Tuesday, December 31, 2013

Joel Kotkin — Neither Party Dealing With More-Rigid Class Structure

Diminished prospects – what some describe as the “new normal” – now confront a vast proportion of the population, with wages falling not only for noncollege graduates but also for those with four-year degrees. Overall, median incomes for Americans fell 7 percent in the decade following 2000 and are not expected to recover, according to some economic models, until 2021.
This decline has infected the national mood. Today, more middle- and working-class Americans predict that their children will not do better than they have done.Overall, almost one-third of the public, according to Pew, consider themselves “lower” class, as opposed the middle class, up from barely one-quarter who thought so in 2008.
It’s not surprising, then, that the vast majority of Americans believe the president’s economic policy has been a dismal failure, at least for the middle and working classes. Federal Reserve monetary policy, in particular, appeared to favor the interests of the wealthy over those of the middle, yeoman class. “Quantitative easing,” notes one former high-level official, essentially constituted a “too big to fail” windfall for the largest Wall Street firms, and did little for anyone else. Faith in the economy, despite the soaring stock market and increased price of assets, has remained weak. Americans by a 2-1 margin rate the economy negatively.
These realities helped spark both the Tea Party and the Occupy movements and underpin the support for such disparate figures as Sarah Palin and Elizabeth Warren. At the same time, outrage at our current economy has undermined public esteem for almost every institution of power – from government and large corporations to banks and Wall Street – to the lowest point ever recorded.
New Geography
Joel Kotkin | Executive Editor of NewGeography.com and Distinguished Presidential Fellow in Urban Futures at Chapman University, and a member of the editorial board of the Orange County Register


googleheim said...

Let them eat jelly beans

Ryan Harris said...

The Walmart/Costco model of requiring producers to move production out of country has been amped up on steroids in the last couple years. Companies, like GE and the other usual suspects are going around, buying up US engineering, technology and research companies, to shut them down, layoff the US workforces and reproduce the products with R&D and engineering in the EM, where it can be done more cheaply. EVERYTHING is done out of country, no management, no research, no development, not even advertising or distribution folks anymore. It has been alarming to watch it accelerate as companies have become so adept at outsourcing that they move in and shutdown multi-billion dollar companies in a matter of months, with nothing left. 5-10,000 upper middle class employees gone at a whack.

With China and Mexico and most of the EM lifting their masses from the low wage nation status to middle income, and have thrown a large part of their national wealth to educating the generations about to come into the workforce, the future is dim for the US upper middle classes. That college dream that was promised to result in ever rising incomes and roads paved in gold has a pretty dim future, indeed. The EM doesn't want to make your shoes or send their kids to put a new roof on your house, they want to do your job for half what you do it for. And they are better educated, hungry and willing to work twice as hard as you.

Instead of fixing the rules, laws and understanding of the economy to address the micro and macro economic issues, the academics were selling their snake oil. Now, they are a decade too late to prevent the catastrophe to the upper middle classes.

Tom Hickey said...

From what I am hearing, it's not just lower wage but no regs, and even more so the regs. Companies prefer a "free market" in which all negative externalities are socialized.

Ryan Harris said...
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