THE BLOG
01/14/2011 04:22 pm ET | Updated May 25, 2011

A Dozen Ways to Eliminate the Middle Class

Cleaning out my files at year's end, I came across notes that I wrote in early 2002 on a dozen ways to eliminate America's middle class through the actions of government and private industry. I must have put the notes away because it did not seem possible that all these things could come to pass. How silly of me! In the past decade more than 90 percent of American families experienced severe economic shocks, and that the damage was particularly bad in households earning between $60,000 and $100,000 per year. They are now poorer, have fewer possibilities of replacing their lost income, and their properties are also worth less than they were a decade ago.

Here's my list of killer actions:

1. Suppress unions. From the 1930s on, unions have been the principal route out of poverty for tens of millions of Americans. Since 1983, membership has been declining, and is now around 12-13 percent of the workforce. Fewer union members equals fewer people in the middle class.

2. Substantially reduce dividends paid by public companies. Stockholders used to rely on dividends to build a nest egg for a downpayment on a home or a fund to send the kids to college. When the average dividend dropped below the rate of inflation, accumulation by dividends became impossible.

3. Lower interest rates on bonds, deposits, and CDs to laughable levels.

4. Fire middle managers and at the same time raise compensation for upper-level managers. Decades ago, the top manager made 40 times the salary of the factory floor worker; now the multiple is 500, and the growth has been provided mostly by firing the managers in between the top and bottom levels.

5. Shift the burden of health care costs from businesses to employees. Medical costs alone don't cause people to fall out of the middle class; it is the burden of carrying overpriced health care.

6. Underfund pension plans, and don't punish companies that fail to make their contributions. When an employer inadequately funds its employees' pension plan, retirees fall out of the middle-class because the money they had counted on receiving has vanished.

7. Raise college tuition to the stratosphere. Even public college costs today are so high that almost no middle class families can pay for college out of current income, and are forced to take out second mortgages so that their children can obtain a sheepskin.

8. Make greed more attractive. When the upper ranks of earners are not taught to be satisfied with a million dollars a year but insist on making ten, rather than being content to share the extra nine with fellow employees, everyone else loses.

9. Make debt attractive. Ease the way for the middle class to spend money through credit and debit cards, and extend credit to people who are less than credit-worthy, thus driving up credit-card rates and greasing the skids toward impoverishment. Then tout second mortgages as a way to consolidate credit-card debts; and then decrease the value of the homes on which the second mortgages have been based.

10. Allow the economy to become over-dependent on consumer spending, and encourage citizens to buy disposable consumer items. The middle class used to be known for its affinity for real property and big-ticket items. But when you don't buy the refrigerator and instead buy suits, pairs of shoes, and electronic toys (all made in China), not only don't you have the refrigerator, but the U.S.-based refrigerator-manufacturing plant shuts down for lack of customers, throwing a couple of more thousand people in Michigan out of the middle class, too.

11. Embrace a tax policy inconsistent with the growth of the middle class, for instance, not permitting tax deductions for such middle-class-boosting expenses as life insurance premiums, college tuition payments, and commuting expenses.

12. Facilitate and protect a bought-and-paid-for Congress beholden to the wealthy for their campaign expenses.