America Turns 250. Yet The Data Isn't Celebrating

Relating to how the six measures are moving together, though they rarely do. I recommend learning the theory of "The Fourth Turning" by Strauss and Howe. The book was published around 1998. I first read it in the mid 2000's. It has influenced my investment strategy ever since. You can find multiple summaries on YouTube from a few minutes to an hour in length.

Has anyone reading this thread owned a business and needed to hire intelligent workers? I may be alone with my opinion, but 1979 is also the year the Department of Education was established. Perhaps the subsequent decline in our education system forced employers to seek technology to increase productivity instead of blue collar worker ingenuity

Thank you. As per your conclusions, no simple answers stand out and I certainly profer none. But the feeling of the election cycle before us and the hope for new and successful ideas for solutions is there - solutions that recognize change and move positively forward.

Wasn't 1980 about when the offshoring, aka hollowing out of America, really took off? How many comparatively well paid, often unionized, garment or textile or furniture makers in the 1980s became barely-above-minimum-wage workers? Perhaps the corporation which had employed them prospered using foreign labor and contributed more to GDP but their wage portion of "productivity" declined. That would suggest that the improved USA productivity is an illusion, at least in part.

Housing in Western nations is expensive due to idiotic central bank policies; all central banks think the same and do the same; think bubbles and undermining the true cost of borrowing.

Increased regulatory meddling in just about everything doesn’t protect consumers; it merely creates a larger empire for left wing apparatchiks to rule over but it makes the ultimate product more expensive for those very same consumers.

Modern governments, obsessed with rights and equality, the results of ever more laws, regulations and ‘obligations’, don’t understand the simplicity of incentivising sensible behaviour and disincentivising foolish behaviour. No society will thrive if governments don’t understand wealth creation, yet concentrate on wealth redistribution.

In my humble opinion, these few sentences explain 95% of why we are, where we are.

I find that the Mauldin group, collaborators and readers are intelligent and insightful. Yet, I must take issue with part of this presentation. I'm specifically speaking of the often rolled out graph of productivity versus wages. The emotional implication is that labor isn't getting its just reward. The data is factual, but the implied conclusion is a gross misrepresentation. Productivity as a calculation is simply GDP divided by hours of labor worked. For most of historical time there was no subsititute for labor in production. Thus, increases in GDP were strictly related to better labor skill. Once there were significant tools to make the labor imput more effective, there was another factor responsible for the greater production and productivity gain. While the lines of the chart are intertwined up to about 1980, it shows that tools were an enhancement of labor not a mass replacement. The separation of the lines in the chart logically correspond to the advent of much better tools that either made for more production with less labor, or eliminated elements of the labor needed. When we recognize that the businesspersons raised and used capital to buy the machine, computer, or robot to increase production, who then owns the productivity gain? The businessperson may even expend additional capital to train the labor to use the tool more effectively, and even pay higher wages for that skill. But it's the significant advance of tools relative to wages that makes the machine more cost effective than some labor. Even better tools means less labor input to production. So, what is labor's claim on that productivity gain?????? I don't mean to devalue the actual contribution of labor, but just to recognize that the emotional argument using this graph that labor isn't getting its just reward is not true. The gap on the graph will continue to expand greatly with AI and any other advancement of tools to aid productivity. The graph will still continue to get rolled out to imply the same old message to support a false narrative, but if won't change things. The businessperson will employ whichever element costs less to create additional production, labor or machine. And any mandated increase in the cost of using labor enables more cost effective machine solutions. If you follow the math, the higher wages are pushed, the greater the use of machines as a lower cost substitute, the lesser labor hours are used, creating a greater productivity measurement. I'm sure labor will roll that one out to claim the use of higher wage labor is actually responsible for greater productivity.

Now all of this does not settle the social implications of wealth disparity. That becomes much more complicated. I only mean to dispell a misleading inference.

My last comment on labor wage implications is in the end it, like everything else, is determined by supply and demand. When we try to deny it is when distortions arise. And the distortions tend to lead to other distortions. Unwinding is difficult.

I find it very interesting that as I talk with family, friends, and business associates, everyone senses that something fundamental is changing. People feel the conflict, the uncertainty, and that we are at a major turning point. Almost no one disputes that.

Over the past few months, I've started asking a simple question: "How would you fix things?" The answers have revealed two consistent patterns.

First, most people instinctively reach for yesterday's solutions. They want to fix today's problems with the same processes, institutions, policies, and ways of thinking that created many of them. We just need to try harder, elect different leaders, spend more here, cut spending there, or make small adjustments around the edges. There is very little imagination for entirely new approaches built around innovation, new technologies, and new ways of organizing society. People naturally cling to what they know because change is uncomfortable. I think much of this is because people don't instinctively search for better ways of doing things. Instead, they rely on what they've been taught, what they've experienced, and the mental models that have served them in the past. Those frameworks can be incredibly valuable, but they can also become blinders when the world changes faster than our thinking.

Second, people generally don't want to sacrifice. They'll support solutions—as long as those solutions don't cost them anything personally. I see this most often among older generations and those in the top 10% of income and wealth. They succeeded under the existing system, so it's understandable that they want to preserve it.

Based on these conversations, I think we're going to need considerably more pain before people abandon legacy thinking and become willing to embrace meaningful change. I wish that weren't true, but history suggests America rarely changes course through logic alone. More often, it takes a shock (or shocks) powerful enough that the old way is no longer an option. I also believe we are at the dawn of an extraordinary economic supercycle for the United States that could extend through the rest of this century. But first, we'll have to endure the birthing pains that accompany this transformation.

As my father told me at the end of his career at Woolworth’s in the 1960s, yesteryear’s Walmart, beware finance people, they ruin everything when they take over a business. Why? Their business is making money not producing the best goods or services which is what made the company successful and profitable in the first place. Today we call it financialization.

Ed, interesting thoughts. Since WWII, first time homes have moved from 900-1200 sq ft to over 2000 (affordability problem or house size problem?). Second, the US has moved from a manufacturing base (pre 1980) to a service economy which "normally" have lower paychecks. Living standards are better today than 40 years ago - air conditioning (ask Europe), internet (lots of free to consumer stuff), cars last longer and better gas mileage, healthcare advances in implants, medications and treatments and many other areas. You did not mention the impacts that the govt has had on prices - just corporations. Healthcare inflation since 1965 is higher than average. College since the Dept of Education in 1979 is higher than other sectors. The regulatory impact is now costing household thousands of dollars a year (some regulations are needed, all of them?) Where is inflation lower? things where there is little govt interference - computers / technology, cars, agriculture, energy (outside wind / solar) etc. You mentioned healthcare insurance premiums and retirement plan contributions / total payroll - not take home pay. Sorry, I do not buy your argument here. Thank you.

Well put, Ed.

There's a lot to be lauded with capitalism, but as the cronyism only seems to gets worse with time, its ability to generate positive outcomes for the majority becomes increasingly limited.

I don't look at the rise of the DSA as a sincere desire for socialism/communism, as much as a rejection of this bastardized form of capitalism that's evolved over the past few decades + frustration with the staggering rise in wealth inequality. The American Dream is being replaced by 'the rich get richer', and putting our heads in the sand while waxing poetic about a form of capitalism that hasn't existed in decades is a strategy that won't get us anywhere.

Frankly I just appreciate someone of your generation being able to say the word 'socialism' without having a mental breakdown 😁