Paul Volker, 1979: "The standard of living of the average American has to decline."

[Hannah Bell]

"I don't think you can escape that."

"Volcker Asserts U.S. Must Trim Living Standard," New York times, October 18, 1979, p. 1.




FDR: Economic Bill of Rights, 1944:

In our day these economic truths have become accepted as self-evident. We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all—regardless of station, race, or creed.

Among these are:

The right to a useful and remunerative job in the industries or shops or farms or mines of the nation;

The right to earn enough to provide adequate food and clothing and recreation;

The right of every farmer to raise and sell his products at a return which will give him and his family a decent living;

The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;

The right of every family to a decent home;

The right to adequate medical care and the opportunity to achieve and enjoy good health;

The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;

The right to a good education.

All of these rights spell security. And after this war is won we must be prepared to move forward, in the implementation of these rights, to new goals of human happiness and well-being.

America’s own rightful place in the world depends in large part upon how fully these and similar rights have been carried into practice for our citizens.

[anigbrowl]

1. I don't see a right to drive a car the size of a boat on there.

Saying that maybe Americans in general are consuming too much isn't an attack on economic freedoms or social justice.

[Hannah Bell]

2. That's not what he said, nor what he meant.

[anigbrowl]

4. Too bad, because that's how it came across

Maybe if you tried explaining what you meant instead of always going for the zinger you'd make your point better.

[Hannah Bell]

6. zinger? i don't see any zingers, nor any personal remarks but yours. if you want explanations,

better to phrase the question without the personal attack.

[anigbrowl]

7. I guess you're not interested in a substantive discussion then. enjoy.

[Hannah Bell]

8. Like I said, the only personal remarks were yours. Here's the exchange:

Hannah:

That's not what he said, nor what he meant.

anigbrowl:

Too bad, because that's how it came across. Maybe if you tried explaining what you meant instead of always going for the zinger you'd make your point better.


Nope, not interested in "discussion" with someone whose first response is unwarranted personal attack.

[Hannah Bell]

28. kick

[leftstreet]

5. If he was referring to his Rich Prick Friends, he'd have a point

But he used the term "average American."

:shrug:

[readmoreoften]

10. Right... Volcker is concerned that America is consuming too much.

Yeah, that was his point. You nailed that one. :eyes:

[leftstreet]

3. aarrggh He makes me sick

[Hannah Bell]

9. Volker's 'Shock Therapy'

"Less appreciated, although perhaps most effective, were the policies of Paul Volcker, which Reagan strongly supported.

Volcker raised interest rates to 16.4 percent in 1981, plunging the US into a deep recession. Christian Parenti quotes Volcker telling the New York Times the recession was necessary because 'the standard of living of the average American has to decline.'

Parenti shares authors Harrison and Bluestone's assessment of the recession, which, according to them, did precisely what it was designed to do.

With more than ten million people unemployed in 1982 it was impossible for organized labor to maintain wage standards let alone raise them Essentially, with wage growth arrested by unemployment, what growth occurred during the Reagan period rebounded mostly to the profits side of the capital-labor ledger."

http://www.counterpunch.org/sherman06112004.html


Already high interest rates from the Volcker Fed since October 1979 had led to a major decline in domestic construction, the ultimate ruin of the US automobile industry and with it, steel, as American manufacturers moved to outsource production offshore where the cost advantages were greater.

Referring to Paul Volcker and his free-market backers inside the Reagan White House, Republican Robert O. Andersen, then chairman of Atlantic Richfield Oil Co. complained, “they’ve done more to dismantle American industry than any other group in history. And yet they go around saying everything is great. It’s like the Wizard of Oz.” 9

http://blogg.aftonbladet.se/12547/perma/702531

[leftstreet]

11. Wash. Rinse. Repeat.

With more than ten million people unemployed in 1982 it was impossible for organized labor to maintain wage standards let alone raise them Essentially, with wage growth arrested by unemployment, what growth occurred during the Reagan period rebounded mostly to the profits side of the capital-labor ledger."

Excellent article.

[SoCalDem]

19. They had to set the stage for the Full-Reaganization of the US

kill unions
eliminate pensions
remove middle class tax deductions
give everyone with a pulse, a credit card to make up for low wages

stir..bake at 500 degrees for 25 years and stand back....

[Earth Bound Misfit]

27. Two GREAT articles, thank you for posting...

...great source of info & history for an economic "dummy" like myself. You're probably already aware of this, but just in case, here's a link to more of F. William Engdahl's articles:

http://www.globalresearch.ca/index.php?context=listByAuthor&authorFirst=F.%20William&authorName=Engdahl

[girl gone mad]

12. I think Volcker was right then..

and he's right now.

He rescued the dollar from collapse, encouraged personal savings rather than overconsumption and at least managed to delay the onset of the housing bubble for a decade.

[Hannah Bell]

13. personal savings rate went down, not up, post-volker recession.

personal income flat-lined.

dollar was not in danger of "collapse".

happy to listen if you have evidence to the contrary.

[Hannah Bell]

15. personal savings rate, volker recession ended november 1982.

[InkAddict]

26. That's just about the time our personal recession/depression

began, as mergers, acquisitions, outsourcing, wage stagnation, higher tuition costs began to creep up...and corporations embraced cheap labor around the globe...GOP policies sux, and there are complicit, owned Dems. Then there are the BANKSTERS, don't get me started...

[girl gone mad]

17. The savings rate spiked when Volcker allowed interest rates to float.

In 1982, the savings rate was 11% of disposable income. it fell precipitously under Greenspan.

Maybe a more balanced take on Volcker is in order.

http://www.marketwatch.com/news/story/Volcker-Greenspan-A-tale-contrasts/story.aspx?guid={084B9CEC-9DCD-4D76-9B77-4A9FC289309C}


The dollar was in danger after the Bretton Woods system was abandoned.

[Hannah Bell]

21. In 1982 unemployment hit 10.8%. The savings rate goes up in recessions - people don't spend,

& it was a 16-month recession, very deep.

When Volker left the Fed in august 1987, personal saving rate was 6.2.

But the legitimate way to do the comparison is to average time-series.

Look at the chart: savings rates were stable between about 6-10% from 1959 until the Reagan admin, with no long term trend up or down.

There was no such problem of "low savings rates" that required fixing by volker.

The trend down began with reagan, & the cause is declining income in relation to costs, a process of decline kicked off with the recession deliberately created & deepened by volker.

http://research.stlouisfed.org/fred2/data/PSAVERT.txt

1976-07-01 9.5
1976-08-01 9.6
1976-09-01 9.3
1976-10-01 9.0
1976-11-01 9.4
1976-12-01 8.4

1977-01-01 8.5
1977-02-01 7.1
1977-03-01 8.4
1977-04-01 8.4
1977-05-01 8.3
1977-06-01 8.7
1977-07-01 8.6
1977-08-01 9.0
1977-09-01 9.3
1977-10-01 9.4
1977-11-01 9.4
1977-12-01 9.4

1978-01-01 9.9
1978-02-01 9.1
1978-03-01 9.1
1978-04-01 8.9
1978-05-01 8.5
1978-06-01 8.1
1978-07-01 9.1
1978-08-01 8.5
1978-09-01 8.8
1978-10-01 8.9
1978-11-01 8.8
1978-12-01 8.7

1979-01-01 9.4
1979-02-01 9.3
1979-03-01 9.5
1979-04-01 9.2
1979-05-01 8.8
1979-06-01 8.4
1979-07-01 9.1

1979-08-01 8.3 Volker starts at Fed
1979-09-01 7.9
1979-10-01 8.7
1979-11-01 8.8
1979-12-01 9.3

1980-01-01 9.3 Recession 1 starts
1980-02-01 9.6
1980-03-01 9.7
1980-04-01 10.1
1980-05-01 10.0
1980-06-01 9.7
1980-07-01 9.8 Recession 1 ends
1980-08-01 9.8
1980-09-01 10.3
1980-10-01 10.4
1980-11-01 10.9
1980-12-01 10.7

1981-01-01 9.9
1981-02-01 9.8
1981-03-01 9.7
1981-04-01 9.8
1981-05-01 10.0
1981-06-01 9.9
1981-07-01 11.4 Recession 2 starts
1981-08-01 11.2
1981-09-01 11.7
1981-10-01 12.5
1981-11-01 12.5
1981-12-01 11.7

1982-01-01 11.9
1982-02-01 11.3
1982-03-01 11.5
1982-04-01 12.2
1982-05-01 11.6
1982-06-01 11.5
1982-07-01 11.9
1982-08-01 11.7
1982-09-01 10.8
1982-10-01 10.3
1982-11-01 9.9 Recession 2 ends: unemployment 10.8%
1982-12-01 9.7

1983-01-01 9.9
1983-02-01 10.0
1983-03-01 9.5
1983-04-01 9.1
1983-05-01 8.9
1983-06-01 8.1
1983-07-01 8.6
1983-08-01 8.0
1983-09-01 8.5
1983-10-01 8.6
1983-11-01 9.2
1983-12-01 9.1

1984-01-01 9.4
1984-02-01 10.8
1984-03-01 10.6
1984-04-01 10.8
1984-05-01 10.5
1984-06-01 10.6
1984-07-01 11.4
1984-08-01 11.3
1984-09-01 11.2
1984-10-01 11.4
1984-11-01 10.6 unemployment still at 7.2%
1984-12-01 11.0

1985-01-01 10.3
1985-02-01 9.1
1985-03-01 8.7
1985-04-01 10.1
1985-05-01 11.1
1985-06-01 9.5
1985-07-01 8.9
1985-08-01 8.0
1985-09-01 6.8
1985-10-01 8.9
1985-11-01 8.5
1985-12-01 8.3

1986-01-01 8.2
1986-02-01 8.9
1986-03-01 9.5
1986-04-01 9.1
1986-05-01 8.7
1986-06-01 8.9
1986-07-01 8.6
1986-08-01 8.3
1986-09-01 6.4
1986-10-01 7.5
1986-11-01 8.1
1986-12-01 5.9

1987-01-01 8.8
1987-02-01 7.6
1987-03-01 7.7
1987-04-01 3.5
1987-05-01 7.2
1987-06-01 6.7
1987-07-01 6.5
1987-08-01 6.2 Volker leaves the Fed
1987-09-01 6.7
1987-10-01 7.4
1987-11-01 7.6
1987-12-01 7.7

1988-01-01 7.0
1988-02-01 7.5
1988-03-01 7.2
1988-04-01 7.6
1988-05-01 7.2
1988-06-01 7.3
1988-07-01 7.5
1988-08-01 7.2
1988-09-01 7.5
1988-10-01 7.2
1988-11-01 7.0
1988-12-01 7.2

1989-01-01 7.6
1989-02-01 7.9
1989-03-01 8.3
1989-04-01 7.3
1989-05-01 7.0
1989-06-01 7.1
1989-07-01 7.1
1989-08-01 6.4
1989-09-01 6.6
1989-10-01 6.8
1989-11-01 7.2
1989-12-01 6.5

1990-01-01 6.6
1990-02-01 7.3
1990-03-01 7.0
1990-04-01 7.3
1990-05-01 7.2
1990-06-01 7.1
1990-07-01 7.2
1990-08-01 6.7
1990-09-01 6.7
1990-10-01 6.6
1990-11-01 6.7
1990-12-01 7.3

1991-01-01 7.9
1991-02-01 7.5
1991-03-01 6.6
1991-04-01 7.1
1991-05-01 6.9
1991-06-01 7.4
1991-07-01 6.8
1991-08-01 7.0
1991-09-01 7.2
1991-10-01 7.5
1991-11-01 7.3
1991-12-01 7.9

1992-01-01 7.4
1992-02-01 7.9
1992-03-01 7.9
1992-04-01 8.0
1992-05-01 7.9
1992-06-01 7.8
1992-07-01 7.5
1992-08-01 7.6
1992-09-01 6.9
1992-10-01 7.1
1992-11-01 7.0
1992-12-01 9.4

1993-01-01 5.8
1993-02-01 5.6
1993-03-01 5.6
1993-04-01 6.4
1993-05-01 6.3
1993-06-01 5.9
1993-07-01 5.4
1993-08-01 5.6
1993-09-01 5.0
1993-10-01 5.0
1993-11-01 5.0
1993-12-01 7.6

1994-01-01 4.0
1994-02-01 3.9
1994-03-01 4.3
1994-04-01 4.2
1994-05-01 5.8
1994-06-01 5.1
1994-07-01 5.1
1994-08-01 4.7
1994-09-01 5.0
1994-10-01 5.3
1994-11-01 5.2
1994-12-01 5.3

1995-01-01 5.6
1995-02-01 5.9
1995-03-01 5.5
1995-04-01 4.8
1995-05-01 4.9
1995-06-01 4.4
1995-07-01 4.6
1995-08-01 4.1
1995-09-01 4.1
1995-10-01 4.4
1995-11-01 3.9
1995-12-01 3.6

1999-12-01 1.6

"After leaving the Federal Reserve in 1987, he became chairman of the prominent New York investment banking firm, J. Rothschild, Wolfensohn & Co., a corporate advisory and investment firm in New York, run by James D. Wolfensohn, who was later to become president of the World Bank."

"As of October 2006, he is the current Chairman of the Board of Trustees of the influential Washington-based financial advisory body, the Group of Thirty, and is a member of the Trilateral Commission. He has had a long association with the Rockefeller family, not only with his positions at Chase Bank and the Trilateral Commission, but also through membership of the Trust Committee of Rockefeller Group, Inc. (RGI), which he joined in 1987. That entity managed, at one time, the Rockefeller Center on behalf of the numerous members of the Rockefeller clan. He currently serves as Chairman of the Board of Trustees of the International House in Manhattan, NY. He was a founding member of the Trilateral Commission."

http://en.wikipedia.org/wiki/Paul_Volcker

[HughBeaumont]

25. No dent in wages, no recovery. It's just that simple.

http://journals.democraticunderground.com/HughBeaumont/86

The savings rate peaked in 1982 and dropped substantially soon after. When the wage in real dollars doesn't rise with the cost of living, one kind of can't save much.

[Dead_Parrot]

14. A little context might help

Volker Asserts US Must Trim Living Standard

Warns of inflation peril is oil spending is not cut

http://www.scribd.com/doc/6441987/Volcker-Asserts-US-Must-Trim-Living-Standard-NYT-10181979

...Mr Volker maintained that, because of the drain of American wealth to the oil producing countries, Americans would have to accept less...

And guess what? after a couple of oil wars and about a hundred billion barrels of oil imported, the US is in the toilet. A pity everyone spent the 80's and 90's with their fingers in thier ears, really.

[cali]

16. He was right

the average American mentality of over consumption based on an oil economy is not a good thing. It was in the seventies that I started to question the American ethos of bigger, faster, more.

[Hannah Bell]

22. Sure Cali, Volker was concerned with americans using too much oil.

That's the ticket.

[northernlights]

18. Volcker's mistake was putting it all on the backs

of the *average* American. And in saying the standard of living must *decline.*

Instead, the standard of living needed and needs to change -- for all of us, not just the average of us. That means for those at the very bottom, it needs to be raised. And those at the very top need to be cut back hard. And those in the middle need to be trimmed and reshaped a bit.

Thanks to Greenspan it did change...just not in the right way.
How many families have I read about or seen throughout the 80s and 90s with 3 or 4 cars per household? How many teens have I seen driving their very own brand-spanking new cars bought and paid for by their 'rents (always too fast and out of control, usually cutting me off)?

Volcker nearly killed me. Early Greenspan put a roof over my head. Middle Greenspan gave me opportunites to save for retirement, which I did. Late Greenspan has stolen my savings. Next I expect Summers and Geithner to steal the roof from over my head.

[ck4829]

20. Key word: "Average American". He didn't say anything about the top 1%.

[Hannah Bell]

23. The average wage had to be lowered so the top could profit.

[ProfessorGAC]

24. Since His Whole Economic Philosophy Is Repudiated. . .

. . .i'd say that he would likely be wrong about this too. In fact, since many published papers in economics, (including one by me in 1988) establish, mathematically, that the middle class is the single most important element in economic strength, then it has been proven he's wrong.
GAC