The press is all abuzz with news of the SEC suing Goldman Sachs for fraud. While this is certainly big news in itself, even more important is what it says about what the financial elite has been doing to America for the last 30 years: shorting the middle class.
The SEC's action is a perfect moment for us to look at the bigger picture of how the American people were sold on the promise of never-ending prosperity while Wall Street was overseeing a massive transfer of wealth from the middle class to the richest Americans.
The results have been devastating: a disappearing middle class, a precipitous drop in economic and social mobility, and ultimately, the undermining of the foundation of our democracy.
Thirty years ago, top executives at S&P 500 companies made an average of 30 times what their workers did -- now they make 300 times what their workers make. And between 2000 and 2008, the poverty rate in the suburbs of the largest metro areas in the U.S. grew by 25 percent -- making these suburbs home to the country's largest and fastest-growing segment of the poor.
The human toll of the shorting of the middle class is brought to life on sites like Recessionwire.com, LayoffSupportNetwork.com, and HowIGotLaidOff.com where the casualties of Wall Street's systemic scam share their personal stories.
Looking through these sites, I came upon a story that struck me as emblematic of where America's middle class finds itself these days. It feels like a dark reboot of the American Dream. Think Horatio Alger rewritten by O. Henry.
It's the story of Dean Blackburn of Alameda, California. The first part of his life was a classic American success story. Raised in Minnesota by a single mom, a teacher, he was "middle class by default." Through a combination of smarts and hard work, he made his way to Yale, then took a succession of jobs in the growing Internet world that had him steadily progressing up the economic ladder.
Then came February 2009, when he was laid off on the last day of the month. His boss chose that day because it meant the company wouldn't have to pay for another month of his health coverage. "Looking back on it," he told me, "that hurt more than the layoff itself -- just knowing that the president of the company was exactly that calculating and that unfeeling about my own, and my family's wellbeing." The timing, Blackburn continued, "put those 'family days' and company picnics in a weird new light."
Fourteen months later, he is still looking for a new job. As he, his wife, and their 2-year-old daughter deal with the immediate financial struggles his extended unemployment has brought, Blackburn has become acutely aware of the broader implications of the shorting of the middle class. "Ultimately," he says, "it's not about a dip in corporate profits, but a change in corporate attitude -- a change that means no one's job is safe, and never will be, ever again."
It's one of the reasons he's decided to try to start his own company, NaviDate, a data-driven twist on online dating sites: "It's no longer a trade-off between doing what you love and having stability. Stability is long gone, so you better do something you love!"
Achieving middle class stability and having your children do better than you, the way you had done better than your parents, has always been the American Dream, but, as Blackburn notes, mobility now is increasingly one way: "The plateaus of each step, which can be a great place to stop a bit and catch your breath, are gone. Now, it's climb, climb, climb, or start sliding back down immediately." The result: "the odds are you're going to wind up at the bottom eventually, unless you get lucky."
Luck. That's what the American Dream now rests on. It used to be about education, hard work and perseverance, but the system is rigged to such an extent now that the way to keep your head above water is to get lucky. The middle class life is now the prize on a scratch-off lottery ticket.
In November 2008, as the initial aftershocks of the economic earthquake were being felt, David Brooks predicted the rise of a new social class -- "the formerly middle class" -- made up of those who had joined the middle class at the end of the boom only to fall back due to the recession. "To them," he wrote, "the gap between where they are and where they used to be will seem wide and daunting."
But, in the year and a half since Brooks wrote this, the ranks of the formerly middle class have swelled far beyond those who joined at the tail end of the boom.
The evidence that the middle class has been consistently shorted is so overwhelming -- and the results so potentially damaging to our society -- that even bastions of establishment thinking are on alert. In a new strategy paper, The Hamilton Project -- the economic think tank founded by Robert Rubin (a big beneficiary of the shorting of the middle class) -- argues, in the Project's own words, "that the American tradition of expanding opportunity from one generation to the next is at risk because we are failing to make the necessary investments in human, physical, and environmental capital."
Of course, it's even worse than that. We are actually cutting back on our current investment in people (see the human cost of massive budget cuts in education, health care, and social services in state after state after state -- all across America).
After reading the details of the SEC's filing against Goldman Sachs, it's hard not to come away thinking: "Why would anyone ever do business with that firm again?" Likewise, after even a cursory examination of the treatment of the American middle class by the Wall Street/Washington class over the past few decades, one should also wonder why anyone would ever do business with that crowd again. And yet, there they are, still running things at the Treasury, the Fed, and the National Economic Council.
The urgent need for the reorganization of our financial system goes far beyond the upcoming debate on new financial regulations. And it goes far beyond the media's right versus left framing. It's a question about the future of our country, and whether we are going to stop the slide toward a Third World system in which there are just two classes: those at the bottom and those at the top.
A lot of people at the top of the economic food chain have done very well shorting the middle class. But the losers in those bets weren't Goldman Sachs investors -- they were millions of hard working Americans who had heard the pitch and bought into the American Dream, only to find it had been replaced by a sophisticated scam.
Follow Arianna Huffington on Twitter: www.twitter.com/ariannahuff
Charles H. Green: The SEC Chose Its Charges Wisely Against Goldman
The SEC chose to charge Goldman Sachs with something that's not only illegal, but resonates easily with Main Street as also being unethical. This is a welcome sign -- a charge that at least tries to re-unite the legal and the ethical.
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That can change, but not until the concept of Labor, its priority, its value, and its human goals are reoriented 180 degrees. There is enough wealth in the nation where, with the right economic system (Money must be replaced), two days labor is all that is needed for basic wants and needs. Just do it.
Have you ever looked for the root of production? Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover it for the first time. Try to obtain your food by means of nothing but physical motions-an you'll learn that man's mind is the root of all goods produced and of all the wealth that has ever existed on earth.
The Government is supposed to be OUR 'counter' to those who would ENSLAVE 'We the People'.
For most Americans, the middle class is seen as the American dream. No they are not necessarily millionaires but they have good jobs, nice homes in good neighborhoods, and their children attend desirable schools. They own good vehicles and take vacations. For most people this is the American dream.
For other Americans, being wealthy is the American dream. Nothing wrong with that either, but understand, if you are not born into wealth you will have to create it. As the old saying goes "it takes money to make money". It is incredably hard to start a business or develop a product or create a new service when you are poor. So for many who wish to become wealthy, the middle class is a jumping off point.
If you destroy the middle class the American dream is dead. Only those who are born into wealthy families will ever know economic security and prosperity. The rest of America will work their lives away only to increase the wealth of those who are already obscenely rich.
wall street was wrecking havoc on all of us hard working middle class while sec was watching over 250,000 porno movies per month using once again the tax payers money, all the while, to pay their salaries.
the rich get richer, the poor get poorer.
The cause for our class segregation is non-other than the federal reserve and our fiat currency. Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value and equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims.
End the fed... vote Ron Paul!
What part of corporate America trying to control our government leads you to the conclusion that weakening the governmnent will solve the problem?
How bout we all just take off our pants and bend over for the Goldman Sachs boys and dispense with the middle man.
Is that what We want America to be? The original author if this statement was Goering...do we want to value what he valued?!?
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GIve us just one example of that.
Get ready for some good ol' "austerity measures" after they've all convinced US that it was OUR fault.
The water is getting hotter, little froggie
Socialist! Socialist! Joe the Plumber, where are you to fight the good fight against the greedy worker who seeks to chop whole inches off the CEO's mountains of gold?
It is possible to be capitalist and ensure that wealth is also spread around.
Heck, the mafia has rules and also spreads the wealth around a little. No one calls the mafia "socialist."
The middle class become complacent. It expected things...for free. It stopped working hard. It wanted to get growth without labor or innovation.
It left itself open to the charlatan the hustler and the con man.
Berlusconi took over Italy that way, now, it's happening here. You're a real good example of the martyr complex, kiddo.
think beautiful thoughts; it'll all be OK
"Republicans are stepping up their campaign to win donations from Wall Street, trying to capitalize on an increasing sense of regret among executives at big financial institutions for backing Democrats in 2008.
In discussions with Wall Street executives, Republicans are striving to make the case that they are banks' best hope of preventing President Barack Obama and congressional Democrats from cracking down on Wall Street.
Wall Street executives have reduced their political contributions to the Democratic Party and its candidates, according to fund-raising reports and interviews with executives at financial-services firms.
Last week, House Minority Leader John Boehner of Ohio made a pitch to Democratic contributor James Dimon, the chairman and chief executive of J.P. Morgan, over drinks at a Capitol Hill restaurant, according to people familiar with the matter.
Mr. Boehner told Mr. Dimon congressional Republicans had stood up to Mr. Obama's efforts to curb pay and impose new regulations." You won't stand up for the little guy John? Mitch McConnell right after meetings with hedge funds managers went right to work by reciting word by word Frank Luntz's Talking Points, Trolls are saying democrats are in bed with wall st and banks so don't trust them and don't vote for them. People,who do you think is the lesser of two evils dems or rethugs. This article was written by WALL ST. JOURNAL. You cannot disregard this infor and think for one minute WSJ is a liberal Media.