Death of the American middle class??

2015-12-30_11-02-50.pngBut maybe the “death of the middle class” conclusion isn’t obvious at all. And perhaps there is more to the Donald Trump phenomenon. Yes, the modern left instinctively sees such studies as further confirmation that inequality is the nation’s premier economic challenge. Much of the media agrees. The rich are gobbling up more and more of the economy’s bounty, leaving less for everyone else. Case closed.

The Pew results are more complex and nuanced than that, however. One reason the middle class — say, three-person households making between $42,000 to $126,000 annually — share is declining is that the upper class is expanding. Back in 1971, 14 percent of households were upper class, and 61 percent were middle class. Today it’s 21 percent upper, 50 percent middle….

Now, none of this is to downplay the particular economic strain on lower-income Americans, especially those without a college degree. There is evidence that real wages for male workers without college degrees have been stagnant or falling for decades. And those are Trump’s biggest supporters. But the billionaire is competitive even among the better educated. When growth goes away or even recedes a bit, bad things happen to the American psyche.  Now combine that with fears college is becoming more necessary and more unaffordable in a time of expanding automation. The emergence of Trump or some populist like him seems inevitable.

SOURCE:  The American middle class is doing better than you think.

This is a very interesting Pew study that kind of confirms what I have thought all along. That is that there are still plenty of households who have more than enough discretionary spending to keep the economy going. If there wasn’t then who are the targets for all the extravagance shown by most cable TV shows.

If you are to believe what you see on TV then all of us should be striving or at least dreaming of backyards filled with fire pits, outside dining and living areas and covered with expensive slate. If there is no discretionary spending left then who are all these people? After all a billionaire only needs so many fire pits.

I have to admit that when I was making close to a six figure income I didn’t consider myself well off. Maybe that was because of my continuing penny pinching from my poorer years. I just couldn’t see constantly spending more and more.  When I retired in 2000 we bought a 1928 farmhouse that had gone through a couple of badly done rehabs. We spent about 70% of the original purchase price in renovations. Since that time our only expenses have been repairs. We are satisfied with the way things are and don’t have much desire for all the latest “improvement” so many say we must have.

Getting back to the original thoughts here, yes the middle class is definitely shrinking but still, as shown above, it accounts for half of all American families. Only about 20% of us really worry if we can put food on the nightly table but that is 20% too many. Then there is that 1% whose power has grown exponentially and have more money than they could ever spend but still savagely seek more and more.  And they are getting it thanks to decreases in taxes beyond sanity…

Poor Little Rich Kids…

RJC - Best of the best BannerI know I shouldn’t nominate myself for the best of the best list but when I ran across this post from October 11, 2011 I couldn’t resist.  It seems it is even more applicable today than it was four years ago.


This excerpt from a Wall Street Journal article peaked my senses. It seems the rich, who we give massive tax breaks,  are aware that their kids will probably blow through their inherited wealth after they are gone.  What a bind to be in!  I bet they take all this planning and  trustees as tax deductions. It seems very ironic that while most of us are just trying to stay out of the poor house, and in any other house at all, there are those who worry about the other end of the spectrum.

Instead of “cleverly written trusts” and “carefully chosen trustees” how about just letting them make their own way in life like the other 98% of us do? Who knows, maybe Paris Hilton would even be a productive member of our society if she had not inherited so much of granddaddy’s wealth.🙂 Up until recently (the 1980s that is) the government taxed wealthy estates so that a significant part of the accumulated money could go back for the common good.  Our country was even established around the ideas that aristocracies are a drain on society. They thoroughly renounced the European version when we formed our country. In fact it was not long after our revolution that the French also rebelled against their aristocracy in a very bloody fashion.  So how is it now that we do so much to retain our version of aristocracy that makes up the top 1% of our population but controls almost 50% of the country’s wealth?

OK, here I go again with the “Walters plan” for accumulated wealth.  I know we can’t force the super rich to allow their children to make their own way in the world. But let’s treat the money they pass on to their children as “income” and therefore subject to the usual income taxes.  To me income is income no matter where it comes from. If you get money that you didn’t work for and you haven’t paid any taxes on  it is still considered income to you. Another part of the “Walters Plan”  is where we establish a more equitable income tax structure. Don’t tax the billionaires at a lower rate than the people who empty their trash. Let’s set a level of tax free income so that a person can get the basic necessities and then tax everything else at a certain rate and with no tax deductions. These big tax loop holes that congress seems to endlessly write for the rich, and for many others for that matter,  are one of the reasons we are in the deficit hole we are in.

But what do I know.

You Never Know….

 

“This is a great country. You never know where our heroes will come from.” – Will Rogers, 7 June 1933

One of the great things about this country is that anyone who is fortunately enough to have just the right circumstances come about can be a hero for future generations.  Many have sports heroes who they admire for their ability to do a particular thing like putting a ball into a hole, hitting it with a stick, throwing it to a teammate. I can’t say that any of those qualities make someone a hero to me. But to each his own when it comes to heroes.

My heroes are more of the intellectual or humanitarian nature. Obviously, to anyone who has read much of this post knows that Will Rogers, Thomas Jefferson, Woodrow Wilson, John Steinbeck, and Gandhi are among my heroes. This group range across the spectrum as far as wealth and influence go. Some came from poverty, some from privileged  classes. Most just went about their daily business with other people’s welfare in mind. Those are my kind of heroes.

I, like many others, have become a big fan of the british TV series entitled “Downton Abbey”. It is a story about an early twentieth century aristocratic family and all the “commoners” who served them. The intertwining of all their lives is what makes the show endearing.  I must admit that I am an antagonist when it comes to a privileged classes especially inherited wealth.  So, it somewhat surprised me to be attracted to this show.

Even up until recently many of the countries in Europe were very class oriented. That is if you were born into a particular class that is where you stayed for your life.  Moving outside of your class was just unheard of in those days. I’m sure this continues to some extent even today but I think it is quickly disappearing; at least I hope it is.

The United States is a country that has always been about opportunity for all. Anyone can go as far as their drive, ambition, and intellect allow them. That is what makes this country great.  I am troubled by the current trends toward aristocracy in this country that is taking place due to inherited wealth. The top one-percent of the population control a very large percentage of the wealth of the country.  This troubles me greatly some times.

Taking It From Somebody….

 

The difference between our rich and poor grows greater every year. Our distribution of wealth is getting more uneven all the time. . . . A man can make a million over night and he is on every page in the morning. But it never tells you who give up the million he got. You can’t get money without taking it from somebody. – 1 June 1930  Will Rogers

WealthAs Will points out here the difference between the rich and the poor has always been greater than many of us would like to see but I really don’t think in Will’s day it was even remotely as wide a gap as it is today.   The latest statistics show that there is about $58 trillion of wealth in the U.S.  But as the chart to the right shows 80% of the population  controls only 7% of the wealth. That is about $10,000 per person for 80% of us. The top 1% average $7,000,000/person.

But as Will further points out that there is just so much wealth that can be owned. There has been a twenty fold increase in billionaire in the last twenty years.  In order for the money to come to them it had to come from someone else. Of course we all know where it came from. It came for the wages and benefits of the 80% that have actually decreased over that same period of time.

I’m not a financial wizard but it really doesn’t seem like rocket science to me to understand that if we want to grow our GDP we must have citizens who have the money to buy additional goods and services. The 1% can only buy so many jets and yachts.🙂   In fact most of their increased wealth is likely just sitting in off-shore accounts accumulating interest.  When the elite among us insist on stagnating wages there are no additional resources to grow our economy. It is a Catch-22 and that I can understand so why can’t the big shot economists in the gOp figure it out?