Fluctuating Fortunes

"Today, when we look at the landscape in Washington, we observe that much legislation and much regulation is captive to corporations – that was not always the case. Business influence in Washington in the 1950s and 1960s was at a low point and the 1970s saw the rise of the consumer movement. This movement had so much momentum that not even a Republican like Richard Nixon in the White House could stop it. He ended up promoting it. Vogel is great at telling the very important story of how business mobilised to push back in the 1970s and what a change that was. He describes several of the fights that took place and I believe it was Vogel who provided this wonderful quote I use in my book, where some lobbyist said: “Gee, my job used to be just providing booze, broads and golf, and now I’m actually expected to make things happen here in Washington.” So there really was a substantial cultural transformation, and Vogel’s book is a pioneering work of economic history describing how that came about. What I say in my book is that there are really two divergences. There’s a skills-based divergence, which is very complicated, and then there’s a divergence between the 1% and the 99%, which is very simple. The skills-based divergence was caused by multiple factors. One factor was the decline of labour, caused in part by the rise of extensive trade with China, which represented the first time the United States was doing a lot of trade with a country that had both really low wages and so many people that bringing wages up as it industrialised was going to take a long time. So trade played some role, but not until the late 1990s. Education also played an enormous role in skills-based divergence. The high-school graduation rate levelled off in the 1970s as technological demands on the workforce were increasing. The supply and demand curves crossed for skilled labour – that bid up the price of skilled labour. Support Five Books Five Books interviews are expensive to produce. If you're enjoying this interview, please support us by donating a small amount . The divide between the 1% and the 99% was caused by two simple things. One cause was the runaway pay for CEOs, which really spun out of control in the 1980s and 90s. The other was the financialisation of the economy, the gradual deregulation of Wall Street, the conversion of investment banks from partnerships to corporations and the letting loose of a culture of leverage. Yves-Andre Istel points out that some of that change was generational. The current generation hadn’t lived through the Great Depression , therefore they aren’t as fearful of debt as earlier generations."