Here are a few charts that I created for no real reason. I was just fiddling around. The first shows real GDP per worker hour:
I tossed in a few big inventions just to drive home the point that practically nothing affects the growth rate of productivity more than a tiny bit. However, it's not quite the same if you look at GDP per worker:
The period from 1973 to 1982 was dead flat. We eventually made up for it, but not another 20 years.
Finally, here's a comparison of GDP with corporate profits:
For 50 years after World War II, corporate profits (adjusted for inflation) grew at a rate of 2% per year. Then, starting in the early 90s, profits suddenly took off, growing at a rate of more than 4% per year.
What happened in 1993 to cause this? In only 30 years corporate profits per hour worked have tripled. That's quite a trick.
What happened in 1993?
Bill Clinton … free trade … supply chains supplying both raw materials and manufactured components at previously unheard of prices.
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What happened in 1993? Increase in monopoly pricing power? I imagine if you broke it out by industry, you'd find pharma, health care, airlines, maybe railroads driving profits.
IIRC I saw several opinions in the 90s alleging that Wall St now owned "both" sides of the aisle.
Until the 90s campaign funding was split with Dems owing unions for their campaign $, while the GOP owed Wall . But around the 90s campaign financing requirements grew while union financing ability shrunk, so Dems had to go to Wall St for the money. When both sides of the aisle "owe you" it's easy to lobby legislation that favors tax cuts, monopolies and minimal legal liabilities.
So legislature's responsibility of serving Main St, shifted to K Street
My Mk I eyeballs suggest 1994, but either way I guess we can say “Thanks Bill!” …
NAFTA came into force in 1994.
You could say the late 90's and perhaps early 00's were return to trend. Post 2008 looks like the clear departure. So did the Great Recession change everything? Likely no single cause though.
1973 to 1982 were some truly awful years, in almost every way.
On another note, in 1979, the US and China signed a trade agreement which placed US workers in direct competition with Chinese workers. It took ten years, but it killed the US trade unions. I believe that's why corporate profits soared after 1992, and it's also responsible for worker (not CEO) wage stagnation since 1980.
https://www.epi.org/publication/charting-wage-stagnation/
Some people will argue that the trade agreement was a good thing, because it raised hundreds of millions of Chinese out of poverty. However, it also plunged tens of millions of US workers into dead end, low paying jobs.
Incidentally, I live in the US, not in China, although I've been there.
If you want to know why MAGA Americans want "revenge", you don't have to look much farther than this.
+1
Reversion to the mean isn’t pretty.
The sharp turn to the right of the US economy began in the 70's as Republicans gained votes by taking over the defense of racism. Democrats have also assisted all along (they could have blocked the Reagan tax cuts and other measures, but didn't), but it's mostly Republican policies that have enriched corporations and the already-rich.
MAGAs want "revenge" because they have been losing the culture wars (Roe was a big loss for them) - White Christian Supremacy is nothing like what it once was. So they vote Republican and make their own economic situation worse.
in the 90's the internet and cheap spreadsheet software allowed corporations to do pricing analysis of their inputs as well as the prices of competitors
oligopolies employed this to implement price ratchets where 'competitors' raised prices to the same level at the same time
“What happened in 1993 to cause this? In only 30 years corporate profits per hour worked have tripled. That's quite a trick.”
Per Piketty: r > g. The post-war period was the anomaly. 1993 was the return to historical norm.
Why are we looking at 1993 as the starting point here, when the noise in the trend didn't disappear until the early 2000s?
And idunno, something something tax cuts.
But my idle theory is that it took about a decade, perhaps a little less, for the end of the cold war to finish the job in killing the last vestiges of the "we're all in this together" capitalism of the actual American golden age, post-WW2. At that point there was no longer any reason for corporations (on behalf of their wealthy executives and board members) to even pretend to care about anything but profits over all else.
Fuck Jack Welch, by the way.
Please stop blaming Bill Clinton for the increase in corporate profits. Trade was growing progressively freer from the the end of WW2 right on through to the 90s. He didn't suddenly render trade "free;" and NAFTA would not have had the kind of impact in any event on corporate profits, because America's economy is less exposed to international trade (yes, trade with Canada and Mexico is still international) than any other rich country. Changes in the domestic economy are vastly more important than how we interact with foreigners.
The most likely "culprit" is....no one. Because it's not bad to be home to lots of highly profitable firms.
What's bad is to fail to tax them adequately. We don't engage in enough redistribution. Same as ever. Full stop. Lower corporate profits won't help Americans. Lower after tax profits may well.
(And if you insist on hating corporate profits, I absolutely guarantee you tax code and antitrust law changes in the Reagan era have more to do with that than anything Bill Clinton did.)
https://en.wikipedia.org/wiki/Reaganomics
"On 30 April 1993, CERN made the source code of WorldWideWeb available on a royalty-free basis, making it free software."
Also, the Mosaic browser was released in 1993.
The flatness from 1973 to 1982 can also be seen in to a lesser extent in the gdp/hour graph.
This essentially corresponds to the first time we hit peak oil production. This represents a decade where productivity growth is going into figuring out how to use oil more efficiently until oil becomes a sufficiently small part of the economy to not matter quite so much.
I want to see these graphs using "gdp - cost of primary energy". We
In the late 90s and more so in the aughts digital technology really began to hit the factory floor. No comparison between auto manufacturing in the 80s and today. Or newspapers -- if you can find a paper paper.
How about wages/salary per hour worked.