Goodbye Middle Class Life

A milestone was passed this month: America’s middle class is now a minority of the population.

The story on NPR.

How much income have American workers lost? The details from MarketWatch.

Reaganomics has divided the population into haves and have-nots, and has done so with a vengeance. Initeconomics has that story here.

Joseph Stiglitz on the politics of inequality.

The revolving door between our lawmaking branch and the corporate lobbying industry is part of a vast engine of inequality.

Robert Reich discusses the problem of income and wealth inequality.

From that bastion of communist orthodoxy, MONEY magazine: an examination of the cockeyed economics of the Republican candidates.

Power once lost is hard to regain. Workers’ rights and the prosperity that came after were won after a century of sacrifice and outright battle with corporations’ strong-arm tactics. This is the kind of history they don’t like our kids to learn in school. If we turn the dial back they won’t have to worry; we are on the way back toward child labor instead of universal free education. Get a quick review of labor history here.

Young workers are going to experience their work lives as one long slump. This is exactly how the 1% want it and Republicans have made it happen. This important story in the Atlantic.

Of course not all rich people are against working Americans. (Some Republicans actually like Bernie Sanders.) Working Americans are the consumers who make the economy hum. Can it still hum?

One of the things forcing incomes down is what’s called The Gig Economy. In place of full employment (with benefits) workers learn to come when an employer whistles. The Gig Economy explained by MarketWatch.

And those safeguards and benefits? A relic of past times. ProPublica describes how Tyson Foods has carved up its employees' workers' compensation. And their workers suffer a lot of injuries.

The safety net? The 1% succeeded in persuading the other 99% that Welfare protections made people lazy. Actually it doesn’t. The story about the welfare laziness myth from VOX.

How does the 1% get the rest of us all worked up? They own the media for one thing. And a worried, fearful public is easier for them to hustle. Panic is good for the 1%. Krugman explains why the rich love generalized panic.


Workers used to have certain rights. An expectation they weren’t being spied on being one of them. No longer. Who's behind this? Walmart, of course.

Income inequality tends to show up in key areas: how inequality is perpetuated by housing.

And while the 1% is scooping up money that used to trickle down to working people, they are sharing one thing. They are letting working people have all the tax obligations. Another in a very thick file of similar stories, from the Guardian.

How Is A National Economy Not Like A Household Budget?

Krugman is especially good today. He makes some crucial points, one in particular, that most Americans don't understand, and that the conservative power structure, the banks, the 1%, are determined Americans never understand:

"Let’s start with what may be the most crucial thing to understand: the economy is not like an individual family. Families earn what they can, and spend as much as they think prudent; spending and earning opportunities are two different things. In the economy as a whole, however, income and spending are interdependent: my spending is your income, and your spending is my income. If both of us slash spending at the same time, both of our incomes will fall too."

The Austerity mantra tells us that nobody should spend more than they have in their pocket right now. No homeowners, no car owners, no college for you.

Unless you are a member of the 1% who have accumulated all of America's earning power over the past 30 years.

What income and savings ordinary working and formerly middle class consumers used to spend now belongs to the very rich and adds to the leverage that the 1% has to manipulate the economy.

The 1% also uses this leverage to manipulate Congress to ease their taxes and increase ours, to get our tax dollars to bail out the big banks but not help the homeowners who were wrongfully foreclosed, to get government to protect corporate earnings and CEO pay from taxes but cover any losses they might suffer through their own risky behavior.

The concentration of wealth also buys a lot of media, a lot of punditry, a lot of "expert opinion", a lot of public relations that can be used to persuade the mass of Americans that they don't deserve what they used to deserve, that austerity is good for them, that Americans should settle for less and quit grumbling.

Austerity policies take trillions out of the middle class consumer economy and put them into the well-stuffed mattresses of the 1%.

To what purpose? The rich can afford to play a long game. (Call it a long con if you like.) Their goal is to suppress working incomes to their lowest possible degree. They own for a living; they see working incomes as an evil. They have been suppressing working incomes for the past 30 years. What will eventually happen is the U.S. economy will begin to resemble a third world country, with large slums full of workers desperate enough to work for pennies and small gated enclaves of very wealthy people and their bodyguards.

Interestingly, the Austerity preachers give us Greece as an example of what happens if a country doesn't act according to the wishes of the very rich. But Greece is an example of the opposite. The Greek economy fell apart because its extremely wealthy stopped paying taxes and the consequences (unwise austerity policies) were forced upon the working population. But economies are made up of people who work and spend money, not just people who own for a living, who are rich for a living and do nothing productive. Why are the latter group made immune to taxes? What happens when trillions are taken out of a nation's economy and put tax-free in offshore banks? What happens is a Greek style collapse.

Un-American Business

All the productivity gains of the past thirty years have been paid upwards, but, hell, that's what productivity gains do or they cease to exist.

Because "increased productivity" is another way of saying workers are working longer/harder/faster for the same or less money. (Or have been replaced by machines.)

That Americans don't understand this shows how good their media are at lying to them, disinforming them, misinforming them, how good the propaganda is. When workers applaud productivity gains they are applauding the enrichment of someone else.

American business used to honor three loyalties: to the customer, to the employees, and finally, when the other two were satisfied, to shareholders, themselves. The first two loyalties have been degraded by a devotion to profit and only profit. Because profit boosts share value and share value boosts bonuses linked to share value. Profits have become God. Because obligations to customers and employees (in a societal sense the same thing) subtract from profit they have become the great enemies of American business.

Praise of the noble employee is lip service; the nobler he/she is the less he/she will work for. (You know how sacred such things as pension obligations are if you've read Ellen Schultz's book Retirement Heist.)

Today's treasured customer is thought of in predatory terms. "New and Improved" usually means they've put more air in the cereal or made the hardware flimsier or the software buggier. A key economic shift occurred when insurance companies ceased to think of themselves as insurers of people and began thinking of themselves as raisers of capital.

The problem is capital has nowhere to go if the customer hasn't got enough income to spend on goods and services. And the customer is the employee. In the past decade American business has shifted its focus from fulfilling needs and wants to exploiting vulnerabilities and shortages and fears. We live in a predatory economy. Next stop? Kleptocracy.

High and Low

Why is our economy so miserable right now? Americans work harder, longer, for less money. Where have the fruits of increased productivity gone? Look up.

As this article in the Guardian reports, CEOs are getting paid big money. It's even bigger when they fire more people (and pay less––or nothing––in taxes.)

Which may explain what's happening to the people in the middle. Middle class workers are becoming extinct. How do we know? Corporate planners are no longer planning for the middle class consumer. New products are aimed at the rich and the poor. High and low. The Guardian has noted this trend, as has the Wall Street Journal.

The middle class is a shrinking market, and it's shrinking because of policies pushed by business and their political allies. For the past twenty years companies have been offshoring jobs––helped by "conservatives" in Washington. For thirty years they've been killing unions. Corporations with cash are buying out competitors and firing their workforce. It's a downward spiral. What's strange is the way millions of American workers are collaborating with their own degradation. And how is it good for business for consumers to have less money to spend?

We are becoming Mexico, Columbia, Nigeria. We are becoming a "Banana Republic", thanks mostly to Banana Republicans. And it isn't the store. It's much less pleasant.

Look at Rick Perry's Texas. The job growth he's touting has a worrisome pattern. The Guardian has a story today on the nature of those new jobs. They pay poverty wages.

The other jobs Rick Perry "created" in Texas, the ones paying a decent livable wage, are government jobs, the kind of jobs Republicans normally hate.

The Late Great Middle Class

For the past generation the Middle Class has been stuck or declining while tip top incomes and accumulated wealth have grown enormously. Taxes that previous Republicans thought fair have been labeled "Communist" and "class warfare".

Taxing the rich isn't Communist. Nor is it Communist to pay working people decently; it's practical. Better paid employees pay the taxes that build the roads but they also make better consumers, which makes a stronger economy. A topheavy economy, like the one the Republicans have built, is unstable and more likely to collapse. Here is an excellent report from the BBC website.

Business insiders are noticing what's happening to the middle class, and they're worried even if the very rich don't care. They know you can't run an economy on jewelry and yacht purchases.

As noted in The Economist (hardly a leftist magazine), this ongoing recession, caused by the recklessness of the largest investors and financial institutions, is causing the impoverishment of the middle class, but is also discarding an entire generation of young people. New graduates from college may never gain their footing, careerwise and incomewise.

And there's this, from Forbes, on Rick Perry's odd rant that the middle class doesn't pay its share of taxes.

It isn't only the "liberal" media that's acknowledging how our tax structure tilts to benefit the upper classes. (And how it doesn't create jobs.) Responsible conservative journals are writing about it too. Our economy is unfairly rigged. Besides being unfair, it's also less productive and impractical.

Middle Class Fear is the GOP's Best Weapon

Middle class worry has worked very effectively for the Tories in the UK, as this piece from the Guardian explains. In England, David Cameron, the Conservative leader who has been sacrificing programs for the working and middle class in order to protect the perks and benefits of the super-rich, is privately glad riots have broken out in London and Manchester. The violence takes his corrupt bargain with Rupert Murdoch, tabloid baron and owner of FoxNews and the Wall Street Journal, out of the news. And it also gins up the worries of an already worried middle and working class, people who feel insecure about their jobs are more pliable when violence threatens everything they've earned

Meanwhile, in this country, Republicans are delivering exactly the economy they want, as this article from Alternet.org explains. Stagnant, insecure, fragile, panicky. They love it. Fearful people are more obedient and more easily fooled. People working their brains out trying to stay even aren't as likely to ask hard questions. They are more likely to watch the propaganda programming on FoxNews that juices their fears and directs them not at the causes but at each other.

I've been pushing the word "HOARDING" as it pertains to the trillions corporations and super rich investors are sitting on. Is it any different than hoarding food in a famine or water in a drought? I'm glad to see the word is being properly applied.

Another article, by a professor at UC Santa Cruz, with useful charts and graphs, explains the poisonous asymmetry in the American economy. Imbalance causes instability. On a fundamental level, worried workers make poor consumers. What ought to worry Main Street is that the Big Boys don't care much about America. Their toast is buttered by growing prosperity in other countries. How patriotic is that?

The Day the Middle Class Died

Today's must-read is from Michael Moore. Sometimes he's a bit annoying. Sometimes he's a blowhard. Sometimes he goes too far (endorsing Nader over Gore). Sometimes he's right. He's right about this.

Talking About the Late Great Middle Class

Here are some links to a few excellent talks about what's happening to the American middle class. America is oddly oblivious, perhaps because the people who deliver our news aren't middle class and are therefore insulated.

Krugman discusses the great prosperity of America's postwar years, and how it came apart.

Another Nobel economist, Joseph Stiglitz, explains what's happened and is still happening to the great American middle class.

The Collapse of the Middle Class, a talk by Elizabeth Warren

How did American workers keep heads above water after Reaganomics became our national religion? Working two jobs, working longer, borrowing, not going to the doctor.

If you haven't seen it before, Robert Reich explains the plight of the middle class in two minutes.

The Two Income Trap, with professor (and future senator?) Elizabeth Warren

http://www.youtube.com/watch?v=8GHg3GAeQ1Y&feature=related

http://www.youtube.com/watch?v=uB7jdjsFErM&feature=share

http://www.youtube.com/watch?v=czKWF0lGikg&feature=related

http://www.youtube.com/watch?v=9twENPYkdcI&feature=related

Springtime for Millionaires

From Mother Jones, and from many non-partisan sources, a lot of useful visuals and diagrams describing what has happened to the middle class. Who stole our prosperity? Guess.

The best way to eliminate the deficit would be to pay all Americans better instead of restricting prosperity to the top one percent. This would make us all better taxpayers, better consumers. We would all feel more secure.

In the past forty years, since Reagan declared "morning in America", only the very few at the top of the income graph have seen an increase in income against the rising cost of living. To borrow a phrase from a popular musical, it was Springtime for Millionaires when Reagan began the reign of Reaganomics. It ended the broad prosperity begun by FDR and continued by Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford and Carter. Reaganomics stole from the many to enrich the few. Robin Hood in reverse. So why do people revere him?

What the Middle Class Loses the Upper Class Keeps

Today's must-read is a New York Times article about how the richest bankers and corporate heads are paying themselves better in this recession than they earned before they helped tank the economy and we bailed them out.

Also, Mother Jones reports on how American workers work harder and longer for less money than they earned a generation ago. Not a good thing, unless you own instead of working for a living.

The Wall Street Journal, Rupert Murdoch's Republican Party newspaper, is reporting that workers who once could expect to earn more and have greater job security as they gained experience, skills and efficiency, now earn less and have less job security as they get past 40. The opposite of how it worked in Eisenhower's America.

Note that the WSJ's solution is to pour more of your earnings into Wall Street (boosting stock prices and executive bonuses and options, while skimping on the middle class "good life"). Was this negative trend part of a long range Republican plan? I don't think they achieved this by accident.

American workers have always been proud of producing more goods and services and doing so better and quicker and therefore earning more for it. It's enabled them to join the middle class, own homes, send children to college and retire comfortably. It also enabled them to be better consumers, which made a lot of businesses more prosperous. A broad prosperity is a more durable prosperity. This was the model until 1980, when the Reagan Revolution changed the formula.

The model since 1980 has been for workers to produce more goods and services better and quicker... but earn the same, or often less, for doing so. Since 1980 the prosperity of people who work and produce has not been considered prosperity at all, it's been relabeled a negative, a debit, a burden, a liability, a cost.

The wages of average workers have remained flat or declined since 1980. This was part of the Reagan Revolution too, but something a lot of people didn't realize they were voting for. This "doing down" has crossed over into the public sphere as well, where the temporary upper bracket tax cuts are sacred but the middle and working class tax cuts and benefits are negotiable and easily taken away, and now, as a finishing touch, middle class public employees are losing their rights and their job security. The job security in the public sector was something that allowed government to pay lower wages, but now security is gone too. Ironically, the savings are being shared out very narrowly to the very rich, with burdens shifted simultaneously onto the middle class.

Prosperity and security have become a narrow right, an upper class right, as was the case before the Great Depression. The real "gift" of Reaganomics is a new aristocracy and a growing servant class. The shift we are seeing is "validated" by Republican mathematics, which puts middle class prosperity in the cost column and upper class prosperity in the profit column, one bad and to be avoided, the other a sacred good to be protected. We need to change the math. It isn't fuzzy, as one Republican once said; it's actually crystal clear, but it's wrong, it's unfairly weighted, its values are skewed toward the values we revolted against in 1776. Ironically, the Republicans are using pictures from the 1950s, the broad prosperity they are destroying, to advertise the new narrower economics that benefits only their richest clients. Un-rich Republicans will receive their reward in heaven, supposedly.

America Isn't Broke, Just the Middle Class

AMERICA ISN'T BROKE. So there's no reason to kill Social Security or Medicare.

We CAN and should repair our infrastructure. It would put people to work, which would pay for groceries and clothes and rent and mortgages and healthcare and pay taxes.

Our middle class is dying because their incomes have been starved for the past thirty years, as all the productivity and increased profitability was funneled into the pockets of the people at the top.

Whether we allow the middle class to die, and the American economy with it, depends on choices we make. It's a perverse strategy to tax the people who are out of money and leave the rich alone.

Ask Americans and you won't find many who know this. You will find millions who feel strained, insecure, frightened, pessimistic about the future, but you won't find many who know why this is or what to do about it.

It is easy to get frightened people to do as they're told. First you make people less secure, then you drop the safety net. It brings a lot of people into line very quickly. Lies are essential.

Backed up by 24 hour talking heads repeating the old joke that tax cuts and endless pay raises to rich people will feed and clothe and house the rest of us. That strategy is what got us here. Ten years of tax cuts to the rich bankrupted the country.

Some are happy with the failed GOP strategy and Republicans in the House of Representatives are comfortably in the pocket of a rich minority who pay for their seats.

People need to start shouting back. Call the radio programs that push the falsehoods. Complain to the advertisers who sponsor the lies. Applaud the media sources that tell the truth. Write your congressperson. Give the Democrats some courage. And vote the GOP out.

Be clever. Surprise people. Talk back. Like this.

The Premeditated Murder of the American Middle Class

This headline isn't from a lefty blogger, it's from Investors' Business Daily:

10-Year Real Wage Gains Worse Than During Depression.

Did you wonder how the American economy went bad? Look no further. The vast majority of Americans are nervous, underpaid, and either out of work or working harder than ever. This does not make for a robust consumer economy. When you starve the majority of incomes it has consequences.

The middle class isn't just done, it's been ruled irrelevant. So says Advertising Age. With flat incomes and rising necessary expenses on fuel, housing, education, healthcare and food, their disposable incomes have disappeared. Without money to spend you don't matter anymore.

The engine of the great American prosperity 1945-1975 was a prosperous working and middle class. The two were practically the same thing. Reaganomics ended that by flattening middle class incomes, killing unions and shifting the tax burden off the rich and onto the middle class taxpayer. Reagan accomplished this with the willing help of millions of American workers.

Today's GOP is outdoing Reagan, though, mounting an all-out assault on the American middle class, while protecting the very small, very rich upper class. A lot of Americans still vote Republican out of habit, out of team spirit, out of obedience to the dog whistle.

The middle class Republican has to swallow a lot of outright lies. Self deception is something you learn to do, and if you practice for a long time you get good at it. Being obedient helps. This GOP ability to lie and get away with it is remarkable enough it's written about in places like Forbes.

Who is really paying taxes? We (the working and middle classes) are. They (the rich) are not. Yet the sacredness of upper class tax cuts remains the keystone of Republican politics.

The reason for the current deficit? Reducing taxes on those who've taken all the income increases over the past generation and a half, while increasing taxes on those whose incomes have stalled–––on most Americans. The Republican policy is to protect and help the few who need no help or protection while leaving the less fortunate, most of us, unprotected and unhelped. Sometimes it's worthwhile to listen to a Nobel economist.

The debt, run up by Bush and compounded by the collapse Bush and his Republican policies precipitated, makes the current situation worse. It takes chutzpah to make debt an issue when your own party created it. If you like massive debt––Vote Republican.