Shall We Take This Opportunity To Eradicate the Middle Class?

Although the stimulus jobs numbers released yesterday by the Obama administration reflect less than 1 percent of the $787 billion stimulus package, our Bubble-Boy mentality leads us to assume that this data means that the stimulus is not working. In any case, the persistently high unemployment rate has also contributed to a resurgence of debate about how the federal government can create jobs. The solution of this country's right, it seems, is to systematically dismantle each and every governmental policy that has contributed to the health, albeit currently weakened, of the middle class.

Writing in Forbes this week, AEI scholar Steven Davis suggests not only that we should not extend unemployment benefits for the 1.3 million Americans who will run out of them by the end of the year (a number he conveniently omits), but that we should end state mandates for minimum health insurance benefits, abolish the federal minimum wage, and kill and unceremoniously bury the Employee Free Choice Act. This, the Chicago economics professor argues, will "foster jobs creation and help reverse the downward slide in the labor market."

Davis's opposition to extended unemployment insurance is not shared among all conservatives, many of whom believe this basic social policy is a moral obligation during an economic downturn. But his argument that the benefits "weaken rather than strengthen the financial incentives for the unemployed to seek new employment" is a classic line of free marketers. Yet, in the current economic climate, one would have to strain quite hard indeed to explain that the problem with our labor market is that too few people are seeking jobs.

Similarly, Davis's call for ending state mandates for minimum health insurance benefits seems out of place. Though such mandates might drive up premiums in some cases and thus make hiring an employee more expensive (the research swings both ways on this and significant numbers of Americans are not subject to these mandates, notably those on Medicaid and Medicare), eliminating the mandates would decrease the quality of health care, leading to less preventative care and more sickness and, in turn, more spending on health care. Rather than suggesting benefit cuts, it seems that Davis should be calling for a thorough national health care overhaul that includes a health insurance exchange with minimum benefits for employees and a public option that drives down costs for employers. This would solve employers' cost problems while improving, instead of reducing, employee health benefits.

Further, Davis attacks the federal minimum wage for increasing unemployment among the young and unskilled. His solution is not to, say, expand youth summer jobs programs (as the stimulus bill did) or improve green job training for the unskilled, but to abolish the minimum wage for all workers. Beyond the fact that the minimum wage allows workers to maintain at least a decent, if extremely tenuous, standard of living, recent research suggests that the minimum wage does not inherently increase unemployment. During the economic downturn, higher wages even provide a stimulus to the economy because low-income Americans tend to spend, rather than save, most of their income.

Finally, Davis instructs President Obama to "forcefully renounce the [Employee Free Choice Act] now." The Act, which allows union recognition by card check rather than secret ballot, is already on ice on Capitol Hill. But Davis's concern is that "Fears that the Act might become law are enough to chill investment by firms that could be targets of card-check certification." First, despite Davis's characterization, EFCA would make unionization marginally easier for employees by preventing employers' strong-arm anti-unionization tactics: these firms already face the prospect of secret ballot elections calling for union recognition. Second, any "chilling" effect on investment now is likely to be at least offset by firms shifting investment decisions forward before the Act's provisions apply.

Despite the overblown criticism of the latest stimulus jobs numbers, job creation is lagging in the United States and the economy is clearly not working for the majority of American middle-class households. Yet, instead of championing job creation measures supported by more reasonable conservatives - for example, a payroll tax cut - Davis has chosen to exploit the stagnant economy to deconstruct the policy latticework that has helped build the middle class.

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Comments

[Deltau]

Do Dems and Repubs really matter? Aren't the dichotomies that the mainstream medi-ites plump up all over the airwaves the real threat to the MIDDLECLASS? Who really keeps "the race issue" alive?

Why don't the USA's businesses pay consumers enough to buy the goods and services that they sell? Let's get over the notion that a "PhD" is a "better person", and get over the ignorant comments the "educated" make about the "not as educated".

Why don't we get focused on the real trouble makers - the MIDDLCLASS needs to get it together and stop being fooled by the Powerbrokers and their tools. Ever wonder how you get the job of hosting a show like meet the press, or, more intriguing, how you keep it?

[afram1]

Anytime the free marketers see an opportunity to starve the beast, they seek to do it.

People will "work harder" to find jobs when they're hungry and desperate (i.e. - no social safety net) - which means they will accept lower wages...if you accept their call to abolish the minimum wage, and extending this logic to the full conclusion, it means that wages would depress and the American middle class would be working for third-world level wages.

Let us also consider the added tension the hunt for jobs would have on the populace. It means that racial and ethnic division could be more easily played, which improves the environment for neoconservative Republicans to be elected.

We all saw what such a world would look like...Frank Capra showed us Potterville from "It's A Wonderful Life" in 1946!

Only a super-greedy, self-interested megalomaniacs wants a world like that! Sane people need to keep fighting the want for such insanity!

[Rogan]

When, insurance or not, a married couple consisting of a successful lawyer and a (highly paid, when working) writer, are immediately forced into bankruptcy by the medical bills when serious illness calls - when that same couple, day in and day out, cannot afford to spend more than fifty dollars a month, on anything "discretionary," for fun, to relax, or to develop their personal infrastructure, because of the ongoing costs of medical treatments and medications... when such things happen - as they do, have, and are, to my wife and I, right now - I'll tell you: the "middle class" is ALREADY living on "third world wages."

[MacQ]

If you wanted to eradicate the middle class, you would create an environment that is hostile to business. One that scares off would be employers and investors (the job creators) with threats, feigned outrage, and making them the scapegoat distraction of the week, week in and week out.

That's what this administration and this congress have done.

Not to mention going on serial spending sprees that threaten everyone's household income (everyone's).
You tell them you're not going to raise taxes (but don't tell them that you only mean income tax and don't tell them about all the taxes they'll really be paying. Just don't call them taxes).

[Patriot86]

Really, it seems the economy crashed under the most business friendly president of all times...George Bush. He crashed the economy with some helps from Wall Street. Pres. Obama is trying to pick up the pieces while dealing with bought and paid for blue puppies-an of course bought and paid for GOP aka obstructionist. Oh and business abandoned America for China, India and North Vietnam thanks to Pres. Bush's tax cuts which encouraged this and slave wages in these countries. Personally, I would slap tariffs on these foreign made products and encourage job creation here at home. Business better straighten up and fly right under Pres. Obama. They have one last chance because if things get worse, a Ralph Nader or Ross Perot third party candidate will win and the one of the two existing parties survives. Given the GOP numbers, it won't be them.

[MacQ]

Not sure how old you are, but there have been several bubbles, crises and crashes in the last 2 or 3 decades. Recessions are nothing new.
Presidents don't crash economies.
Not sure what you mean by business better straighten up and fly right under Obama, but so far they are certainly hunkering down, not doing any expansion or hiring. That's something presidents can do (hand in hand with congress) that affects economies: they can be business friendly or business hostile. Being the latter can take a recession and create a depression.

[gaholiday]

Friday, October 16, 2009, 12:00pm CDT
Dell to outsource N.C. jobs to Mexico
Austin Business Journal

http://austin.bizjournals.com/austin/stories/2009/10/12/daily34.html

This is the exact reason why America may never recover. There should be tariffs placed on ALL " US " imported into America. Tax breaks should apply to businesses that create jobs here instead of outsourcing them. Until that idea is drilled into the head of our so called politicians and leaders there will be even darker days ahead

Dell Inc. is outsourcing to Mexico and other countries the work done at the North Carolina manufacturing plant the company is closing.

Round Rock-based Dell (Nasdaq: DELL) revealed the plans in a Trade Adjustment Assistance Act petition that the computer maker filed this week with U.S. Department of Labor, according to several published reports.

Dell is cutting nearly 1,000 jobs as a result of the move. The first 600 workers will lose their jobs next month.

[MrReal]

WHERE IS THE ARAB LEAGUE, WHY ARE THEY NOT SENDING TROOPS & MONEY INTO IRAQ & AFGHANISTAN ??? THE ARAB NATIONS WITH OIL HAVE BEEN SUCKING DOLLARS OUT OF THE US FOR YEARS & HAVE NOT MILLIONS, NOT BILLIONS BUT HUNDREDS OF TRILLIONS IN US DOLLARS & DEBT....
WHY ARE THEY NOT SPENDING THOSE DOLLARS TO HELP THEIR OWN???
WHY ARE THEY NOT SENDING TROOPS TO SAVE THEIR OWN PEOPLE???
WHY IS IT THE ONLY THING THEY CAN DO IS COMPLAIN ABOUT ISRAEL & THE AMERICANS & THE INFIDELS THAT ARE ON THEIR MUSLIM SOIL???
WHY IS IT THAT THE US DOES NOT OPEN A NAVAL BASE & AN AIR FORCE BASE IN ISRAEL, PULL OUT OF EVERY ARAB COUNTRY THEREBY TAKING THE COMPLAINT OF INFIDELS ON MUSLIM SOIL AWAY FORM THE BAD GUYS... OPENING TWO MILITARY BASES IN ISRAEL WOULD FORCE THE GOVERNMENT IN ISRAEL TO MAKE PEACE BECAUSE IT WOULD ELIMINATE THE FEAR THAT ISRAEL HAS ABOUT BEING ATTACKED... THEREBY AGAIN ELIMINATING THE BAD GUYS SAYING WE SUPPORT ISRAEL IN KEEPING ARAB LAND....

DO THE ABOVE & NOT ONLY WOULD BE BE OUT OF THE POLICE BUSINESS BUT WOULD BE SAVING TRILLIONS OF DOLLARS THAT COULD BE USED IN THE US AS WELL AS BRINGING ABOUT PEACE IN ISRAEL....

PLEASE SOMEONE TELL ME WHY ALL OF THE ABOVE IS NOT A GREAT IDEA & AN IDEA THAT SHOULD BE FOLLOWED......

[azdirk]

Has Davis ever been unemployed?

[mrbline]

A well paid, working middle class is the backbone of life as we know it. What those balking at the need to pay employees well, remember, "you get what you pay for." You pay minimum wage, you get minimum work.

[iridium53]

Henry Ford had reasoned that since it was now possible to build inexpensive cars in volume, more of them could be sold if employees could afford to buy them. The $5 day helped better the lot of all American workers and contributed to the emergence of the American middle class.

Without a strong, well-paid middle class - who will buy American products?

American industry is dying. And, with it the American middle-class. Decades of outsourcing manufacturing has left U.S. industry without the means to invent the next generation of high-tech products that are key to rebuilding its economy.

American corporations have used their low tax rates to reduce the competitiveness of American industry by taking accounting profits out of the system and giving those accounting profits to the executives.

it is time we stop the ability of corporations - fantasy humans - to make political contribution. Time to remove the overwhelming influence of a few executives with access to corporate money from democratic political influence. Corporate political contributions are un-democratic and un-American.

Time for America to demand that corporations play by rules that benefit society as a whole, not just the greedy few top executives that have bought our politicians.

Time to restore American competitiveness.

[KOSMOCITIZEN]

Find a way to allocate some wealth, from the hands of very few, in the hands of the masses
just 10 --15% that's all . it is a simple as that. Every other talk is like ,talking about green horses

If we do not have some kind wealth balance in this country in the next 3-4 years, the whole Nation will be in trouble not just the middle class

American's spending of the last 30 years support the whole world to be a better place. This came to an END,
who is going to be next crazy consumer . China , India, Europe, Latin America, ... keep dreaming
what is the future of '' the dollar'' Then , what anybody knows?

Sooner or later we all will start working for the Europeans and Chinese

For now just keep talking about minimum wages or get upset like JO the PLUMBER , ABOUT WEALTH DISTRIBUTION.)

[WorkingClass]

When middle class people are "destroyed" they don't die. They just migrate down here to live and work among the working poor. This they regard as a fate worse than death. If being poor is so terrible, why has the middle class looked the other way for the last 30 years of continuous war against American jobs and wages?

[longtalldrink]

Yes, good question. I guess it can be answered by...when they came for the poor, I did not care because I was not poor...well you get the idea. I guess the original quote was something like...when they came for the Jews, I did not care because I was not Jewish...

[Patriot86]

Because the traders pitted everyone against everyone. We need to band together and bring back decent paying jobs that made this country great.

[The Meek]

From Steven Davis and his ilk's point of view the people that put the food on their table and provide all their stuff and services are just parasites cutting into their bottom line. That is what all aristocracies think.

The logical conclusion of this type of thinking is a working class that doesn't make enough to pay taxes, an elite class that won't pay taxes, and an in between class that is paying for everything resulting in social collapse.

[Jannsmoor]

Steven Davis only makes sense when you realize all his ideas will contribute to the destruction of the middle class. Once the middle class is destroyed and there are only two classes, the super rich and the serfs, maybe then we can get on with the business of creating a society which puts the interests of the middle class above the interests of the rich and powerful.

[masher]

You are both wrong. If we don't start to protect our manufacturing jobs from cheap imports then we will do nothing to stop jobs from moving overseas. Its that simple.

Nothing else really matters in comparison to trade. Free trade is killing American working families.

[Jannsmoor]

Are you afraid to compete with workers who will work for less than $10.00 per day, no benefits and destruction of the environment?

[Bellla]

The problem to me seems that instead of 3 social classes we now have 5. Upper, Corporate, Middle, working class and underclass. The upperclass (old money) seems to have been largely static, but the rise of the new corporate class is entirely at the expense of the middle and working classes and the dropouts from those social classes swell a burgeoning landless, homeless, disenfranchised underclass. The corporate class through the actions of lobbyists and by purchasing representation in government through "campaign contributions" has managed to accrue more rights for corporations than are afforded to actual people and as a result has created a situation where the middle class has been regarded as a source of assets to be harvested rather than as the core of the culture and the bedrock of the democracy. As a result of the disempowerment of the middle class, cultural models favored by the young (therefore the modalities of culture in future times when the young in their turn are the dominant age cohort) are coming from the underclass instead! Hence young men wearing their jeans down to their buttcracks (a fashion evolved from hustlers in prison), and the popularity of tattoos and exotic piercings. When this sort of thing happens, expect social turmoil and turnover, the middle class was a stabilizing effect on the culture, but now the pins have been knocked out from under it and when the sans coulotte set the agenda, expect blood to flow.

[Jannsmoor]

Everything you describe is completely predictable. This is what society looks like when government is owned by big business. It's called libertarianism. Freedom from government means business assumes power over a society. When business runs a society, the middle class are viewed as prey from which the rich and powerful glean money. Greater profits can be made from destruction of the middle class, so it is always shrinking. Eventually you end up with the haves and the have nots, a two class society.

We need to deal with the issue that the amount of labor available always exceeds demand for labor. If we do away with the safety nets, as advocated by Steven Davis, it will mean the end of the middle class. The middle class only exists as a function of the safeguards government creates for it.

[MighteeAphrodite]

The middle-class is being demolished. Bankruptcies, foreclosures..and now sticker shock at the supermarket. Eating will soon become a luxury, even with food assistance programs subsidizing those who qualify. And I refuse the argument that eating "right" and food shopping wisely is the solution to this assault. Eating fruits, legumes and vegetables primarily, with no meat or animal products, makes little difference in cushioning the rise in food prices when dealing with medical bills.

That should satisfy some anti-health care reformers, though, who think that losing weight is the answer to the health care mess.