A Changing ECONOMY

Transformation of the American Economy (1980-Present)

Overview

  • Focus on causes and effects of economic and technological changes.

  • Significant shifts due to digital technology and global economy participation.

Emergence of the Computer

  • Computers originated in the US in 1946; required large spaces to operate.

  • Technological advancements like transistors and microprocessors miniaturized computers.

  • By 1977, home computers were introduced by Apple; IBM followed in the 1980s.

  • Rapid increase in personal computer adoption in workspace settings towards the end of the 1980s.

Transformation Through the Internet

  • The Internet emerged in the 1990s, revolutionizing communication and commerce.

  • Originally a network of interlinked pages, accessible via phone lines.

  • Digital modes of communication replaced traditional methods, such as email replacing letters.

  • File-sharing platforms (e.g., Napster) reshaped the music industry, leading to significant business model changes.

  • E-commerce (via Amazon.com) allowed remote goods purchasing, negatively impacting physical retail stores.

Impact on the Economy

  • Debate over the economic impact of the digital revolution:

    • Increased productivity observed starting in 1995 due to enhanced global communication.

    • However, increase in productivity did not proportionally raise living standards.

    • Income disparities and changing nature of work have contributed to this paradox.

Shift in Employment Landscape

  • Manufacturing declined significantly; service sector surged.

    • Outsourcing of manufacturing jobs to countries like China, facilitated by trade agreements (e.g., General Agreement on Tariffs and Trade in 1994).

    • Decrease in labor union membership: 35% of workers in unions in 1954 down to about 12% today.

      • Notable event: 1981 Reagan administration fired striking air traffic controllers, weakening unions.

Service Sector Dominance

  • Definition and significance of the service sector:

    • Comprises jobs providing intangible products (education, legal services, etc.).

    • As of today, approximately 71% of American jobs are in this sector.

    • Manufacturing is largely offshored to countries like China despite high consumer goods availability in the US.

Economic Disparities

  • Widening income gap over the years:

    • Real wages for the working class stagnated from 1979 to 2007.

    • Top 1% of earners saw a 275% increase in wealth, while the middle 60% saw a mere 40% rise.

    • Contributing factors: Outsourcing of high-paying jobs, low-wage service job growth, and tax policy restructuring favoring the wealthy.

Conclusion

  • Digital revolution fundamentally altered the American economy, with ongoing effects.

  • Continuous evolution of work and economic standards in the current era.