New at Reason

February 9, 2007

Nick Gillespie ponders "who will stick up for the middle class?"

Comments

|2.9.07 @ 12:18PM|#

Anyone catch Bernanke's testimony yesterday?

Damn leftists.

tros|2.9.07 @ 12:18PM|#

But it's so much easier to SEE the filthy rich these days. Seriously, have we ever had such an intense view of the inane habits of the rich and famous. I know how we can stop all this stupid middle class rhetoric. Why don't we take all the stupid rich people off the public airwaves!

What does reason think about nationalizing basic television networks? They belong to the public, no? Is there any reason these stupid motherfuckers should be allowed to pollute the media with their corrupt bullshit any more?

curbed|2.9.07 @ 12:44PM|#

A historically high 70 percent of Americans own their homes (see table 956).

Is this really a good thing, esp. for the construction industry ? And, come on - they don't own the home, they're in debt to a bank in order to live there.

That wouldn't be happening if the U.S. was fast turning into the Brazil of the North.

Have you seen the M3 data ? Yeah, neither have I because the Fed no longer publishes it. Inflation calculations using Reagan era CPI puts inflationary levels at, what 7 - 8 %. Hunt up the links for yourself, I'm too lazy.

You're also ignoring the neg. savings rate (something like -1.6%) that we've been running for quite a while now, not a sign of a healthy econ.
Given the recent explosion in foreclosures (see HSBC's and New Century's announcements yest.) and ever spiralling debt levels you'd forgive me for thinking that we have traded the middle-class for a form of debt slavery.

I have no problem with the rich being rich and becoming more-so. I just refuse to believe that our current economic situation is actually good.

|2.9.07 @ 12:52PM|#

[Dobbs] ponders daily why it takes so many families two incomes "just to get by."

Because his definition of getting by is to have a nice house and new cars and to eat out frequently; to have 2.5 children, spare income to make up for the as-yet-reneged-upon promise of Social Security and Medicare, and annual vacations to exciting foreign and domestic ports of call. At least that's why my wife and I both work. One of us could easily quit. Then we'd be just getting by. And I still would not be able to muster up the energy to care that others make more than I do or speak a different language.

|2.9.07 @ 1:03PM|#

Your own particular feelings about whether the non-rich have it "good enough," or not, there is something going on.

Even as productivity continues to grow at a healthy 3% annual clip, wages and salaries are stagnant in real terms. In fact, they are now down to their lowest share of GDP in American history, 50.2%. At the same time, CEO pay continues to set records, and the income difference between employees and top brass has grown tenfold in the past 30-40 years.

A rising tide is supposed to lift all boats, and yet it isn't. Something is occuring that is causing the additional wealth produced by a growing economy to be concentrated among fewer and fewer hands.

|2.9.07 @ 1:15PM|#

A rising tide is supposed to lift all boats, and yet it isn't. Something is occuring that is causing the additional wealth produced by a growing economy to be concentrated among fewer and fewer hands.

Maybe, but that is a thin metaphor. No one who understands the different capabilities of people really expects everyone to become wealthier at an even pace. What ultimately matters to me is the somewhat vague concept of standard of living. In my opinion across the spectrum citizens of this country have a higher standard of living than at any time in American history, and have it better than almost all people around the world right this minute. It is about perspective.

|2.9.07 @ 1:19PM|#

I'm sensitive to their plight, but Most poor people choose to be poor. Just as most "middle class" who "need" 2 incomes choose a lifestyle that requires it.

And as for the comment above about people "not really owning their house, but paying a mortgage to the bank"- True. But, I don't know about you but I'd rather pay a mortgage for 15-30 years than pay rent for 50 or 60+.

|2.9.07 @ 1:26PM|#

This is the story of technology driving increased productivity and the real value of mechanizable labor falls commensurately. In the grand scheme of things, that is good. I don't want everyone growing their own food because food is scarce and hard to produce. I'd rather deal with the plight of former farmers who were displaced by plentitude.

Also, I don't know that this is really a problem. All boats are being lifted if you look at how people actually live, which strikes me as the relevant measure.

|2.9.07 @ 1:38PM|#

"No one who understands the different capabilities of people really expects everyone to become wealthier at an even pace."

But productivity among those salaried and waged employees is rising. That makes it difficult to believe they are not keeping up because there has been a real decline in their value.

Jason L,

The replacement of "mechanizeable labor" with machines also results in the growth of a workforce to produce, operate, and maintain those machines. In fact, this increased productivity has always resulted in overall economic growth and the expansion of middle-class wealth. This time it doesn't seem to be, and that is unique.

|2.9.07 @ 1:44PM|#

I dunno, Nick. $13,000 over 35 years doesn't sound like it even keeps pace with inflation. It sounds like the middle class has taken a big dive. Unless you meant that the middle has achieved a $13,000 increase every year, in which case the "middle class" makes $455,000 more than before.

|2.9.07 @ 2:05PM|#

Lamar, I think that $13,000 figure adjusts for inflation already.

|2.9.07 @ 2:11PM|#

Ahh. Adjusting for inflation can be as controversial as the figures themselves.

|2.9.07 @ 2:13PM|#

I hear that. But if these figures are wrong, they are at least uniformly wrong since 1978.

According to the table, they used the CPI-U-RS - "a price index of inflation that incorporates most of the improvements in methodology made to the current CPI-U since 1978 into a single, uniform series. Before 1977 the CPI-U-RS is extrapolated."

|2.9.07 @ 2:21PM|#

last i checked a 20,000$ stereo has only margninally more utility then a 200$ stereo...and usually less reliable...and it is impossible to buy a better ipod then an ipod.

Brad Pitts ex-wifes t-shirt may have costs 400$ but it is only marginally better then a Hanes t-shirt you can get 3 for 10$ at Wallmart....the list goes on to include everything but health care, k-12 education and real estate...the three most heavily regulated industries in the country.

Side note: it does not matter who or what you pay for higher education...if you paid money to get a humanities degree at Georgetown...you are an idiot.

|2.9.07 @ 2:26PM|#

A rising tide is supposed to lift all boats, and yet it isn't. Something is occuring that is causing the additional wealth produced by a growing economy to be concentrated among fewer and fewer hands.

Here is proof positive on my idiots get humanities degrees at Georgetown comment.

|2.9.07 @ 2:26PM|#

Gotcha. Though, given the change in our society from industrial to service-oriented, and the wildly divergent rates of inflation for different sectors, I'm not sure the CPI-I-RS means much, especially if it doesn't factor for the types of inflation that would likely hit the middle or lower middle class. Of course, once you try to be more precise, you end up introducing subjective decisions and it's not longer an unbiased affair. I guess the numbers are good for some purposes, but they seem sloppy to me. I mean, the CPI doesn't include stocks or bonds. How is that supposed to measure the classes?

|2.9.07 @ 2:38PM|#

The replacement of "mechanizeable labor" with machines also results in the growth of a workforce to produce, operate, and maintain those machines. In fact, this increased productivity has always resulted in overall economic growth and the expansion of middle-class wealth. This time it doesn't seem to be, and that is unique.

Still more proof.

|2.9.07 @ 3:15PM|#

Well, if I recall correctly, joe got a degree from George Washington University. But I think one of the Reason staffers once admitted to getting a humanities degree from Georgetown.

|2.9.07 @ 3:25PM|#

The word on the street is that you can pay for a Georgetown education with free trips to horse-sex farms in Washington state. Any truth to this?

|2.9.07 @ 3:38PM|#

Even as productivity continues to grow at a healthy 3% annual clip, wages and salaries are stagnant in real terms.

Umm, benefits, anyone?

And why are we ignoring the increasing wealth of so many in society, via retirement plans and ownership in general? My father's "wages and salaries" have declined to zero, but his income is higher than ever since he retired.

|2.9.07 @ 3:47PM|#

"via retirement plans and ownership in general?"

My point exactly. I don't know if a better measurement system would lend support to the right or left wing arguments or what, but wouldn't it be nice to see a quality study done? Well, no, but for purposes of this post, wouldn't it be great?

|2.9.07 @ 3:58PM|#

joshua,

That you cannot compose an argument, or even cite any evidence, about my statements has been noted. You certainly have an unpleasant method of drawing attention to how far in over your head you are.

See how RC Dean did that? Can you see how that's different from writing "Yur a dummie?"

Any time you'd care to refute, rather than express your unhappiness with, the statements I made, that'll be great. I won't hold my breath, though.

|2.9.07 @ 4:00PM|#

RC,

I am fairly certain that the studies I've seen have taken benefits into account, but that's a good question. I do know that the stagnation in middle-class compensation dates to the early 70s, well before the dramatic increases in health costs that began around 1990.

tros|2.9.07 @ 4:15PM|#

you'd forgive me for thinking that we have traded the middle-class for a form of debt slavery.

Bingo. College + House + Insurance = debt slavery

I'm sensitive to their plight, but Most poor people choose to be poor.

I'm sorry, but this is inexcusable stupidity. You are obviously not sensitive to their plight if you think that. Grow a brain. People who are born into poor families do not choose to be poor. They generally try to claw their way out of poverty by any means neccessary.

Please grow a brain and tell us about it when you are finished. Thank you.

|2.9.07 @ 4:19PM|#

joe-

Maybe the studies did take benefits into account, but it would be good to double check that. Given the pace at which health care costs have been increasing, I think RC is right to point to health benefits as something to consider. If the nominal value of health insurance is soaring, but everybody still feels (perhaps quite justifiably so!) that their HMO sucks, then the problem facing us is not really inequality in compensation, but rather the crapitude of health care in America.

Or, more accurately, the system that delivers and prices health care. (Calm down, everybody, I'm not suggesting that market economics is to blame here. I'd say there are plenty of non-market factors in our health care system, and that these factors deserve an ample share of the blame.) Now, the crapitude of our health care system is a whole separate topic in its own right...

Of course, whether the health care issue is pertinent here will depend on whether or not those numbers have already been included in the figures under discussion. So until I see numbers I leave open the possibility that I'm barking up the wrong tree here.

tros|2.9.07 @ 4:24PM|#

I don't want everyone growing their own food because food is scarce and hard to produce.

You should probably say "I don't want to grow my food because I don't know how to and I have other skills with which I can provide a service to the larger society in which I live."

Now, that is of course a legitimate position, provided that your non-menial skills are actually valuable to the market. Food is not scarce, though. It really isn't. Food is regularly thrown away in prodigious quantities by supermarkets across the country as a matter of POLICY. Also, a lot of food is wasted so that Americans can eat meat all the fucking time.

Now might be a good time for thinking about how you and the people close to you might go about making your own food. You know, just in case.

|2.9.07 @ 4:43PM|#

Um. As I recall*, the second and third quintiles have stayed fairly flat in terms of after-tax income after inflation for the last 30 years. (*and am too damn lazy to look up and confirm)

However, this calculation does not seem to take into account the qualitative changes which have taken place: The average house has gotten larger, the opportunities for entertainment have gotten wider ["horse-sex farms in Washinton state" *giggle*], the quality of medical and dental care has risen, cars more reliable, etc.

So, I am a little dubious about a purely statistical measure of the "squeeze on the middle class". What counts is whether people's lives have been getting better, which I think is the case.

|2.9.07 @ 4:47PM|#

Arensen,

It also fails to take into account the rising cost of living, so those two are probably a wash.

|2.9.07 @ 4:54PM|#

tros:

I can't help but notice you missed by miles the point of that comment. The idea there is that you'd rather have the technology produce more food than have farming be the most valuable skill set on earth because food is hard to produce.

joe:

The gap is in education, which roughly correlates to the ability to add value in a post mechanized economy. I don't think wages are stagnant for those with college degrees or technical training. I could be wrong, but I don't think so. I suspect what is happening is that the manufacturing set used to be able to command middle class wages and they can't now.

I'm not interested at all in how much wealth is held by people at the top of the pyramid. It just doesn't matter. People are not living in stagnant states, or anything close to it. You don't want to impose wage controls or something idiotic like that to fix a non problem.

|2.9.07 @ 4:59PM|#

I can't reconcile the massive growth of surburban developments and the claim that there is no middle class. I know foreclosures were up during the housing downturn, but you don't see the disaster the bubble people were expecting. I don't believe that there is massive irrationality in lending. People are taking on debt and the vast majority of them are paying it with incomes from their middle class household incomes.

|2.9.07 @ 5:11PM|#

joe

Fair point. I THINK (and as I said, am too damn lazy to look up) that the income was measured in constant dollars. None of the inflation indexes has ever been adjusted for the quality of goods and services, since that is too subjective to measure, although they are adjusted periodically to make them conform to the "basket" of goods and services people buy.

BTW Could you do me the favor of getting my handle right? It's "Aresen" - which is my initials - "r - s - n" - rendered as phonemes. Once wrong is a typo, everytime wrong just kinda puts my teeth on edge.

|2.9.07 @ 5:11PM|#

"I'm not interested at all in how much wealth is held by people at the top of the pyramid. It just doesn't matter."

Well, it has caused most of the world's political and revolutionary instability since 1900 or so.

|2.9.07 @ 6:18PM|#

That you cannot compose an argument, or even cite any evidence, about my statements has been noted. You certainly have an unpleasant method of drawing attention to how far in over your head you are.

actaully i composed an exeletn arguemnt...that what the rich can buy in comparison to the poor or middle class is only marginal in utiolity and that that margin is actaully shrinking and from 1980 up till now has shrunk substantially....so what if a rich guy can buy the best car and hundreds of them when a poor guy can buy a cheap car that does exactly the same fucking thing....so what if Soros can have a website....any asshole can have a website....so what if the rich can fly to paris...any body with 500$ can fly to Paris.

Your whole argument stems from unequal pay...and the lack of raising wages...of course total compensation has actually risen when you add in retirement plans and health care, but that is RC's argument and not mine...he is dead right and you are dead wrong...but I am just pointing out another way you are dead wrong.

When individuals of all classes have greater choice and gain greater utility from the goods and services they buy and that gain has been equal in all pay scales it makes me laugh in your face when you come up with complete and utter bullshit claims that gains in productivity has not translated in gain for the middle class or that inequality has risen or that all boats have not risen...it has not both in measurements in real pay, as RC has demonstrated or in utility which i have demonstrated.

I don't expect you to understand any of this as being a former student of Georgetown...but others here will understand it so i do this for their benefit so they can have nice chuckle with me at how dense you are.

tros|2.9.07 @ 6:58PM|#

I can't help but notice you missed by miles the point of that comment. The idea there is that you'd rather have the technology produce more food than have farming be the most valuable skill set on earth because food is hard to produce.

I understand. I am telling you that there are many people in the world that disagree with that sentiment for various reasons. For example, said technology could cause food to become diseased, or might also be controlled by a racist police state.

|2.9.07 @ 7:39PM|#

it has not both in measurements in real pay, as RC has demonstrated or in utility which i have demonstrated.

should be "....it has, both in measurements..."

forgive me i was on a role.

|2.9.07 @ 8:33PM|#

1. the CPI is trash. It leaves out energy and food prices, both of which are a) necessary and b) increasing. Second, there's that swapping-out in the basket and comparing apples to oranges in technology in order to keep the putative inflation rate low. Scam, scam, scam. I estimate true inflation at present to be roughly 8%-9%/year.

2. "Middle-class" people FEEL that their lives are going down. People are more jittery about health care costs, energy costs, mortgages, education costs, etc. etc. and so forth. They don't believe their children are going to live better lives than their parents. Commentary purporting to show how this is all a statistical illlusion doesn't fly. What they do see is a small section of the population seemingly getting richer and getting more and more tax breaks.

3. People are worried about stuff for the future. Underfunded pensions at large corporations, expected social security short-fall, too many cases where corporations have gone back on pension plans to provide security to retirees. Oops, sorry, not enough money--but we do have enough money to pay for golden parachutes for our last CEO. People notice this sort of stuff. They notice stuff such as Enron and the lack of protection of the workers there (what happened to their pensions?) Zilch, nothing.

4. Historically, large disparities between the top people of the economy and the bottom have been fixed via revolutions. You want a happy middle class to protect against this (one reason why the 1848 "new revolution" in France was a damp squib.)

|2.9.07 @ 11:18PM|#

R S N. I get it.

|2.10.07 @ 1:40AM|#

"Middle-class" people FEEL that their lives are going down. People are more jittery about health care costs, energy costs, mortgages, education costs, etc. etc. and so forth.

Has there ever been a time when the middle class was content with their situation?

Also, I loved that comment above about the expanding suburbs. How can the suburbs be expanding if the middle class is shrinking? I live in the Chicago suburbs my self and I know of no poor suburbs around me. Either the middle class is doing fine like it always has, or more and more people are becoming wealthy.

Perhaps the rising tide is lifting all boats.

|2.10.07 @ 8:08PM|#

Lurker Kurt--

I also live in the Chicago suburbs and can very quickly take you to neighborhoods close by that don't look all that hot. 5 blocks south of where I am and you get the grills over the windows and the stores, the pawnshops, the check-cashing loan shark places, etc. etc. and so forth.

Open your eyes and see. Walk around places like Oak Park and notice the number of small stores that are vacant or going out of business. Ask people how much MORE they are paying this year for energy, food, health insurance, housing. Ask them if their salaries have gone up commensurately.

"A rising tide is lifting all boats." Yeah, right. Only if you are a trustafarian brat.

|2.11.07 @ 12:09AM|#

Wow Grumpy,

A more apt handle has never appeared on this board. ;-)

The last time I was in Oak Park was when the most recent Harry Potter book came out. It seemed like a very nice community. Mrs. Lurker and I entertained the thought of looking for a house in the area.

I live in Bartlett. It is just south and east of Elgin. In 1980, it had a population of 8,000. It now has a population of 40,000. This is not Barrington or Kenilworth. There are no mansions here. Bartlett is a living example of a middle class community. I acknowlege that the definition of middle class can be fairly broad. When I speak of the middle class, I am speaking of me and my neighbors. Some work in white collar jobs, others in the trades. No CEOs or 'trustafarians' to be seen.

My point is, in the suburbs around me, Elgin, South Elgin, Streamwood, Schaumburg, Bloomingdale and Hanover Park, there has been a lot of growth. A lot of houses have been built. No mansions, very few 'McMansions', and no ghettos either.

Perhaps it is my optimistic nature, but as time goes by, by and large, things do get better for the vast majority of people.

|2.12.07 @ 6:49PM|#

4. Historically, large disparities between the top people of the economy and the bottom have been fixed via revolutions. You want a happy middle class to protect against this (one reason why the 1848 "new revolution" in France was a damp squib.)

My ipod's battery just died...and i have to wait a week for my next pay check to buy a new one....screw all that! Lets start chopping off heads and raping nuns