The failure of American capitalism

The charts below (via Peter Whiteford of the Australian National University in Canberra) are most interesting.  On the same scale (so comparison is facilitated) they show the average annual growth rate in real income by decile for men and for women.  So, taking Australia as an example, they show how, over the quarter century from 1980 to 2005, men in the lowest decile (i.e., the poorest 10 % of the population) had a real (i.e., after inflation) growth in their incomes of around 0.5% per annum, or roughly 13% compounded over the whole period.  During the same period, women in the lowest decile had income growth in real terms of around 1.4% per annum.  Notice how men in the top decile--the richest 10%--had annual growth of 1.5%,  or a cumulative increase of 45%, so that income inequality among men increased, between men and women decreased, and within women increased a little.  I expect much of this difference was because of the decline of blue-collar jobs in manufacturing as Ozzie industries faced a decline in protective tariffs, whereas women weren't doing blue-collar jobs, and were also entering the labour force in a big way for the first time.

Now look at little Finland's real income growth rates.  Once again, women's incomes have grown faster than men's, but the overall growth rate has been higher and much more equal than in Australia.  In fact, almost all deciles across the spectrum had real income rises of 64%.

The United States' chart is the shocker:  Over the 25 years, for men, the poorest 10% had falling real incomes, by (I'm reading this off the chart) about 0.6% per annum.  That's a 14% decline over 25 years.  The richest had real income rises of 0.8% per annum, which over the whole period equals 22%.   Once again, women did better than men as gender income inequalities were reduced.  But notice this: apart from Canada, the total growth for all deciles was lower than in any other country.  And this was before the GFC (2008 and ongoing).  All the "socialist" countries did better than the US.  These are all countries where business is privately owned, but individuals have a comprehensive welfare safety net, including such things as universal free health care, the dole, income support, progressive income tax, etc.

The argument for the extreme dog-eat-dog form of capitalism in the US with all it entails is that even though it produces greater inequality within the populace, it produces greater income growth for everybody.  Yet this is clearly not true.  And that is very interesting indeed.

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