty
2. Democracy in Chains by Nancy MacLean
3. The Evangelicals by Frances Fitzgerald
We started digging the hole we're in almost 300 years ago.
Occasionally, we fill it in a bit (eg.,1930's to 1970's). But since Regan we've continued digging and now have an expert shoveler in place. Moral: There's nothing exceptional about what's going on now
6
Mr. Krugman's article and charts quantify the modern class warfare waged by a small group of ultra wealth donors (e.g. the Koch Brothers, the Coors family, the Scaife family, etc.) against progressive ideals which has damaged working and middle class families. They have bought academic, political and media outlets (think the Cato Institute, the Republican Party and Sinclair Media) to dismantle the progressive policies and concentrate financial and political power to a small, ruling elite.
144
Yes! The public relations industry, think tanks, media outlets and academic chairs for favored schools of thought are at the heart of what ails us.
There's an industry of political strategists that feeds on all that money. The tools they use have become more and more sophisticated. People believe things that are absurd, but have no idea of why they believe them.
The power of the wealthy is international, so it's not surprising that the same thing has happened in other nations.
7
This is exactly what I was thinking as I read this piece. I'm in the middle of Dark Money right now and am astounded at the history and depth of the Koch, Scaife, Olin, et al. shadow government. I'm further astounded when I see agents of the Cato Institute or the Heritage Foundation, et al. appear as talking heads on reputable news shows with no caveat given. The Richie Riches have corrupted and debased every major area of our society, and we have so much work to do to overturn their debasements.
8
Reagan made popular the ideas of anti-government / deregulation / tax cuts for the rich, which leads to deficits and income inequality. Then he repealed the Fairness Doctrine just as media was becoming fractionalized through cable news and later the internet, so "spin" and one sided false "facts" became the norm. Suddenly it became much easier to sell lies. All of that, in turn, led to polarization of our political parties and now the dysfunction which threatens us.
The way to fix this is:
1. Reinstate the Fairness Doctrine or something like it so that both sides are heard in any significant political broadcast, and facts are checked too, in real time. You can't censor speech, but you can require that facts be checked and give the other side an opportunity to rebut.
2. End gerrymandering of voting districts. The problem with gerrymandering is not just that one side gets more votes, it's that both sides become extremists when politicians mainly have to appeal to their hard liners to win. Extremists lead to dysfunctional govt.
3. Stop large campaign contributions which are obviously just legal corruption.
4. Change the election process which is all about charisma and marketing and "gotcha".
So we are nominating pitch-men with slogans. It needs to be about facts and ideas. Politicians should be required to present a list of priorities and especially a proposed budget, then they and a panel of their chosen experts should be cross examined and have defend both.
213
Interesting. What facts and ideas did the democrat party have last time? As far as fact checking goes, who gets to appoint those folks, my side or yours? Fairness doctrine? Who gets to decide that? Can't let the people(I'm sorry, the subjects) make that decision they aren't "knowledgeable" enough. Yes, that is the fix of the democrat party. Enact government rule over the subjects to control the information to the subjects. Fine idea. Most socialist regimes do it.
Great post David Kent. I would add shortening the election cycles. Currently close to two year campaigns give a real chance for the slogans and the gotchas to take root, instead of being something to toss in the trash can.
10
Here's a fact for you: it's the Democratic party, not the Democrat party.
Reagan aside but still significant as you indicate, I blame Television for the decline in American's health and lower life expectancy. This coincides with the obesity epidemic and incidence of Diabetes and Heart disease as a result of poor diets advertised on TV and the lack of exercise attributable to countless hours of viewing. Probably my best argument is former cigarette commercial advertisements that promoted smoking that became extremely widespread in America and the ultimate ban on those cigarette ads and decline in smoking.
4
Honestly Mister Krugman I agree with you on this post. However it does not do any good because while you say a lot of interesting things (that I genuinely think are correct) there is no way to get modern conservatives to believe it. What we really need is this post and then another post that is much longer that goes into an honest review of history.
You say " they haven’t changed their ideas, or indeed come up with any significantly new ideas, for the past 35 years". This is true for the most part for national republicans. It is however not true for a lot of the state republicans. I would like to see you (or someone more knowledgeable than me) put in print what the national republicans have come up with (not much - they keep re-shelving the same ideas in a new wrapper), the state republicans (health care in Massachusetts for instance) , the national democrats (national health care, Dodd frank, finical reform after the fiscal crisis, etc..) and state democrats (not sure on this one outside of MD, in MD expansion of public transportation though was not a republican idea it has been acted on by republicans).
If we want to get the idea through the middle of the country and recover the national sanity we must play up what state republicans have done and play down what national and state democrats have done. That way, maybe, rural America will listen and not feel attacked or threatened.
3
I don't think Democrats should have to hide their light under a barrel so that people will listen .
I don't think Democrats should always have to be the adults in the room when Republicans behave like petulant children and get away with it.
I am getting to the point where I feel people should have to live with the consequences of their poor political choices.
4
When Reagan fired the air traffic controllers in 1981, it sent a signal to business owners and executives that they could treat counterparties in negotiations with contempt, and it would be OK. So rather than leave money on the table for business partners, it became just fine to use whatever market power you had to just take everything for yourself. We see this now in the attitude of "realizing the value of our product" or "achieving pricing." It was the end of the idea that specialization and trade is to benefit all parties.
40
I'd like to see a plot of America's collective I.Q. scores during those crucial years. It would probably look much like the down slope of an Olympic ski jump, plunging into negative territory in November, 2016.
It might have had something to do with Reagan's declaration that Ketchup was a vegetable in school lunchrooms. Kids growing up with inadequate nutrition might have marked the turnaround in American intelligence.
When quality information is lacking people will start devouring fake news. Eventually, they may even start to like it. When they eschew a healthy diet of solid information, they'll elect a president with low moral fiber. This results in information constipation, which puts a cramp in everyone else's style.
137
interesting correlation between junk news and junk food. it has been shown that when you have a diet that includes junk food it leaves you craving more junk food. it can replace your desire for real food if not controlled.
6
Reminds me of that tee shirt asking, "Which one's the vegetable?" Underneath the question it showed a bottle of ketchup and a photo of Reagan.
5
I appreciate the concept, but have looked into it, and that dog don't hunt. About 5 years ago, I asked a Ph.D. psychologist about this -- I knew that early in his career, he'd actually administered numerous IQ tests that were used to calibrate the IQ test scoring (establishing the median and variance). He said that American IQ has actually been going up over time. Of course, the median is always at 100 from year to year, but in recent times, to be at the median, a person had to score more points than was the case years ago. I was surprised, and I guess we have to look elsewhere for an answer. Of course, there's always the issue of what a person with a score of 100, or 90, or 120 or whatever actually does with their brain . . .
Indeed - a graphic representation of 'Greed is God' (um, er, good) and the rise of the Vulture Class.
Where do people like us write to obtain permission for use of this image on our tombstones, someday ?
26
Agreed, many of our problems can be traced back to Reagan, but it began with Carter. He was the first deregulatory President, and he provided the model for the Clintonian triangulators. Lots of blame to go around. But we can't forget about the American people who colluded in much of this. The New Deal/Great Society may, as we look back one hundred years from now, be recognized as short-lived exceptions to the dog eat dogism that marks so much of American history. It does not make me happy to say this. Donald Trump may be an especially vulgar manifestation of a deep strain in American culture. But he's not an anomaly.
21
Carter's approach was to deregulate those industries which were protected by regulations from competition (e.g.) trucking, railroad freight and airlines. The result was much cheaper transportation of both goods and passengers to the benefit of the US economy as a whole. Undeniably, this deregulation also depressed wages in those industries.
Reagan's approach was to get rid of regulations that benefited people (e.g.) the New Deal and Great Society.
76
This nation is so far off the rails it is for all intents finished. David Tepper, a greasy, sleazy hedge fund operator, puts enough dough together to spend $2.3 billion on a pro football team. I hope it goes down like the Titanic. Yet I get hit up by the hardest working guy at my data chop shop, a janitor. My $20 might get him by for a day or two but it is not a solution. I would probably get hit up by the other staff but they don't speak English too well. I am sure they endured a border run to get this job, no business invited them in, it was all on them. Think about that if you go buy a ticket to see a pro football game. Better yet, turn around, give the dough to a poor person and watch the crap on TV.
19
This is also concurrent with the rise of the “Religious Right” for whom conservatism, trickle down economics, American exceptionalism, and the like are no longer political ideas but religious doctrine. If they change their minds on any of this, in spite of overwhelming evidence that their ideology has flaws, their god dies. It’s not just political loss for them.
230
Yet more reasons why I say, "Reagan killed us."
Usually, I think of that in terms of climate change as Carter was planning on 20% renewables by 2000, based on energy independence not climate change, and Reagan shut that down with extreme prejudice, fast.
Reagan killed us. We just don't know it.
383
Reagan’s biggest sin was putting a pleasant avuncular face on a repellant ideology, opening the door for W and Trump.
18
Reagan ripped the solar panels off the White House that Carter had put there. This was a foreshadowing of the contempt that Trump and the current Republicans have for Americans who care about the environment.
107
Reagan caused the break-down of the nuclear family?
No, that was on the people involved.
Blaming others from a keyboard is so easy. Accepting responsibility is hard work.
https://fred.stlouisfed.org/graph/?g=jRUl
January 30, 2018
Per capita personal income for Mississippi as a percent of Massachusetts, 1929-2017
https://fred.stlouisfed.org/graph/?g=jRUK
January 30, 2018
Liabilities of Households and Nonprofit Organizations as a share of Gross Domestic Product, 1985-2017
1
Wonderfully illuminating graphs constructed by Paul Krugman:
https://fred.stlouisfed.org/graph/?g=ffIy
January 30, 2017
Income Gini Ratio of Families, 1947-2016
https://fred.stlouisfed.org/graph/?g=ffIA
January 30, 2017
Income Gini Ratio of Families, 1947-2016
(Indexed to 1947)
5
1980; the year America had the choice of Carter, who advised us to grow up and behave with intelligent restraint, and Reagan, who told us we were so exceptional that we could have anything we wanted and the bills would never come due.
And we chose that direction and never looked back.
444
We also had the choice of John Anderson. The Republicans chose Anderson over Reagan and the nation chose Reagan over Anderson and Carter. It was the beginning of fiscal irresponsibility teamed up with a war on the facts, war on women, star wars and religious freedom and separation of church and state.
25
Sorry, but the pivotal year was 1978, and the key to the switch was not the President, but the Ninety-fifth Congress.
The power shift began not under Ronald Reagan and the Republicans in the 1980s, but earlier, under Jimmy Carter, in the Democratic-controlled Congress of the late 1970s.
Carter confronted a hidden new reality: the newly organized legions of business, energized by the Powell memo.
Ralph Nader wanted a consumer protection agency. What was expected to be an easy win turned into a disastrous defeat.
Labor law reform, making it easier for unions to organize and curb anti-union activities of business, was filibustered to death.
Indexing the minimum wage (as Social Security payments are today) was defeated.
In 1978 Congress deregulated the trucking, railroad and airline industries.
A new bankruptcy law put corporate management in solid control of restructuring. Instead of ousting the old CEO and replacing the old corporate leadership with an outside bankruptcy trustee, as in the past, the new law left the old management in place and let it mastermind the whole process.
The 401(k) provision for pensions allowed many corporations to off-load hundreds of billions of collars in pension expenditures onto their employees.
In a watershed moment, Congress balked at Carter's tax bill to close loopholes and end tax breaks for the affluent. Instead of using the tax system to redistribute income to the less-well off, Congress charted the opposite course.
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gzuckier - For a country that can create as much of the currency its debts are as it needs out of thin air, the bills never come due.
Reagan's faults lie elsewhere