Middle Class

The U.S. middle class continues to shrink as the median household income declines, a process analyzed by the Pew Research Center for those who are pleased by numbers. Twenty first century America seems destined to be not only post-Christian and post-constitutional, but post-capitalist as well. Generally, Americans are no longer regular churchgoers, election losers no longer accept the winners’ right to govern and the control of capital is narrowing.

The historic human economic norm remains a relatively few with wealth and power entrenched over masses of proletarians, a model that fits many places today. Significant middle classes have been rare and as we are seeing, short lived. There are very basic reasons for that.

Exceptional wealth is produced by exceptional people, always a small group in society. Most produce no more than they need to maintain themselves and another few fail even that. That is a reality of the human condition. Accumulated wealth confers political power that in human hands is turned first to satisfy its owners and then to protect and aggrandize that wealth. Inevitably then, wealth and government join their interests. Somewhere in human DNA there are probably genes conveying that behavior. While exceptions have always existed, that behavior is in an economic sense, universal. Ambitious politicians that have promised to alter these realities by various plausible means have never done so, though they have invariably enriched themselves and continue to do so.

America’s founders tried to game all that via higher power granted to the people by God, power that, when God outranks government, obviates any inherent power of the state. The state’s power is then delegated by the people and the state must answer to them, reversing the traditional arrangement. But today, God has been fired, taking with Him the people’s power over the state; we are back to traditional relationships. Such is progress: America’s founders moved God from behind King George to emplace Him behind the American people; now in their wisdom, those people have replaced God with Government. Not perhaps, a comforting time to recall that government is a bunch of contending and often corrupt politicians.

Finally, governments are annoyed by the existence of a middle class; a too large, too wealthy, too independent and too immovable lump that similarly to a large, independent church, is often seen as an obstacle in the preferred path of the rulers. From a ruler’s viewpoint,the bourgeoisie are deplorable, never seeming to know their place.

All that may help analyze the seldom explained middle class vanishing act, a process clearly reflecting specific government policies. Let’s list a few of them (in no particular order):

  • Political corruption of the U.S. labor movement overpriced U.S. labor in an expanding, increasingly competitive world market. In competition with the rest of the world, higher costs are unsustainable. That has moved U.S. capital to China, Mexico et al for cheaper labor, finances labor replacing robots and supports the importation of cheaper foreign workers.
  • With higher paid jobs diminishing, jobs available are increasingly in lower paid service categories.
  • Public education produces too many people inadequately qualified for productive employment.
  • Ever-increasing government regulation has imposed costs and inefficiencies that join high labor costs in reducing competitiveness.
  • Increasing total U.S. government spending (Federal, state and local: approximately $6.9 T) is money diverted from the private, productive economy. Additionally, ever growing government debt financing of the spending is a prior claim on private capital, foreclosing future production.
  • The money, credit and market manipulations of the U.S. Treasury and the Federal Reserve have, by subordinating economic to political goals, restricted the productivity of capital and the efficiency of markets. The political “too big to fail” preservation (at great cost) of huge, moribund assemblies of relatively unproductive capital have prevented its more productive use elsewhere. Politically motivated, artificially imposed low interest rates discourage savings and destroy pensions.

In short, government interventions and extractions have stultified a previously relatively free market economy. Less capital is freely available and too much is crippled by debt. And this has been accomplished simply by doing what governments do, as the similar conditions elsewhere in the world will attest. Flooding the politically constipated market with fiat money has papered over these effects for now, but fiat money is not capital, only its stand-in and reality’s arrival is inevitable.

Three notable conditions resulting from the foregoing seem predictive: First, that the government policies described are continuing with little likelihood of significant change, second, that these policies prevail at varying degrees worldwide. Finally, that history and economics tell us that such policies (especially the debt), have always and everywhere amounted to a political balloon headed for an economic pin.

We are reminded of two famous quotes from our past: Benjamin Franklin’s reply to the woman who inquired of him what the Constitutional Convention had provided when he answered: “A republic, if you can keep it” is the first. The other is classic Alexis de Tocqueville: “The American Republic will endure until Congress discovers that it can bribe the public with the public’s money.”Middle Class

About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much) Couple of degrees in government, a few medals in figure skating; just reading and suspicion for economics ...
This entry was posted in Economics, Goverrnment, Politics, Uncategorized and tagged , , , , , . Bookmark the permalink.

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