Free Who Stole the American Dream? by Hedrick Smith

its workers with corporate welfare—steady pay raises plus health benefits and guaranteed retirement pay.
    Finally, Wilson tired of industrial warfare and periodic disruptions of GM’s output, and he offered Reuther a grand bargain: shared prosperity for workers in return for labor peace. No more wildcat strikes unpredictably shutting down plants. Reuther seized the moment. The two men reached a monumentally important agreement. GM agreed to give its autoworkers annual pay raises that would increase their living standard roughly 20 percent over five years. It agreed to pay half the cost of worker health insurance. And it promised to provide its longest-term employees with an unprecedented pension of $125 a month. The union eagerly accepted the deal and promised a strike-free contract period. GM got peace on the assembly lines. Hence the name “Treaty of Detroit.”
    That contract had sweeping impact all across the nation’s economy. Its escalator provisions set in motion a steadily rising standard of living for the broad American middle class. Because the deal had the imprimatur of General Motors, it had a powerful ripple effect. It was soon matched by other carmakers and then by major companies in other industries. The pattern set in key industries, such as autos and steel, became a model for the rest of big business, even for non-unionized workers. By the early 1960s, as
New York Times
economics writer Steven Greenhouse reported, “more than half the union contracts in the nation had copycat provisions calling for annualimprovement factors and cost-of-living adjustments…. With labor unions representing one in three workers and threatening to unionize millions more, many nonunion companies adopted a me-too approach, providing cost-of-living adjustments and annual improvement factors, both to keep their workers happy and to keep them from unionizing.”
Nixon to Khrushchev: The United States Is a “Classless Society”
    In Washington, a bipartisan political consensus gave its blessing to sharing America’s wealth democratically and to linking corporate profits to the American Dream of steady work, rising pay, and generous benefits.
    In 1959, at the heart of the Cold War, Richard Nixon, as vice president under Dwight Eisenhower, bragged about America’s shared prosperity in his “kitchen debate” with Soviet premier Nikita Khrushchev at the U.S. exhibition in Moscow. Nixon rattled off to his Communist adversary the bounty enjoyed by the American middle class—three-fourths of America’s 44 million families owned their own homes, and collectively they owned 56 million cars, 50 million television sets, and 143 million radios. In a classic rejoinder mocking Soviet claims of a classless Communist society, Nixon taunted Khrushchev: “The United States comes closest to the ideal of prosperity for all in a classless society.”
    Nixon was right. To a far greater degree than most Americans today realize, our economic boom in the three decades after World War II delivered solid middle-class prosperity to a large majority of Americans.
    Of course, the economy had plenty of problems. There were ups and downs in the business cycle, periodic surges of unemployment, and too much poverty. People lived in smaller homes than today, with fewer appliances and gadgets. Families had one car, not two.And despite the model of the Treaty of Detroit, there were strikes, occasional violence, and stormy labor-management confrontations.
    But the prevailing pattern was one of rising middle-class living standards. Ordinary Americans felt they were getting their fair share of the country’s economic growth, and the numbers confirmed that. The hourly wage of the average worker essentially kept pace with rising productivity. That hourly wage doubled from 1947 to 1973. Those solid earnings and job security gave average workers enough money to spend and, thus, the ability to power another round of economic growth.
“The Great Compression”
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