It is a minor mystery to some about how Wall Street expanded so much since the end of the Cold War and yet wages really didn’t go up much at all. Certainly the Democrat Party lost interest in finding good ways to increase the standard of living for ordinary Americans long ago. They play the race card and flirt about with environmental issues and so forth and blame Republicans frequently for looking at Medicare, Medicaid and Social Security cuts and in effect ignore the real world economics altogether since politicians seek to be rich too.
Political campaigns are largely funded by wealthy donors or those able to afford to give away money. Realistically, corporatocracy has largely replaced Democracy in America. There are a lot of shareholders in corporate America. Some people though, are conscientious objectors to owning stock- all that is required is capital, and with the capital investment one gets money without actually doing any work. There are always people around that object to exploiting other.
Employees doing actual work-for-others haven't shared the post Cold War economic boom at all. The new boomers are those that have become shareholders since then including drug cartels and people overseas. Those living on working wages have evolved to being a lower class in America these days. Apparently the advantaged don't choose to share corporate profits with workers voluntarily; such is life everywhere throughout history preponderantly. American workers may become even more marginalized with more AI and robots. The media are aid well by corporate and say what is needed to pacify the populace and keep them away from relevant politics.
Democracy allows for substantial taxation on the rich and the right to allocate that revenue wheresoever they want. That isn't socialism as the public was trained to believe. Socialism requires that business be partly owned by the government. George Washington was the first President to make a federal tax. It was on whiskey primarily. There was a rebellion or insurrection in Pennsylvania and Washington raised a 13,000 man militia and led it himself to put down the Whiskey Rebellion. Abe Lincoln crested the first federal income tax to fund the civil war. He probably would have hung tax rebels if he could.
Republicans at least seek to tighten the labor market a little with closed borders while Democrats want to have open borders and are happy with lower wages for workers- at least they voted for Bush II tax cuts 100% with the exception of bernie Sanders when he was a Democrat.
I asked Gemini; How does Wall Street go up 1500% and the median income only goes up 30% since the end of the Cold War? Are the corporations not paying their employees better wages?
Gemini-The divergence between skyrocketing stock market performance (Wall Street) and stagnant median income (Main Street) since the end of the Cold War (approx. 1991) is driven by a shift in corporate strategy that prioritizes shareholder returns over employee compensation. While the S&P 500 has experienced immense growth—up over 2,700% from the mid-80s to 2022 in some analyses—real median household income has grown significantly less,, largely due to structural changes in the economy.
Here is a breakdown of why this gap exists and how corporations have behaved:
- Corporate Strategy: Profits Over Wages
Prioritizing Shareholders: Companies are under pressure to maximize shareholder value in the short term. Profits are increasingly funneled into stock buybacks and dividends rather than reinvested in worker wages, training, or R&D.
Stock Buybacks: Corporations have spent hundreds of billions annually on buying back their own stock, which artificially inflates share prices and increases executive compensation (often tied to stock performance), but does not improve the livelihoods of typical employees.
Lower Wage Costs: Labor’s share of corporate income has fallen to record lows, meaning companies are paying out a smaller percentage of their revenues to employees.- Structural Economic Shifts
Globalization: The ability to move jobs to lower-wage countries has reduced the bargaining power of American workers, keeping wages flat even as productivity increases. - Decline of Unions: The decrease in union membership has weakened the ability of workers to negotiate for higher wages and benefits.
Automation and Technology: Advances in technology allow companies to produce more with fewer workers, leading to higher profit margins without corresponding payroll increases. - Financialization of the Economy
The Growth of Financial Sector: Wall Street now makes up a much larger share of the overall economy compared to 1980, with a smaller portion of its funds actually invested in productive, employee-heavy businesses.
“Superstar” Firms: A few large firms dominate their industries, boasting high profits but often using technology to keep their labor costs disproportionately low. - Productivity-Pay Gap
While productivity (the output per worker) has increased significantly since the 1990s, wages have not kept pace. Historically, workers’ pay and productivity rose together, but since the 1970s and 1980s, the gains from productivity have primarily gone to corporate profits, executives, and investors.
Economic Policy Institute
In summary, corporations are not necessarily failing to make profits to pay higher wages—they are making record profits. However, those profits are being directed toward capital owners and investors rather than workers, resulting in a widening wealth gap." - Taxing the rich to redistribute wealth, even directly to the poor, is generally considered a hallmark of social democracy or a welfare state rather than pure socialism. Socialism involves collective ownership of the means of production, whereas high taxation and cash transfers represent government-led redistribution aimed at tackling inequality.
- Redistribution is not Social Ownership: The primary definition of socialism is workers or the state owning the factories and businesses. Taxing income or assets and passing it to the poor is a welfare mechanism (social democracy) that leaves the capitalist system (private ownership) intact.
- Democratic Deliberation: Taxing the wealthy to support the poor is viewed by proponents as a democratic choice to manage high inequality and maintain social stability, rather than a transition to a socialist system.
- Different Perspectives: While some might argue that any massive wealth redistribution fits a broader interpretation of socialism, others consider it necessary economic regulation to prevent oligarchic outcomes where inequality destroys democratic processes.
- Cash Transfers: Giving taxes back to poor citizens as cash is a method for boosting purchasing power and reducing poverty, commonly used in capitalist societies to address poverty and economic downturns.
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