Naked Capitalism Link of the Day

Today's link: The Truth About the American Economy, by Robert Reich:

Starting more than three decades ago, trade and technology began driving a wedge between the earnings of people at the top and everyone else. The pay of well-connected graduates of prestigious colleges and MBA programs has soared. But the pay and benefits of most other workers has either flattened or dropped. And the ensuing division has also made most middle-class American families less economically secure.

Government could have enforced the basic bargain. But it did the opposite. It slashed public goods and investments — whacking school budgets, increasing the cost of public higher education, reducing job training, cutting public transportation and allowing bridges, ports and highways to corrode.
It shredded safety nets — reducing aid to jobless families with children, tightening eligibility for food stamps, and cutting unemployment insurance so much that by 2007 only 40 percent of the unemployed were covered. It halved the top income tax rate from the range of 70 to 90 percent that prevailed during the Great Prosperity to 28 to 35 percent; allowed many of the nation’s rich to treat their income as capital gains subject to no more than 15 percent tax; and shrunk inheritance taxes that affected only the top-most 1.5 percent of earners. Yet at the same time, America boosted sales and payroll taxes, both of which took a bigger chunk out of the pay the middle class and the poor than of the well off.

In this post, I think he does a pretty good job of describing the differences in domestic policy over the periods he is describing.  I believe he plays down too much the effects of foreign competition and peaking U.S. oil production (1971), especially in the late 60's and throughout the 70's.  I think the governmental responses to these changes were lacking, and didn't take into account how much more Americans consumed than other nations.  These governmental failures in leadership led to an undermining of faith in governmental competence, making it easier for the Reagan revolution to gain a foothold.  After that, it has been general incompetence in government, especially Republican government, along with the constant drumbeat by Republicans that government can't do anything right, which has turned nearly half the population against all government.  Meanwhile, the best-off in our society have been making sure they can continue their lifestyles, at the expense of the vast majority of the population, when all of our lifestyles are unsustainable.  Without a significant reordering of our infrastructure and lifestyle, we will face a dramatic dropoff in standard-of-living.  I guess I see two choices, a voluntary moderate decrease in lifestyle, or an involuntary major decrease.  We need to figure out how we address this.  My first expectation is that we need more dense, walkable communities with more public transportation.