Culture is the greatest asset and liability that a nation has.....with natural resources being a close second. What do I mean by culture? There are books and books written about it, so I will keep it simple and just describe culture as the living, evolving, and dynamic amalgamation of a people's beliefs, attitudes, and conventional wisdom, etc. So, we can say that a nation's 'people' and its 'culture' are basically interchangeable under this definition.....people = culture. And for those of us that have broken through the false neo-liberal economic mythology that the US dollar is a scarce commodity and that the Federal Govt operates just like a household or business, we would never place financial wealth on par with the REAL wealth of a nation....its people. The US dollar is nothing more than an American invention and the Federal Govt is the only body that is Constitutionally allowed to create and maintain our national currency system. As such, there is no technical limit to the amount of US dollars that the Govt can create and spend.....
This fact is proven quite simply by the 1900% increase in net financial wealth that the Govt has created and given to the non-Govt between 1979 and 2012. The uninitiated will know this by the misleading nomenclature of "federal debt", which is simply the amount of global US dollars that have been deposited at the Federal Reserve bank into interest bearing securities accounts (just like a CD at your local bank). Total Treasury Securities outstanding is an accounting record of the amount of new money the Federal Govt has created by deficit spending. And that has risen 19X from $800 billion in 1979 to $15 Trillion in 2012.
As far as I can tell, there are three main pillars that support the phenomenon of the declining portion of our national income that goes to labor. This manifests itself as the well-known fact about how, when adjusted for inflation, median wages have been essentially flat for over three decades.
The USA prioritizes risk-taking, market fundamentalism, individuality, and innovation in our economic culture, which predictably leads to the following three foundational pillars that have played the primary role in getting us into our current situation.
1. Innovation through technological advances.....includes robotics, the internet, computer processing power, general mechanization, etc.....all leading to much higher production per worker, which is a good thing. Its better to NOT have most of your citizens working in factories making widgets for 12 hours a day at low wages in order to be competitive globally for the production of low end products. This used to be the US post WWII as most of the developed world was destroyed and the rest didn't have our far more advanced productive capacity. Today, this is the role of the third world. Which leads us to our next pillar....
2. Globalization......modern communications make it possible to transfer advanced production capacity to any place on Earth and get similarly skilled labor. So multinational companies simply go to where the lowest possible price can be had based on the relative low living standards and market wages of the local population.
3. Union membership decline.... While the above two pillars are pretty much unavoidable problems for developed economies, the union decline is nothing more than a political choice based on cultural values. Our culture doesn't value unions and solidarity as much as other nations. We value individuality and "freedom" more......of course corporate propaganda, right wing and even mainstream media propaganda, and even many democrats have spread the myth that those two values are mutually exclusive......only ideologues and the corporate agenda would have the narrow-minded view that solidarity and individuality can't coexist in the real world.....but I digress.
All three of these pillars interact and effect each other to ultimately set the relative leverages of labor and capital. The success of our economy after WWII until the late 1970's was defined as labor having much more leverage against capital and as such, they were able to take home a much higher percentage of our national production = income. But as a nation's economy matures, and productive efficiency (technological advances and globalization) increases to the point that the private sector does not need to employ everyone domestically in order to satisfy the demand for goods and services.
But there is hope, the US Federal Govt is monetarily sovereign with monopoly control over our national currency...the US dollar. We can run deficits high enough (RE: create enough new money yearly) to employ every American that wants a job. Full employment is a great way to increase labor's leverage. We can afford for everyone who wants to get a post-high school education to be able to do so. We can afford to employ as many scientists and researchers as we want, we can afford to employ as many construction workers to build as many roads, ports, high speed broadband lines, and on and on as we want. We can afford to not make health care a marginal cost of production for our US businesses, which hampers not only our global competitiveness but also our national health outcomes. The only thing holding us back is our false neo-liberal economic belief that the US Govt is like a household or business and must "get money" in order to spend money. Money is no object and the only thing holding us back from maximizing our most precious national asset, our people, is ironically.....our own people's culture.
It's our culture that allows the legalized bribery and corruption of campaign contributions, lobbying, and revolving door politics that perpetuates the myths of the perfection of markets and the scarcity of dollars. Its our culture that allows six corporate media conglomerates to control 90%+ of our national media and discourse. Its our culture that allows Conservatives to rail against the incompetence of Govt, only to get elected and prove that incompetence over and over again. Its our culture that allows so many Democrats to become conservative-lite and push the entire national dialogue further and further to the right. Its our culture that accepts the hardship of millions of our fellow citizens due to our economic reality. Its our culture that hates unions and solidarity because....communism. In other words, we get the Govt we deserve and until our national culture changes, things are only going to continue to get worse for more and more Americans.
Please join our group "Money and Public Purpose" here at Daily Kos as we are the only group that analyzes the economy through the prism of our post gold-standard fiat currency reality.
MMT = Reality