The Gap: A Modern History

A Too Much review of
The United States Since 1980
By Dean Baker
Cambridge University Press, 2007

By Sam Pizzigati

March 26, 2007

You don’t have to be a historian to know that something fundamental changed in the United States in the 25 years between 1929 and 1954.

Americans entered the quarter century that began in 1929 a deeply divided people. The 1920s had roared, but only for America’s elites. The huge fortunes these elites had amassed left them politically dominant in a nation where most average families lived paycheck to paycheck, just an injury or an illness away from abject destitution.

Fast-forward 25 years. By the mid 1950s, most American families, for the first time ever, were enjoying basic middle class comforts. Rich people, meanwhile, were doing more grumbling than dominating. They grumbled, most often, about federal tax rates that claimed 91 cents out of every dollar of income over $400,000.

The United States, by the 1950s, had truly changed. How incredibly eventful those years between 1929 and 1954 now seem. Depression. War. Recovery. Quite a story.

Dean Baker has a different story to tell in his new book, The United States Since 1980, a story of a quarter century that seems, at least on the surface, curiously uneventful. No great economic collapse. No all-consuming war-time mobilization. No great change in how average Americans go about their daily routines.

But surface appearances, Dean Baker helps us understand, can be terribly deceiving. The United States has changed as much over the last 25 years as the nation changed in the quarter century that began in 1929. To be more precise: The United States has changed back.

Over the past 25 years, we have essentially recreated the deeply divided society that existed back in 1929. Once again, an incredibly rich few lord over a nation where average families struggle to get by, amid an economic insecurity that seems never-ending.

How did this happen? Dean Baker, an economist by profession, traces the steps that created our contemporary great divide in his insightful new history of our recent past. The inexorable workings of the “free market,” he shows clearly, didn’t turn the United States upside-down in the quarter century after 1980. Conscious political decisions did.

Over these years, writes Baker, public officials “implemented a series of policies” that, taken together, “had the effect of shifting wage income upward.”

These policies impacted everything from trade and immigration to labor-management relations and patterns of corporate regulation.

“In each of these areas,” notes Baker, “the government adopted policies during this period that had the effect of weakening the bargaining power of workers in the middle and the bottom of the wage distribution, thereby improving the relative situation of those at the top.”

Some of the history that Baker relates will be familiar to those who lived through it. President Ronald Reagan’s 1981 decision to fire and permanently replace striking federal air traffic controllers, for instance, made massive headlines at the time.

But much of the history that Baker relates will be unfamiliar to readers, even those who did live through it. Baker, who now co-directs the Center for Economic and Policy Research in Washington, D.C., does an especially apt job exposing how “free traders” have ever so selectively practiced what they preach.

Boosters of NAFTA and other recent “free trade” pacts like to claim they are simply removing obstacles that keep the global marketplace from operating efficiently. But the “obstacles” that get removed, Baker shows, only seem to be those that function as protections “for workers in the bottom three-quarters of the labor force.” So-called “free trade” subjects “these workers to increased international competition” — and shields income-earners at the top from this same competition.

One example: Doctors in the United States average incomes that run over twice as high as doctors in other wealthy developed nations.

“If the salaries of doctors in the United States could just be brought in line with their counterparts in rich countries,” notes Baker, “this would result in savings to consumers and taxpayers of more than $70 billion a year.”

In 1997, Congress moved to make sure that would not happen. Lawmakers, facing protests from American medical groups over the rising number of foreign doctors practicing in the United States, sliced “the number of foreign medical residents who could enter the country” and put in place new regulations “intended to make it more difficult for foreign doctors to practice.”

The bottom line on The United States Since 1980: a fine introduction to a crucially important period whose history — and impact — has only begun to be understood.

Sam Pizzigati edits Too Much, the weekly online newsletter on excess and inequality. For regular updates on inequality books — and everything else about inequality — check here for a free weekly subscription.