The Shocking Truth About America’s Economic Shift: How Shareholder Capitalism Changed Everything

For decades, the American economy was guided by a compass balancing the interests of workers, communities, and shareholders. But starting in the 1980s, this compass shifted dramatically towards shareholder capitalism—a system where maximizing stock prices became the singular corporate goal. This shift was not merely economic; it reshaped the cultural and social fabric of the nation.

The Reagan administration’s sweeping tax cuts lowered the top marginal tax rate from 70% to 28%, aiming to stimulate growth but resulting in soaring deficits and wealth concentration among the richest Americans. At the same time, government investment in infrastructure—the backbone of economic productivity—was slashed from 2.5% to 1.3% of GDP between 1966 and 1983. Roads, bridges, and public utilities began to deteriorate, impacting millions daily.

Labor unions, once a powerful force advocating for workers’ rights and wages, saw their influence wane as strike actions plummeted and unfair labor charges remained high. Leveraged buyouts surged, enabling investors to acquire companies with borrowed money, often dismantling them for short-term profits. Productivity soared by 72% from 1973 to 2014, yet hourly compensation rose only 9%, illustrating a growing disconnect between worker output and pay.

This era’s legacy is a drift away from a stable middle-class foundation, creating economic and social instability. Understanding this history is critical to grappling with today’s challenges and envisioning a more equitable future.

References for further reading and detailed analysis on this transformation can be found in the book's comprehensive chapters and external economic studies. 1 2