A friend of mine sent me the text of Whatever Happened to the Leisure Society? – by Thom Hartmann.
In a 1966 article, TIME Magazine looked ahead toward the future, and what the rise of automation would mean for average Americans. It concluded:
“By 2000, the machines will be producing so much that everyone in the U.S. will, in effect, be independently wealthy. With Government benefits, even nonworking families will have, by one estimate, an annual income of $30,000-$40,000.”
Now, that was in 1966 dollars, it would be over $120,000 a year now…
So by the year 2000, TIME predicted in 1966, we would enter what was referred to as “The Leisure Society.” The only problems facing America would be, just how the heck everyone would use all that extra leisure time! What kind of things would people get into when a nation has lots of money and lots of free time on their hands? And as we know today, we WISH that was our biggest problem.
Turns out, predictions about the leisure society were dead wrong. Productivity DID increase significantly during the 1960s. This actually starts from 1947 up to 2000, mostly thanks to automation and better technology.
Unfortunately, productivity increased, but wages didn’t. And neither did leisure time.
In 1966, when the TIME article was written, the top income tax rate was 70%.
And what that effectively did was encourage CEOs to keep more money in their businesses — to invest in new technology — to pay their workers more — to hire new workers and expand their companies.
After all, what’s the point of sucking millions and millions of dollars out of your business if it’s going to be taxed at 70%?
Thinking that way — if suddenly businesses became WAY more profitable and efficient thanks to automation — then that money would flow throughout the business, raising everyone’s standard of living, and increasing everyone’s leisure time.
But when Reagan dropped that top tax rate down to 28%, and everything changed…
Now, as businesses became more profitable, there was far more incentive for the CEOs and senior executives to pull those profits out of the company and pocket them, because suddenly they were paying an incredibly low tax rate. And that’s exactly what they did.
All those new profits thanks to automation that were SUPPOSED to go to everyone, giving us all higher paychecks and more time off, went just to the top 1%, to just about 345,000 millionaires.
Everyone else’s wealth has pretty much stagnated since the Reagan tax cuts, except for the top 1%.
HAPPY LABOR DAY.