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What Went Wrong: How the 1% Hijacked the American Middle Class . . . and What Other Countries Got Right
Americans have long been proud of the strength and robustness of their economy. We’ve been told from the time we were children that we live in the best country in the world, with the most expanding and dynamic economy. We’ve been told that we live in the home of the American Dream, a country that—more than any other—allows people to rise up from poverty into the ranks of the rich. But the truth is average real incomes in the United States have been flat for more than three decades. Economic inequality in the United States is now closer to a third-world country than to our first-world peers, and is growing. Many things have been blamed for these failures—globalization, outsourcing, economic cycles, weakening education, and so on—but the reality is that the failure of our economy stems directly from a set of political and economic choices voters have made since the early 1980s.
Proof of this is embodied in several countries—Australia, Austria, Belgium, Denmark, France, Germany, the Netherlands, and Sweden—that practice "family capitalism,” a variation of free-market capitalism that emphasizes corporate productivity and growth in family incomes. These countries, facing even harsher challenges than the United States, have achieved dramatically better results: growing wages, higher productivity, higher incomes, and lower inequality.
This isn’t about the size of government or social welfare programs. And it isn’t about left versus right—prudent Australia, for example, had a right-wing government for many years and is ranked by the Heritage Foundation as far more free than the United States. It’s about policies on wages and corporate governance that have converted globalization to nationwide family prosperity and have been proven over decades to generate superior results. It’s about crafting an economy that creates wealth for all, not just for a few. It’s about returning to a set of policies that once made the United States the most dynamic and fair economy on the planet.
What Went Wrong is a fact-based analysis of how America got on the wrong track and what we can do to return our nation to greatness. It is the most optimistic book about economics you will ever read.
Proof of this is embodied in several countries—Australia, Austria, Belgium, Denmark, France, Germany, the Netherlands, and Sweden—that practice "family capitalism,” a variation of free-market capitalism that emphasizes corporate productivity and growth in family incomes. These countries, facing even harsher challenges than the United States, have achieved dramatically better results: growing wages, higher productivity, higher incomes, and lower inequality.
This isn’t about the size of government or social welfare programs. And it isn’t about left versus right—prudent Australia, for example, had a right-wing government for many years and is ranked by the Heritage Foundation as far more free than the United States. It’s about policies on wages and corporate governance that have converted globalization to nationwide family prosperity and have been proven over decades to generate superior results. It’s about crafting an economy that creates wealth for all, not just for a few. It’s about returning to a set of policies that once made the United States the most dynamic and fair economy on the planet.
What Went Wrong is a fact-based analysis of how America got on the wrong track and what we can do to return our nation to greatness. It is the most optimistic book about economics you will ever read.
576 pages, Hardcover
First published January 1, 2013
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387 people want to read
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Displaying 1 - 12 of 12 reviews
December 8, 2013
The cover tells the tale. Since 1985, total employee compensation in the following countries has increased by the following amounts: Australia 64%, Denmark 220%, France 154%, Germany 194%, Netherlands 192%. US - less than 1/2 of 1%. Back in the day, before the 1% took over the regulatory process and most of the government, increases in productivity were shared among workers, managers and shareholders. Now, the 1% keeps it for themselves. Thirty years ago the average CEO made 20-30 times what the average worker was paid, now it is 300-400%, most of it generated by those productivity increases.
The countries who have shown so much better results for the middle class practice what is known as family capitalism or stakeholder capitalism which strives for a balance among the participants in an economy. Pretty embarrassing that the U.S. is now considered a "low wage" nation. Even Adam Smith, so often cited as the father of capitalism felt that the "bloody tooth and claw" of raw capitalism needs to be tempered by regulation to permit its benefits to be widely enjoyed over the long term.
Why do we have such political gridlock? Because the 1% wants it that way. No change means they keep the lowest tax rates in 30 years and paralyze the government from enacting new and needed programs like infrastructure investments and the jobs it brings.
One aspect of this book is both a blessing and a curse and that is the detailed, well researched, well cited material by an individual well qualified to present it. Great for a policy wonk like me who doesn't mind plowing through 500 pages of stats and graphs and discussion of economic theory; not so good for the average person who really needs to hear the message and the proscriptions but will find the book somewhat dry and a bit of a slog.
Still, the best discussion I have found of the issues facing this country and a shame the content is not more widely disseminated.
The countries who have shown so much better results for the middle class practice what is known as family capitalism or stakeholder capitalism which strives for a balance among the participants in an economy. Pretty embarrassing that the U.S. is now considered a "low wage" nation. Even Adam Smith, so often cited as the father of capitalism felt that the "bloody tooth and claw" of raw capitalism needs to be tempered by regulation to permit its benefits to be widely enjoyed over the long term.
Why do we have such political gridlock? Because the 1% wants it that way. No change means they keep the lowest tax rates in 30 years and paralyze the government from enacting new and needed programs like infrastructure investments and the jobs it brings.
One aspect of this book is both a blessing and a curse and that is the detailed, well researched, well cited material by an individual well qualified to present it. Great for a policy wonk like me who doesn't mind plowing through 500 pages of stats and graphs and discussion of economic theory; not so good for the average person who really needs to hear the message and the proscriptions but will find the book somewhat dry and a bit of a slog.
Still, the best discussion I have found of the issues facing this country and a shame the content is not more widely disseminated.
May 15, 2015
I wanted to give this book a higher rating because Tyler is addressing a critical socioeconomic issue regarding the widening income gap between the top 1% of American earners and the hollowing out of the middle class and the suffering of people living below the poverty line. However, the book reads like a first draft. There is no doubt Tyler has the raw material in its 467 pages of narrative and an additional almost 100 pages of notes to write a definitive state of where we are in American society today. The book could have been severely edited by at least 100 pages and the arguments more synthesized with a more compelling narrative. He quotes entirely too many individuals. If I was a writer of the Financial Times, I would ask to get a residual of sales. This tic of quoting multiple authors for extended sentences and even paragraphs makes it seem as if Tyler is unsure of his argument and needs to buttress his analysis with others, plus, it absolutely kills the narrative drive of the book. Quite honestly, the book is a slog to read. It is dense with facts and so wide-ranging that at times the examples are peripheral to the main thesis of the book. In addition, Ronald Reagan is so despised and pilloried throughout the book that I started to feel Tyler needed to see a psychiatrist to help get over his personal opprobrium of Reagan. It is suggested that people may need to hear something up to 10 times in order to comprehend what is being said. Reagan (or variants of Reaganomics) must be mentioned at least 250 times. In fact, I would love for someone to count the number of times Reagan is mentioned. If this was a college drinking game whereby people would have to drink every time Reagan was mentioned, the participants would be dead from alcohol intoxication.
And yet it's a shame, because Tyler has some pretty worthwhile analysis to ponder and some devastating quotes to those Ayn Rand, Tea Party, free market acolytes and zealots. He effectively uses Adam Smith to demonstrate how badly conservatives misinterpret the free market. Here is one of the best quotes that come from Jack Welch near the end of the book, "...shareholder capitalism is the dumbest idea in the world. Shareholder value is a result, not a strategy. Your main constituencies are your employees, your customers, and your products." Tyler also effectively disputes the flaneur culture that many conservatives have of Northern Europe and actually demonstrates how productive they are and how companies are in partnership with their employees to preserve high paying wages with engaged workers. He also goes on to excoriate Apple for outsourcing American ingenuity to lower paid countries who go on to sell back their products to American consumers. He is also brilliant when it comes to demonstrating how little American workers share in productivity gains as compared to other countries and how "regulatory capture" ensures that the few get rich at the expense of the many. It was also interesting to me to read how these European-originated companies pay their American workers 10-20 dollars an hour less than workers in their home country. Its too bad though that the reader has to work so hard to isolate the powerful message the book contains in a tsunami of unneccessary verbiage.
And yet it's a shame, because Tyler has some pretty worthwhile analysis to ponder and some devastating quotes to those Ayn Rand, Tea Party, free market acolytes and zealots. He effectively uses Adam Smith to demonstrate how badly conservatives misinterpret the free market. Here is one of the best quotes that come from Jack Welch near the end of the book, "...shareholder capitalism is the dumbest idea in the world. Shareholder value is a result, not a strategy. Your main constituencies are your employees, your customers, and your products." Tyler also effectively disputes the flaneur culture that many conservatives have of Northern Europe and actually demonstrates how productive they are and how companies are in partnership with their employees to preserve high paying wages with engaged workers. He also goes on to excoriate Apple for outsourcing American ingenuity to lower paid countries who go on to sell back their products to American consumers. He is also brilliant when it comes to demonstrating how little American workers share in productivity gains as compared to other countries and how "regulatory capture" ensures that the few get rich at the expense of the many. It was also interesting to me to read how these European-originated companies pay their American workers 10-20 dollars an hour less than workers in their home country. Its too bad though that the reader has to work so hard to isolate the powerful message the book contains in a tsunami of unneccessary verbiage.
December 30, 2017
This book was a mixed bag for me, coming down in the end on the "meh" side of things.
The positive: This book contains lot of information about how an economy can fail if it's been hijacked by special interests. In particular, it focuses on the Great Recession and how it followed from the economic policies since the Reagan era.
One of the core arguments of the book is that capitalism doesn't have to look like laissez faire capitalism advocated by libertarians in the US and those influenced by them. In fact, by accepting that capitalism overall has failed because of the problems of this particular model's problems is buying into the false narrative that capitalism must look like unconstrained markets with regulatory capture by large businesses. Tyler argues that capitalism can look different by comparing the US to other countries that practice what he calls family capitalism, which is capitalism which considers protecting the needs of employees as the primary role of government interaction with business rather than protecting the needs of businesses. Note that part of this is an acknowledgement that the Reagonomics, as he calls it, practiced in the US is not, in fact free of government interference. It very heavily relies on the government regulating in favor of business owners. Other countries show that this need not be the case.
Overall, this general argument had me thinking about a lot of interesting ideas about what assumptions we bring to economic systems and the importance of studying not just history but also what other countries do today.
The negative: The strength of this book was the comparative analysis with other countries, but sadly that comparison was not particularly systematic. What I would have liked to see is a comparison where the countries considered to do a better job of helping employees were compared broadly to the US and where other countries that are considered to have problems were also included in the analysis. That would allow us to understand what factors really differentiate countries that do capitalism well (for some definition of well) from those which don't. Instead, what Tyler does is take specific problems with contemporary capitalism in the US (of which there are plenty) and compare them to specific instances where other countries do better. We hear that codeterminism in Germany helps employee voices get heard on boards and wage setting policies in Australia help all employees have a living wage, but we don't really see the data to show that these are the root cause and not just a symptom of a deeper difference between the systems.
Tyler also relied heavily on quotes which did nothing but restate points he could have made as well himself. Essentially, instead of providing data, he relied heavily on argument from authority. E.g., instead of using quotes to show why some economist came to some particular conclusion, he just gave the quote showing that some economist concluded the point he was trying to make. As a long form, analytical news article it would have been great, but that same style extended to a book is rather shallow. Related to this, he tends to use arguments of the style "Adam Smith would not have agreed with this" as if that proves his point.
Another problem I had with this book is that Tyler was kind of obsessed with demonizing Reagan. Yes, I agree that the economic policies set into motion by Reagan and doubled down upon by his successors have systematically favored the short term interests of investors over longer term interests of companies or employee interests. Still, we got the point after the first 100 pages -- really, after the first chapter. Tyler spends so much time saying how Reagan's policies were wrong and damaging that he never really digs more deeply into why those policies spread so successfully in the US and what factors would make more positive policies take root.
Finally, the solutions proposed are not rooted in the current US regulatory and business environment. Tyler essentially says that the US should adopt the policies that other countries successfully apply, but doesn't give any sense of how that might realistically be achieved. I don't expect a full fledged policy proposal from a book whose main purpose was to describe what went wrong, but I do expect slightly more thought put into whether or not what works in other countries would work in the US.
Overall, if this book hadn't given me pointers to other material to read and triggered some good thought experiments, I would have given it 1 star. Since it did get me to think I'm rating it a bit higher, but still, I was unsatisfied in the end.
The positive: This book contains lot of information about how an economy can fail if it's been hijacked by special interests. In particular, it focuses on the Great Recession and how it followed from the economic policies since the Reagan era.
One of the core arguments of the book is that capitalism doesn't have to look like laissez faire capitalism advocated by libertarians in the US and those influenced by them. In fact, by accepting that capitalism overall has failed because of the problems of this particular model's problems is buying into the false narrative that capitalism must look like unconstrained markets with regulatory capture by large businesses. Tyler argues that capitalism can look different by comparing the US to other countries that practice what he calls family capitalism, which is capitalism which considers protecting the needs of employees as the primary role of government interaction with business rather than protecting the needs of businesses. Note that part of this is an acknowledgement that the Reagonomics, as he calls it, practiced in the US is not, in fact free of government interference. It very heavily relies on the government regulating in favor of business owners. Other countries show that this need not be the case.
Overall, this general argument had me thinking about a lot of interesting ideas about what assumptions we bring to economic systems and the importance of studying not just history but also what other countries do today.
The negative: The strength of this book was the comparative analysis with other countries, but sadly that comparison was not particularly systematic. What I would have liked to see is a comparison where the countries considered to do a better job of helping employees were compared broadly to the US and where other countries that are considered to have problems were also included in the analysis. That would allow us to understand what factors really differentiate countries that do capitalism well (for some definition of well) from those which don't. Instead, what Tyler does is take specific problems with contemporary capitalism in the US (of which there are plenty) and compare them to specific instances where other countries do better. We hear that codeterminism in Germany helps employee voices get heard on boards and wage setting policies in Australia help all employees have a living wage, but we don't really see the data to show that these are the root cause and not just a symptom of a deeper difference between the systems.
Tyler also relied heavily on quotes which did nothing but restate points he could have made as well himself. Essentially, instead of providing data, he relied heavily on argument from authority. E.g., instead of using quotes to show why some economist came to some particular conclusion, he just gave the quote showing that some economist concluded the point he was trying to make. As a long form, analytical news article it would have been great, but that same style extended to a book is rather shallow. Related to this, he tends to use arguments of the style "Adam Smith would not have agreed with this" as if that proves his point.
Another problem I had with this book is that Tyler was kind of obsessed with demonizing Reagan. Yes, I agree that the economic policies set into motion by Reagan and doubled down upon by his successors have systematically favored the short term interests of investors over longer term interests of companies or employee interests. Still, we got the point after the first 100 pages -- really, after the first chapter. Tyler spends so much time saying how Reagan's policies were wrong and damaging that he never really digs more deeply into why those policies spread so successfully in the US and what factors would make more positive policies take root.
Finally, the solutions proposed are not rooted in the current US regulatory and business environment. Tyler essentially says that the US should adopt the policies that other countries successfully apply, but doesn't give any sense of how that might realistically be achieved. I don't expect a full fledged policy proposal from a book whose main purpose was to describe what went wrong, but I do expect slightly more thought put into whether or not what works in other countries would work in the US.
Overall, if this book hadn't given me pointers to other material to read and triggered some good thought experiments, I would have given it 1 star. Since it did get me to think I'm rating it a bit higher, but still, I was unsatisfied in the end.
March 10, 2020
DNF 30-40%
I am very bad at knowing when to give up on books. Adding to that, I got this from a Goodreads giveaway. I felt bad that I didn't read it in a timely manner, but figured as long as I finished it eventually my guilt would be assuaged.
But I started it years ago and I don't look forward to picking it up. It's an interesting subject that I want to know more about, but it's written mostly in quotations by other people. It feels very much like a long college essay. I don't need this massive tome hanging over my head.
I would definitely read something more condensed by the author in the future, especially if he tightened up his writing style.
I am very bad at knowing when to give up on books. Adding to that, I got this from a Goodreads giveaway. I felt bad that I didn't read it in a timely manner, but figured as long as I finished it eventually my guilt would be assuaged.
But I started it years ago and I don't look forward to picking it up. It's an interesting subject that I want to know more about, but it's written mostly in quotations by other people. It feels very much like a long college essay. I don't need this massive tome hanging over my head.
I would definitely read something more condensed by the author in the future, especially if he tightened up his writing style.
Read
August 29, 2019This book resonated with me both as an explanation of middle-class American financial frustration since Reagan economics began and a humbling look at how far the nation has to progress to recover from decades of a failed economic ideology. Perhaps if more Americans understood the things taught in this book, we could push for policy that would return wage/investment priorities to American families rather than promoting the 1% and large corporations.
August 5, 2013
I must have read a different book than the reviewer who gave this two stars!
Believe me, it's a 5-star book, is VERY well-written, and is an exceptional retracing of the roughly 30-year period during which the American electorate willingly ceded control over so many aspects of economic and political rule.
The results of this "Stockholm Syndrome" behavior are graphically presented on the cover: total employee compensation in the U.S. has grown by 1/2 of 1% since 1985--compared to more than 150% in France, Germany, and other European countries.
As a deep review of the period, the book IS long, but is extremely well-organized and footnoted. The careful organization makes it easy to skim through the detail if you want, while retaining the central narrative. Another reviewer sees this as a defect, but I find it a superb "plus," since it brings together the essential points of many other writers. It's both an engrossing tale in itself, but also a great compendium of other critics and critiques--including MANY non-U.S. sources that Americans are unlikely to have seen (and it's for this reason that I appreciate the many quotations from the Financial Times, for example, which another reviewer sees as a shortcoming).
Tyler, who has the resume to speak knowledgeably about these topics, rests his entire analysis on a comparison between "shareholder" and "stakeholder" capitalism--and makes the case that while American policies have privileged laissez-faire capitalism to the detriment of the middle class, many European countries and Australia/New Zealand have never lost sight of the need to maintain a financially sound and engaged populace.
Tyler is a very good writer, and this is an entertaining read; another reviewer didn't find it so, but as a writer/editor myself, I appreciate Tyler's engaging style.
Overall: This is an enormously appealing analysis of a three-decade failure of American policy-making. It speaks eloquently and energetically about that failure, and presents a stark and dramatic picture of the consequences for the middle class: loss of accumulated wealth, loss of current and future prospects for dependable participation in the economy, and (most worrisome) a steep upward climb if there is ever to be a return of balance and equal participation in this country. Absent change, the American electorate will remain undereducated, underemployed, and devoid of opportunities in keeping with our historic (and "exceptional") aspirations.
Get George Tyler's book and read the first two chapters. If you can put it down after that, drop us a note here on Goodreads!
Believe me, it's a 5-star book, is VERY well-written, and is an exceptional retracing of the roughly 30-year period during which the American electorate willingly ceded control over so many aspects of economic and political rule.
The results of this "Stockholm Syndrome" behavior are graphically presented on the cover: total employee compensation in the U.S. has grown by 1/2 of 1% since 1985--compared to more than 150% in France, Germany, and other European countries.
As a deep review of the period, the book IS long, but is extremely well-organized and footnoted. The careful organization makes it easy to skim through the detail if you want, while retaining the central narrative. Another reviewer sees this as a defect, but I find it a superb "plus," since it brings together the essential points of many other writers. It's both an engrossing tale in itself, but also a great compendium of other critics and critiques--including MANY non-U.S. sources that Americans are unlikely to have seen (and it's for this reason that I appreciate the many quotations from the Financial Times, for example, which another reviewer sees as a shortcoming).
Tyler, who has the resume to speak knowledgeably about these topics, rests his entire analysis on a comparison between "shareholder" and "stakeholder" capitalism--and makes the case that while American policies have privileged laissez-faire capitalism to the detriment of the middle class, many European countries and Australia/New Zealand have never lost sight of the need to maintain a financially sound and engaged populace.
Tyler is a very good writer, and this is an entertaining read; another reviewer didn't find it so, but as a writer/editor myself, I appreciate Tyler's engaging style.
Overall: This is an enormously appealing analysis of a three-decade failure of American policy-making. It speaks eloquently and energetically about that failure, and presents a stark and dramatic picture of the consequences for the middle class: loss of accumulated wealth, loss of current and future prospects for dependable participation in the economy, and (most worrisome) a steep upward climb if there is ever to be a return of balance and equal participation in this country. Absent change, the American electorate will remain undereducated, underemployed, and devoid of opportunities in keeping with our historic (and "exceptional") aspirations.
Get George Tyler's book and read the first two chapters. If you can put it down after that, drop us a note here on Goodreads!
April 26, 2014
Hopefully enough will read this book and start making difference.
I would say the author is on the right track in this comparative study of economics in the US and abroad. A whole bunch of this book made perfect sense to me. I haven’t felt it possible for anyone to truly get ahead in the US. We've almost achieved a class structure once more much like the one that existed during the gilded age. Those that are poor will always be poor. I’ve never been well to do myself.
It seems to me that those who do the actual labor aren't valued by their employers. At most of the companies I've worked at you don't even have any kind job security. You're just a commodity that's easily discarded. We're not talking minimum wage jobs either. Sorry to be so negative but I can't help it, this book made me think of all of that again.
Anyway, if you really would like to understand the cause and effect of US economic policy read this book. With clear and concise language the author has used every concept I feel can easily be grasped by the average person.
I would say the author is on the right track in this comparative study of economics in the US and abroad. A whole bunch of this book made perfect sense to me. I haven’t felt it possible for anyone to truly get ahead in the US. We've almost achieved a class structure once more much like the one that existed during the gilded age. Those that are poor will always be poor. I’ve never been well to do myself.
It seems to me that those who do the actual labor aren't valued by their employers. At most of the companies I've worked at you don't even have any kind job security. You're just a commodity that's easily discarded. We're not talking minimum wage jobs either. Sorry to be so negative but I can't help it, this book made me think of all of that again.
Anyway, if you really would like to understand the cause and effect of US economic policy read this book. With clear and concise language the author has used every concept I feel can easily be grasped by the average person.
October 22, 2014
Very interesting account of what went wrong: Ronald Reagan was elected President of the United States. What he did was to create and nurture a policy of greed, selfishness, short-termness,profit - oriented culture. This is a model when the rich get fabulously richer in good and bad times, while the poor become poorer in good times, and have to pay for the rich's debts in bad times. Obscene,unfair,ugly. Makes me feel ashamed of being part of the human race!
February 9, 2014
Although far from an easy read, this book does marvelously what no supporter of Reaganomics can do: uses real, hard data and specific examples to outline the slow developing catastrophe that has been taking place since the 80's. I find myself very passionate about this topic as a millennial whose generation is only beginning to reap the fallout for the mistakes of our forebears.
February 11, 2014
This book traces the poor performace of the American economy to the actions taken in the Reagan administation (anti-government, anti-taxes, anti-regulations, et al). He provides considerable detail to his analysis and well supports it. The results is an America which has the greatest disparity of income since the gilden age of the late 1800's.
February 13, 2015
A very well supported thrashing of the Reagan era economic decisions and how they are still negatively affecting us today. In addition to the criticism, there are viable solutions provided. It's a pretty long read due to the dense content, and it will make you sad, but the suggestions provide a little hope.
September 8, 2015
This is a must read for evaluating the current economic environment
Displaying 1 - 12 of 12 reviews