America! The greatest country in the world—where our robust free market system ensures that our economic growth is the envy of all lesser nations! Right?
Jeremy Grantham is one of the world’s most famous investors, a money manager who helps oversee more than $100 billion. His periodic letters to investors are widely read. His latest one, released this week, asks the question: is America all it’s cracked up to be? It is a great place for the extremely rich, but what about for everyone else?
For the 50 years I have been in America, Business Week and The Wall Street Journal have been telling us how incompetent at business the French are and how persistently we have been kicking their bottoms. If only they could get over their state socialism and their acute Eurosclerosis. And as far as I can tell we have generally accepted this thesis. Yet Exhibit 1 shows what has actually happened to France’s median hourly wage. It has gone from 100 to 280. Up 180% in 45 years! Japan is up 140% and even the often sluggish Brits are up 60%. But the killer is the U.S. median wage. Dead flat for 45 years! These are the uncontestable facts.
In another chart, Grantham looks at how much of our hard-earned (and barely growing) wages we are all paying to the jack-booted thugs of the U.S. government:
The data presented in Exhibit 6 examines the proposition that “more and more goes to the government and soon they will have everything.” You have heard that many times recently in the political debate. Sorry, “bull sessions.” You can see that the U.S. share going to the government in taxes is about the least in the developed world and that it has barely twitched for 50 years. Yet, apparently we have been steadily going to hell.
The conclusions that one might draw from these simple charts are:
- America’s wealth is being captured by the very rich to a greater degree than almost anywhere in the developed world.
- The average American worker has been getting screwed by corporations and the government for the past 45 years.
- We pay lower taxes than most everywhere in the developed world, and who saves the most money because of that? The rich, who by the way are also the only ones whose wages are growing at a healthy pace.
- We should raise our taxes and we should enact policies that direct economic growth towards the middle and lower classes.