The Death of the Middle Class, Part One
It’s important to distinguish between one’s politics and likely reality. What I mean is that one’s politics is based on some high but reasonable percentile of the possible, a lofty goal. One’s planning, however, should be for the likely reality. The following is not what I want to happen, but it is what has happened and will likely continue to happen:
This morning I had occasion to venture into a mall, a place I rarely go. Given the inhospitable summers where I live, and being out and about in the earlier morning hours with my family, we decided to go and walk around in the retail temple of American life. Indoor malls tend to attract unsavory characters with nothing better to do than loiter, but in the two hours before lunch, before most of the urban wildlife wakes from their post-nocturnal slumber, it can be a tolerable experience.
I think what shocked me today were prices. Father’s Day cards and a couple of trinkets from Hallmark: $23. A few paperbacks and a children’s book from the bookstore: $33. With a median income per wage-earner person of about $30,000, my morning outing represented four hours of labor, or 10% of someone’s workweek. In 1998 dollars (just ten years ago, and approximately where my price indexes are stuck mentally), that’s just $23,500.
What Pat Buchanan predicted fourteen years ago in his seminal work The Great Betrayal has come to pass. The American elite has abandoned any pretense of being a real nation and thus, they have killed the middle class.
Debt will sustain the trend a bit longer, but American living standards are going to drop.
Part of me sees this as inevitable. Absent a restraining force (a sense of loyalty to one’s nation or family, which Westerners seem to pathologically lack), the animal spirits of capitalism will do their job. Capitalism has succeeded in providing abundant material goods at cheap prices to masses of people. But it is also having a leveling effect.
If a Chinaman can assemble cars as well as an American at a cheaper wage (and this is especially true if their competitors are the affirmative-action-crippled unionized-spoiled-brats of GM and Ford), then if the gap is sufficient to pay for the switching costs and transportation costs of bringing goods to market, then the work will go to China. Combine this with an alienated and decadent elite in this country who would rather lose money outsourcing (as many of them do) than give their own people decent-paying jobs and the process is inevitable.
And once it starts, even paternally-minded business owners will be forced to offshore or else be driven out of business by consumers increasingly driven by price. Losing jobs makes Americans poor which makes them more price sensitive which makes companies offshore to cut costs and then Americans lose more jobs. The decapitalization of this country is occurring at a breathtaking rate. Since Bush took office, U.S. manufacturing jobs have declined 25%.
This is an important statistic because for most of world history, wealth has been distributed very unequally. Economists believe this is because of a phenomenon called information asymmetry. The most valuable roles in society are physically idle roles that specialize in information processing. Unfortunately, the genetic lottery is very unequal in its distribution of information processing skills (i.e. intelligence, with a strong non-linear component due to the winner-take-all economic law of “low price gets the sale”), thus resulting in wildly unequal distributions of wealth. This is not fundamentally unjust, just reality.
The advent of manufacturing, on the other hand, for the first time made it possible for an average person to have enough productivity to justify a middle-class wage. In a national setting with high material demand and a limited labor supply, wages can rise to just under the actual economic value of the work.
But it does not have to be this way. Open up your labor markets to an influx of people, and those wage rates will be bid down. Profits will be beat down and the temporary anomaly of a middle class will be destroyed.
This is happening in American at a pace unprecedented even by the decadent standards of the contemporary West. Europe, with all its socialist rot, is careful about preserving jobs for its people. They suffer from immigration problems as we do and also from moral degeneracy, but there is something admirable in many European countries’ genuine concern for the plight of their average people. We may disagree with some of their methods (high taxes, ugly socialism), but the elites of Europe are somewhat better than the elites of America in this regard.
This may go back to our Second Revolution of 1865. Aleksandr Solzhenitsyn famously said “Live not by lies”. Post-Lincoln, this country has tried to define itself not as a particular nation for a particular people, but as a country based on an ideology, Equality. This ideology is so evidently false that like the Soviet system before it, the elites merely mouth the politically-correct words while undermining its basis in their behavior and actions. Intel isn’t offshoring to Gambia, but to China, based on the very real inequality between the two nations of people living in those places.
The tragedy of this false ideology is that the true American nation, the Anglo-American core, is denied the use of language that could express a common interest and the means of self-defense. The elite cravenly attacks the middle classes when they attempt to organize themselves (witness the decrying of calls for immigration law enforcement as “racist”), all the while engaging in highly unequal, discriminatory practices among themselves.
Their kids will never be bussed into the ghetto and don’t even apply to the public universities where affirmative action is most rudely practiced. They rarely have to interact with the sheer incompetence and annoyance of everyday life in America these days, as more and more competent Americans are replaced with hostile foreigners in every sphere of life. When was the last time the CEO of Citibank or Microsoft stepped into a post office and came face-to-face with modern American reality?
Politically, it is our duty to continue to fight for our nation, whatever the odds. But, on a personal level, we must plan for what seems likely. I’ll paint that picture more specifically in a subsequent post.
June 9th, 2008 at 1:06 pm
Lee Iacocca tried to warn us 25 yrs. ago. I agree with almost everything you say about our “elite” selling us out. But I’m not so sure that our nations alleged quest for equality is as much a problem as plain old greed.
I wonder if your picture “for what seems likely” matches mine.
June 11th, 2008 at 5:01 pm
A good article, and I agree.
“Status” has no value with foreigners that our elitist rarely see……..but, destroying their own middleclass is most worthy for a group of Globalists that have always been loyal to the flag of money.
In the early seventies a German friend asked me “How do Americans justify the outragious income gap between physicians and other professionals?”……………I had no answer……..I love the story of how Henry Ford paid his employee base a fair wage, understanding that the automobile would be a small industry if just for the rich.
June 11th, 2008 at 7:28 pm
Yes Roho, “loyal to the flag of money”. I keep thinking about this and I believe that greed is a bigger problem than the costly infatuation of making everyone equal. The phrase “all men are created equal…” keeps popping into my head when I think about Tom’s article. (where did I read that?)
Not everyone is equal in terms of IQ or ability and some people refuse to accept this for sure. But so much more than that factors in to making someone succesful in material and moral terms. Pluck, Luck, timing and wisdom are factors. Birthright is critical.
I think of Tom’s previous story regarding the tire store owner as an example of someone who enjoyed material success even though it doesn’t take a genuius to sell tires. What does selling tires and being frugal have to do with “information asymmetry”?
I make it a point to buy Goodyear tires because the rubber that goes into them is made where I live. I buy groceries from a locally owned chain. I could be greedy and pay less for tires and food. But I realize that doing so in some small way, may lead to my own demise.
June 11th, 2008 at 8:07 pm
I think our perception of what “smart” is may be colored by media stereotypes. It takes more of a genius to sell tires than you may think. But if someone wears overalls and talks with a southern accent, we discount their intelligence. I’ll be the first to admit, of course, that entrepreneurs in particular have less need of raw IQ per se and more get-up-and-go, luck, etc.
But for your garden-variety professional, whether lawyer, doctor, accountant, whatever, absent an independent entrepreneurial streak then IQ is going to be primary, but not sole, determinant of their success (you might object that hard work is important too, but every person like this I know works long, hard hours and so any effect from this factor in explaining differences is canceled out). The professional exams required not only ensure such an outcome, but reflect this reality. These are all information-processing roles with minimal physical labor, and they are rewarded because information processing is usually more valuable than physical labor in a market economy. Skill in deciding “what to do” is more scarce, and thus pulls more wages, than skill in “doing”.
In the case of my tire-selling friend, the “information asymmetry” at work was his knowing that there is more profit in a humble retail business than there is in a salaried position with a major corporation. And not caring that he went to work with his name on his shirt and came home smelly and dirty.