Archive for September 15th, 2010

Why is the middle class disappearing? Why are women suddenly making more than men in their peer groups? Why is consumption in China all of a sudden looking like it could outpace the U.S. one day?

These questions might seem unrelated, but they’re not. They are all the signs of the anti-Christ.

No wait. What I meant to say is that they are the predictable results of capitalism. But it’s an easy mistake to make.

We all remember “Leave It To Beaver.” The classic nuclear family protected by middle class trappings and postwar prosperity wrapped up in pretty shirtwaist era dresses. A whole slew of new articles have been appearing in the major magazines pointing out what a lot of you already know, which is that Beaver is dead. And no, I don’t mean that he died in Vietnam after getting a punji stick infection. I mean the American dream of the 1950s–to have one breadwinner with economic security and a stable pension who can also provide for a family with two or three kids, all of whom can afford college–is disappearing. It was a reality so recent and so palpable that it seems now with each passing year to have been a pernicious joke played by God or the Shriners to make us feel that much worse now that it’s disappearing.

But it seems in retrospect Ward and June lived at an inflection point in history–a vast expanding post-war boom on the one hand and a strong labor movement on the other that protected workers, where a floor was set on wages. Where one of the world’s best educational systems allowed a smart person to go to class, and more important, allowed him to leave his class, too. Ward cringed when the Beaver wanted to be a garbage man. Why? Because American upward mobility has been the siren song drawing immigrants up through dry bone desert nights and the recurring source of American pride for both left and right. It’s one of the few things we all agree on. That and Willie Nelson.

Now it’s being chiseled away at, and everybody’s got their own parochial ideas about why it’s happening. Timothy Noah at Slate is currently publishing an incredible series on the vanishing middle class that I highly recommend. The good news about him is that he approaches new ideas with intellectually curious humility, not the dismissive, counterintuitive arrogance of lawyers (like many other Slate writers). In this particular case, he tries to examine all sides of the issue.

First the right wing: to the extent that they care at all, they seem to think the vanishing middle class is an immigration issue. It’s simple supply and demand. Paco the wetback is coming over here to pick your grapes and tomatoes, and because he’s bringing his cousins, the dollar that would go to your cousin gets divided up into nickels. After all, the tomato doesn’t care.

This concept is so easy to understand that I can almost forgive you for believing it.

I give you an other image: Paco the Wetback Accountant, crossing the border with his clothes in a plastic bag, dodging concertina wire and rattlesnakes and the Minutemen all so that he can come over to set up an office of beaverboard in a strip mall and steal your tax planning clients with his cheap Mexican calculator.

Sound stupid? Yes, immigration would be harming our middle class, but only if 1) Immigrants were coming to America with middle class skills (they aren’t), and 2) They were fanning out across the U.S. (they aren’t).

But let’s skip the loin and go right for the ribs: right wingers don’t care if there’s a wealth disparity anyway. The rich right wing have got the fundamentalist tenets of capitalism on their side which says, “If I have the capital, I’m already doing my job. You can party in my house. But don’t forget who owns it.”

You might say, “So what? That how capitalism ought to work!” But you might also know people (as I do) in all walks of life who are overpaid at their jobs. Similarly, I think the rich are vastly overpaid for the work they do in our economy. At the end of the day, the main thing they want is to suck more off the top than they put in. That’s what private equity investing is. I drink your milkshake.

Those conservatives who aren’t rich … well, they confuse me. They seem ready to fight and die for the most insignificant tax breaks you can imagine. They are either perversely wedded to ideology or ready to give up better roads and schools for a plasma TV.

For more proof about how conservatives don’t care about wealth disparity, you only need read an article by the rare one who does–say, a National Review writer who brings up the shrinking middle class issue to his fellow conservatives and gets himself roundly booed for it. Read how he sheepishly has to apologize that he’s not arguing for socialism. For conservatives, there is no middle ground between a discussion about wage disparity and collective farming.

Liberals have their own problems to work out. My personal feeling was that Ronald Reagan ended the middle class by cutting taxes on the rich and destroying labor when he fired air traffic controllers. But that’s an oversimplification, too, because wages started to stagnate in the 1970s, before Dutch took office. Still, the periods in the U.S. when there is an aristocratic tendency toward wealth disparity have usually been those periods when government was least involved, in other words, when Republicans are in charge, the poor see income stagnate and the rich don’t. That’s not because they’re stealing. It’s because they are letting the engine run without controls. And over time, the engine diminishes the rewards to those with redundant skills (in other words, regular people) and rewards those with the capital (mostly the rich, even if, like me, you have a mutual fund and benefit slightly).

When your labor is redundant or commoditized or can be taken over by a machine, your value declines. This is as true for doctors as it is for mechanics. To be paid more, you have to offer something that is not routinized. You have to find a place where the market could be working better and see how you can be taking advantage of it. This is one of the beauties of capitalism because it creates wealth where there wasn’t any before. But when it decides that your labor isn’t necessary any more, screw you. A doctor surrounded by lots of other doctors won’t make more money. Only a frontier doctor will. Problem is, the frontier is gone.

Today it’s in China, a country with a 60% rural population rapidly urbanizing and rapidly creating a consumer culture–which is the economic potential of a supernova. What you call the American dream will in 50 years be called “The Chinese Dream.”

The nice thing about America circa 1950 and its nice middle class was that the lines were blurred enough that anybody could conceivably jump classes (up or down) according to what their spirit desired. If a stupid Marxist attacked you for your bourgeois indulgences like perfume and chocolate, you could rightly say “a world in which everybody could chase perfume and chocolate indulgences would be a pretty sweet ass world.”

To keep your middle class, you need new industries to be borne up and you need more ways for more people to participate in it. It means giving business incentives, but it also means educating your people and safeguarding their wages with rugged regulation. There is no way around this. If we ignore it and let the anti-government fanatics have their way, America is going to become a world of plutocrats and look more like one of those tiny countries with a landed class that sells rubber and coffee and lives off the backs of peasants. Despite what flag-waving faux-patriots at Fox News say, our greatness will surely be over.

*My original title for this post was “Kiss Your (Middle C)lass Goodbye,” but then I saw after the fact that the Huffington Post already took that headline a few months ago. This is the problem with trying to be original. Too many other people do it first.

Image: healingdream / FreeDigitalPhotos.net

Read Full Post »