The structural problem began in the late 1970s when a wave of new technologies reduced the costs of outsourcing jobs abroad. Technologies took over many (remember bank tellers? telephone operators? service station attendants?).
Meanwhile, as the pay of most workers flattened or dropped, the pay of well-connected graduates of prestigious colleges and MBA programs—the so-called ‘talent’ who reached the pinnacles of power in executive suites and on Wall Street—soared.
Companies slashed jobs and wages, cut benefits, shift risks to employees, bust unions, and flee offshore. Regulation shriveled.
The puzzle is why so little was done to counteract these forces.
With increasing fervor over three decades, government deregulated and privatized.
It increased the cost of education and cut public transportation. It shredded safety nets. It halved the top tax rates, boosted sales and payroll taxes, taking a bigger chunk out of the middle class and the poor than of the well-off.