Economy of the United States is having bad times nowadays, when the economic crisis is evaluated as a worse one than the Great Depression in the 1930s. Millions of US residents have lost their jobs and homes, and they see decline in job security and pensions. Poor people live with more and more uncertainty in their lives, while wealthy ones become wealthier each day. The prominent economist Richard Wolff considers the problem of economic crisis and tells about what he thinks is a reason for that. Not only the corrupt bankers and government speculators are the main cause but there is a much deeper issue.
Professor Wolff states that there was a 150-year period (1829-1970) in the American history when the real wage, i.e. the money people got in comparison with the prices they had to pay, kept rising. Capitalism in the US was seen as the best one in the world and it produced the sense that each new generation should live better than the previous one. The American society showed constantly improving standards of living to the citizens. However, after 1970, the real wage increase stopped, the life of working people became worse, and there are a lot of reasons for that.
The main reason is that it has become less profitable for employers to hire people, due to the technological breakthrough and the invention of computers. It made it possible to reduce the amount of employees and to save money on that. Computers are now able to do much more than humans, while they need less time for that. Employers do not need an army of workers in order to do the job which can easily be done by a machine which does not need to be paid, to be given a leave, and so on. In the meantime, according to Wolff, wages in the US were recognized to be the highest in the world, and as a result, the jobs began to be outsourced internationally.
Thus American employers did not require as much workforce as they did before. However, at the same time, the amount of workforce became bigger, with the women’s movement and housewives’ acquisition of right to have paid jobs. Together with the influx of immigrants, it created a much higher number of people looking for a job while the amount of positions was not as high. It was no longer necessary for employers to raise wages. As a result, the average wage of an American worker remained virtually the same in 2011 as it was in 1978.
Following the American dream, workers have to work more and more, to look for additional jobs and to take on debt. Gradually the debt level became so high, that people could not sustain it anymore. The economic crisis began as a result of American working class’ physical and psychological exhaustion.
Professor Wolff comments that capitalism is an inherently unstable system, while the society has shown to be unable to think critically about it. Thinking that the Great Depression of …