Saturday, December 3, 2011

Going Bust: The Vanishing Middle Class

Courtesy of the Library of Congress
"It's no longer an exaggeration to say that middle-class Americans are an endangered species."
         -Arianna Huffington

"Slums may well be breeding grounds of crime, but middle-class suburbs are incubators of apathy and delirium"
         -Cyril Connolly

"As mass production has to be accompanied by mass consumption, mass consumption, in turn, implies a distribution of wealth - not of existing wealth, but of wealth as it is currently produced - to provide men with buying power equal to the amount of goods and services offered by the nation's economic machinery.  Instead of achieving that kind of distribution, a giant suction pump had by 1929-1930 drawn into a few hands an increasing portion of currently produced wealth.  This served them as capital accumulations.  But by taking purchasing power out of the hands of mass consumers, the savers denied to themselves the kind of effective demand for their products that would justify a reinvestment of their capital accumulations in new plants.  In consequence, as in a poker game where the chips were concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing.  When their credit ran out, the game stopped."
  The above borrowed from Marriner Eccles' memoir, "Beckoning Frontiers" summarizes prophetically the economic climate of the United States since the late 1970's.  As the child of poor Mormon Scottish immigrants, Eccles embodied the idyllic American success story by creating a large financial empire.  At the time of the Great Depression, he was one of the few business tycoons to continue to stay above water. His realizations about the origins of the worst financial disaster in world history contributed greatly to the eventual recovery, stabilization and unparalleled economic growth that lasted from 1947 to 1975.  The direct result of what became known as the New Deal, which comprised a multitude of programs including the Social Security Administration, Public Works Administration, the Work Projects Administration and employment boom as a result of WWII, was arguably the greatest invention of the 20th century; the middle class.  While not all Americans benefited equally during this time period (racial minorities, women), the rise of the middle class with the safety nets allowed people to live what we now know as the American Dream.  
  Beginning in 1975, new movements of both social and fiscal conservatism, which glorified protestant individualism and laissez faire economics began to erode the safety nets created by both the New Deal and the War on Poverty.  Taxes on the wealthiest Americans also began to shrink under the guise of trickle down economics, or the belief that wealth given to the top will be distributed down the social ladder.  In 1928, as the Great Depression loomed on the horizon, the top 1% earned almost 25% of the total income.  After the New Deal, wealth became more evenly distributed and allowed greater purchasing power for the middle class.  After 1975, deregulation and lower taxation of the wealthiest Americans concentrated more wealth at the top of the economic ladder.  The middle class, accustomed to a quality standard of living began to, for the first time, use credit in large amounts to maintain their lifestyles.  By December 2007 the top 1% was again earning roughly 25% of the total income in the country.  
  Today, the American Dream remains in the hearts of most Americans.  The belief that each generation will have a better life than the previous through hard work and dedication.  Indeed, there seems to be a belief amongst the middle and lower classes that if we were to increase taxes on the rich, then it would hurt them later down the road when they too become rich.  Reality however is much dimmer.  The roads believed to be paved with gold are now filled with potholes as more and more middle class Americans lose their sense of well being and are now simply trying to survive.  According to the Brookings Institute, between 2000 and 2008 the percentage of suburbians living in poverty grew by 25% making suburban America, once the symbol of prosperity, the largest and fastest growing segment of the poor.  Opportunities of upward mobility in America are shrinking and according to CNN Money Canada, Germany, France and all of Scandinavia have higher rates of social mobility.
  This post certainly is not comprehensive nor does it mean that only a few factors lead the middle class to where it is today.  The implications of the vanishing middle class however are clear.  This group has historically been the maintaining force of American democracy as we know it through taxes and voting power and according to teacher, historian, and author Gail Chumbley, is the binding that holds the world together.  Middle class pioneers  who have the luxury of having a voice were and continue to be the defining force of the greatest progressive social movements of the 20th and 21st centuries and acts as a shield against plutocracy and cronyism.  As the middle class erodes and more people slip into survival mode, social, political and economic power will consolidate into the hands of the few.  This is evidenced by more tax loopholes for the rich, the disintegration of collective bargaining agreements and blame placed on the middle and working classes for their current situation.  In the late 19th century individuals who profited at the expense of their workers were known as robber barons (though they referred to themselves as captains of industry).  Today, they are known job creators and are symbols of  American economic mobility.  Without the middle class, modern capitalism will end and the United States will begin to resemble the developing world where the rich live behind gated walls and the rest barely
  The profession of social work depends on the middle class for its survival as well.  With limited entitlement programs, a reduction of donations to non-profits and a stagnation of wages, social workers will be unable to fulfill its mission to reduce poverty, enfranchise marginalized populations, and promote the welfare of all.  As a united profession both in the US and abroad, we must act through legislative outreach and grassroots community organizing to change the economic and social destruction of the middle class.  Indeed, self-preservation demands it.

Further Reading on the Decline of the Middle Class

Aftershock: The Next Economy and America's Future by Robert B. Reich

Third World America: How Our Politicians are Abandoning the Middle Class and Betraying the American Dream by Arianna Huffington

Falling From Grace: The Experience of Downward Mobility in the American Middle Class by Katherine Newman

Wealth and Democracy: A Political History of the American Rich by Kevin Phillips

The American Dream vs. The Gospel of Wealth by Norton Garfinkle

1 comment:

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