Barbara Garson's "Going Underwater in the Long Recession"

Barbara Garson had a great post on TomDispatch last week, "Going Underwater in the Long Recession." The Long Recession refers to the wage stagnation and job loss of the American working class since the middle-1970s. In Garson's piece she looks at this phenomenon through the prism of her encounters over the decades with a GI she originally met in a Hippie coffee house where she worked. Here is her tidy sketch of neoliberalism:

Between 1971 and 2007, real hourly wages in the U.S. rose by only 4%.  (That’s not 4% a year, but 4% over 36 years!)  During those same decades, productivity essentially doubled, increasing by 99%.  In other words, the average worker’s productivity rose 25 times more than his or her pay.

This was, of course, a bonanza for corporations and for the richest Americans.  In 1976, the top 1% of U.S. families held 19% of the country’s wealth.  By 2000, they held 40% of it.  In those same years, 58% of every dollar of income growth went to the top 1%.

There was, however, one small problem: we Americans sell to one another more than 70% of what we produce.  If the majority of American workers were producing more without earning more, who was going to buy all the stuff?

CEOs and financiers were desperate to answer that question, for during those years of high productivity and low wages, immense profits and “returns” kept accumulating in brokerage accounts and banks.  But a bank can’t keep its money in the bank.  Under the pressure of those swelling piles of capital, the answer they offered to worker-consumers like Duane was: instead of paying you enough to buy what you produce, we’ll lend you the money.

First, they loaned for big-ticket items: cars, homes, college educations; then, through credit cards, for everyday household expenses.  As we came to realize after the meltdown of 2008, the ultimate Ponzi scheme of the era would involve bundling and reselling mortgage loans made to people who couldn’t afford houses in the first place.

The answer offered to those who had ever less money to spend was: take out more loans.  The folly of lending money to people with stagnant or declining wages may seem obvious now, but like many houses of cards it must have looked solid enough to some back then. 

The power of the piece is really in Garson's telling of the story of the veteran Duane, a guy who as a machinist stayed one step ahead of the downsizing and offshoring curve but still ended up at the time of his death with a home mortgage underwater and $6,000 in credit card debt.