But if we cut taxes to zero, then the unions will come back.

Or something.

Back in that golden age people didn't have cell phones, personal computers, or DVDs. Now even working class people have them. American capitalism, not unions made that possible.

Also people lived in fear of a nuclear war, before Ronald Reagan stood up to the Soviet Union and ended the cold war.

I personally think that this post gets at one of the great problems facing us as a nation, and points to a great scientific deficiency in economics today: the effect culture has on economic decisions.

I don't see how one can explain the increasing gap between the rich and everyone else without recourse to cultural assumptions about how workers and employers should interact, and what the obligations on both sides are. There was an obscenity factor present in the 50s 60s and 70s that prevented executives from demanding enormous salaries. That obscenity factor has atrophied to near nothingness today.

I think it's a simple mistake to imagine that there's something deeper than this that fuels the absurd gap in incomes today.

Economists don't want to hear of this it seems, because their models have no way to accommodate it. But that is the limitation of their methods. Reality is as complex as it wants to be; if basic phenomena in their own domain escape the attention of their models, it is simply a failure of their science as science.

Those of us in the real world, however, must seek out solutions.

I think that one factor in the more humane employer-employee relationship of those days was fear on the part of employers of what could happen if they squeezed too hard. There was an alternative model in the world at the time, a model where at least theoretically, the workers owned the means of production and the overly greedy capitalists would go up against the wall. Such words probably appear ludicrous to some of you young ones, but to show you just how seriously it was taken, see this ad.

Once communism was defeated, and unions were busted, there was no longer a reason to treat workers humanely.

....I know the empirical evidence doesn't give a lot of weight to the union story for preventing inequality,

Yeah, but in the real world we can't test a control against what really happened. They can argue that about their studies all they want, but when we had the unions things worked out well enough and now that they're gone, things are correspondingly different on the business side of the equation. So it's not that unions didn't lead to the basically-ok state of things today (in a situation where unions are no longer strong). The situation of a country's economy is too complex to just say unions had no effect. Those studies have to show how we wouldn't have gotten to where we are today absent a whole lot of other considerations before they can be persuasive.

Al wrote:

Back in that golden age people didn't have cell phones, personal computers, or DVDs. Now even working class people have them. American capitalism, not unions made that possible.

Whoa, we got here through going through a long period with big unions. They eventually shriveled, but show me how we would have gotten everything we have without the unions. You can't, because that's not what happened. Every Bill-Gates-like engineer who gave us computer innovations was the son of some working class guy who raised his family in one of those thriving '50s suburbs. The New Deal and the G.I. Bill and basically the so-called "Welfare State" made that possible, do those kids could grow up thinking about sci-fi and go on to MIT and NJIT, then to developing the best defense and private sector technology. It wasn't anything else that kept half or more of those guys from not growing up in some ghetto. It was all middle class and working class guys like that who led the technology revolution, not rich entitled kids.

It's odd how the Democratic Party strongly supports scab labor, union-busting, and lowering wages in the form of massive IllegalImmigration. Why, if I didn't know better I'd call them corrupt and duplicitous.

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oops:

do those kids could grow up thinking about sci-fi and go on to MIT and NJIT, then to developing the best defense and private sector technology. It wasn't anything else that kept half or more of those guys from not growing up in some ghetto.

should have been:

so those kids could grow up thinking about sci-fi and go on to MIT and NJIT, then to developing the best defense and private sector technology. It wasn't anything else that kept half or more of those guys from growing up in some ghetto

I believe that there was a general corporate point of view that existed from the end of the depression through, probably, the mid-seventies, that saw workers as effectively partners in enterprises. This changed, and labor became nothing more than another input, in effect a raw material. I suspect that a researcher might find that this shift in attitude coincided with a shift in corporate leadership away from CEOs who had come up from the factory floor to MBAs specializing in corporate finance and marketing; for the former, workers were real people, while for the latter, they were simply numbers. It's also interesting to note that this is the era when personnel departments (which dealt with people) were replaced by human resource deparments (which dealt with resources).

Right. The theory back then was the "countervailing power" of Big Unions, Big Business, and Big Government kept each other in check. As Kevin says, much of it was exerted on a cultural / moral level of what "just wasn't done." For example, it just wasn't done to pay anybody over a million dollars per year.

American capitalism, not unions made that possible.

Actually, it was unions that created the middle class in the US, with all their disposable income, which was the driving force of USAmerican capitalism. Otherwise we would have continued to be a third world nation producing goods for the rest of the world to consume.

A: "Also people lived in fear of a nuclear war, before Ronald Reagan stood up to the Soviet Union and ended the cold war."

Before or after the Germans bombed Pearl Harbor?

Back in those golden, golden sixties the economy was growing at about 3% a year, and the money was actually reaching the common folks. It's easy to be generous when things are going well.

Life today is actually much better than it used to be, particularly for blacks and Hispanics, but it hasn't improved much in the Bush years because the top 10% reap all the benefits. Rather than just thinking about unions and the sixties in a golden haze, we ought to think about ways to make the rich cough up more of their cash. One problem is that the Sen. Reid seems to think that that's a bad idea.

At least on the health care front, health care was pretty basic (and inexpensive) by modern standards. Its cost wasn't a big issue for employers, it was a lot cheaper to be responsible back then. Of course the other things mentioned, about cultural norms, and professional managment career tracks are also factors. The largest single factor is competition with foreigners for low wage jobs. Today a factory manager can threaten to move the jobs offshore. And it isn't just that todays indivdual managers are more mean spirited, but that the system mercilessly drives firms towards the lowest cost methods.

Keep in mind that back then, in the middle of the cold war, the US had to make a convincing case that capitalism could provide better opportunities and a better quality of life than Communism, so creating the idea that "you can work for a factory in a free market and live a good life!" was an important point to drive home to the public.

In the absence of any alternative economic systems, there's no outside threat that incentivizes employers to make it seem like their jobs provide a decent life. All they have to do is convince the worker that it's better than starving and that there's no other alternative.

Critical to the success of unions was acceptance of the idea that collective bargain was fair and reasonable. Even people who were not union members benefitted from living in a country where that kind of idea was strong. In those days most people thought that communities are good and community interests are important. That notion has been replaced by the sociopath's creed of "rationality" which is defined as behaving according to one's self-interest. Taking community interests into account, by this view, becomes irrational. So the company that feels a responsibility toward its employees is behaving irrationally. The government that promotes community rather than self-interest is also behaving irrationally. As long as those assumptions hold, the working middle-class that once existed will be in trouble.

Kevin,

why does every pro-labor comment you make have to be caveated by some note about how you need to take unions "warts and all"? do unions have problems? sure. let's take corruption. a problem, no doubt. but there is rampant, large scale corruption in corporate America as well, on a scale (in terms of dollars, e.g. Enron) that dwarfs union corruption. yet no one calls for an end to corporations (as an instituion) every time there's a scandal. funny how that works out.

It used to be that employers knew that if they screwed their workers too badly, they'd unionize. Not a concern now.

One only need go to Europe and do a little businessto be taken back to post-war USA. Labor, the unions, are always factored into every discussion. Quite often, they are literally sitting at the table. This is not to say they run things. Rather they are always taken into consideration in a very real way.

And this is the amazing part. European businessmen make money. Some even become rich.

Joe Buck and Tryo said it.
One of the greatest ironies of Communism is that fear of Communism provided a better life for workers than actual Communism ever did.

Let's just remember that economists yammering on about the importance of "free markets" and "free trade" are partly responsible for the decline Thoma is complaining about.

Ah, Kevin.

I'd like to ask you and your liberal friend Mark Thomas something.

Let's say your a single working mother, and your tryinf to feedl your baby. But guess what. You've got no canned peaches, becuase the peach canners walked out of the plant in a snit. And there's not baby food because all the baby food is on strike. Heck, all the food production is on strike.

Are you still going to be supporting these thuggish unions then?

Can we get the real egbert back? The replacement just writes jibberish.

The New Deal and the G.I. Bill and basically the so-called "Welfare State" made that possible, do those kids could grow up thinking about sci-fi and go on to MIT and NJIT, then to developing the best defense and private sector technology.

And in many cases resenting the very institutions that made their success possible. It's preferable to imagine that one did all by oneself.

Unions worked not just for the people that belonged to them, but they represented a potential *threat* to employers who had non-union work forces. They had to tread a little more softly, have a decent company Christmas party, Turkeys for Thanksgiving, etc. Not to mention that the non-union employers needed to pay a little more to keep their people from leaving. We also had political competition back in those days-the Soviets and the Labor/Social Democratic governments in Europe, i.e., that kept our government and industry just worried enough to keep them a little nicer than they wanted to be. You also had more business people with generalist educations who didn't want to be perceived as Ebenezer Scrooge's. There also could have been a little afterglow from WWII when everybody was sacrificing for a common goal. Now we are all in our own little paper hexagon in the hive.

It should be noted again that if the median wage household of today were forced to adopt the living standard of the median wage household from Kevin's halcyon days of yore, that he frequently waxes so nostaligically about, today's median wage family would likely forment armed revolution.

I do agree that CEO and elite management compensation suffers from a dreadful (and difficult to address productively) principal/agent problem, but, gosh, can the chatter about the good ol' days be given a rest? It's no more useful coming from Democrats than it is coming from Republicans.

Let's say your a single working mother, and your tryinf to feedl your baby. But guess what. You've got no canned peaches, becuase the peach canners walked out of the plant in a snit. And there's not baby food because all the baby food is on strike. Heck, all the food production is on strike.

What a maroon...Yeah, we only have one brand of peaches, and one cannery, this being the Soviet Union and all. And the farmers market shut down. And there was no oatmeal on the grocers shelves.

Agree that this new egbert program definitely needs work. The only thing that's right is the "ah, Kevin" part. Case in point: this bot has not made a single youth group reference in weeks.

The difference, jeremy, is that Enron no longer exists, while the Teamsters union does.

Two important events shaped the generation we are talking about. The first was the great depression and the second was WWII. Both were real existential threats. Americans of all social classes and stripes had to pull together or we were doomed. The people who came out of WWII had a profound sense of responsiblity.

I remember growing up an instance when my Dad had to layoff some of his employees. He tried everything he could to avoid it. It broke his heart. He could tell you all about everybody who worked for him. He knew and keenly felt the pain of those layoffs not just on the people he was letting go, but on their wives and children. He took laying off those people as a personal failure.

His company had unions and they went on strike. He never held a grudge and always treated the union leaders with respect. They did the same with him. Of course, my dad had been in a union, in fact, before going into management he had been a union stewart.

It is funny but when my Dad died a whole lot of people came to his funeral who were retired former employees, including some of the people he let go.

My dad was very typical of management in his generation, all of whom came out of the shared experience of WWII. When your life depends on the guy next to you, you don't think of him as just another brick in the wall. I doubt the current MBA school executives have that same feeling of connection to the people who work for them.

Let's say your a single working mother, and your tryinf to feedl your baby. But guess what. You've got no canned peaches, becuase the peach canners walked out of the plant in a snit. And there's not baby food because all the baby food is on strike. Heck, all the food production is on strike.

And that's not the half of it, buddy.

Let's say that everybody gets real hungry because of the no food being produced thing. Then let's say they start looking at your baby, and saying things like, "Mighty fine lookin' baby you got there, Ma'am. Sure hope nobody has a hankerin' for baby fat, you know what I mean, Ma'am?" And you can't help noticing the drool from their mouths when they say it, because it's dripping into the stroller. And let's say you wake up one morning to hear the baby squalling and you find a big bite missing out of your baby's butt. And let's say the next day you wake up and find your baby's missing too, all of him, you know? Then the next day you wake up with a huge pain in your butt, and, sure enough, there's a bite missing out of your butt too?

Are you still going to be supporting these thuggish unions then? Huh? What are you going to think then?

I take it you haven't read Paul Krugman's book, "The Conscience of a Liberal." He provides an excellent study of the relationship between unions and the "Great Compression" which lasted from 1945-1973, plus a road map as to how to regain economic equality. His book is more generic and less detailed than some of his other work, which makes it both easier to read and a bit frustrating at the same time. But as ever, he does not disappoint.

....And in many cases resenting the very institutions that made their success possible.... Horatio Parker at 2:12 PM

.... if the median wage household of today were forced to adopt the living standard of the median wage household from....days of yore....today's median wage family would likely forment armed revolution.....Will Allen at 2:18 PM

Even though unions aren't as strong as they used to be, there are cases, like UPS & FedEx where the unionized company unintentionally helps pull up the wages of the non-union company. If you had more unions, there'd be more of that going around.

To All: Read Thomas Geoghegan for further elaboration on this theme, esp. "Which Side Are You On?" and "See You In Court".

Excellent POV from a longtime labor lawyer.

"Back in that golden age people didn't have cell phones, personal computers, or DVDs." -Al

His point being, I guess, things are better because we own more things?

What happens when those 4 billion without rise up and knock on your door Al.

I don't see why Kevin finds it "hard to say" whether unions were a cause or result of the "social relationship"- especially when he goes on to explain in the next paragraph some reasons that unions were a cause of that relationship.

Employers paid scale, and the reason they did that was that most of the people at that time had lived when there were no unions, and didn't want to go back to that time.

Employing a non-committal qualifier as a sort of stylistic mnenonic weakens the writing.

The USW, as an example, arose in an era (actually several) and from circumstances where management could hardly be called "enlightened". See also the UAW. But the success of the union regarding wages also contained the seeds of its demise. The relationship was always adversarial and the union leadership negotiated on that basis, even during those golden days of yesteryear.

When an industry downturn, combined with the continuous caster, led to plant closures, bankruptcies and loss of the economic benefits negotiated for, the union never changed its tune or its tone.

Mark may pine for the years when there was a difference in the employee-employer relationship but he might as well pine for the fjord. The union parrot is deceased, it is no more, it has ceased to be, it has joined the choir invisible, etc., etc.

No, Mike, what is silly is to look at something other than how well people actually lived, and which living standard they would prefer, when deciding which era was superior. If people in the median wage household of today were forced to adopt the living standard the median wage household from the early 70's, they would be less likely to own their home, and if they did it would be markedly smaller. They would drive a car that they hated, compared to driving, say, a Honda Civic or a Saturn. They would have fewer choices available to them when they took a vacation, since air fares were far less affordable then. Their affordable entertainment choices would be much fewer. If their child were to be afficted with leukemia, they'd be grief-stricken and outraged to learn that their child was overwhelmingly likely to die, instead of being successfully treated. Their options for food would be far more constricted, and their food was in many instances more expensive, in terms of the % of their wages consumed.

The one area in which the early ,70s family had it better was in the area of the cost of college education, and of course that is not an area which has been subject much to market forces, except in the sense that a college diploma is such a widespread signaling device that, along with other factors, the demand for a college education has skyrocketed, with has helped drive tuitions sky-high as well.

I know reactionary Democrats such as yourself like to paint the past in rosy hues as much as reactionary Republicans do, for different reasons, but both groups are pretty silly.

It's difficult to separate the decline of unions from other changes. There used to be more job stability, and companies are more likely to care about the plight of their workers if those workers are going to be around for a long time. There used to be more jobs where the bottom line of the corporation was less impacted by the quality of the work, so it was easier to put all the workers together on a union scale. It also used to be more difficult to ship jobs overseas.

If unions were as strong as they used to be, would wages and benefits have continued to rise? It's difficult to know.

Will Allen should keep in mind that "back in the day" Honda Civics were not available to the rich, either. Nor were cellphones, personal computers, or CAT scans. The reason Bill Gates can buy an iPod today (an option his well-off father did not have) is that lots of modestly-off people can afford to buy iPods. If they could not, it wouldn't pay to manufacture iPods. If modestly-off people could not afford PCs, it's doubtful that Bill Gates would have sold a bazillion copies of Windows, either. So let's not get hung up on comparisons of the absolute standard of living (for either rich or poor) across decades.

It doesn't take a "reactionary Democrat" to recognize that a thriving economy needs CUSTOMERS to buy its ever-growing and ever-better outputs. Masses of customers. The rich can't make a go of it by merely selling to each other.

-- TP

To Will Allen and everyone else carping about the improvement in living standards: Your basic argument is that anyone who's alive today can't complain because, you know, stuff hadn't been invented yet.

Silly me: I should be happy just to be alive. It's insane to expect anything more. I mean, Julius Caesar never had Tivo! Do you think Alexander the Great had an Ipod? Napoleon can only wish he drank Red Bull!

Do you really expect so little of America that you want people to shut up and accept their lot just because they were born now and not centuries ago?

Tony, my only point was that it is ludicrous to claim or imply that median wage earners from thirty or fourty years ago had things better than the median wage earner of today. The median wage earner of today would no more want to adopt that living standard than he or she would want to hit their thumb with a hammer. If people want to decry increased inequality, then they should decry increased inequality, and explain why it undesirable, and also explain, in detail and with some attempt at intellectual honesty, how inequality can be reduced without other unwanted effects which outweigh the intended effect. It would be preferable, however, if they were to avoid the silly notion that that people were better off in 1972. That's just dumb.

No, slothrop, I merely stated that it was inaccurate to portray thirty or forty years ago as a time when median wage earners, or to use a less precise term, average citizens, had things better than such people do today.

Used to be that the owners lived in the towns where they did business. My grandfather's boss, John Patterson of NCR, lived just blocks away and walked to work. The NCR of that time was one of the most employee friendly places you'd ever want.

I think locality had a lot to do with it. Local economy - where you know the folks and a home town ethic prevails - makes for respectful employee/employer relations. It is personal after all.

Unfortunately, Ed D., there is no way to achieve today's living standards with a local economy. I know nostalgia can be comforting, but beyond that it is of very little use.

So when Republicans go on about taking us back to Reagan's America, they should add: "which was of course a place without Ipods and cell phones and good HBO programs. And where hot pink was the color of the day and big hair ruled!"

The idea that these things have to be literally accounted for when we talk about relative measures of equality has nothing to do with anything.

there's no other alternative

Uh-huh. I mean, look at Europe. They're economy is in ruins and they're all about to become Muslims. If only they'd learn from us.

Did we have the equivalanet of Norquist, Rush, Hannity, Coulter, etc., etc. stirring up fake contention back in the day?

I'm posting this from Flint, Michigan, my home town. My family was/is UAW-CIO. We weren't GIVEN anything from GMC. We TOOK it. We took it with strikes or the threat of strikes. And the rest of the American working class got an example to follow. All "benefits" you know them were won by organized labor and collective bargaining, led by the CIO. If you have a health plan, for instance, you are a "free rider and you owe what you probably take for granted to the example and the pressure of organized labor. Anybody who thinks otherwise is ignorant. Anybody who says otherwise, blusters and lies out of ignorance. We changed America

but we let the bastards get away....

Yeah, buddy66, and then you got your ass handed to you by labor and management which built better cars, so much so, than within a few short decades your company and your union were in full retreat from that other labor and management. Congratulations on getting whipped. How's that working out?

Will, I understand your point: we are ALL "better off" than we were 30-40 years ago. And I think you understand mine: the rich have "more choices" today than 30-40 years ago precisely BECAUSE the not-rich have them.

We can't all be rich. If we were, "rich" would no longer have the cachet it has today. The distinction between rich and not-rich is purely relative, and always has been. It's the RATIO between rich and not-rich that some people feel was "better" 30-40 years ago. Specifically, since we measure everything in dollars, it's the ratio of median income to mean income that is either "better" or "worse" today. The argument that the median person (or family) can only enjoy a higher standard of living, tomorrow, if we adopt policies today that tend to increase this ratio is (barely) plausible. But those who make it need to be explicit about their definitions of "better off", "standard of living", and so on, too. They may discover that their definitions are not in fact universally accepted.

-- TP

Wel, Tony that's not an argument I've made, but I will note that even if the principal/agent problem in CEO compensation were solved, so CEO's pay was more in line with a better functioning market in the services they provide, and all that extra pay were redistributed to workers, it wouldn't have nearly the effect on inequality as some suppose. If the CEO of Walmart had his entire yearly compensation completely redistributed to Wal-Mart employees in the U.S., each employee would get about a whole whopping 14 dollars a year, before taxes.

It's true that absolute living standards are higher today. It's also true that more families today have two wage earners, work more hours and have less economic security and more stress than in the past. Tradeoffs, tradeoffs. And of course it gets very tricky trying to decide how much credit for technological advances should be attributed to changing labor relations. Some, no doubt, but there were lots and lots of advances in the 40s, 50s and 60s. Televisions and polio vaccines were pretty big back in the day.

Dear Will Allen:

You do not of what you speak. Most of your references are to pointless gadgets. Does having a cell phone make us better off? I don't really think so, but it costs me two grand a year to have them for me and my family. What about an IPod? I don't own one even though I could obviously afford one, but I don't feel deprived. Does having a TV in every room make you better off? You can only watch one at a time and 95% of the programming is garbage. I'll tell you what is not affordable for the middle class anymore. Good schools. A house. Medical care. A university education. You know, the little things in life. Things that were once taken for granted by middle-class families. Oh, and all done by one wage earner. And whatever happened to company pensions? You said, "The median wage earner of today would no more want to adopt that living standard than he or she would want to hit their thumb with a hammer." I think there are a lot of people out there who would trade a 1973 lifestyle if they knew they'd get a pension when they retired. For another thing, they wouldn't have to work so hard so they could spend more time with their families. And, btw, I'm fifty, so I remember the 1973 lifestyle very well.

"affordable entertainment choices would be much fewer." - W. A.

Yes, how horrible for a family to actually talk or play a game or like my family did, go outside and play.

"If their child were to be afficted with leukemia, they'd be grief-stricken and outraged to learn that their child was overwhelmingly likely to die, instead of being successfully treated" - W. A.

Oh yeah, healthcare options are so much better now for the 43 million uninsured in the country.

"If their child were to be afficted with leukemia, they'd be grief-stricken and outraged to learn that their child was overwhelmingly likely to die, instead of being successfully treated."

Childhood leukemia mortality has declined by 50% since 1975. The best you can say is that the child has a better chance of surviving, assuming his family can afford the treatment.

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Our blog-commenting due process rights are being violated!

I'm from the south and I think employers here have historically been more self-serving and have been more inclined to squeeze labor out of their workers at the lowest possible cost.

After all, the first labor system the south chose was slavery. It's still the ideal in many southern employers' minds, and some try to get as close to it as current ethos allows.

As southern influence on culture and politics has grown nationwide since the 1960's, the denigration of labor has also spread throughout the country.

Will Allen: I do not suggest that you are for, against, or indifferent to, "inequality". I am a bit confused, however, as to why you bring the "principal/agent problem" into the discussion.

But since you brought up Wal*Mart, I can't resist pointing out that several of the largest personal fortunes in America belong to "principals" of Wal*Mart. (Arguably merely heirs, I guess, but let that pass.) Those fortunes represent some fraction of the increase in utility that Sam Walton generated for "the economy". I don't know what fraction. Maybe Sam captured the dollar value of the entire net utility he added to "the economy"; maybe less; maybe even more. The question at hand is whether his customers would have seen a bigger, smaller, or identical increase in their own utility if Walton had shared more of his profit with his "associates" by paying them more or providing them health insurance. If you buy a dozen tube socks at Wal*Mart for a lower price than you could find elsewhere, is your "standard of living" affected by how Sam splits the take with his workers?

-- TP

Two comments: I so agree with this post on the tacit compact b/t employees and employers back in the day. My father had a blue collar job, though non union, in Michigan in the '60s-'80s. During a few recessions, the owners cut hours across the board rather than lay off a few men. My father was always willing to have his hours cut -- he was one of the first hired, so he was never in danger of being laid off (unless the whole place tanked) -- rather than to go to bed at night and know that one of his former work buddies may not have been able to feed his family that night.

The other comment: the survival rate for childhood leukemia is directly related to the type. So while survival rates have shot up for some types, they remain in the cellar for others, having spent the last several months consoling my children on their friend who passed away earlier this year....

Back in the 60s there were few large corporations, not like we have today. Most people worked for small businesses where the owners were little better off than their workers -- and worked with them in their stores. The disconnect we see today between workers' wages and CEO wages stems from a new generation of managers whi have never had a working relationship with their employees.

Unions were certainly NOT the result of a positive social relationship between owners and workers...

Jose, if your child was diagnosed with leukemia forty years ago, he was pretty much guaranteed to croak. Now, median wage earner familers have children who survive leukemia on a regular basis. You can have the good ol' days.

Also, here's a hint, Jose: if you are spending two k a year for something that you don't makes you better off, get rid of it. My bill will be forthcoming.

My wife and I got rid of cable and our landline today

Hey, nutty, you are your family can do anything you damned well please. Stop trying to say people are better off with the choices you prefer, which is a typical charateristic of the reactionary.

TP, the only problem I have with executive pay is to the degree the executives did not receive the pay with the full consent of the people who own the company, the shareholders. This is actually less of a problem at Walmart than at other companies, where compensation boards without large stakes in ownership have an incestuous relationship with management, and compensation does not have a relationship to what serves the owners' best interests.

Al,

Apparently "American capitalism" includes a huge element of state intervention, then. The postwar electronics industry was almost entirely a creation of the WWII and Cold War military-industrial complex. Micro-circuitry and cybernetics were both developed as R&D efforts by corporations contracting to the Air Force. So "capitalism," as you see it, must not have a whole hell of a lot to do with free markets.

BTW, I don't own a cell phone; their main function has been to hook people to their jobs by an electronic leash. And I much preferred it before DVDs crowded the VHS out of the market. DVDs are DRM'ed to hell and gone by the copyright Nazis. Like most forms of digital entertainment, the main consideration in their design seems to make older standards of "fair use" technically impossible (by criminalizing circumvention technology, if need be).

And if you read the Cluetrain Manifesto and Yochai Benkler's work, the network society the PC has made possible will probably destroy hierarchy in the workplace, along with the corporate dinosaurs whose business model depends on "intellectual property" [sic] and other forms of special privilege against market forces. So, God willing, the free market will destroy "American capitalism." "American capitalism" will go the way of its other statist competitor, Soviet-style state socialism.

I'm an economist. Kevin and one of the early commenters, frankly0, are right: Cultural norms play a big role in the wage distribution. The existing econometric literature doesn't do a very good job in explaining the growth of inequality over the last three deacades: Sure, some due to skill-biased technological change, just a bit due to trade, a bit more due to miscellaneous identifiable factors--but most unexplained. The huge growth in CEO pay relative to workers' pay isn't because CEOs have become relatively more valuable. It's because of the erosion of norms favoring greater equality.

Unions certainly played a direct economic role in keeping middle class wages robust and CEO wages earthbound up through the 60s

No doubt that prior to reagan's attack, unions did help keep -- or define the middle-class. But I believe that the tax code was also a factor in both the middle class living standard, as well as keeping CEO greed in check. Prior to Kennedy's well-documented tax-slash, the top marginal rate was over 90%. After the slash, it was still around 75% IIRC. Want to make obscene amounts of money? FINE --- at least 75% will be going to the common good (roads, education, etc) and this will minimize the burden on the middle and lower classes.

"Jose, if your child was diagnosed with leukemia forty years ago, he was pretty much guaranteed to croak. Now, median wage earner familers have children who survive leukemia on a regular basis. You can have the good ol' days.

Also, here's a hint, Jose: if you are spending two k a year for something that you don't makes you better off, get rid of it. My bill will be forthcoming."

Hmm, four hours staring at your computer screen and that's the best you can come up with? So, the gutting of the middle class is justified by one family in a hundred thousand having the chances that its kid lives improved from near hopeless to highly uncertain, if they have the money to pay for it. You still haven't explained how DVD players and cable TV make up for the inability of the middle class to afford homes, medical care, excess to good schools, and university educations. You also didn't explain why with all these great advances we pay much more for energy today than we did thirty-five years ago.

PS: regarding our cell phone usage, it is unfortunately expected that people have cell phones today. That's why I'm getting rid of our landline.

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