Most dramatically, it slid by over twenty percentage points in China and also dropped steeply in the rising industrial giant of South Korea. “Since the 1980s, the share of income going to labour has shrunk, globally and in most countries of economic significance… The labour share fell in the USA from 53 per cent in 1970 to 43.5 per cent in 2013.
Meanwhile, those relying on state benefits have fallen further behind, many pushed into homelessness, penury and dependence on inadequate private charity. The Second Gilded Age has also involved growing inequality, but this time real wages on average have stagnated or fallen.
In the first, which ended in the Great Crash of 1929, inequality grew sharply but wages on average rose as well. “Today, we are living in a Second Gilded Age - with one significant difference. “Ironically, it was mainly social democratic parties that shifted policy towards workfare, requiring the unemployed to apply for non-existent or unsuitable jobs, or to do menial, dead-end jobs or phony training courses in return for increasingly meagre benefits. As previous generations of social democrats had understood, benefits designed only for the poor are invariably poor benefits and stand to lose support among the rest of society. “To defend labour-based welfare, social democratic governments turned to means testing, targeting benefits on those deemed the deserving poor. “The labourist model frayed in the 1980’s, as labour markets became more flexible and increasing numbers of people moved from job to job and in and of employment. The ultimate fetishism was Lenin’s dictate, enshrined in the Soviet constitution, that anybody who did not labour should not eat. “Labourism promoted the view that the more labour people did, the more privileged they should be, and the less they did the less privileged they should be. As workers previously had little security, this was a progressive step. “Those in full-time jobs obtained rising real wages, a growing array of ‘contributory’ non-wage benefits, and entitlements to social security for themselves and their family. “The essence of labourism was that labour rights - more correctly, entitlements - should be provided to those (mostly men) who performed labour and to their spouses and children. “The period from the nineteenth century to the 1970’s saw what Karl Polanyi, in his famous 1944 book, dubbed “The Great Transformation.” The pension system and employment protection rules are still keyed to those fortunate to have a steady job, public assistance is rooted in the misconception that we can rely on the economy to generate enough jobs, and welfare benefits are often not a trampoline, but a trap.” “We’re saddled with a welfare state from a bygone era when the breadwinners were still mostly men and people spent their whole lives working at the same company. So now we had workfare instead of welfare, and, as we saw last time, social welfare became “a system of suspicion and shame.” Then, in the 80’s and 90’s, about the time the job was starting to lose its economic vitality, policy-makers doubled down on it: work had raised the welfare of the whole world since the days of the telegraph and railroad, and surely it was still the best route out of poverty. 40 years of post-WWII economic success positioned the steady job as the cornerstone of economic prosperity and upward mobility. You might believe that or not, but what matters now is that the times changed and you didn’t. If you could listen, hindsight would tell you that there was more to it than what you were doing, that a lot of what happened was you being in the right place at the right time. You keep doubling down until you’ve made a mess. Do you try something new? No, you double down - it worked before, surely it will work again. It keeps working until one day it doesn’t.
Psychologists call it “the success delusion.” You do something and get a result you like, so you keep doing it, expecting more of the same. How did the social safety net turn into a poverty trap? It was a victim of the success of the job as an economic force.