Introduction

If the American dream is not dead, then surely it is in intensive care. Consider this. Compensation per hour, adjusted for inflation, grew at a compound rate of about 3 per cent in the twenty-year period between 1948 and 1968. This meant that the family of a typical worker could consume about 3 per cent more each year, year after year. At that rate the standard of living was doubling about once every generation. But a dramatic change took place in the American economy between 1968 and 1973, approximately contiguous with the Vietnam War. In the twelve-year period since 1973, real hourly compensation increased at a rate of about three-tenths of 1 per cent per year. This means that the standard of living of the typical American family is doubling only at a rate of about once every few hundred years!