1939-1980 - American capital tied to American labor. Capital investment used American Labor to manufacture products. Government policies/programs ensured high wages/benefits. The result was that that the father could support entire family on just his wages, so the mother could stay home and raise the kids. This is when Reagan bragged about having the highest paid middle class workers in the world. The high wages paid to the middle class meant that the American consumer had tons of spending money for consumption. This lead to massive capital investment: when there is a high demand, capital must innovate and invest and add jobs to capture that demand. (Don't try to explain this to a "talk radio Republican" - they have been kept ignorant of the relationship between high wages = high demand = economic growth)
1980 - Capitalist saw how cheaply goods were being made in Asia and Global south. The capitalist realizes that he could have his goods made by workers who made pennies a day and lived in hovels beneath dictators. Capitalists begin to offshore their production to Communist China, Taiwan, Korea as well as Latin and South America. The capitalist sees his profits rise as he ships jobs away from the American middle class to ultra-cheap labor markets. The American middle class begins to die, and must be saved by a massive expansion of credit: debt based consumption > Morning in American brought to you by Master Card, American Express and Visa. Don't take my word for it: research what happen to household debt since Reagan and the birth of offshore capitalism)
Cheaper Labor costs provide higher return on investment = Pure Capitalism - Capitalism is known for getting incentives right. Cheaper labor costs means higher profits. Higher profits IS the primary incentive for sound investment. Therefore, getting rid of the high cost of American Labor is the essence of capitalist logic, which is driven by a higher rate of return. Nike investors make more when each shoe is made for pennies, as opposed to having to support the expensive living standards of the American Middle Class.
Since workers make so much less (in order to give capitalist higher rate of return), what follows? Answer: workers have less money for consumption. Because workers can no longer afford to consume as much, the USA, since Reagan, required a credit economy to finance consumption. So, starting in 1980, to make up for the shift of jobs to low cost labor markets, the USA grew a massive debt economy where individuals started receiving 3 credit card offers a week. Starting in 1980 American Families went on an unprecedented borrowing binge.
By 2000, Americans were so in debt that they could no longer borrow as much to consume and keep the economy afloat.
So how did they keep the economy afloat? Where did the USA find its stimulus, if not through traditional credit based consumption?
Answer: housing bubble. The financial industry turned to the last thing left with any value: the home. So the Bush administration made it easier for each American to leverage their home's value to borrow enough to keep consuming. They created a conveyor belt where each new mortgage was turned into a financial product that they could sell around the globe. (Wall Street sold Europe over a trillion dollars of mortgage backed securities and derivatives. Through rate manipulation, Greenspan made the housing sector the only game in town, promising the best returns available. So money flowed into the US economy to create one of the most fraudulent bubbles in history.
When the bubble burst, the government bailed out the wealthy Wall Street private sector, and then foreclosed on the poor.
It was a wealth transfer from the middle class to John Galt . . . as per usual.
And "no" - to answers the OPs question - we have not learned a thing. The predators who profited from the bubble and it's popping have paid generously into the Conservative Message Machine to convince America that the falt lies with the poor middle class who got foreclosed on, and not the wealthy private sector who made money on the way up, then on the way down, then after being bailed out.
Welcome to predatory capitalism.
American swallowed poison in 1980 when it freed capital to get its manufacturing from cheap labor markets in Communist China. It sold the middle class down river, requiring the use of credit, debt and bubbles to sustain the American economy (to make up for the shift of jobs to cheap labor climates in dictator lead nations).
(the average Republican voter knows none of this. Ask a GOP voter where Walmart gets most of its manufacturing, and they look at you with a blank stare. They are the useful idiots of predatory offshore capitalism).
