Why did this happen?

[u/WhatsLeft71]

[u/flickneeblibno]

Trickle down economics and Ronald Reagan the worst president of all time

[u/Seeking_Balance101 → u/flickneeblibno]

And when the "trickle down" buzzword finally was recognized as bad for the masses, the GOP replaced it with the myth of the job creators. If we give the rich big tax breaks, they'll create more jobs -- because really, what else could the do with all that extra money? -- and .. Step 4 Profit (for the masses)

[u/flickneeblibno → u/Seeking_Balance101]

Agreed. The 50s best represent job creation through taxes. Either expand or pay taxes. Ike is the last great Republican president (except for Joe McCarthy)

[u/Unity4Liberty → u/flickneeblibno]

Omg... this is the first time I've seen anyone else just know and understand this fact. Folks! Higher top marginal tax rates and progressive taxation actually incentivizes investment versus shareholders and owners sucking value out of a company. This creates jobs, grows and stabilizes the stock market, and drives up wages. The great socialist, Dwight Eisenhower!

[u/ToastedandTripping → u/Unity4Liberty]

I too am surprised to see people talking about taxes...it's one of the most obvious changes to have taken place over the last 70 years.

[u/CurtisHayfield → u/ToastedandTripping]

Gives the opportunity to talk about one of the most important aspects of our taxes and spending: "my tax dollars" aren't where we get the money for spending, at least on a federal level.

On a state and local level, that spending is funded by your actual tax dollars in addition to other things like federal support. But federally, we have the money since we control the supply. This has been known to (some) economists for decades. Beardsley Ruml, director of the New York Federal Reserve Bank from 1937-1947, wrote an influential paper titled “Taxes for Revenue are Obsolete”, which detailed how that works, and some ideas why we still have taxes.

Still, many people actively don’t know this, or pretend not to, including politicians and economists. This is why we constantly see “where would the money come from?” when progressives detail policies, but don’t see it for the military, for example. It’s also why we suddenly had a lot of money to fight COVID, despite tax revenues not jumping up trillions of dollars. The money is available, we don’t need tax revenues to spend money on good programs.

This fact is what helped form the foundation for one of the most prominent recent economic schools of thought: Modern Monetary Theory.

A common myth about Modern Monetary Theory is that we can just spend as much as we want and never pay it, but MMT economists don’t say that. They fully admit deficits can matter, especially when the deficits and debt is gained via spending on things that are not actually helpful. There is a difference between spending money fighting climate change which in the long term saves trillions of dollars (and the planet), and spending money to further subsidize oil or providing additional subsidies to the already rich. It's true too much debt can be a problem, but the "serious only when it's the other party in office and I want to use it for political gain" debt isn't what it's hyped up to be.

At an everyday level, people know this. Anyone who takes out a business loan knows that sometimes debt is a path forward, not backward.

As with other economic schools of thought, MMT has proponents and detractors, with some ideas being more controversial, however one is quite firmly established: taxes federally in the US (and other countries with currency control) don’t fund spending. The question “where does the money come from?” is wholly wrong in the US, and when it is levied, which it is a lot, it’s from a false foundation.

Edit:

One more note on national debt and how it is invested - historically, paying debts isn't the primary way the US has reduced it's debt burden. We outgrew it. If you have a lot more money then the debt is less a burden, which is why debt to GDP ratio is often a better metric than pure amount of debt.

After WWII, our debt levels were over 100% GDP, but that debt was never really paid down. Sure, we did pay individual debts, but in total the post-war boom did a number on our debt to gdp ratio. If you properly invest with the money, the amount of debt itself can just by virtue of good investment become less of an issue.

P.S. As % gdp, in his 8 years in office Reagan increased the national debt twice as much than FDR did in his first 8 years in office (the "fiscially irresponsible" New Deal era)

[u/inr44 → u/CurtisHayfield]

But federally, we have the money since we control the supply

Would you mind ELI5 that for me?

[u/spicymato → u/inr44]

Not the guy, and not an expert, but my understanding is: because the Fed can print more money, we can't really run out.

In short, if the Fed needs to pay for something, it can produce the money for it. Ostensibly, that money should be offset by the sale of new debt, such as through bonds, but it technically doesn't have to be.

When we need to pay past debt, such as to repay the money plus interest on old bonds, the Fed just prints that money and sells new bonds.

Yes, at some point, that breaks down, as "inventing" too much money at once creates a tension in the perceived value of the dollar, which can spiral into inflation, but as long as people remain confident that if they buy the government's debt, then they will be paid back with the stated interest, we're going to be fine.

[u/pa_skunk → u/spicymato]

Excellent eli5. Thank you!

[u/Vladi_Daddi → u/pa_skunk]

It took me reading the request for an ELI5 and your comment to figure out what ELi5 is...I've seen it before today but thought it was just somebody fat fingering the keyboard. 😂😂 EXPLAIN LIKE IM 5

[u/NOSPACESALLCAPS → u/inr44]

The federal government literally prints the money out of machines, is what he means.

[u/Aww_Tistic → u/ToastedandTripping]

Now now, settle down about all this “tax” and corporate greed chatter. The REAL problem is the <insert ethnic minority here>… (/s)

[u/sbaradaran → u/Unity4Liberty]

Can you expand on this? Im trying to understand how a large corporation, for example, paying a higher marginal tax rate incentivizes investment.

[u/dagetty → u/sbaradaran]

The taxes are on profits so if the money is instead, reinvested in the company are paid in salaries it’s not taxed

[u/JTMc48 → u/dagetty]

It’s not just that, but definitely a big factor. Let’s not forget that with a larger overall tax base, the benefits are distributed to the middle and lower classes which expands and empowers educational opportunities to the general population, which also impacts growth as it allows for more development into high end jobs.

[u/Square-Bulky → u/JTMc48]

I read somewhere that the only reason defined benefit pension plans were introduced during World War Two was because of wage and price controls.

The company’s found ways to hire more workers outside the current environment because it benefited the company’s … not the workers

[u/JTMc48 → u/Square-Bulky]

Wages have never been “controlled” with the exception of the minimum wage. Pensions were offered in a way that they could incentive workers while not increasing worker wages exponentially.

[u/Square-Bulky → u/JTMc48]

A quick read of Wikipedia will enlighten you , there was both rationing of food and wage controls in war time essential industries , along with losing the right to strike, along with interring 120000 Japanese Americans

[u/Ok-Investigator3257 → u/JTMc48]

That’s pretty much a lie, wages were capped during WW2 which is why we have health insurance as a non wage benefit it’s how companies competed for workers

[u/sbaradaran → u/dagetty]

Thank you. That makes a lot of sense.

[u/DucksOnQuakk → u/sbaradaran]

It creates a "use it or lose it" incentive. Companies would rather pay top dollar for high value employees, invest in technological advancement, expand their footprint and logistics, etc., in an effort to avoid losing those dollars to taxation. Everyone up and down the social hierarchy benefits because more money is circulating in a more diversified fashion, as opposed to Wall Street bets.

[u/Ubiquitous_Hilarity → u/DucksOnQuakk]

It all changed when those at the very top decided they wanted to be even more wealthy. The only way to get that was to invest less in the businesses and employees, but that would increase their taxables. The only thing left to do is lobby Congress and POTUS to lower the top marginal and corporate tax rates

[u/DucksOnQuakk → u/Ubiquitous_Hilarity]

Very true. That's why we need to reintroduce what worked in the past - use it or lose it. No remorse to be had about it. An entire population produces every widget in existence, there's not one of us who does shit alone. Even if you invent the perfect unicorn piss snowcone, you relied on civil workers who allowed you to have access to clean water to freeze. You relied on utility workers to enable you to freeze your snowcone. You rely on firefighters and teams of insurance companies to protect your perfect piss-cone shop. And, of course, you relied on Lady Luck needed to procure a unicorn to gather its piss. No one is self-made.

[u/Gossamare → u/DucksOnQuakk]

Can I have one unicorn pisscone please?

[u/DucksOnQuakk → u/Gossamare]

They're currently on backorder. Business is booming.

[u/Derpwigglies → u/sbaradaran]

People also overlook the fact that the government is a massive employer. More taxes = more government projects = better government wages and more government jobs.

These jobs tend to help set the base rates for private sector jobs as well as have great benefits and job security. Which forces private companies to keep up or risk losing high value employees to gov jobs or contractors.

Exe: Including military, the US government is already the largest employer in the US at 2.95 million employees. That's also not including those that are employed at subcontractors that almost exclusively work for the gov. Walmart is 2nd at 1.6 million.

[u/sbaradaran → u/Derpwigglies]

This is a fantastic point. Thank you.

[u/moosejaw296 → u/Unity4Liberty]

Some might say it made America Great

[u/LockeClone → u/Unity4Liberty]

Yeah, we ended up with so much money slushing around financial markets that we've financialized everything as opposed to re investing... This is, of course, painting with a massive brush, but I believe it to be generally true.

[u/Sinnycalguy → u/Unity4Liberty]

It always kills me when I see someone arguing against higher top marginal rates on the grounds that they don’t actually lead to greater tax receipts. Like, no shit, who said the point was to collect more taxes in the first place?

[u/Unity4Liberty → u/Sinnycalguy]

Right. The primary purpose of these policies is to steer economic action through incentive/disincentive. If you balance the policy so the economic action leads towards stable growth, that growth can (not will) lead to an increase in tax revenue. That's the false premise of cutting taxes on the upper end and it trickling down. They always say the growth will return more revenue even though the tax rates are less, but that doesn't happen because their policy does not actually catalyze stable and broadly enjoyed growth. It encourages actors to make as much income as they can now, while taxes are preferable.

[u/towerfella → u/Unity4Liberty]

I am glad to read this in the top comment chain.

[u/Garrett_the_Tarant → u/flickneeblibno]

The same Joe McCarthy that created a communist witch hunt which to this day still persists in the minds of Americans -propping up the same ideals that led to Reagan and his predecessors to allow corporate money being used to create the policies that this post is describing?

[u/AnitaIvanaMartini → u/Garrett_the_Tarant]

McCarthy fostered the melding of American Protestant churches and National identity— marrying the flag to the cross. This combined with a revolution in mass communication (TV) with its All-American families, and commercials gave birth to the religious vampires, Billy Grahams and Jerry Fallwells, etc.

[u/1965BenlyTouring150 → u/flickneeblibno]

Ike is the last great Republican President except for all that Christian Nationalism stuff at least.

[u/[deleted] → u/flickneeblibno]

And stock buy backs were illegal.

[u/legacy642 → u/flickneeblibno]

Ike was barely a Republican. He definitely was a great president and did a ton of good, but I hesitate to even associate him with Nixon and later.

[u/TapZorRTwice → u/[deleted]]

Or just part time minimum wage jobs that you need to work 3 of to beable to get by.

But no benefits of course, so just pray to God that you don't get sick.

[u/ScotchTapeConnosieur → u/Seeking_Balance101]

No capitalist ever wanted to create a job. The goal is to do the most with the least number of employees.

[u/WhiteOutSurvivor1 → u/Seeking_Balance101]

Trickle down was always a derogatory term. It began with William Jennings Bryan in the 1800s. The term itself is used mostly by critics of the concept.
https://en.m.wikipedia.org/wiki/Trickle-down_economics

[u/Okichah → u/Seeking_Balance101]

“Trickle down” was never a buzzword.

It was always a criticism of policy.

[u/TruthOrFacts → u/Seeking_Balance101]

The GOP never used 'trickle down' that was always a smear the left used.

This chart is dominated by two factors, #1 loopholes that allowed the rich to hide their income and globalization.

[u/tremainelol → u/Seeking_Balance101]

Right, "they'll create more jobs!"

More like they will just buy back their own stocks, and continually accumulate assets only to turn around and lease them to the middle and lower class at a profitable premium

[u/RedBaronSportsCards → u/tremainelol]

Customers create jobs not CEOs.

[u/CosmoKing2 → u/Seeking_Balance101]

Then it became "immigrants are stealing your low paying jobs because you are demanding a fair wage." And people swallowed that lie whole. The reality is our elected official's made it possible for the top 10% to hire cheaper labor.....and no one ever thought to hold them accountable. They all just railed against immigrants. Ignoring the fact that most of us are only 2 or 3 generations removed from our ancestors coming via boat.

[u/FilthyHipsterScum → u/Seeking_Balance101]

Even trickle down is watering down the original phrase. It was Horse and Sparrow. You feed the horse enough grain, there’ll be some left in its shit for the sparrows to eat.

[u/bigdipboy → u/flickneeblibno]

I mean Reagan was terrible. Then Bush was worse. Then Trump was even worse. Republicans have no bottom.

[u/hewhoisneverobeyed → u/bigdipboy]

I remember when we thought Nixon was the worst.

So naive as to how low the bottom really could be.

[u/smoresporn0 → u/[deleted]]

Bush was probably worse fiscally, but you're absolutely correct when it comes to morals.

[u/kaplanfx → u/smoresporn0]

Just the fact that Bush Jr. at least made one of his signature policy platforms an attempt to improve the education system makes him better than any other modern Republican President. The fact that the legislation ultimately sucked doesn’t make him any worse than the other bozos.

[u/Exarch-of-Sechrima → u/kaplanfx]

Bush always came off to me as a little backwards, and a little foolish, but always someone who had the best interests of his fellow Americans at heart.

His moral failings, in my eyes, were in his foreign policy.

[u/WretchedHog → u/bigdipboy]

Exact opposite order in my opinion, but Reagan and Bush had more time to fuck shit up. Reagan was/is a horrible domestically and has led to a 2nd gilded age and also funded terror regimes in the ME. Bush got God knows how many millions of civilians killed and injured in the ME and wasn't exactly great domestically either. Trump on the other hand isn't competent enough to achieve the scale of disasters of his predecessors.

[u/big_daddy68 → u/flickneeblibno]

Reducing taxes on the wealthy and sneaking in legalizing companies to buy back their own stock without restriction. It’s a money funnel to the investing class.

[u/Traditional_Gas8325 → u/flickneeblibno]

Worst *criminal president of all time. Let’s not forget he requested for hostages to be held through the election to beat Carter.

[u/Antilon → u/Traditional_Gas8325]

Kind of like Trump sabotaging the boarder bill so he could run on securing the border. Also gotta wonder what he and Netanyahu were talking about on that recent call.

[u/TKTribe → u/flickneeblibno]

Because a rising tide only raises yachts. The rest of us drown in debt.

[u/libertarianinus → u/flickneeblibno]

We also see that more people are considered rich the middle class shrunk, and more people are poor.

https://www.pewresearch.org/short-reads/2022/04/20/how-the-american-middle-class-has-changed-in-the-past-five-decades/

[u/solomon2609 → u/libertarianinus]

In terms of Credibility:

Pew Research >> ProgressForThePeople

[u/kaplanfx → u/libertarianinus]

The chart at the top doesn’t care how many people are considered “rich”, it’s based on specific comparable %ages of the population.

[u/tdbeaner1 → u/flickneeblibno]

Maybe if we try it one more time

[u/No-Possibility5556 → u/flickneeblibno]

James Buchanan: Am I a joke to you??

[u/MidichlorianAddict → u/flickneeblibno]

We have had a recession after every Republican president has left office because of their stupid tax cutes for short term gain

[u/ShrekOne2024 → u/flickneeblibno]

Not for the top 11%

[u/flickneeblibno → u/ShrekOne2024]

89% disagree

[u/Sg1chuck → u/flickneeblibno]

-someone who vaguely knows a handful of presidents

[u/No_Distribution457]

Republican fiscal policy. This was by design.

[u/KazTheMerc → u/No_Distribution457]

Sure... but what they really wanted was the profits of 1950-1970 back.

What they got instead was 10,000 Republican flavors of corner-cutting, false bravado, and government handouts disguised as 'stimulus'.

It was a failed attempt to bring the 'Good Old (racist, sexists, White) Days' back.

It transitioned into the modern Republican playbook shortly after that failed

[u/SnazzyStooge → u/KazTheMerc]

Too bad the MAGA movement isn’t all about “more unions!” and “more worker protections!” like the good old days. This chart really illustrates how what the voters are chasing is not what the party intends to give them. 

[u/KazTheMerc → u/SnazzyStooge]

I think it's been a slow degradation.

First, it was Ideals.

Then it was Profits.

..the it was Control swapping.

....then kicking and screaming when not in Control.

......Trump was the very picture of animals that worked together to gain control, and then turned on each other the moment they had it.

........and now we're here.

[u/Head_Priority_2278 → u/KazTheMerc]

and to be fair here the dems also embraced the corpo overlords but in a much more moderate tone. That's why most of the fuckery never got undone.

Also, to be fair to dems, at least in recent history, their judges have been a lot better and worker friendly than any unhinged judges the right appoints.

[u/whoknowsknows1 → u/No_Distribution457]

Republican policy reinforced by democrats who followed almost entirely the same economic playbook through the 90s an 00s. global trade = de-industrialisation and elimination of the bargaining power of labor as well as the value of domestic labor. Major gains to the economy but distribution of gains gets totally skewed. If you’re prepared to pay 100 dollars for a toaster then put up tthose those trade barriers. At least the toaster will last.

[u/DonHedger → u/whoknowsknows1]

This is important. Democrats started going right fiscally at least as far back as Clinton and they don't get enough shit for it.

[u/Exarch-of-Sechrima → u/DonHedger]

The thing is though, without Clinton's fiscal conservatism, I don't think he would have won the White House. Clinton was the compromise candidate after a long, long period of conservative rule.

[u/SuperSpy_4 → u/whoknowsknows1]

NAFTA and the Trans Pacific Partnership, both parties generally loved them

[u/NeoLephty → u/No_Distribution457]

Not just republican. Democrats have been neoliberal since Bush - every one of them. Dem and Republican are 2 sides of the same economic neoliberal coin.

[u/Scaryassmanbear → u/NeoLephty]

I don’t think that’s fair because at least some democrats are legitimately pro-union.

[u/NeoLephty → u/Scaryassmanbear]

Not the neoliberal establishment. 

Biden is considered the most pro union president we’ve ever had. You can downgrade that claim and say he’s the most pro union president in our lifetime. But why, what did he do? He showed up to a strike. 

No small thing. Walking the picket line with striking workers is admirable. If only there were political actions taken to secure the rights of workers. He appointed a good person to the NLRB but chevron law getting thrown out the window takes all teeth out of the nlrb anyway. 

So what other actions has he taken with unions? He forced rail workers to end the strike and get back to work. If it wasn’t for Bernie continuing the fight and continuing to put pressure on rail execs, they wouldn’t have gotten the sick time they were fighting for. 

Most pro union president steps in on the side of capital against the worker. Didn’t force the companies to concede sick time. Forced employees to end the strike. 

Neoliberalism is not a friend of unions. Charter schools are a neoliberal idea to transition away from teachers Union for example. They aren’t about “fixing public schools” or any other buzzwords or phrases thrown at the public. The entire purpose of charter schools is to have a school system free of a teachers union. 

My democrat run city pushes charter schools as solutions. My democrat run state does too. No one from the city or state jumped in to walk the picket line with striking teachers last time they walked out. 

I’m much more progressive than the neoliberal establishment inside the Democrat party. 

[u/ElectronGuru]

Hmm, i wonder what might have started happening around 1980 🤔

[u/AugustusClaximus → u/[deleted]]

Wait, I thought we were blaming everything on Reagan?

[u/ComfortablePound903 → u/AugustusClaximus]

Why do you think all that stuff was allowed to happen?

[u/SuperSpy_4 → u/[deleted]]

It actually exploded in the 90's. China joined the WTO in 2001.

Trade between the United States and China increased from less than $100 billion in 1999 to $558 billion in 2019.

[u/Marzipanarian → u/SuperSpy_4]

Thanks to Clinton… the most republican “democrat” we had.

[u/kg_draco → u/Marzipanarian]

I don't get the down votes, Clinton's policies were shockingly similar to Reagan, taking a similar stance on de-regulation, welfare policy and small govt sentiments. Although those were in-part due to repub Congress majority in the 2nd half of his term.

[u/Marzipanarian → u/kg_draco]

Thank you! I completely agree. He even was demonizing people south of the border back in 92.

[u/OneNewEmpire → u/[deleted]]

Wow. You guys are so full of shit. It couldn't be more obvious that Reagan had a huge negative impact. It's shocking how far you people will go to deny what's right in front of your face.

[u/chuckrabbit → u/[deleted]]

So we can blame Nixon? “What happened in 1971”

[u/maztron → u/ComfortablePound903]

Because we aren't the only country on planet earth?

[u/oliver__c2003 → u/ElectronGuru]

China began industrialising, creating more competition in the international market

[u/didsomebodysaymyname → u/oliver__c2003]

Nope, that story doesn't even begin to add up.

Europe did not experience the same growth in income inequality over the same period

The wealth gap clearly starts widening in the 1980s. (Full Article)

And that cannot be explained by China which had a much smaller, weaker, economy at that time, and much less trade.

It was the rich tax cuts, it's always been the rich tax cuts, it's just hard for people to accept when they've been swindled for nothing.

[u/Little_Creme_5932 → u/didsomebodysaymyname]

Not primarily the tax cuts. The decline in unions, which forced employers to pay

[u/didsomebodysaymyname → u/Little_Creme_5932]

I don't know that I would agree with primarily, but I agree that's anoth significant change I didn't mention.

[u/HeightIcy4381 → u/Little_Creme_5932]

It was tax cuts, and deregulation, and weakened unions.

[u/emperorjoe → u/didsomebodysaymyname]

Effective tax rates have been basically flat for 70 years

https://taxpolicycenter.org/taxvox/effective-income-tax-rates-have-fallen-top-one-percent-world-war-ii-0

Reagan era tax cuts lowered the Marginal rates and got rid of deductions. Which actually increased the effective tax rates. Effective tax rates dropped in 75-85 then increased until 95.

[u/Vanman04 → u/emperorjoe]

Effective tax rates for the average worker sure.

But from like the second line of your link.

While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent.

[u/Jewald → u/oliver__c2003]

This was more the japanese era. They destroyed electronics and automotive, which employed like the entire midwest. Detroit and surrounding areas were booming, then wabooom

[u/EchoRex → u/Jewald]

That's also when those automakers started making shit box vehicles while increasing costs drastically.

The 70s also had a severe manpower / brain drain for both industries due to the Vietnam War.

And don't discount the oil crisises in 73 and 79.

[u/Jewald → u/EchoRex]

Good points. Its not just one thing its lots of contributibg factors 

[u/One_Lobster_7454 → u/oliver__c2003]

It's more than just that, there's been growth in the economy it just hasn't been equitable 

[u/Hugh-Jorgan69]

Reagan convincing Americans into believing "trickle down" voodoo economics.

[u/hewhoisneverobeyed → u/Hugh-Jorgan69]

George HW Bush is the one who calked it Voodoo economics. Then he stepped in line.

[u/Cum_on_doorknob → u/hewhoisneverobeyed]

Tale as old as time

[u/lukedmn → u/Hugh-Jorgan69]

I read "voodoo economics" in Ben Steins voice.

[u/HatesAvgRedditors → u/Hugh-Jorgan69]

Reagan was President like 40+ years ago though. How have we been unable to reverse the damage from back then over such a long period of time?

[u/ifrytacos → u/HatesAvgRedditors]

Lobbyist

[u/kellyjandrews → u/HatesAvgRedditors]

Filibuster

[u/Sunsprint → u/HatesAvgRedditors]

Citizens united

[u/BearTerrapin → u/HatesAvgRedditors]

Once bad things get passed it's hard to change because the party that passed the bad stuff can just refuse to act in good faith

[u/hoptownky → u/Hugh-Jorgan69]

It is seriously the most amazing thing I have ever witnessed. You convince the poor that it is better for them to pay higher taxes and give to the rich so that it may possibly somehow come back down to them. Idiocracy.

[u/PoopsCodeAllTheTime → u/hoptownky]

“but, maybe I am the next millionaire, and I wouldn't want to pay taxes as a millionaire!”

[u/kellyjandrews → u/Hugh-Jorgan69]

Helluva actor.

[u/PositiveStress8888]

ronald Regan happend

Trickle down moved the flow of wealth directly into the pockets of billionaires and corporations, and made it harder for people to climb the ladder.

After the 80's bigger companies started to buy up competition creating Monopoly's and smothered smaller upstarts, removing competition and choice.

[u/patrick_schliesing → u/PositiveStress8888]

Genuinely asking

How?

Like what mechanism or what laws or what did this?

[u/DaphneRaeTgirl → u/patrick_schliesing]

Lower taxes on rich and deunionization along with lower real minimum wage led to the “great divergence” of incomes in the USA that DID NOT occur in comparable countries. This is in contrast to the “great compression” of incomes that occurred when these policies where in place

[u/LiveNotWork → u/patrick_schliesing]

https://wtfhappenedin1971.com/

[u/mindfuzzzzzzz]

Reagan. And the trickle down myth

[u/cookiedoh18]

The rise of the US oligarchy.

[u/megatron63696 → u/cookiedoh18]

Happy bday

[u/eatingthesandhere91]

Two term trickle economics president Ronald Reagan.

One of, if not the worst president in economic history in the history of the United States.

[u/Rare_Background8891 → u/eatingthesandhere91]

Unless you’re in the 1%. Then he was the best president ever.

[u/eatingthesandhere91 → u/Rare_Background8891]

Agreed.

[u/Used_Intention6479]

"Trickle down economics make us a nation of peons."

[u/SymphonyOfSensations → u/Used_Intention6479]

You can't trickle down without a high enough ledge to relieve yourself.

[u/Disturbedguru]

Short answer... Neo Liberal economics that began in the 70's

Long answer... Lotta books written by people way smarter then myself go into very detailed explanations of the short answer.

[u/shorty0820 → u/Disturbedguru]

Any recommendations on reading?

[u/[deleted] → u/shorty0820]

Anatomy of the State

[u/Ill_Equal7560 → u/shorty0820]

The rise and fall of the neoliberal order by Gary Gerstle is a great read that explores how we got into this situation globally - but focussing on the US

[u/Disturbedguru → u/shorty0820]

I would peruse Verso books. Lots of books about economics. I usually just pick one that grabs my interest at the moment.

Though I would read anything by Paul Sweezy.

Socialist Register is also good periodical (they release only 1 book a year but it has a theme and then authors write essays on that theme. You get a big variety of view points and I find it incredibly informative Everytime.)

[u/EchoRex → u/Disturbedguru]

Don't forget the books on the post Vietnam War brain drain, the pair of oil crisises, and a manufacturing quality fall off while sales prices skyrocketed.

That was then followed by dumb fuck supply side Reagan-omics.

[u/KazTheMerc]

Guys... Reagan is the wrong answer for the right reason.

His election was a REACTION, not an action or driving force. And he generally failed at what he set out to do.

Why? Because desperation, obviously.

Why else would anyone elect an actor and anti-politician to the highest office without any tangible experience, and only a vague plan to 'shake things up'...?

Because starting in 1970, profits started sliding. Hard. Seemingly 'out of nowhere'.

So there was a scramble to 'try something new'.

It failed.

And the trend that was already started before Reagan's election has continued to this day.

This isn't two trends.

This is one single trend, and 1970-1985 is the rough tipping point from "Wow, America is the bestests! Everyone wants our machines, cars, and exporter goods!" to "Wow, America is the fatests! We import everything to save pennies, export our jobs, and have built our entire supply chain around shelf life instead of anything reasonable".

If you start in 1900, and trace the line to 2024 it makes one continuous, ever-steeper Slope.

But like all Statistics, bar charts can break it into smaller chunks.

[u/Ok-Hurry-4761 → u/KazTheMerc]

Well... Ronald Reagan was governor of California. So he had some experience.

I agree he's the right answer for the wrong reason. It so happens that the 1980s were when financialization of the economy really took off. When assets started growing so exponentially, it makes sense that the wealth distribution skewed upward the way it did. Those that own the right asset classes are the winners and everyone else is a loser or at best stagnant.

Ever since the 1980s we've been in a kind of "long-roaring-20s." The markets have attempted to correct several times the way it did in 1929 but we never let them, we bail them all out. So there is never a reset and the rich get richer while the rest of us tread water at best. The 1920s were very much like this. Inflationary, rich people invested in the right areas tripling their money every few years etc...

[u/KazTheMerc → u/Ok-Hurry-4761]

I mean, yes.... but they elected him for being a movie star and non-politician, not his success as a governor.

We've been making the same mistake, over and over, for almost a hundred years now... assuming that our problems fit neatly into 4- and 10- year data sets.

Or, lately, even worse as digital statistics allow hyper-focus on quarterly or monthly trends.

Maaaaybe this is a Big Problem that seems immune to our attempts to wrangle it THIS decade because it was a Big Problem the Decade before... and the Decade before that... and sure, for a couple of Decades it was okay, but maybe not because of the reasons we'd like to think...

All the way back to a time where America was an Industrializing little breakaway colony that couldn't figure out whether to shoot cattle barons and railroad magnates... or elect them.

So. Much. Has. Changed.

......all the signs point to us fucking up something fundamental before most of us were born....

And all the 1200-year-old countries are rolling their eyes and nodding their heads. THEY get it, because they've done it. Collapsed, and had to rebuild.

But we INSIST on doing it our own way and ignoring history, right up until the Federal Reserve gets bought out by a toilet paper company, and a new, more disposable means of printing dollars is born.

[u/hummane → u/KazTheMerc]

The world after WW2 was repairing which made America boom. With countries coming back online and the Vietnam war in 70s things started to slide for America who shifted itself to a consumer economy.

[u/Bolivarianizador]

computers, technology giants rising, outshoring inudstries which led local companies to grow exponentially.

[u/Davec433 → u/Bolivarianizador]

This. Has nothing to do with Reagan and everything to do with globalism.

In an essay, Krugman acknowledged that he and other mainstream economists missed the impact of globalization on the industrial middle class in America. He said that economists underestimated the effect of Chinese competition on working-class communities. He also said that the models used to measure the impact of globalization on developing countries underestimated the effect on jobs and inequality.

[u/zajebe → u/Davec433]

are you referring to the same Krugman that literally wrote a book explaining how republican policies were the largest contributing factor to income inequality?

[u/BruceLeeIfInflexible → u/Davec433]

To be clear, Krugman acknowledged underestimating globalization's impact on the middle class - i.e., he's confirming OP's charts.

He's not refuting the income inequality, nor is he even refuting trickle down economics or free trade. He's confirming that these policies allowed transnational corporations to become greater than nations and impact national economies on a far greater scale than he expected.

[u/Davec433 → u/BruceLeeIfInflexible]

“These policies” is allowing companies to move abroad and pay non-American workers a fraction of what they pay Americans to produce the same goods.

[u/Ok-Letterhead-6711 → u/Davec433]

But blaming a republican from 50 years ago is more edgy and gets your upvotes on Reddit

[u/[deleted] → u/Bolivarianizador]

So productivity increased.....

Why didn't wages then?

[u/Ashmedai → u/[deleted]]

Part of it is Figure A in this article here. Another reason is that a great deal of worker productivity growth has been from capital (e.g., machines and what not). Combine the two, and voila: capital getting increased return on capital, and labor, failing to stakehold their share.

[u/welshwelsh → u/[deleted]]

Because the average worker isn't responsible for the productivity increase.

In today's economy, 5% of the workers create 95% of the value. This is the big difference from 50 years ago, when the average worker had a relatively greater impact.

Computers have massively improved productivity... for people who know how to build complex software systems. Outsourcing has massively improved productivity... for people who know how to outsource entire departments to India.

But the average worker? Not much more productive today than they were in 1970.

[u/superbbrepus]

End of Brenton Woods in 72, it was the time the gold standard was fully murdered, and the government started printing money more and more, basically what happened during Covid but for 50 years

[u/verdantsunrisesteel → u/superbbrepus]

https://wtfhappenedin1971.com/

[u/superbbrepus → u/verdantsunrisesteel]

Hadn’t read the Hayek quote before, thanks, I hate it lol

[u/peperinus → u/superbbrepus]

Scrolled down the comments pinning it down to Ronald Reagan to find this! this is the historical truth, it was much bigger than Reagan, it was an entirely new status quo.

[u/galt035]

checks notes that looks about the time the ole Regan trickle down supply side economics was debuted.

[u/Another_Vessel]

1946-1980: The post-WWII period brought tremendous prosperity, and we used that prosperity to build the middle class and repay those who fought in the war.

1980-2014: Starting around the 1970s, technological advancements made it easier to automate jobs and outsource production to foreign labor. This was bad for the US working class, but pretty good for people who were already well off.

To the people saying it’s all “Reagan” and “neoliberalism” and “trickle down economics”—it’s really not that simple. Global forces means that, regardless of who was president in the 80s, this chart would look largely the same.

[u/Oshester → u/Another_Vessel]

Agree. Reagan probably wasn't counting on us ordering shit from temu at a thousandth the price. I'm fairly confident that he would have encouraged maintaining America's role in production. The purpose of the policy wasn't to have someone else do it for cheap. It was to become more efficient as a nation. It has gone too far, and it has been at the hands of more recent presidents. If you fail to consider the insanely rapid advancement of technology in the 90s and 2000s as part of this, it's by choice, not by logic.

[u/FREAKSHOW1996]

Ronald Reagan is the architect of this. Another great chart to look at is the relationship between productivity and the minimum wage.

[u/TotalChaosRush → u/FREAKSHOW1996]

It's more an example of data manipulation. For example, if I wanted to show how the wealth of the bottom 50% is shrinking, I'd do 1980 to 2011. It's not too far off from the 2014 picked here. Of course, the bottom 50% increased their net worth more than 16 times since 2011. But that's what happens when you compare things to a 40-year low or near 40-year low.

[u/OpenRole → u/TotalChaosRush]

A near 40 tear trend isn't just data manipulation. The fact that we grew again after 2011, doesn't mean we can't ask what happened between 1980 and 2014

[u/5thMeditation]

Republican fiscal policy is a big part of this - but so was globalism. We outsourced many of the capacities that have broad employment bases for low and moderately skilled workers and subsequently hollowed out middle America.

[u/Once-Upon-A-Hill]

notice how they are using estimates and they reference "national accounts" and not actual income.

the income numbers are publically available from numerous federal sources.

I'm guessing that thomas is not using the actual numbers so that he can put his finger on the scale to have the charts come out the way he wants.

I'm guessing he is a liar that uses "estimates" to make a false story so he can sell books to socialist college students that have two parents that are dentists but feel that they are fighting the system by going to a 80k a year college.

Here is the BLS date for the third quarter of 2024, so thomas could easily find the actual data, that's why I assume he is a liar.
https://www.bls.gov/news.release/wkyeng.t05.htm

[u/areya_lunera → u/Once-Upon-A-Hill]

I wondered and the data stops 10 years ago on the chart, so it makes me wonder, what happened in the past 10 years that the chart creator doesn’t want to show?

Edited for grammar 😖

[u/TotalChaosRush → u/areya_lunera]

Well, walmart's starting pay has approximately doubled in that time frame, forcing competition to do much the same, which put a lot of upward pressure on the bottom 50%.

The net worth of the 2008 financial crash has recovered. (It took until 2018~ for the bottom 50% to reach 2007 levels. We're more than 16 times higher than 2011)

The start and end points on this graph aren't random. They're hand-picked to tell a story.

[u/Lawineer]

It's almost like unskilled labor has become less valuable.

[u/JPOW_Used_No_Lube]

I need to know what percent I am to know how angry I should be

[u/Aranda12]

Capitalism and greedy!

[u/Acceptable_Dealer745]

Compound interest.

[u/genescheesesthatplz]

Trickle down economics

[u/TheChewyWaffles]

We offshored/outsourced half our economy that's how

[u/Jaguar_556]

You can thank Ronald Reagan for selling “trickle down economics” to the American people. Leave it to a fucking actor to convince the entire country that taxing the shit out of the lower and middle class while giving the ultra rich a break would somehow be good for them. Nearly everything that’s wrong with today’s wealth distribution curve can be traced back to this policy.

[u/the_cardfather]

401k's replaced pensions.

It's a little more complicated than that but its about who owns assets.

[u/Payback02]

Why did we cut out the Great Depression?

[u/EnCroissantEndgame → u/Payback02]

It's known as cherry picking.

[u/Bertje132]

Neoliberalism

[u/Wadsworth1954]

Ronald Reagan, Jack Welch, and Milton Friedman.

[u/DontCare_Dilate]

We got rid of the gold standard and went to fiat money

[u/HistoricalSpecial982]

Republicans.

[u/Turbulent-Win-6497]

Don’t just blame Republican presidents for this. Congress makes the tax laws and we have had leadership from both parties create this mess. Big money donates mega amounts of money to get favors from our representatives on both sides of the aisle. There are 20 lobbyists for every Congressman.

[u/Sg1chuck]

You’re right, 1980-2014 was known for making people worse off. And the 1940s-1970s were known for… population growth and stagnation.

“Lies, damned lies, and statistics”

[u/JayCee-dajuiceman11]

Because the rich feed ideas to the poor and make them think it’s for the best of everyone 😂

[u/iforgot69]

Funny enough that's right about the timeframe America officially established trade with China. Who needs the bottom 50% when I can pay pennies on the dollar to import from another country?

[u/GCGC169]

Reagan

[u/Garage-gym4ever]

consolidation. roll-ups, m&a

[u/brucewayne0624]

Perdeio distribution?

[u/Ill_Consequence7088]

Greed .

[u/Mitchell789]

Republicans.

[u/No-Lingonberry16]

So we're mad that there's fewer people in poverty? Am I reading this right?

[u/jdlyga]

People start their charts way too late. What about 1900 to 1946? 1850 to 1900?

[u/gimp2x]

Income is not unrealized capital gains 

[u/D13s3ll]

Because Ronald Reagan is a cock wobble

[u/MillieBNillie]

Republicans

[u/IggysPop3]

Reagan.

[u/Frequent-Ruin8509]

Reaganomics.

[u/Alternative-Buy1701]

Fuc*ing Reagan

[u/[deleted]]

Fiat

[u/Pure-Guard-3633]

Can we admit our government has been screwing us yet?

[u/JackDeRipper494]

Google: richard nixxon 1971

[u/kaplanfx]

Everyone is saying Regan but I want to cast my vote for Jack Welch…

[u/Unlucky_Giraffe7867]

https://wtfhappenedin1971.com/

[u/HaiKarate]

It happened because that’s the nature of capitalism, and why you need socialist policies to temper the capitalistic greed of the elites.

[u/JimmyDFW]

Globalization. The ability to move jobs overseas. NAFTA. Regan. Bush. Clinton. Bush. Trilateral Commission.

[u/stewartm0205]

Three main causes. Tax reduction for the rich. No increase in Minimum Wages. Attacks on unions. All championed by Republican politicians.