Compared to these folks, the big company engineers seem blissfully ignorant. Most don’t spend the time writing blogs, going out after work to talk to business contacts, and most certainly don’t spend much time thinking about the next big thing. As a result, not only are they unaware of what’s going on, they don’t have a marketable brand. Outside of their small circle of colleagues, no one else knows that they are competent. What’s more, their type of competence is not something that can be plucked out of a large company and used to run an independent company. The good thing is that if you know what makes superstars is not innate you can learn to think like one.

Economists have spent a lot of time studying various factors in increasing income inequality, such as technology, trade, and immigration. The usual assessment is that trade and immigration both have a modest effect on inequality, but that technology is the main driver. Paul Krugman:

The pervasiveness of the shift toward highly skilled labor suggests that the explanation for growing inequality lies not in international trade, which affects labor demand by changing the mix of industries, but in technological changes that have reduced the demand for the worst-paid workers in all industries. That phenomenon is poorly understood, but two observations can be made. First, it seems clear that modern information technology has the effect predicted long ago by Kurt Vonnegut in his 1952 novel Player Piano: It tends to eliminate routine jobs, without (so far) an equal impact on the more complex ones. Numerically controlled machine tools allow manufacturing firms to lay off lathe operators; they do not replace engineers. Personal computers allow companies to get by with fewer typists; they have not yet helped them get by with fewer vice presidents.

Second, the combination of information and computer technology has what Chicago economist Sherwin Rosen, in a prophetic 1981 paper, called the “superstar” effect: In many fields modern technology appears to change the nature of competition into a sort of winner-take-all tournament, in which most of the rewards go to a few exceptionally talented or lucky people. A seemingly trivial example is the performing arts, where the displacement of live performance by recordings and broadcasting has vastly increased the disparity in fortunes between a handful of Madonnas and a multitude of wannabees. It is arguable that similar factors have widened income disparities in many fields. What is certainly true is that the growth of inequality in the United States has a striking “fractal” quality: The pattern of widening gaps between education levels and professions is mirrored in the pattern of increased inequality of earnings within professions. Lawyers make much more in comparison with janitors than they did 15 years ago; but the best-paid lawyers also make much more in comparison with the average lawyer.

Can technological progress really hurt large numbers of people? Yes, it can and it has. Indeed, historians tell us that the original Industrial Revolution in Great Britain was associated at first with a decline in the real wages of most workers, and that the wider benefits of technological progress could not be seen until about 1840, a half-century after large-scale factory production began. Given that experience, we should not find it incredible that the first two decades of the Information Revolution have seen income fall for many workers.

When these same individuals lose their job as a manager at a granite company, then their $450k house, then their Nissan Titan, then their townhouse, I realize that their personal economy was built like a financial deck of cards. Personal debt has skyrocketed with consumers spending unnecessarily like teenagers drinking at a keg party.

The under-reported story in this Subprime mortgage bail out is the bartender buying the $700,000 house. Living in Florida bartenders can make “good” money but I don’t think three quarters of a million dollars money. I wonder out of the 2million subprime mortgages, how many of those were people spending beyond their means?

These are personal anecdotal evidence I have come across and can only surmise the same is occurring throughout flyover country as well.

Phil, you’re just not looking. And you might want to redefine “average worker”– instead of carpenters (who are skilled, way-above-average workers, drunk or not) try cashiers at a WalMart (the largest employer in America).

And “best years to be an american” is an incredibly subjective yardstick– esp one to ask a seen-it-all (and maybe a little depressed) 70 y.o. living in/near Cambridge.

The existence of unprecedented levels of consumer debt and parental gifts make it difficult to see how people’s earnings really are. It is difficult as a young person from middle-class Flyover Country to see one’s peers living in New York and Boston, only to realize that many are only able to do so because of parental subsidies.

It seems that immigration raises the cost of housing in the good locations (I think Steve Sailer wrote something about “the dirt gap”).

The things I wonder about are:
* To what degree has the required education increased for similar jobs / earnings / lifestyle? It seems that a masters’ degree is now almost required to be middle-class.

* To what degree has the debt load increased for a middle-class lifestyle?

* Have cost-of-living differentials increased? I mean, can a middle-class person with a bachelor’s degree from a typical state university move from Flyover Country to New York, Boston, San Fransisco, or Los Angeles without parental subsidy and without living in poverty?

I understand the argument that the work we provide to India and China, etc., is still better for them relative to what they would have otherwise. I’m sure it is, and I’m not even touching the moral issue, here. I’m just saying it’s bad for US.

Trade with India and China has let us tap into to some incredibly economically powerful exploitation that has masked the decline of our own labor market, that is on par with the economic benefits of early American slavery. In fact, it is actually cheaper to pay a person in China to make stuff for us than it would be to have actual slaves in America. You couldn’t shelter and feed a person in America for 64 cents an hour. Hell, it costs more to board a cat. I think people would be shocked if they knew what was really going on in China, behind the patina of Western-style capitalism that they put on display to make us feel good about doing business with them. There are numerous reports of outright slavery in the rural areas, and even if Apple doesn’t use slaves, they use people who benefit from it, and that contributes to the depressed prices in China which allow labor to be paid so little and still survive.

This can’t go on forever. There are already signs of rising wages in China, and eventually we’ll have to pay dearly for this illusion of prosperity that you observe. So, I don’t entirely disagree with your thesis, but I’m skeptical that it can *all* be explained by immigration.