Adrift

Imagine a great ship sailing on the vast ocean of the American economy. For decades, this ship was steady, guided by a compass that balanced the needs of workers, communities, and shareholders alike. But in the 1980s, the compass needle swung sharply toward shareholder value, a new north star that promised prosperity through rising stock prices. This shift was not just economic but cultural, as the nation embraced rugged individualism and the primacy of capital markets.

The era began with a bold experiment: drastic tax cuts that lowered the top marginal tax rate from 70% to 28%. This was meant to unleash investment and growth, but it also tripled the national debt and seeded vast inequality. Infrastructure investment, the ballast of the economy, was slashed from 2.5% of GDP to just 1.3%, leaving roads, bridges, and public utilities to crumble. One in five roads today are in poor condition, and water crises like Flint, Michigan, reveal the human cost of neglect.

Labor unions, once a powerful voice for workers, lost ground as strike actions plummeted and unfair labor charges remained high. Meanwhile, leveraged buyouts surged, allowing investors to acquire companies mostly with borrowed money, often dismantling them for short-term gains. This financialization fueled corporate profits but left employee compensation stagnant.

Productivity soared, yet wages did not keep pace. From 1973 to 2014, productivity grew 72%, but hourly compensation rose only 9%. The fruits of labor were increasingly harvested by shareholders and executives, not workers. This decoupling of productivity and pay is a defining feature of modern American capitalism.

As these forces converged, the American ship drifted away from its middle-class foundation, losing ballast and stability. Yet, this story is just the beginning. The next chapter reveals how these economic shifts intersected with global progress and societal change, painting a complex picture of promise and peril.