Saturday, October 23, 2021

Where Has Our Middle Class Gone?


When our Founding Father's sat down and tried to create a new country, what they had in mind was a nation of " yeoman farmers and shopkeepers "; basically, a country of the middle class. It's a matter of history and economics that nation's with a strong middle class are the most stable

These countries have the highest quality of life. Their citizens are typically the happiest and their governments are stable. They are well educated. They are the most innovative. Unlike nations in Latin America, Africa, the Middle East, and parts of Asia which never really developed a strong middle class, those with a large strong middle class are, frankly, the most successful.

The central problem with Communist countries is, ironically, they are all "equal" (some are more "equal" than others). Karl Marx introduced the Communist mantra "Each according to their needs", which implied that everyone would be equal economically. Therefore, the state owned everything and allocated it as it saw fit.What's more "equal" than that?

Under Communism, there's no private property, no Wall Street, no family run businesses. Nada. The state doles out whatever it said you needed. Which, on one hand, was kinda nice, especially if you were a bit lazy. It meant that you got paid the same as the other bloke without doing all the work.

Everyone gets a similar small apartment, which you may be required to share with another family (or two), including the bathroom and kitchen. You get the same bare minimum healthcare. You may get lucky and receive the medicine you need, which is often scarce. And you get to stand in the same lines and stare at the same empty shelves.

Of course, quotas were imposed, but all that did was just produced low quality products. Naturally, those in government got more. They also got better accommodations and access to a slightly better availability and selection of food or other items from government only stores.

The result was a lack of incentive. A lack of motivation. Why try if it doesn't benefit me or my family? Of course, that translates into a lower quality of life for everyone (except the ruling class). It creates a society with a certain dullness; a sterility to society. At least everyone could share the same misery equally.

In non-Communist countries which never developed a vibrant middle class, like those found in parts of Asia, Africa, Middle East or Latin America, were due typically to backward (and often brutal) authoritarian regimes, be they tribal, a monarchy, theocratic, or had the facade of a democracy.  

The reasons they failed to develop a broad middle class are various, but usually the result of an imposed restriction in who can and can't be educated; high taxes on the masses; a lack of investment in the civil infrastructure; restricted land or business ownership; restrictions in who can or can't vote, and so forth.

As stated above, these are countries which are controlled warlords and/or autocrats. Many use tribal, religious, or partisan connections to gain and keep power (which is usually maintained through fear and violence).  These countries are almost always as corrupt as they are poor. Not surprising, they are usually dependent on foreign handouts to keep the corruption going, with the citizenry getting literally crumbs.

America was, whether by design, fluke , or divine intervention, came into being as mankind's greatest hope to rise above the much of poverty and ignorance. Here, you could own property, start a business, get an education, and believe whatever you wanted to believe.

Not even the most progressive country in Europe or Asia could boost of the same opportunities. There was no social, caste, or class restrictions. You didn't have to ascribe to a state religion. Innovation was rewarded. It was even possible to hold office. If you were determined and willing to work hard, there was nothing you couldn't accomplish.

All of this was made possible because we were a Constitutional or democratic Republic of "yeoman farmers and shopkeepers". America's success was built on and by its broad middle class. But, where is that middle class today?

Since the 1970's, America's middle class has been on the decline. Meanwhile, the nation's wealth has been increasingly concentrated into the hands of fewer and fewer individuals and corporations, whose grasp has spread out across the globe.

The top 1% controls twice the wealth of the bottom 90%.  Just eight billionaires control more wealth than 50% of the world's population. Three of them---Jeff Bezos, Bill Gate and Elon Musk---are wealthier than the bottom 50+ percent of Americans. That's over 160 million Americans.

As most of us already know, we are no longer a Constitutional Republic, though we still pretend to be the way ancient Romans did under the early decades of the Caesarian dictatorships. We are a defacto Corporatocracy, which is a merger or close partnership between government and big business. So close in fact that it's sometimes difficult if not impossible to see where one stops and the other begins.

This Corporatocracy doesn't exist on its own. Like every governing system, it has managers---very rich manager. These managers are called Oligarchs (though some prefer the name "plutocrats" or "kleptocrats", it's all the same), and they literally own the government. While some members of Congress, the Presidency, the Judicial system, and bureaucracy which keeps things functioning may be a part of the Oligarchy, all of them in some way work for it.

The Oligarchs write the laws (which is why there appears to be one set for us and another for the rich). They dictate foreign and domestic policy. They decide on whether we to go to war or not, who are latest ally or enemy is, and they own the media which they use to manipulate our opinions. They provide us with the same "bread and circus" the Caesars of old did, but on a whole other scale.

In fact, almost everyone in Congress is a millionaire. Many are multi-millionaires. Those not a millionaire going in are almost always one by the time they come out. The ruling Oligarchs have made it virtually impossible for the average citizen to participate in the political process thanks to Citizens United which allows nearly unlimited corporate donations while capping us; partisan gerrymandering; and the absence of term limits, not to mention a fair amount of nepotism among with super wealthy.

What made America great was its middle class, which has been in decline for the last 50 or so years as I said earlier. A recent report shows that the wealthiest top 10% now owns 70% of all the nation's wealth. That's more than the middle and lower classes combined!

According to the OECD (Organization for Economic Co-Operation and Development), more than half of the world's industrial nations have a larger and more vibrant middle class than the United States. The top 1% own more than at any other time in our nation's history. For that matter, the top 10% has never had it so good either, while the bottom 50% has never owned less or had a higher percentage of debt.

When we look at income inequality, it shows a similar picture. Between 2009 and 2019, the bottom 90% saw their wages increase by just 8.7% while wages for the top 1% increased 20.4%. As an aside, the top .01% saw their incomes increase by 30.2% for the same period. What about working more?

From 1979 to 2019, worker productivity went up by 72%. Nevertheless, hourly wages increased just 17% over the same period, which almost negligible. The hourly wage ratio between the average employee and CEOs is $830 to $1. Since 1985, Wall Street bonuses increased 1,217% .

It's worth noting that union membership comprises just 6% of the total workforce (it's highest in public sector jobs). Today, union's seem more interested in keeping workers in their seats and off picket lines. The days of activism unions are long gone. Unions today largely serve the interests of management, leaving the average employee on their own.

During the last 19 months of the COVID pandemic, the rich got richer. How much richer? 62% richer, or to put it into dollars, they got $2.1 trillion dollars richer. Before the pandemic, there were 614 billionaires. Now there are 745, and practically all of them pay less income tax than the average American.

One of the hallmarks of a strong middle class, and a strong economy is a well educated work force. But, as readers of A/O know from previous articles, America is consistently ranked toward the bottom of industrialized nations when it comes to math and science (which is dominated by mostly Asian countries).

In math, we averaged a score of 478, which was below the OECD average of 489. Countries like Singapore, Macao, Hong Kong, Taiwan, and Japan all made up the top five. In science, we did a little better with a score of 502 compared to a OECD average of 489, but again, failed to crack the top echelon held by Singapore, Macao, Estonia, Japan, and Finland. So why is that a big deal?

Education is the key to not just productivity, but to innovation and future economic growth. A well educated workforce attracts businesses with above average paying jobs. That brings a greater tax base which improves the infrastructure, provides more social services, and attracts more businesses, and so forth. It also encourages innovation, which creates new industries, new businesses, and new jobs.

In terms of healthcare, we were once the world's leading nation. Now we're 27th. We also have one of lower life expectancies of any industrial nation too (26th out of 35 OECD nations).  In terms of quality of life, we are again ranked in the lower tiers, often behind Europe and especially the Scandinavian countries.

 In the area of "social progress", we're 28th. Norway ranks first. In terms of freedom, we're ranked 17th according to the Cato Institute's "Human Freedom Index", and labeled as a "flawed democracy" per the Democracy Index . New Zealand and Switzerland were ranked one and two.

The one thing we do seem to excel at is war. We spent $725 billion dollar in 2020 on national defense, not including what is outsourced, or what we spend on intelligence or national security. We spent more money on just defense than the 11 largest economies...combined, including China and Russia.

Approximately 11% of our national budget goes to the military along with half of all discretionary spending. Remember that the military, industrial, and technology contractors also make up a large portion of the ruling Oligarchy.

However, while that's a lot, we spend the bulk of our nearly $4 trillion dollar budget on social services. 73% to be exact, which includes Social Security, Medicaid and Medicare, Veteran benefits, healthcare, and education. We also spend another 6% to service the interest of our national debt.

So, what can we do about it? Obviously a Corporatocracy run by an Oligarchy isn't what our Founder's had in mind for this country. We must come together again as a united nation. If we don't, we risk splintering into factions, and that will give the ruling Oligarchs the excuse they need to declare martial law and turn our nation into a police state. 

The elites eagerly await the day when they can proclaim "Novus ordo seclorum"---"a new order of the ages", but we must embrace another motto, "E Pluribus Unum"---"out of many one".  We must restore our nation's middle class, and with it, our Republic.  Want to know more? Check out the links below.               

Determining Where U.S. Ranks in Education

 

The U.S. Education Rankings Are Falling Behind The Rest ofthe World


Income Inequality


The US Is Officially A Banana Republic


U.S. Defense Spending Compared To Other Countries


Announcing the 2020 Social Progress Index

 

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