US middle class being wiped out

[Matt-Chicago]

The politicos here have probably already read this article - but this is something I've seen happening for a long time.
Why do you think this has happened and what should we do about it?

• 83 percent of all U.S. stocks are in the hands of 1 percent of the people.
• 61 percent of Americans "always or usually" live paycheck to paycheck, which was up from 49 percent in 2008 and 43 percent in 2007.
• 66 percent of the income growth between 2001 and 2007 went to the top 1% of all Americans.
• 36 percent of Americans say that they don't contribute anything to retirement savings.
• A staggering 43 percent of Americans have less than $10,000 saved up for retirement.
• 24 percent of American workers say that they have postponed their planned retirement age in the past year.
• Over 1.4 million Americans filed for personal bankruptcy in 2009, which represented a 32 percent increase over 2008.
• Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.
• For the first time in U.S. history, banks own a greater share of residential housing net worth in the United States than all individual Americans put together.
• In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.
• As of 2007, the bottom 80 percent of American households held about 7% of the liquid financial assets.
• The bottom 50 percent of income earners in the United States now collectively own less than 1 percent of the nation’s wealth.
• Average Wall Street bonuses for 2009 were up 17 percent when compared with 2008.
• In the United States, the average federal worker now earns 60% MORE than the average worker in the private sector.
• The top 1 percent of U.S. households own nearly twice as much of America's corporate wealth as they did just 15 years ago.
• In America today, the average time needed to find a job has risen to a record 35.2 weeks.
• More than 40 percent of Americans who actually are employed are now working in service jobs, which are often very low paying.
• For the first time in U.S. history, more than 40 million Americans are on food stamps, and the U.S. Department of Agriculture projects that number will go up to 43 million Americans in 2011.
• This is what American workers now must compete against: in China a garment worker makes approximately 86 cents an hour and in Cambodia a garment worker makes approximately 22 cents an hour.
• Approximately 21 percent of all children in the United States are living below the poverty line in 2010 - the highest rate in 20 years.
• Despite the financial crisis, the number of millionaires in the United States rose a whopping 16 percent to 7.8 million in 2009.
• The top 10 percent of Americans now earn around 50 percent of our national income.

[Dad]

I read this the other day. It's quite disturbing.

Thanks president (bag'odouche) bush! Way to make the rich, richer and the poor, poorer!

[MATTHEW'S_DAD]

Of course the democratic controlled congress has nothing to do with any of that. Nor did Barney Frank wanting everyone to buy a house and securing loans with Fannie May and Freddie Mac, even though the buyers couldn't afford the houses they were buying, have anything to do with that. Don't get me wrong, Bush was far from perfect, but the blame doesn't all go on him. And the mistakes he made are only being multiplied by the Obama administration.

Bush never should've started the bailouts, NEVER. The economy did not need saving and if they had left it alone so it could "collapse", we would not only be surging ahead by now and we as a society would've learned our lesson (for the time being anyway) and hopefully prevented these mistakes for the next couple of generations. I equate what we're doing right now to pulling a band aid off one hair at a time when I believe it would be much better to rip it off. I feel we're doing this in a manner to keep society happy with the "status quo" because if if the typical happy family can't buy an suv and an lcd tv, someone might get voted out of office. But that's just my opinion.

And if anyone disagrees with me, then you're a silly liberal hippy democrat that should be stripped of your rights.

[WD-40]

I read this the other day. It's quite disturbing.

Thanks president (bag'odouche) bush! Way to make the rich, richer and the poor, poorer!

There are definetely alot more 'targets' that are responsible than just W. Bush over the many years as MD said. Reading the statistics above makes me sick to my stomach. It can be summed up with one word: GREED.
Obviously, if you own or control a company, you make more money. It's totally obnoxious what Corporate Executives have made all these years, and along with their 'bonuses', it's flat out disgusting! I understand that alot of our taxes come from the elite money makers, and many of the wealthy provide jobs to Americans, but it's the corporate boards that allow big payouts to happen. Of course, they'll give themselves raises, bonsus and perks that they wouldn't dream of giving to the working class of their businesses...that would cut into their greed.
And, of course, we keep electing idiots and power hungry politicians back into office. If I wasn't in the job i have now, I'd be a strong advocate of Term Limits and would be trying to force it into the public spot light. So what's a good 'term limit'?...say 8 or 12 years (4 or 6 terms) in the House, and say 12 years (2 terms) in the Senate? That way the leaders won't be so powerful as to dictate that party's policy to the junior members, and the junior members can vote their conscience and represent their own states better.

[samonuh]

The rich deserve being rich for actually trying, and the homeless should all be executed for polluting the streets, survival of the fittest...

[ProfessorDreadNaught]

The problem is both simple and complex, but it boils down to this: the "middle class" no longer makes any products that they can afford.

The "middle class" emerged in capitalist society when unskilled to moderately skilled laborers produced products that they themselves could then purchase creating their own market for goods and to a lesser extent, services. When great new inventions were made to kick off the industrial revolution there was a great focus on processes to make manufacturing costs low enough for an employee to own one. Henry Ford used assembly lines to create cars at prices his employees could afford. The best times for the "middle class" man were when industrialists returned cost savings back to the consumer to sell more product. Think about it...when was the last time a new car got cheaper to buy? Since the Model T we've only invested in making them better and safer, not more affordable.

In the early 80's after finding out that Japanese manufacturers could build everything we do cheaper and better America began shifting our economy to a Service economy. Parents all wanted their kids to be doctors and lawyers and architects instead of mill/mine/foundry/factory foreman. Thinking is now the way to make a living. Our higher education system was the envy of the world. Outside of Great Britain, no other countries' universities could compare in scientific and engineering achievement. Computers became our signature gift to the world. Though the components were manufactured where all manufacturing was going, the R&D and final use of computers was centered in the US. Along comes the Internet and a giant service sector is born where native talent can serve it best. The dotcom boom era.

Sorry guys, but service jobs can't replace manufacturing jobs sustainably. Bubble burst!

Housing!! There we go! Americans can build houses for each other! Ok banks, loosen up. We need people to buy houses. That way our retailers (we are now a retail economy BTW) can resell manufactured products one needs when buying a new home. Too bad we can't manufacture them here at a price the buyer could afford. We will pay the Chinese $5 mark it up to $10 and the American consumer will be happy. Someone forgot to tell Greenspan and Congress that you can only chew on your own arm until there is nothing left. Service jobs and retail jobs can eventually not make enough to buy the house or make payments on 50 and 60 year mortgages. Bubble burst!

Throughout all of this, the smart money maker is simply selling what people are buying, getting it for as cheap as he can and marking it up. The top 1% seems more successful then ever. Simply because the middle is shrinking and the 1%er is able to exploit a foriegn laborer far in excess to what he can an American. Example: population of the US-approx 300 Million...population of India -approx 1.5 Billion with 780 Million in extreme poverty. There is NO WAY Americans can produce manufactured goods as cheaply. Unskilled labor is too plentiful and inexpensive. Environmental and safety rules and regulations are nearly zero. It is no wonder our richest 1% are so wealthy. They take advantage of low cost and high demand. Apple iPhone 4 bumpers cost $30 US. Manufactured and shipped they originally cost $5.

In the end Americans have to buy from each other. That means your $40 DVD player will cost $120. A refrigerator will cost $1500 instead of $800 from China. Lifestyles will be drastically cut back and only the middle class and poor will suffer. But it is what must happen to avoid total collapse. Or perhaps it will only happen as a result of total collapse.

BTW my solution is to go quotaless with immigration, creating a low cost labor pool to excite domestic manufacturing. I have a detailed plan, but it is for another thread. This post is long enough to get me in trouble.

[Dad]

Perhaps I should elaborate.

Bush was the final nail in the coffin. Obama is just throwing the last shovelful on us.

The government has been slowly taking more and more from americans and giving it to everyone else. Think about how economics really works. Loosen immigration enforcement and flood the workpool with cheap, substandard labor. They now have perpetual jobs fixing their own mistakes as well as free health care and schooling for their children. Allow corporations to do away with the 40 hour work week with their "salary" crap and "human resources" vomit. While they are at it, let them take away any retirement savings of all employees at the last gasp. The punishment? One guy does a couple years in jail. This is if they even let the employee reach retirement age. Unions steal from retirement funds to endorse corrupt politicians. Pass regulations that make too easy to buy a home, let the family lose the home, then pass regulations to make far more difficult to buy a home ever again. And so on and so forth, ad nauseum.

These are all attacks on the middle class. Take away retirement and who will employ you at 50-60 years old? Keep taxing and spending. Who bears the brunt of these taxes? Not the rich nor the poor and illegal. Keep working class families out of the housing market by keeping houses in the hands of banks. You will never see a return on renting.

Middle class inheritances have shrunk dramatically in the last half century. Middle class standard of living has dropped dramatically in the last 20 years. Far too many jobs have been sent out of the country that were once held by working families.

The top 1% all gained in wealth throughout the recession.

How long are we going to let the government piss down our backs and tell us its raining?

[Matt-Chicago]

Interesting thread, and I can't believe I agree with almost everything WD-40 said - as we are very far apart on the political spectrum.
I don't think these stats are just to do with the housing bubble, and they definitely took more time to develop than the last few years.

MD - I think a bailout had to happen or we could end up in a decades long slump - I just disagree with who was bailed out and on what terms. I also think many people bought homes they could afford, just not mortgages they could afford. I mean really, 8, 10, 12, 17% interest on a home mortgage? When banks were borrowing at 3, 2, 1, and 0% from the Fed? That's just ridiculous usury and greed, turning a $150,000 house into a $500,000 house because of interest. We did have way too many people taking home equity loans based on inflated bubble appraisals, then ended up with loans worth twice what the house is worth.

I agree with a lot of the facts Dreadnaught laid out - but come to different conclusions along the way. I first got politically active around international trade issues (anti WTO like in Seattle '99) and sweat shops, slave labor, and child labor. Back then we were trying to push for "fair" trade instead of so called "free" trade. We all saw the game happening and called it the race to the bottom. Corporations, investors, currency traders - scouring the world like vultures for the cheapest labor and resources, the most lax environmental and tax laws - with the vast majority of the benefits going to those top percentages mentioned above. That's exactly what has played out over the past few decades. Consumer goods get a little cheaper, the lives of the super poor slowly improve, and the money gushes over the wealthy like a tsunami - destroying the environment and exploiting the weakest. Our insatiable and unsustainable consumer society doesn't help, with our consumption financed mostly on credit, lack of savings, and uncertain retirement.

There's no reason the US economy or the world economy have to run like this. Multinational corporations have to be chartered somewhere, and in the US corporations were allowed charters by the states to do a public good. They enjoy all kinds of rights far beyond that of individuals, with barely any of the responsibilities - which is the whole point - limited liability. Employees, the board, shareholders - none are held personally liable.
Contrary to modern public belief, corporations are not there just to make money, they are chartered and allowed these rights to perform some public good. There's no reason we should allow these artificial legal entities to game the whole world like this.

The biggest reasons I see for this massive concentration of wealth are the policies that began under Reagan and so called supply side economics and trickle down. By bestowing ridiculous amounts of wealth and power to a small minority, everyone was supposed to gain. So, income taxes for the wealthy were lowered, corporate tax loopholes make the effect rate the lowest in the world, capital gains taxes significantly lower than takes on actual work, and on and on. We now reward those who produce nothing with riches they couldn't spend in 10 generations, while those who actually produce make less and less here, and a tiny fraction of that in developing countries. All the "wealth redistribution" in the past three decades has been from the middle class to the very wealthy. I think this trend needs to be reversed.

[Jango_Fred]

I am a silly liberal hippy democrat but I believe that both sides are EQUALLY to blame for this mess we have.

And if anyone disagrees with me, then you're a silly liberal hippy democrat that should be stripped of your rights.

[MATTHEW'S_DAD]

MD - I think a bailout had to happen or we could end up in a decades long slump - I just disagree with who was bailed out and on what terms. I also think many people bought homes they could afford, just not mortgages they could afford. I mean really, 8, 10, 12, 17% interest on a home mortgage? When banks were borrowing at 3, 2, 1, and 0% from the Fed? That's just ridiculous usury and greed, turning a $150,000 house into a $500,000 house because of interest. We did have way too many people taking home equity loans based on inflated bubble appraisals, then ended up with loans worth twice what the house is worth.


The biggest reasons I see for this massive concentration of wealth are the policies that began under Reagan and so called supply side economics and trickle down. By bestowing ridiculous amounts of wealth and power to a small minority, everyone was supposed to gain.

We bought our house at about the same time as some friends. The bank approved use for waaay more house than I was comfortable buying and did the same for our two friends. Our friends buy huge expensive houses and we buy buy what we feel we can afford. We still have our house and manage to live very comfortably. One of the friends has lost their house and the other is living paycheck to paycheck. Who messed up?? Our friends did. So the way I see it, how did the government cause their problems?

Oh, and as far as this all beginning with Reganomics, I guess I forgot how good things were in Jimmy Carters presidency. If we want to start tracing back what got us where we're at, we can go back to the new deal and teaching Americans how to become dependent on the government. We can also blame the WW2 moms for overindulging the baby boomers as kids. We can blame Wilson for normalizing the progressive movement. We can blame the mishandling of reconstruction in the south after the civil war. I personally think people just follow the path of least resistance and generally we do better at remembering that path after periods of war and economic crisis. When things are good, our memory tends to shorten up.

Oh, and Fred, you silly wabbit, trix are for kids.