海角大神

Rarely in history has the cause of a major economic problem been so clear yet have so few been willing to see it.

The major reason this recovery has been so anemic is not Europe鈥檚 debt crisis. It鈥檚 not Japan鈥檚 tsumami. It鈥檚 not Wall Street鈥檚 continuing excesses. It鈥檚 not, as right-wing economists tell us, because taxes are too high on corporations and the rich, and safety nets are too generous to the needy. It鈥檚 not even, as some liberals contend, because the Obama administration hasn鈥檛 spent enough on a temporary Keynesian stimulus.

The answer is in front of our faces. It鈥檚 because American consumers, whose spending is 70 percent of economic activity, don鈥檛 have the dough to buy enough to boost the economy 鈥� and they can no longer borrow like they could before the crash of 2008.

If you have any doubt, just take a look at the , released Monday by the Federal Reserve.聽Median family income was $49,600 in 2007. By 2010 it was $45,800 鈥� a drop of 7.7%.

All of the gains from economic growth have been going to the richest 1 percent 鈥� who, because they鈥檙e so rich, spend no more than half what they take in.

Can I say this any more simply? The earnings of the great American middle class fueled the great American expansion for three decades after World War II. Their relative lack of earnings in more recent years set us up for the great American bust.

Starting around 1980, globalization and automation began exerting downward pressure on median wages. Employers began busting unions in order to make more profits. And increasingly deregulated financial markets began taking over the real economy.

The result was slower wage growth for most households. Women surged into paid work in order to prop up family incomes 鈥� which helped for a time. But the median wage kept flattening, and then, after 2001, began to decline.

Households tried to keep up by going deeply into debt, using the rising values of their homes as collateral. This also helped 鈥� for a time. But then the housing bubble popped.

The聽Fed鈥檚 latest report shows how loud that pop was. Between 2007 and 2010 (the latest data available) American families鈥� median net worth fell almost 40 percent 鈥� down to levels last seen in 1992. The typical family鈥檚 wealth is their home, not their stock portfolio 鈥� and housing values have dropped by a third since 2006.

Families have also become less confident about how much income they can expect in the future. In 2010, over 35% of American families said they did not 鈥渉ave a good idea of what their income would be for the next year.鈥� That鈥檚 up from 31.4% in 2007.

But because their incomes and their net worth have both dropped, families are saving less. The proportion of families that said they had saved in the preceding year fell from 56.4% in 2007 to 52% in 2010, the lowest level since the Fed began collecting that information in 1992.

Bottom line: The American economy is still struggling because the vast American middle class can鈥檛 spend more to get it out of first gear.

What to do? There鈥檚 no simple answer in the short term except to hope we stay in first gear and don鈥檛 slide backwards.

Over the longer term the answer is to make sure the middle class gets far more of the gains from economic growth.

How? We might learn something from history. During the 1920s, income concentrated at the top. By 1928, the top 1 percent was raking in an astounding 23.94 percent of the total (close to the 23.5 percent the top 1 percent got in 2007) according to analyses of tax records by my colleague Emmanuel Saez and Thomas Piketty. At that point the bubble popped and we fell into the Great Depression.

But then came the Wagner Act, requiring employers to bargain in good faith with organized labor. Social Security and unemployment insurance. The Works Projects Administration and Civilian Conservation Corps. A national minimum wage.聽And to contain Wall Street: The Securities Act and Glass-Steagall Act.

In 1941 America went to war 鈥� a vast mobilization that employed every able-bodied adult American, and put money in their pockets. And after the war, the GI Bill, sending millions of returning veterans to college. A vast expansion of public higher education. And huge infrastructure investments, such as the National Defense Highway Act. Taxes on the rich remained at least 70 percent until 1981.

The result: By 1957, the top 1 percent of Americans raked in only聽10.1 percent of total income. Most of the rest went to a growing middle class 鈥� whose members fueled the greatest economic boom in the history of the world.

Get it? We won鈥檛 get out of first gear until the middle class regains the bargaining power it had in the first three decades after World War II to claim a much larger share of the gains from productivity growth.