The 31 year period between 1914 and 1945 was the most destructive in human
history. Towards the end of WWII, the leaders of the western democracies met to
figure out a way to avoid a repeat of such a calamitous period. They had seen
that the rise of fascism and communism had been enabled by the massive suffering
and deprivation caused by WWI and the Great Depression. They agreed
that the way to prevent future demagogues from coming to power was to ensure
that all the democracies developed a stable and prosperous middle class, a
society in which anyone who was willing to work could achieve a comfortable
life. The period of 1945-1980 was a vindication of all they had planned, the
West became more prosperous and more stable.Starting around 1980,
our leaders seemed to forget the lessons of 1914-1945, perhaps because that time
seemed remote. They began to dismantle the programs of the post war years. The
middle class and working class began to struggle, today they are in crisis.The elite think they can keep control with poverty increasing and
opportunity waning. They will be shown to be as wrong as the elite of 1914.
For the record, what is happening fits Marx's econometrics to a
"t." Marx believed in the efficiency of capitalism, and that it would
do pretty much what it has done, but ultimately it would become what it is
becoming before our eyes. What to do? We need a new setup. Socialism of a
sort, but it has to be a brand of socialism which preserves democratic
institutions. This is not going to be easy, but we had better get on with it
before too many of us are trapped in poverty that we can't shape our fate.
And ya'll think Marx was wrong? Notice how the
President's proposals attack the problem head on, and the Republican
proposals deny the problem and compound the problem. GDP growth by itself
won't prevent the described dystopia. The growth has to include the middle
as a major component, not a bystander.
I don't see this being a problem. Middle-class jobs that are eliminated by
automation will free up workers to do something that's more productive.
Outsourcing of manufacturing is already slowing and somewhat reversing (due to
supply-chain problems when working with China), and outsourcing of other jobs
will also free up workers to do something more productive. Yes,
there will be a difficult transition period for each and every middle class
worker who loses his/her job. But the end result will be greater opportunity
Thanks for asking. We don’t have to revert to the world of
the “Middle Ages” where there was only the extremely rich and the
extremely poor. As thinking, reasoning and innovative human beings we have the
ability to change our world to fit our needs. Previously there was
a balance between the benefits of civilization where ordinary people survived by
trading their labors for things that they needed. Whether they were slaves or
employees they were needed in the process of creating wealth. The peak of this
probably occurred in the “Industrial Age” which preceded the
“Information Age” which is now the “Automation Age”.While all wealth is still the creation of physical or mental labor,
business now has the ability to store up the labor in automation and use the
same labor over and over with out any further sharing to the ordinary people.
A new way must be found to share the wealth with all the people.
Society as a whole, as provider of much of the capitalization of business,
should be recognized as part owner entitled to its share of the profits.
First, an interesting and thought provoking piece.Second, kudos to
Roland Kayser for an excellent comment.As Roland indicates, we would
do well to remember that this is not just about economics. Unlike many older
nations on earth, Americans are not bound together by just a few ethnicities and
religions. We are nothing if not varied. The social contract that has created
America has always been both political (an electorate that is invested in the
system) and economic (the so-called American dream).A strong middle
class has been a hugely stabilizing influence in American political life. If we
no longer have the economic side of the American equation, the political side
will likely destabilize as well. In short, the economics could eventually put
at risk our very identity as a single nation of Americans.
Remember back when 'the jetsons' came out everything was about the
coming benefits of the then dubbed 'pushbutton age' when drudgery
would be gone and everyone would have more time to be more productive and also
have more leisure time? How was that supposed to be work? More productive at
what? Is unemployment to be considered leisure time? We're in that
pushbutton age, at least somewhat, but it turns out the benefits mostly go to
those who own the equipment on which the buttons to be pushed are located. We
truly have turned the average worker into a liability, having failed to prepare
them to be more productive at anything except jobs that are gone. It's not
Roland Kayser needs to enumerate the programs that were so critical to American
middle class prosperity during the post-war years. I have my doubts that their
mere existence made prosperity possible, or that reinstating them would bring
back those glory days.Programs are not the source of prosperity,
capital accumulation is. But in order to create a suitable investment climate,
the federal government needs to divest itself of its hostility to business.
FDR's administration was one of the least business-friendly in American
history, but the Obama administration is running a close second. To make matters
worse, Ben Bernanke is doing everything exactly upside-down and backwards from
what the post-war Fed was doing. So we have the worst of all possible economic
environments for creating prosperity.
SEY,With all due respect the "hostility to business" is a
figment of the far rights imagination. Corporate profits continue to increase
year after year after year. Tax rates on business are at the lowest level they
have been in the last 75 years. Roland Kayser correctly identified
the time when the assault on middle class started. 1980 was the introduction of
President Reagan's trickle down economics. Tax rates where cut for the
wealthy and for business with the idea that we would see a massive reinvestment
and that would lead to improved circumstance for all. Trickle down economics
has been a disaster for the middle class. THe article is a simple
projection based on the current trend. Unless something dramatically changes,
the projections in the article will become our future.
So you think corporations are in good health? You are tragically mistaken:“Many companies are repeating some of the mistakes of the
past,” by taking on too much debt, said Edward Altman, a New York
University business school professor and the creator of a well-known tool for
measuring corporate health, called the Z-score."Mr. Altman said
his latest forecast, which measures the probability of corporate defaults,
showed overall corporate health was “no better than it was in 2007 and by
some measures worse.” (WSJ)We are caught in the middle of
another Fed-created bubble, this time in the bond market. Government and
corporations are awash in debt. If you want to find t the real culprit in the
disappearance of the middle class, you needn't look any further than the
Ok, here's one concept I would welcome back from the post-war period: the
Bretton-Woods agreement. It's far from ideal, but it's better than the
pure fiat-money system in place now. Oh, and bring back William McChesney Martin
as chairman of the Federal Reserve. That combination alone would do more to
strengthen the middle class than any program you could come up with.
SEY,I wouldn't disagree with the problems that some
corporations and the federal government are in trouble and awash in debt,
primarily through self inflicted wounds and corporate greed. The
middle class problem however can be traced directly to President Reagan and his
changing of the taxing policies related to wealthy Americans and businesses.
The export of American jobs overseas to third world countries has been a middle
class killer. There has been no trickle in the trickle down economics of
President Reagan which have been largely in place for the last 40+ years.
That was depressing but probably accurate.I mean Robocop nailed
Detroit to a tee, probably Detroit in Robocop looked better. I think the other
dystopian movie our future will begin to look like is Running Man. The poor
entertained by reality TV and computer games while living in shanties. I think
the setting of that movie will eventually be pretty much dead on...
Sey, I tread carefully here because I think your conclusions are not necessarily
true, but your overall concerns probably are. Concerns about corporate debt are
valid with the caveat that corporate debt today is driven by the model that
corporations don't create value in order to survive and prosper. They
create value in order to be able to create wealth, thus the risky debt Altman
talks about. While this is made possible by low interest money
it's not a result of low interest money as you infer. The corporate
decision to trade value production for wealth production happened decades ago.
Even Mr. Altman's concern with the fed is not the low interest money (money
supply), but will the fed be able to ease off appropriately. The good news here
is this is the first fed to actually worry about unemployment and inflation at
the same time. Lastly, Mr. Altman's model doesn't include
the financial sector which is where our problem was in '07, so to say we
look like '07 is not exactly true. Debt, a problem..sure.
Kill the Fed...no.
Thanks for your input, but I find your comments unpersuasive. They are typical
Keynesian analyses, the kind that put us in the economic condition we're
in. Reagan, by the way, was Keynesian as well. Our economy is run by the Federal
Reserve, not corporations alone. The Fed is the enabler of corporate welfare and
income disparity. It is the Great Enabler of middle class destruction.
Sey, I had no illusions you would be persuaded, and I'm not sure
what's Keynesian about claiming that corporations quit decades ago trying
to create value, and instead simply create wealth for the asset holders, however
they can. Yes, believing in Keynesian principles has gotten us into
our current situation. A situation where albeit we have recessions we
haven't had society crushing depressions, which is the logical free market
solution to market inequalities. While not perfect (nothing human is) I'll
take what we have every time versus unfettered free market tyranny.
On the other hand I think since our populace will still be generally educated,
this will present a problem for this predicted future. I really can't see
millions of college educated Americans sitting around in shanty towns working
lousy jobs. Like in other societies of the past, this educated group will
provide the intelligentia for a revolt or revolution. Wealth will be
redistributed one way or another. Again, we might evolve toward that hyper
meritocracy as outlined in the article, but again, since so many will be
educated with high expectations, I really see trouble with accepting this new
Dear DN moderators:Please tell me where the following post contains
"name-calling", "epithets", "racial slurs" or "other
derogatory statement". * Comment included name-calling,
epithets, racial slurs or other derogatory statements.They fail to
mention a key reason for the decline of the Middle Class: too much cheap labor
immigration. Of course, this goes against the prevailing agenda, so leaving it
out was predictable. Every time US middle class workers make any gains,
immigration knocks it down. Such as hundreds of thousands of STEM careers
decimated due to now nearly one million H-1B and L1 workers in the USA. Not to
mention hundreds of thousands of construction and other manual labor jobs
decimated by illegal immigration.