Tuesday, September 7, 2010

Coasting on this thing they called the "middle class"

Yessir, when I read articles about stagnant wages, while the upper 1% control a historically high and growing percentage of America's dough , it makes me get itchy. Historically, it's been bad news when that happens. Ain't pretty. Those types of stores make me want to start stocking up on canned goods and rations, and preparing for the coming apocalypse secure in the knowledge that at least I have beans and canned early girl tomatoes.

Even Ayn Rand acolyte Alan Greenspan thinks the wage disparity getting kind of ridiculous.

"This is not the type of thing which a democratic society—a capitalist democratic society—can really accept without addressing,"

I believe that our current middle class is largely supported by the momentum of the middle class before us. And as they pass on, we'll see an increasingly faster rise in wage disparity.

Here's a bit from the Slate article I just read:

It's generally understood that we live in a time of growing income inequality, but "the ordinary person is not really aware of how big it is," Krugman told me. During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth—the "seven fat years" and the " long boom." Yet from 1980 to 2005, more than 80 percent of total increase in Americans' income went to the top 1 percent. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20 percent. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.

With the top 1% in America controlling 24% of the wealth, and knowing that many younger Americans just out of high school and college have been hit hard by this economic recession...

According to the Bureau of Labor Statistics, people 16 to 24 are experiencing the lowest level of employment -- that's EMPLOYMENT (not unemployment) -- ever recorded by the BLS: 48.9%.

I believe we're well within one generation, or twenty years, of seeing the full force of the growing income inequality. And that is because, I believe we're being carried by the spending momentum of the previous generation that actually had a strong middle class.

As soon as many of the older individuals start passing on, the contraction is going to be felt. There's got to be quite a bit of financial momentum in the older generation that won't be found in the generation behind them. Pensions are a relic of the past. Social Security is in question. Housing and investment values have been contracting or stagnating.

There's currently an income flowing into the older generation that they have been receiving even after they left the labor force. And that income is feeding the economy, possibly holding it up more than we're aware. When these dudes pass on...they're not going be leaving a job opening behind for another person to occupy. Their pension or social security income won't be re-directed to their next of kin as inheritance.

It will simply be money that is no longer in the community. Gone.

Without something dramatic taking place, there will be a net decrease in money held by the middle class and in our towns over the next 20 years. Between that and the effectively stagnant wages for American households for the past 30 years...

...let's just say I need to get canning.

1 comment:

Don M said...

September their is a "new" military study created for “change” coinciding with the Coast Guard 20 year plan, and the EPA, — over two years after Senator Boxer killed the legislation created by the largest elected legislative voice of the American people,– they will meet to discuss their “new findings” and might have “new” recommendations. Will they continue on a slow course for change to protect foreign economic interest, or will they speed up mandatory requirements allowing faster protection of our waters and economic growth for our country?
The following report for Congress in DEC 2009 that explains that national ballast water legislation would do the same thing as tariffs, plus protect our environment from the carbon footprint and dirty water trail of foreign ships bringing foreign manufactured imports into our country, stealing jobs from Americans. “Although estimates of the costs of ballast treatment may be imprecise and vary from vessel to
vessel, there is some general agreement on average costs.14 For example, it may cost an estimated $400,000 per vessel for modification of container/bulk vessels to use onshore ballast water treatment facilities at California ports. More generally, the cost of retrofitting vessels to treat
ballast water has been estimated at between $200,000 and $310,000 per vessel for mechanical
treatment and around $300,000 for chemical treatment.15 Most of this expense will be borne by
foreign shipping companies, as the U.S. flag fleet is a small percentage of the global fleet,16 and
likely passed along to consumers of products imported on these ships.”