The 1990s: A Political "Twilight Zone" That Makes No Sense

by Ralph Heller

ore and more Americans find themselves struggling to somehow understand what has really been happening to them in recent years. People sense that something's not right, but they have a hard time putting a finger on it.

For example, most Americans now realize that the daily business and economic reporting they see on television news and in their daily papers has virtually nothing to do with them. Consider what was reported in the first quarter of this year. We were told that the Dow Jones showed a substantial gain, but we were not told that bankruptcy filings reached a fifth straight record high in this year's first quarter. There were 335,073 of them, to be precise, up 26 percent over the same quarter in 1996.

In his new book, Money: Who Has How Much and Why, author Andrew Hacker suggests that a rising tide does not necessarily lift all boats. "That's heresy," you protest, but figures cited by Hacker showing increases in average income between 1975 and 1995 speak for themselves:

Richest 5 percent: up 54.1 percent

Top 20 percent: up 35.4 percent

Second 20 percent: up 13.0 percent

Middle 20 percent: up 6.7 percent

Fourth 20 percent: up 4.4 percent

Bottom 20 percent: up 1.5 percent

Note that while everybody gained, the top fifth fared 24 times better than the bottom fifth. Indeed, the median wage for men dropped during those 20 years from $24,007 to $22,562 because of disappointing wages at the bottom of the scale. Shall we look at a few more statistics that raise unsettling questions about today's prosperity?

In 1970 a newly built house cost about twice a young couple's annual income, but by 1994 the price of a typical new home cost that couple almost four times their annual income. Moreover, according to New York University economist Edward Wolff most Americans these days save so little that if today's typical middle income family found itself suddenly unemployed it would have assets sufficient to sustain its customary lifestyle for no more than 90 days.

The Most Important Economic Change

Behind these disturbing realities lurks the most important economic trend of the last 20 years—the decline of U.S. manufacturing and the corresponding shift to high technology, retailing and entertainment. According to a recent report in the Boston Globe, "The average wealth of the richest one percent of Americans has increased from $10 million to $14 million since 1989, while accumulated wealth at the low end of incomes has actually been shrinking."

The biggest difference between "then" and "now" is the decline in American manufacturing as a significant segment of the U.S. economy. Manufacturing had long provided good-paying jobs for middle and lower income Americans—and for many immigrants, too, who today find their job options increasingly limited.

One of the most interesting developments generally thought of as associated with the decline in manufacturing is the sharp decline of union membership and influence in daily American life, although declining union membership actually began more than 40 years ago. At their peak in 1953, private-sector unions accounted for 36 percent of total U.S. employment. But by 1996, attrition had reduced union jobs to 10.2 percent of the private workforce.

Even worse news for union officials was not the fact that some of their organizations faced imminent extinction, but that union membership was actually beginning to hurt workers. As recently as 1982 union members enjoyed a 7.1 percent advantage in total compensation. By the time Bill Clinton arrived in Washington in 1993 that collective bargaining advantage had been trimmed down to 1.4 percent, and since then the lines have crossed.

As of March, 1997, union members working in the private sector were earning 0.8 percent less in total compensation than their non-union counterparts.

Government Takes More and More

Only among government employees, interestingly, has union membership grown in recent years, and perhaps not surprisingly, government is also now consuming a larger and larger slice of the overall economic pie. Federal tax receipts, for example, amounted to 19 percent of Gross Domestic Product (GDP) when Bill Clinton came into office, but by the fourth quarter of 1996 and the first quarter of 1997 Uncle Sam's slice of the pie had grown to 21 percent of GDP. And many of the individual states—although not all of them—have been as busy as Uncle Sam when it comes to raking in the cash.

Updated government tax and spending statistics came out last month from the U.S. Census Bureau. The Bureau of Labor Statistics and the Tax Foundation revealed government in Nevada to be costlier than ever. By seven different statistical comparisons, here's where Nevada now stands among the 50 states:

Per capita federal tax burden:

Per capita state and local taxes:

State and local taxes per $1,000 of
personal income:

Per capita state and local govern-
ment spending:

Per capita state and local govern-
ment debt:

Average pay, state and local gov-
ernment employees:

Increase in total government

7th highest

6th highest

18th highest

13th highest

12th highest

11th highest

1st (up 5.4 percent
this year)

Some idea of where the uncontrolled government spending is worst can be discerned from the fact that on a per capita basis property taxes in Nevada rank only 35th highest among the 50 states. In other words, pending closer scrutiny of these rankings in the months ahead, it would appear that it is state government spending rather than local government spending that is most out of line when compared with other states.

Underlying some of this unprecedented government spending are widespread, serious disagreements concerning not only our national priorities but involving even basic concepts of what is and is not significant.

Few things illustrate this widening gap in perception quite so well as Gov. Bob Miller's obsession with "wired classrooms." Interestingly, computers in classrooms once enjoyed the zealous support of Steve Jobs of Apple Computer fame, but he has changed his mind:

"I used to think that technology could help education. But I have come to the inevitable conclusion that the problem is not one that technology can hope to solve. What is wrong with education cannot be solved with technology."

Few intelligent people would differ with Jobs conclusion. Does anyone want to compare the vocabulary, sentence structure, overall knowledge and reasoning powers of a computer literate recent high school graduate with the vocabulary, sentence structure, overall knowledge and reasoning powers Abraham Lincoln mastered in a one-room schoolhouse?

Jobs believes that today's biggest educational challenges are "socio-political," and he recently had this to say:

"You can plot the growth of the National Education Association and the dropping of ACT scores, and they are inversely proportional. The problems are the unions in schools. The problem is bureaucracy."

Fallout Here, There and Everywhere

The combination of factors—the switch away from stable manufacturing employment, the vastly increased cost (and intrusiveness) of government, and the recent "dumbing-down" of public education—together these things have produced a nation that is reading headlines about how well it is doing at the same time it feels increasingly uneasy about what it sees happening on every hand.

Since World War II the economic worth of high school diplomas has eroded even as more and more Americans have earned them. In 1940, only 25 percept of adults age 25 and older had graduated from high school, but by 1995 that figure had jumped to 82 percent. Yet does anyone want to claim that today's typical high school graduate is better educated than his 1940 counterpart?

Amusingly, even President Clinton knows better and is advocated adding l3th and 14th years to every student's schooling to accomplish what 12 years in school used to accomplish.

That uncomfortable feeling you have that things aren't what they ought to be—indeed, aren't all peaches and cream as your local paper would have you believe—is validated on every hand. For example, the U.S. Census Bureau reports that the percentage of households headed up by married couples continues to drop. Here is the percentage of households headed up by married couples at four different points in recent American history:

1970: 70.5 percent

1980: 60.8 percent

1990: 56.0 percent

1996: 53.7 percent

With this has come a sharp decline in church membership among the largest Protestant denominations—Baptists, Episcopalians, Methodists and Presbyterians. Yet to even hint that there may be a statistical correlation between declining church membership and declining traditional family life invites stern lectures about the sacred separation of church and state. Yet here's what this century's most widely admired political liberal had to say on the subject in a radio address to the nation on Feb. 23, 1936:

"No greater thing could come to our land today than a revival of the spirit of religion—a revival that would sweep through the homes of the nation and stir the hearts of men and women of all faiths to a reassertion of their belief in God and their dedication to His will for themselves and the world. I doubt if there is any problem—social, political or economic—that would not melt away before the fire of such a spiritual awakening."

If Franklin Roosevelt gave that address today the nation's press would have a fit.

...So We Find Ourselves in Today's Twilight Zone

Somehow we have substituted a volatile so-called "service economy" for stable manufacturing, high taxes and government spending for personal responsibility and initiative, computers for effective old fashioned teaching, ideological prejudices and gibberish for religious guidance, and government decrees for common sense judgment.

Mystically symbolic of much of this is a deserted steel mill on the banks of a four-mile stretch of the Lehigh River in Bethlehem, Pennsylvania which is likely to be transformed next year into an industrial museum to be managed by the Smithsonian Institution and to be its first museum extension well outside Washington, D.C.

The mill was one of several owned by Bethlehem Steel along the East Coast which together for more than three years during World War II turned out an incredible ship a day. But the day came a few decades ago when a contractor building a hotel in Las Vegas or Reno realized that he could buy structural steel in Japan and have it shipped all the way across the Pacific—and that it would still be substantially cheaper than he could buy the steel here.

Just as the Smithsonian plans to take over an old steel mill to manufacture nothing but to operate a subsidized museum instead, our national focus has become more and more aimed at government as a sort of national savior, as if government might accomplish wonders far beyond the capabilities of ordinary mortals to accomplish.

Some parts of the country are more enamored of government rule than other parts, of course.

The San Francisco Chronicle last month reported some new environmental rules San Francisco is thinking of implementing, all part of a 150-page "Sustainability Plan." Provisions include mandating fruit trees in front yards, creating auto-free zones, ending free parking for workers, discouraging the use of perfume and cologne and rounding up stray cats. The plan also calls for "more sex education programs for youths, urging supermarkets to carry organic foods, tightening gun control, banning cigarettes in bars and adding gardening to school curricula."

But can there be anyone who doesn't recognize that the road leading from building a ship a day to San Francisco's "Sustainability Plan" runs straight downhill? Leading us into today's twilight zone as often as not has been today's shallow, unreflective media. Suffice it to say that in this article you learned more about who is really profiting in today's economy, about the critical changes of recent decades and even about your own taxes than your daily Nevada newspaper has provided you in the last year. And that may be our biggest problem of all. u

Ralph Heller is Senior Consulting Editor of Nevada Journal.


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