20 September 2013

The disappearing "middle class"

Excerpts from an essay at Salon:
When I was growing up, it was assumed that America’s shared prosperity was the natural endpoint of our economy’s development, that capitalism had produced the workers paradise to which Communism unsuccessfully aspired. Now, with the perspective of 40 years, it’s obvious that the nonstop economic expansion that lasted from the end of World War II to the Arab oil embargo of 1973 was a historical fluke, made possible by the fact that the United States was the only country to emerge from that war with its industrial
capacity intact. Unfortunately, the middle class – especially the blue-collar middle class – is also starting to look like a fluke, an interlude between Gilded Ages that more closely reflects the way most societies structure themselves economically. For the majority of human history – and in the majority of countries today – there have been only two classes: aristocracy and peasantry. It’s an order in which the many toil for subsistence wages to provide luxuries for the few. Twentieth century America temporarily escaped this stratification, but now, as statistics on economic inequality demonstrate, we’re slipping back in that direction. Between 1970 and today, the share of the nation’s income that went to the middle class – households earning two-thirds to double the national median – fell from 62 percent to 45 percent. Last year, the wealthiest 1 percent took in 19 percent of America’s income – their highest share since 1928.

Capitalism has been doing exactly what it was designed to do: concentrating wealth in the ownership class, while providing the mass of workers with just enough wages to feed, house and clothe themselves.

The United States will never again be as wealthy as it was in the 1950s and ’60s. Never again will 18-year-olds graduate directly from high school to jobs that pay well enough to buy a house and support a family.
More at the link.

30 comments:

  1. Great read, thanks for sharing.

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  2. Capitalism has been doing exactly what it was designed to do: concentrating wealth in the ownership class, while providing the mass of workers with just enough wages to feed, house and clothe themselves.

    No, that's socialism. Capitalism isn't designed to do anything. It's spontaneous order.

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    Replies
    1. I agree. It's trendy among the Occupy Generation to demean those things (like capitalism) which allow them to have their iPhones, $6 lattes and such. Back in the day it was called ingratitude, now it's just stupid.

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    2. "Capitalism isn't designed to do anything."

      Denial is such a beautiful thing!

      Yes, capitalism- it's just "the natural order of things." Hhmmmm... where did I hear that before- oh yes, it was commonplace among practitioners of slavery.

      http://www.youtube.com/watch?v=QPKKQnijnsM#t=17
      http://www.democracynow.org/2012/6/6/joseph_stiglitz_on_the_price_of
      http://www.youtube.com/watch?v=1wlI9sQPdyQ

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  3. The issue with the disappearing middle class is greed. instead of being willing to raise prices and pay workers, companies have decided that it is better to move the jobs to third world or developing nations. This caused our rural areas to fall into incredible decline. Take a trip around to a few towns that have a few thousand people in them and look at how bad off they are. Nothing like the bustle of the early 1970's.

    By not paying middle class workers and moving their jobs out of the country, guess what? The middle class not longer has work. Without work, they move from middle class to a lower class, often the poverty class.

    This is the inevitable outcome of the Job exodus of the late 1970's into the 1980's.

    So who is to blame? Greedy people. Shareholders, executives, middle management, all those who decided that bigger profits were better than paying United States workers.

    So what do we do about it? Get new leaders in government and promote more interest in the United States as a job producing nation. Fix the infrastructure and create jobs by fixing what we have ignored for the past forty years. Promote rural areas and move jobs from the overcrowded urban areas into ares where people really need the work.

    TLDR verison; quit being greedy and put the jobs back where they were in the middle of the last century.

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    Replies
    1. So who is to blame? Greedy people. Shareholders, executives, middle management, all those who decided that bigger profits were better than paying United States workers.

      Seriously? How about the generation who doesn't see a need to work? We have become a nation of "I got mine, so screw you." There are producers and there are takers; which are you?

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    2. Hello Steve,
      I am not a U.S. American, so I of course do not know the situation your country is in. Nevertheless I have to wonder how you believe those "takers" are to blame - and for what. Where I come frome (i.e. Germany) there is of course also talk about the "Spaßgesellschaft" (hedonist society)- the young people who don´t believe in honest work but only mind having their fun. But while many of societies problems - alcoholism in young people, lack of education - is blamed on that factor, I don´t see anyone blaming them for the problems in the economy (which are not that apparent here anyway, despite the talk). Sooner or later these people (if they really exist) do have to work to finance their way of living. Other candidates for "takers" are of course people who receive money as per unemployment benefits or else. But while there might be a small percentage of people that really forfeit going to work for those benefits, most people who are out of work seem to be in that situation because of the economy, not the other way around.
      To make my allegiances clear: I am not a very political person, but for utilitarist reasons I believe a strengthening of the middle class through what measure what so ever to be highly beneficial (this has got to to with my understanding of marginal utility). For this and other reasons I would probably regarded as a leftist or bloody socialist by many people, though I would seek to refute those claims.

      Despite that I do not want to ridicule your views or produce one of those "terrible arguments on the internet". I would hope very strongly for you to elaborate on your understanding of those "takers", the situation of your country and also maybe the nature of Capitalism on the whole.

      Yours sincerely, D. H.

      P.S.: I tend to use overcomplicated grammar and other bad English because I am not a native speaker - sorry for that.

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    3. Unfortunately nothing will change until we have campaign finance reform. Right now, it seems to me, we have a Congress that's bought and paid for by special interests--bankers, oil men, big pharma, or, in short, the moneyed class. I'll mention again that I used to be a Republican, but became so appalled by what the Republican Party was turning into, I became a Democrat. I think that if Abraham Lincoln and Teddy Roosevelt were still around, they would not recognize the Republican Party.

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    4. "How about the generation who doesn't see a need to work?"

      There's only 1 job for every 3 unemployed people trying to get one. Save the millennial hate for the boomers. The actual bums who ruined the country.



      http://www.bls.gov/news.release/jolts.htm

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    5. So who is to blame? Greedy people. Shareholders, executives, middle management, all those who decided that bigger profits were better than paying United States workers.

      Greed is part of human nature. Any economic plan that rejects this premise is doomed to failure.

      Do you think that workers aren't greedy? Do you think that poor people aren't greedy? Everyone acts out of self-interest.

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    6. @John Farrier,
      Wow, that was eye opening.....

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    7. JF- Wow, Common ground!

      Yes, everyone is greedy- the human condition! Which is why we need regulation, regulations that prohibit predatory socio/economic systems that allow unfettered greed to run amuck at the cost of human lives.

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    8. Stan B. -- if you enforce property rights, you will prevent "unfettered greed" from running amok. If, on the other hand, your regulations consist of taking money from person A and giving it to person B, then you create a system that rewards theft and other forms of coercion (i.e. socialism).

      Minnesotastan -- excellent! Please sign over the entirety of your next paycheck to the charity of your choice. And when your employer next offers you a raise, politely decline.

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    9. @ John -

      "Please sign over the entirety of your next paycheck to the charity of your choice. And when your employer next offers you a raise, politely decline."

      First of all, I'm unemployed and don't get any paychecks. Secondly, you know that greed and charity are not opposites. Greed is defined by everyone as an excessive desire for wealth. I don't have that.

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    10. John Farrier- "... a system that rewards theft and other forms of coercion(i.e. socialism)"

      And you no doubt say that with a straight face- while describing exactly what the banks have wrought this century! Fortunately, I didn't have a drink in hand or it would have been one massive spit take on my monitor.

      The first thing we need to do is bring back Glass-Steagall, enacted in '33 after the banks last went wild. Hell of a coincidence that the banks once again imploded soon as it was repealed and predatory capitalism in all its unregulated glory was encouraged to run rampant...

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    11. Steve -

      You don't see the stockholders as "takers"? What do they actually DO to earn those dividends?
      You don't see people who actually work with their hands producing things as "producers"?

      You have succumbed to 1984 think, where black is white,and war is peace.

      My goodness have you swallowed the free market fantasy, hook line and sinker. The investment class - the takers - have been looting the country, and now are aiming for looting the world, and you think they are the producers. Wow. Where did you learn your logic - from the back of a Cheerios box?

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    12. Minnesotastan--I'm sorry to hear that you're unemployed. I hope that you are able to overcome this time of troubles.

      What is excessive? People act in their own self-interest. This is natural. They try to earn more money.

      The problem comes when they try, instead of earning money, to take it. They vote in governments that promise to steal from other citizens and give that stolen property to them. It's called a redistribution of wealth.

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    13. "If, on the other hand, your regulations consist of taking money from person A and giving it to person B, then you create a system that rewards theft and other forms of coercion (i.e. socialism)."

      You're describing neoliberalism and capitalism as practiced by the U.S.A.
      The most successful countries in the world keep very strong checks on capitalism and the free market. Welcome to the real world, the one measured in actual achievements and success rather than Austrian fantasies and libertarian fascism.

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  4. Thank you, David. I found an interesting take on the relative wealth of current [US] society. I would think it's similar to what you would find in Europe. People seem content with their current status yet mock the things which created it.

    Today's Young Americans Are the Luckiest Generation in History

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    1. So reading that link, minimum wage was $1.60, which the author says is $8.43 in today's dollars. He then gives you a table of things you could buy with a summer's earnings at $1.60.

      Now I'm not that smart, but it seems to me that an soles to apples comparison would be in today's dollars.

      8.43/1.60 = 5.26875

      5.26875 * 768 = 4046.4

      4046.4 > 3840, which is the point of the original article.

      Yes, technology is better, and consumer electronics are cheaper, but inflation isn't pegged to consumer electronics alone. Health care costs for instance, have quadrupled:

      http://www.forbes.com/sites/chrisconover/2012/12/22/the-cost-of-health-care-1958-vs-2012/

      You could argue that the health care industry is one where Adam Smith's invisible hand can't operate because of limited to nonexistent consumer information, but I'd argue that the free market rewards those who intentionally limit consumer information, and so is extremely susceptible to people with power who can game the system. The health care system is actually representative of unfettered capitalism.

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    2. From your link, a list of what a summer's minimum wage salary would buy for a college student:

      Items Purchased in 1973 with Summer Earnings @ $1.60 Min. Wage = $768
      Power Return Electric Typewriter $193
      Pocket-Size Electronic Calculator $99
      12-Inch Portable Color TV $190
      Stereo FM/AM Radio-Tape Player $188
      5.4-cubic foot Compact Refrigerator $100
      TOTAL $770

      The typewriter would have been a graduation present from high school. The calculator would not have been standard for almost any college student. This was back in the days when we were still using slide rules and tables in the back of textbooks to get our answers. Calculators were for working professionals, and even most of them only had adding machines. A color TV? In 1973, in a college dorm room? Most homes didn't have color TV in those days. A radio/tape deck would either be a gift, a hand-me-down, or nonexistent. The average college student at that time would not spend that kind of money for such a thing. And buying a refrigerator for a college dorm in 1973? What planet does that writer live on? A handful of rooms in a dorm 10 years later would RENT a mini-fridge. Again, very rare, and certainly not something a student PURCHASED.

      TL;DR..the article is a lie from start to finish, made to trash today's youth for not being quiet about the society they're inheriting.

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  5. Oh my God, this is going to be good.

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  6. I would take exception to the idea that there have almost always been only two classes. There hasn't always been a huge middle class but through most of history there has been a merchant class as well as a wide range of skilled artisans who essentially lived a middle class lifestyle.

    But, yeah, as to today, the main problem has been the greed of the 1 percent. Once companies started to be run for the good of the company's investors, rather than for for a company's long-term health, or for its employees, or for its customers, bad corporate decisions started to be made that have hurt our economy and our culture (including off-shoring jobs, which pushed more people into unemployment and even welfare.)

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  7. This is the first time I've ever seen anyone besides me point out that the USA was Numero Uno after WWII because the enemy couldn't bomb our ball bearing factories - meaning our industrial strength was intact.

    It only took the rest of the world about 30 years to begin to catch up with us - which is why Nixon felt he had to take us off the gold standard in August, 1971. He sneaked that one past everyone, because he did it in the same speech in which he established price controls. Everyone was so focused on the price controls that they gave him a pass on taking us off the gold standard.

    As to the middle class in the post-war era, it was actually an artifact of the New Deal - specifically the Wagner Act, which guaranteed the right to collective bargaining. It was collective bargaining - yes, UNIONS - which pulled the income of Americans upward. There was essentially no appreciable middle class before the Wagner Act. As part of the New Deal, the Republicans on behalf of Capital aimed to do away with it, just like they are trying since 2005 to eliminate the last New Deal program still alive - Social Security. it has taken them about 80 years to get down to the last New Deal program, but they are still trying. Unless we fight them, it will be gone, too, before long.

    After Reagan targeted the unions (remember PATCO?), the bashing of unions became the "truth" in America, allowing cover for the dismantling of the middle class. The union bashing was the mechanism for "divide and conquer."

    Which is where we are now. Everyone has been brainwashed to now think that collective bargaining - the ONLY means by which workers ever had an equal say in things - is a bad thing, because the Right labels it "socialist."

    Folks, collective bargaining was the ONE thing that created the greatest wealth by a nation in the history of mankind. Without collective bargaining we are all at the mercy of the corporations.

    "United we stand, divided we fall." When was the last time you heard that? Our kids probably never have heard it.

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  8. Elagie -

    "There hasn't always been a huge middle class but through most of history there has been a merchant class as well as a wide range of skilled artisans who essentially lived a middle class lifestyle."

    You seem to know little about what you wrote here. The merchants were not middle class, and there were very few of them. They were wealthy.

    Your "skilled artisans" were members of the craft guilds, who jealously guarded their craft secrets, in order to keep their special status and incomes. They purposely kept their numbers LOW, in order to keep prices high. They also stood in the way of technological progress, because they fought to keep everything secret, and this resulted in stifling innovation.

    You should read "The Wealth of Nations" by Adam Smith, published in 1776.

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  9. It's important to remember the difference between capitalism and plain market economy. The latter made the so called middle class possible.

    Capitalism is a market economy taken hostage by lobbyists, interests and politicians. So when your favorite political party hands out big subsidies to their current pet industries go blame capitalism. But if your alternative is even more political influence you will see the middle class disappear even faster...

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  10. Middle class had been established in middle ages in Europe - so, I wouldnt say it was nonexistent through majority of human history...You might want to check "Bourgeoisie" in wikipedia, or whatever source You find credible.

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  11. “You can’t grow an economy, grow a middle class, without making things, producing stuff,” says Mike Stout, a steelworker.

    Ask China about that. And Malaysia, Japan, Vietnam, Mexico, etc.

    The "Service Economy" sales pitch of the 1990s was a diversion tactic to keep us from noticing that the real economy - MAKING THINGS - was being handed to the Chinese for free.

    Also, I reiterate that people read up on the Wagner Act, from the New Deal. Without it there were no unions to speak of. Without it there was no post-WWII boom.

    And without it being used all the time, there IS no middle class to speak of - only the odd merchant here and there who rises above the rabble.

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