The decline of America's middle class can be charted directly. In the three decades after World War II, the median wage (smack in the middle) grew rapidly, right along with productivity gains. Even as late as 1980, the richest 1 percent of Americans received only about 9 percent of the nation's total income.
But starting in the 1980s -- and increasingly since then -- the economy has made the rich far richer without doing squat for the vast middle. The median hourly wage has barely grown, if you take inflation into account. Indeed, it dropped in the last so-called "recovery" between 2001 and 2007. And health-care and pension benefits have declined; we've gone from defined-benefit pensions to do-it-yourself pensions, while health insurance premiums, deductibles, and co-payments have skyrocketed.
Meanwhile, the rich have been getting a larger and larger portion of total income. From 9 percent in 1980, the top 1 percent's take has increased to 23.5 percent in 2007. CEOs who in the 1970s took home 40 percent of the compensation of average workers now rake in 350 times. Financiers who forty years ago made only modest fortunes today, even after the Great Recession they helped bring on, routinely earn seven and eight-figures. In 2009, when most of the nation's middle class was deep in recession, the 25 best-paid hedge-fund managers took in an average of $1 billion each. (Their marginal income tax, by the way, was barely over 17 percent, while the typical family paid a marginal tax far higher.)
What happened? It wasn't just greed. It was also the systematic and ever cleverer manipulation of laws and rules by those able to pay lobbyists, legislators, lawyers, accountants to do their bidding. As income and wealth have risen to the top, so has the power to manipulate the system in order to acquire even more money and more influence.
To be sure, globalization and technological change have bestowed gains disproportionately on those with the education and connections to benefit most from them, while burdening Americans without the education and connections most needed. But instead of enlarging the circle of prosperity so that the vast middle class could come out winners as well -- instead of strengthening trade unions, improving public education, deepening public investments, enlarging safety nets, and making the tax system more progressive -- the nation took direction from those at the top, and did the opposite.
It is not surprising America's middle class is increasingly frustrated and are venting their anger -- at politicians, the leaders of big business and Wall Street, as well as global traders, immigrants, and others who are easy targets of resentment. A politics of audacious hope has turned into a politics of fear -- meaner spirited than at any time in recent memory.
I am not a class warrior. Call me a class worrier. Our choice in the years ahead is either demagoguery that turns Americans further against one another and the rest of the world, or genuine reform that enlarges shared prosperity. It is the responsibility of all of us to fight the former and work toward the latter.
Uh oh...............
Oh, and by the way, THE CAPITALIST CLASS LOVES BIG GOVERNMENT, which also generally benefits the "middle class" more than the "lower income groups" as well. But one would have to have the patience to seriously pick apart the federal budget to understand that reality.
Much easier to just spout libertarian cliches...........
I have theorized herein that technological advances has sublimated America's Middle Class. Sublimation as either a physical of social catalyst is not a zero-sum outcome. By definition there can only be a single survivor. There is no genuine reform to restore the sublimated entity.
Are we to define America's Middle Class by characteristics (such as skills, or wealth formation strategies) or scale (revenue for example)? If by characteristic, the Middle Class of the 1980's is in irreversible decline. If by scale, a new Middle Class is emerging, growing as a result of technology. In my opinion we are witnessing a transition of the defining characteristics of the global Middle Class.
Blaming our Politicians, Bankers, and Wall Street executives for the destruction of the present Middle Class is misdirected. With due respect these wealthy persons did not possess the means to destroy the Middle Class. It would be more precise to blame the circuit engineers, programmers and network technicians. They provided the wealthy class with the tools, and happily deployed the seeds destruction. One could argue the world's richest man marshaled the critical mass of resource that destroyed the Middle Class.
Demagogues divide Americans by defining sides and arguing cause and effect. Americans willingly go along blaming the Bankers, or Wall Street executives. Demagogues wrap themselves in differences over policy, tax systems, and social systems. Americans argue incessantly over which demagogue has the better story. Discontinuing demagoguery will NOT enlarge shared prosperity.
You correctly identify the impact globalization and technological change played in widening the income gap. I would suggest a better word than "burdening" when you describe it's impact on Americans limited by education and connections.
I would suggest "sublimated" would more accurately explain their condition presently. There exists several primary and tertiary examples of sublimation along with a multitude of related derivatives. Let me provide two examples.
Microprocessor driven robots replaced a staple of Middle Class employment, the assembly line worker. Many ascribe off-shore manufacturing as the demise of these jobs, however regardless of venue, the human jobs were done in by microprocessors. That is true of practically every large-scale manufacturing industry around the globe.
Microprocessor driven software enabled the production and marketing of exotic financial instruments. A type of these derivatives - Credit Swaps underpinned the ruination of the American Mortgage industry. The effect was to destroy the primary Middle Class wealth multiplier - owning a home.
I can provide 100 more examples of the effect of this type of sublimation.
I would like to offer an answer to your question Professor Reich.
In 1982 IBM packaged a 16-bit microprocessor, and launched it's distribution through Sears. That act, anchored the mass distribution of microprocessors to the world. America invented computer processing, and American ingenuity unleashed the single greatest technological period since man crawled out caves.
I research the effect of microprocessors on the human condition. America invented the single greatest technological innovation known to man. American innovation destroyed America's middle class.
That Sir is what happened.
Your comments are well recieved. There are countless examples of the type you illustrated. Irony is a very good way to describe the outcome of these events.
I appreciate your contribution.
Best F / F
All of those things you mention are important landmarks, they are all related to advances in locomotion. What distinguishes microprocessors as the greatest single technological advancement to date is their ability to alter the dimensions of space and time.
Finally, H-1B work visas and offshoring are having a dramatic impact of skilled technical labor. Programmers and engineers are under constant assault by large corporations. They either offshore our jobs or they import workers using federal work visas.
I just wish Reich would be honest that government *is* the problem here. The government under both parties has rigged the system to drive down our wages to increase profits for the few. It was no accident. And it is the heart of the class war.
Dead on right! Fanned!
Reich is absolutely right that the influence peddlers in the form of their lobbyists have infested the Hill and completely absconded with the American democratic process. In a rare moment of candor for a politician, Dick Durbin summed it up succinctly with this quote: “Quite frankly, they own the place.”
It is ABSOLUTELY a class war, and the wealthy class won. The question is for how much longer? The answer to this question is in the hands of America's citizens, who are currently still being played against each other as a distractionary diversion by these same modern-day robber-barons while they conduct "business as usual".
This is not a left issue. This is not a right issue. This is the ONLY issue. Open your eyes, America. Follow the money. It leads right to the doorstep of your oppressors and your REAL enemy.
wise words from george carlin...
http://www.commondreams.org/headline/2010/08/15
Jobless Millions Signal Death of the American Dream for Many
by Paul Harris
Mr. Reich, "Our choice in the years ahead is either demagoguery that turns Americans further against one another and the rest of the world, or genuine reform that enlarges shared prosperity. It is the responsibility of all of us to fight the former and work toward the latter." That's what you got? That's the extent of your years of study and authority? You couldn't even get the word Oligarchy in the article?
An Oligarchy is a far better descriptor of America today than a Democracy. You might even have a good argument that we've become a plutarchy or "plutocratic corporatocracy".
One thing's certain: all the votes in this country won't make an iota of difference if they're wasted on a democrat or a republican. The two-party system is how the scam is perpetuated with its exclusionary monopolistic tactics.
Extreme polarization is the new reality. And this is, as you eloquently point out, not a random occurrence.
If everyone would step back from their myopic, media-fed defensiveness about who's to blame for the sad state of this country and simply follow the money, do a little deductive reasoning and some actual critical thinking, they would soon realize that ALL Americans, from every political stripe, have a common enemy: BIG MONEY.
THEY OWN...
WASHINGTON: This means our public servants - left and right - are not working for US anymore.
THE MEDIA: This is how they control the message and keep American's divided while they keep running their scams.
THE BANKS: Do you see any real competition between banks anymore?
THE INSURANCE COMPANIES: Again, where's the choice? Where's the competition in our "free market economy"?
BIG OIL: Why are gasoline prices always within a few cents difference no matter where you buy?
BIG AGRA: Guess what? Our government, (with "input" from the wise agrabiz boys) decided us poor, dumb consumers will be "confused" if we're allowed to know whether our food is GMO or not.
BIG PHARMA: How come American pharmaceutical companies are permitted to export their drugs, but Americans are not allowed to import theirs? Maybe that's why drugs cost so much in this country???
Nothing will ever change in this country until we collectively wake up to who's really stealing our money and our democracy: BIG MONEYED INTERESTS
http://www.lcurve.org/
The US population is represented along the length of the football field, arranged in order of income.
Median US family income (the family at the 50 yard line) is ~$40,000 (a stack of $100 bills 1.6 inches high.) --
The family on the 95 yard line earns about $100,000 per year, a stack of $100 bills about 4 inches high. --
At the 99 yard line the income is about $300,000, a stack of $100 bills about a foot high. --
The curve reaches $1 million (a 40 inch high stack of $100 bills) one foot from the goal line. --
From there it keeps going up...it goes up 50 km (~30 miles) on this scale!
Does it make sense from looking at this graph that we have to cut social services and unemployment to balance our deficit?
We wouldn’t even have to increase taxes on the rich to put the country in the green. Just do to them what they want to do to us.
"Take the Rich Off Welfare", Zepezauer and Naiman
"If you cut 26 percent of the welfare now given to the rich you have instantly balanced the budget." "If you cut out wealthfare, you could pay off the national debt in 11 years."
And that's the trouble. We argue - I argue too much with people who disagree with me (STUPID PEOPLE! . . .) - and this argument creates a kind of black cynicism, so dark I fear we will never be able to organize into anything other than blogs. Loud and powerless, lacking the will to do the right thing. We don't all need to be rich to be better off, but we do need better than what we've been used to these past 3 decades.
60 years ago boxers, baseball players and football players did not fit that category, neither did many movie stars and musicians. Hell most of the career politicians are in that category and they seem to be quite forgetful about paying taxes, even the one who are responsible for the tax code.
Sure NAFTA was a bad idea and has destroyed much on the middle class, so has porous borders. Today a construction worker employed as a framer or hanging drywall makes about $3 per hour less than I did 20 years ago. Of course today that construction worker has to compete against an army of workers willing to be paid far less as long as it is in cash at the end of the day.
America has an addiction to cheap technology as well, that iPhone 4 did not roll off an American production line, it came from foxcon in China. The last American made TV rolled off a production line a few years ago and no one noticed, they were all too busy trying to find a good deal on a new SONY or Samsung.
But the American dream was higher wages and cheaper goods, you got your dream was it not what you wanted?
Was the final actual cost too high? Well you can thank a union and while you are at it thank a politician who was supported by a union.
And we ended up with big corporately owned box stores occupying an endless stream of strip malls selling things that are not made in the US. Fact is, people got what they asked for, only they were thinking way too short term. We didn't want to go to "Papa Luigi's" and have to actually read the menu, we wanted to go to Olive garden where we knew what was on the menu, and we knew exactly how it tasted. Nothing against Olive garden, mind you.
Good news is, its easy to fix. Think about where you are spending your money before you spend it. Start tomorrow.