The admirable Billmon has a statistic I don’t understand and can’t really believe: All told, real wages dropped more than 20 per cent between 1972 and 1992. I’ve often wondered what the political fallout would have been if that same decline had been administered the old-fashioned way – through direct pay cuts by employers instead of the gradual, indirect erosion of inflation.”
I can’t think of anything which Americans were able to buy 20% less of in 1992 than in 1972 — not even illegal drugs. So in what sense did real wages fall? The statistic I always remember is that for the “middle classes”, real wages have stayed approximately the same since the 1970s. This alone would produce a certain dissatisfaction and political savagery, especially in a culture where everything is always meant to be improving.
But maybe I am just showing a lack of imagination. Things that might be 20% less affordable for the average American include health care, child care, and housing.