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hilgi I do see some of your point.After ww 2 we were the only 1st world producer left standing.We were the china of the world back then, everyone bought from us.But the new deal created a safety net for the middle class to save a butload of $ without worrying about going destatuite like the 30s or earlier.And if a bank went under the would not lose there money because of fdic.
The unusual thing was a middle class composed of hourly and salaried workers and not limited to small business owners, licensed professionals and local bankers. The former are the classes that have had most of the economic pain due to increasing costs and lowered income. Purchasing power created by artificially low interest (20+%?) does not create a middle class. The lowering income has been created by off shoring industry, unlimited immigration and increasingly regressive taxation on all levels of government. The traditional business middle class has been doing quite well and the uppermost 5% off the charts.
I believe this was the major goal of the Raygun Revolution. It wanted to eliminate the riff-raff from the middle class and reestablish the eroding exclusivity of the traditional middle and wealthy classes. It has obviously worked. We can look forward to very large class low paid hourly workers, a modest size service and professional workforce and a stable but increasingly wealthy financial ownership class.
This is the essence of economic class warfare and by using the deception of credit and household equity, along with the purchase of the political system, the financial class won.
Greg,
I would say it is more of a byproduct then a goal to increase the wealth class. This type of cycle happens every 80 years or so. Back in the teens and 20’s new technologies led by autos exploded on the country. This benefited the companies and entrepreneurs who were at the forefront of the new Tech.
As stock prices increased especially in the new companies many people were made radically wealthy. It also increased our lifestyle for a time but the real benefits of the cars and electronics were not realized until the 50’s. By the time the emerging companies hit full market station in 1929 the top 1% had a huge percentage of the wealth. That percentage didn’t bottom until the late 70’s. Then the next tech cycle kicked in and started the process all over again. The cycle for the next 40 years will be a smaller percentage of wealth in the hands of the top 1%.
Of course the more we tinker with the natural cycles the more the elite (govt and the rich) will benefit, no matter who is in charge.
Outside of this cycle we do have problems with corporate charters and the monetary system but that is another topic.
hilgi I do see some of your point.After ww 2 we were the only 1st world producer left standing.We were the china of the world back then, everyone bought from us.But the new deal created a safety net for the middle class to save a butload of $ without worrying about going destatuite like the 30s or earlier.And if a bank went under the would not lose there money because of fdic.
Tired, The New deal was a lot more than FDIC and most of it was done away with in WWII.
The banking system is corrupt and our debt based monetary system is a scam. FDIC is just an allusion to keep the bankers rich. We lose our savings through erosion as we pay more for their bailouts etc. There is no real safety-net, only transfers from one group to another, with the elite taking their cut all along.
The depression was natural cycle recession turned into depression because of Hoovers massive spending programs after 1929 and continued under FDR. It is not widely know that FDR campaigned against Hoover on a small-government platform, promising to cut government, taxes and tariffs, preserve sound money, and allow for the liquidation of bad assets.
Last edited by hilgi; 01-26-2010 at 02:04 PM..
Reason: formating
Blame Henry Ford. He WANTED to raise the wages of his line workers well above what they "naturally" would have been, so they could afford to buy his cars. When unskilled and semi-skilled labor (everyone from garbagemen to Vegas blackjack dealers) could make middle-class wages, returning soldiers could attend universities for little to no cost, and would-be homebuyers didn't need 20% down because of VA and FHA, the traditional barriers to entry into the middle class largely fell. The benefits of this to the wealth of the United States were HUGE. I'd be willing to bet that there are literally millions in today's professional classes who had parents who worked in union jobs and could afford to send their kid(s) to college, often without student loans. I'd also bet that most of the managerial and professional class of the 60s through the 80s went to college on the GI Bill. The GI Bill and government-backed mortgage insurance (as opposed to government-backed mortgage securitization, which is a different animal entirely) turned lower-class people into middle-class people, purely and simply.
So is the middle class a governmental "construct?" It certainly was in the post WW2 era and through Vietnam...and it was a huge engine for economic growth. I continue to be dismayed and appalled that some people want to roll all those programs back, either not knowing or not caring that it would return universities to being enclaves for the children of the rich, and most Americans to rental housing. Have there been excesses? Of course-- but none so vile as to justify a baby-bathwater toss.
Part of what made the middle class so big after the second world war, was the manufacturing sector we had made for ourselves. We were the last super power standing, and no other nation had the build up that we had after the war.
That, combined with a MASSIVE influx of money, due in part to the increase in the national debt during war times. Thats what made Americas middle class so massive.
Now, things have changed. Cheap labor is found in foreign countries, and people demand cheaper items for their homes. Its created a cycle where incomes have become stagnate, and items have become cheaper and cheaper. This allows for continued spending, to a point.
Capitalism, by no fault of its own, tends to lower the size of the middle class. Today, thats what we are seeing. Our middle class has been shrinking for years, but more in recent years, because of the hands off approach that the last administration took.
FDR's Fed chairman said something like this.
Think of the economy as a poker game. As long as there is enough money to play, then everyone can stay in the game. However, sooner or later, one person gets to much money, and there isn't enough to go around, and the game ends.
Thats what happened during the Depression. Money got consolidated under one group of Americans, and the rest of the country didn't have enough to keep things moving. So, the federal government went into debt, to get more money out, and it got the economy moving again.
The war just made things better.
So, without government intervention, money goes to the top. Its just the nature of our economic model. Thats part of the reason why the top 50% of Americans pay all of the taxes in this country.
What the government needs to do, is convince those with more money, to invest in our economy more. Put some of that "extra" income they have, back into the system. To do that, the government has to back the loans, or decrease the chance of loss. How they do that, I'm not sure, but thats what needs to happen.
Well we3 curently have alot more governmant intervention and more entitlement programs than ever in our history and a shrinking middle class;;at least as we know it.IMO;I thnik waht is middle class has just beeen redefined really. We actaully have a huge middle class and more poeple being upper middle class i thsi country. Certainly the american dream has changed when it use to just include s modest home but that went out the door years ago.Hoe days p[eople want different things;some want the latest cellphone;computers evry few years;totasl acess to internet;new cloth often;two new expensive cars and more often thn needed;eating out at restaurants frequently;expensive entertainm,ent options and the list goes on.Others forgo many of these things and put it into housing;saving for retirement and family vqcations which is pretty much what the middle class did in the haydays of the 50's and 60's.Most people then were really lower midle class by todays standards really.Capitalism allow all these things while if you had socialism you would have the rish or elite and evryoen else would be poor mostly unless they were doing illegal things.
texdave - I think you have cause and effect entirely out of phase. All the cost items you listed are trivial compared to the real, not speculative, value of a home and an education. These are the foundation of a middle class lifestyle. The wealthy, through their control of government financial regulation made home ownership a losing proposition by artificially raising prices and mortgage costs for the buyers and increasing the returns to the bank speculators. Many home buyers were steered by mortgage companies to buying a much more costly home than they could afford. Yes, people should have resisted (we did) but most fell victim to sleek salesmen with very sophisticated pitches. Many of the lower and mid-middle classes have lost what little equity the may have had in the crash of this price bubble. Many already middle class home builders also went broke because of the crash.
Since Ronald Regan we increased the cost of education by gutting the GI Bill. It helped my wife and me but it did not provide nearly the support it did for WW2 Vets for the Vietnam Veterans. The WW2 guys received room, board, books and tuition for most any school they wanted. My GI Bill provided enough money to pay the space rent on a house trailer (no provision for married couples on campus) and buy beans and franks for the duration. Not the same deal at all. We managed to get through school because my wife’s generous family and part time work. I believe we both would have done better in school if we did not have to spend time commuting and working but that is just hindsight. The government did have a grant program that we were not qualified for and a loan program (Nixon’s invention to replace government grants) that we used.
Since then the GI Bill is still inadequate, although the military will pay for your education if you stay in. That is better than a private sector employer but the private sector does not expect you to be a target in the Imperial Wars. The big difference has been the elimination of government scholarships and grants which did not have to be repaid with loans that require repayment as well as subsidize the banking industry. This has resulted in many students graduating under a tremendous debt load owed to the private sector. IMHO a better system would have been for the government to loan the money at government rates and arrange for a permanent income tax percentage increase to get the loans repaid. That would allow students to study things they wanted to instead of treating college as an advanced trade school in order to repay the usurious debt. One of the results of debt based higher education is developing an over supply of business school graduates and a shortage of high school teachers, scientists and engineers.
All in all our government’s policies have been designed to slow the acquisition of wealth by the working class by trying to eliminate unions to reduce labor costs, reduce the advancement of the lower middle class by replacing a stable real estate funding with a speculative disaster and mid middle class by making college unaffordable for almost everyone but the elites.
The result of this return to the beginnings of the 20th century will be a working and lower middle class that rent instead of own their homes, an mid middle class with fewer college educated children, particularly women, and a decreasing value real estate system as fewer people outside the elite that can afford homes.
This is social engineering on a grand scale and has little to do with unrestricted capitalism but a lot to do with crony, monopoly, loss prevention and other fixed market capitalism. Economically our system is a market for the masses and a protective socialism for the few.
Comment on GI Bill.
I believe one of the reasons the GI bill benefits were reduced was to increase retention so enlisted or drafted military would stay in instead of getting out and going to college. I believe this was exacerbated by the increasing number of blacks in the service. (The military was officially color blind but I knew a lot more black laundrymen than radiomen in my short stay.) I considered staying in the Navy, but given my situation I realized if I stayed in ‘Nam I would die in ‘Nam, I took my DROS and went home to one of the most depressed areas of the country.
Of course the middle class was built by means of government programs. We can go all the way back to the New Deal, with its programs designed to protect the safety and integrity of banks and other investments, amortizing mortgages, and Social Security to keep retired people out of poverty.
After World War II government policies like the G.I. Bill enabled millions of (primarily) men to become the first generation in their families to attend college and opened the door to careers in knowledge-based industries. Couple that with homeownership assistance to veterans and the Interstate highway system, which gave rise to the growth of the suburbs, and we have a massive program of government aid to create a strong and healthy middle class.
The Republican project since Reagan has been to favor the rich, and to attack programs that support the poor and the middle class, and the stagnancy of real wages and the wealth gap are the fruits of that program.
What is ironic is that the Republicans have been able to enlist the support of so many middle and working class people whose interests are the very thing that the Republican Party has been attacking, in large part by convincing them that the changes that Republicans are pushing, like reductions in the capital gains tax or elimination of the estate tax, benefit the middle class, and not primarily the rich. In addition, there is the attitude, which we see too often on these boards, that people have what they have strictly because of their own heroic efforts, and that they owe nothing to the contribution of government to stable markets, a stable financial system, national defense, roads and other infrastructure, and the existence of the middle class that makes their successes possible.
Last edited by jackmccullough; 01-27-2010 at 06:56 AM..
A thin middle class means thin purchasing power and thus a thin economy.
The poor cannot purchase anything but subsistence items like basic foods and shelter.
A subsistence items market cannot support a strong economy.
Like it or not we are all in it together.
You don't need a "strong economy" nor a "middle class", and you gain nothing by using one contrived concept to define another contrived concept.
The goal is the general well-being of our nation, and furthering that is the measure of our success. It is of no significance that 90% of the people have iPods, if 10% are homeless unfed beggars in the streets. Much better that there are no beggars and no iPods.
The important thing is to assure that everyone can afford your subsistence items. When you reach that goal, then your "middle class" has saturated at 100%, and you can afford the luxury of dangling toys in the marketplace to convert the surplus wealth of the middle class into the opulence and extravagance that the greedy so richly deserve.
If there is something to sell then you will have a middle class. For as long as there have been merchants there has been a middle class. This pre-dates the United States.
Now, when society moved into factory work and people stopped making products "themselves" then the middle or merchant class was replaced with what we have now. It lays largely in the fact that they work for others, not for themselves. This is what Marx was pissed about. It doesn't matter if you agree with him or not.
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