Jonathan Levy, a historian at the University of Chicago in his book Ages of American Capitalism, describes the age of capitalism we live in as an age of chaos: a time when capital has become more fluid, fluid and unstable, constantly flowing in and out. Boom and bust in contrast to the volatile order – and widely shared prosperity – that characterizes the post-industrial economy. Levy started the story in 1981, the same year Forbes considered his list. That year the Federal Reserve, under its chairman, Paul Volker, raised interest rates to 20 percent in a bid to end inflation. Volker’s Fed succeeded, but according to Levy, the decision, without far-reaching consequences, accelerated the transition of capitalism away from the production of American goods that had never been seen before. The value of the dollar has skyrocketed, making American exports less attractive and imports cheaper; Many of the factories that were profitable were shut down because they could make money in an environment with such a high rate of incredible returns, they were not only profitable Enough. When the Fed began its grip, the widely available credit released a speculative bonanza, benefiting a newly empowered corporate class that felt little obligation to the workforce and deep obligation to shareholders.
The economy usually expands when it comes to investing in productivity, but this expansion was different: Levi wrote, “This is the only one on record, before or after, where fixed investment as a part of GDP has declined.” In other words, our industrialists were investing less in production Accessories – Ships, factories, trucks – more money is made when it is done. In fact, they often tore up those items and sent them abroad; This was the age of corporate attackers, who would book huge profits by keeping Americans out of work. As the birth of the Wall Street-Main Street divide, you can see it in crude terms: the separation of the money industry from the “real” economy.
The transition to a highly financed, post-industrial economy was aided by the Reagan administration, which deregulated banking, reduced the top income tax rate from 70 percent to 28 percent, and targeted organized labor – a political scapegoat for a slow, inflationary economy. 70s. The rise of computer technology and the developing world will expand and accelerate all these trends, turning the United States into a kind of frontal cortex for the globalized economy. Just as importantly, the technological revolution has created new ways for entrepreneurs to make a fortune: software development is by no means cheap, but requires less staff and less fixed investment, and can be instantly reproduced and shipped around the world, and virtually no matter the cost. That the powerhouse of 20th century capitalism, Ford Motors, now employs about 183,000 people and has a market capitalization of close to $ 68 billion; Google employs about 156,000 people and has a market cap of about 8 1.8 Trillion. This new economy will operate, and for them, the knowledge workers, who will make the most of the profits, and therefore have more money to spend on services – a sector that this transformation will replace production, but will never come to fruition. Removed.
“In the Reagan years,” Levy wrote, “something new and distinctive emerged that survives to this day: a capitalism influenced by rising asset prices.” That is, an economy where the rising value of assets – stocks, bonds, real estate – will, in some ways, be the fuel for economic growth. In other words, it’s a good time to own a lot of assets. And wealth ownership is largely the work of billionaires.