There May Not Be Enough Of A Shrinking Middle Class To Gamble In Deadwood

The optimistic Representative Reverend Steve Hickey recently tweeted:

Deadwood economic slump fix: bring in the occult, expand gambling, 24hrs of booze. I vote no. Build family friendly venues and they'll come
— stevehickey (@stevehickey) February 7, 2014

Perhaps he's correct: there's powerful magic in the words "If you build it they will come." Deadwood may have been constructed near a wormhole that connects to a corn field in Iowa, and people who travel through that wormhole may pay to watch Ray Kinsella play catch with the ghosts of his father and Shoeless Joe Jackson.

On the other hand, a recent Pew study shows there aren't as many middle class folk to come to Deadwood.

The proportion of Americans who identify with the middle class has never been lower, dropping  to 44% from 53% in 2008 during the first months of the Great Recession, according to a survey conducted Jan. 15-19. The share of the public who says they are in the lower or lower-middle classes rose by 15 percentage points, from 25% in 2008 to 40% today.

Further, many do not believe their lives will get better.

A Pew Research Center analysis of government data found that, since 2000, the middle class shrunk in size, fell backward in income and wealth, and shed some — but not all — of its characteristic faith in the future. 

Seth Michaels points out businesses seem to be ahead of the game.

As politicians and pundits in Washington continue to spar over whether economic inequality is in fact deepening, in corporate America there really is no debate at all. The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.

Businesses answer is to take steps to shrink the middle class even further.

As an employer like Darden Restaurants — owner of Olive Garden and Red Lobster — sees profits falling from their mid-priced outlets, it’s easier for them to shift focus to higher-end restaurants than pay Olive Garden employees enough to afford to eat there.

Deadwood is an indicator of a far larger problem that South Dakota's legislators seem willing to blithely ignore because it's easier to throw red meat about the evils of sin or seek simple solutions like selling more booze.

Rick Santorum Shows Why Ronald Reagan Couldn't Win In The Current Republican Party

I haven't searched all of Ronald Reagan's speeches, but near the end of his administration, he seemed proud of his efforts to protect the middle class. In fact, he sounded like a true class warrior:

The charges go on and on, but the truth remains the same. No matter how you look at it, the last time they were in office, the liberals clobbered the American middle class -- and we stopped them. Some are calling this last-ditch opposition campaign an attempt at ``class warfare.'' So, what's new? Our liberal friends have been at war with America's middle class for years. Now they want you to turn the other cheek -- but will they just take that as an opportunity to really let you have it? Main Street America is in better shape today than it's ever been. Why would we ever want to put it back in the hands of those who almost turned out its lights?

According to Rick Santorum, Reagan needs to be called out for his Marxist rhetoric



It's a dangerous step when the debate moves from how best to help middle income folk to denigrating those who use the term middle class to describe them. Of course, calling people out for using the term middle class shifts the debate away from declining social mobility and income stagnation. That may be the result Santorum desires.

The Middle Class Ain't What It Used To Be

This William Galston Wall Street Journal editorial makes two key points about America's middle class. First, members of the middle class may be doing better than their parents did, but the middle class is shrinking:

Four decades later, the middle class share had declined by 10 percentage points to just 51%, while the upper class share increased by six points and the lower class by four. The U.S. income distribution is still a bell curve, but the left and right tails are fatter and the hump in the middle is lower.

This means that the middle class is less economically and socially dominant than it once was. Relatively speaking, more Americans are enjoying affluent lives at the same time that more are just barely making it (if at all). But that doesn't mean the middle class got poorer. During those 40 years, Pew calculates, the median income of middle-class households (adjusted for inflation) grew by 34%. The median grew for the others as well—by 43% for upper-income households and 29% for those with incomes below the middle class. This isn't surprising, because the median income for all U.S. households rose by 32% during that period, from $44,845 in 1970 to $59,127 in 2010. Indeed, 86% of middle-class Americans, and 84% of all Americans, enjoy higher incomes than their parents did.

Second, the current state of events may have some positive elements, but the recession devastated the middle class. Further, Galston points out that the efforts the middle class has undertaken to survive are unsustainable in the post-recession era:

We can argue about how squeezed the middle class was in the decades between the end of the postwar expansion and the onset of the Great Recession. But two things are clear: The coping mechanisms the middle class employed in those decades (fewer children, more hours worked, more borrowing against home equity) are played out, and it will take middle-class households years to recover from the recession-induced blow to their income and wealth. If we cannot restore a vigorously growing economy whose fruits are widely shared, the struggles of the middle class will persist, and our democratic distemper will deepen.

Left unsaid is an acknowledment that no one from the right, the left, or the center has new idea about how to "restore a vigorously growing economy whose fruits are widely shared," so the middle class will continue to struggle.

Job Creator Idolatry

Nick Hanauer, an American venture capitalist, puts the lie to many Romney/Ryan/Rand talking points. The best line of many great lines: "It's a small jump from job creator to the Creator"

HT: This David Frum post

 

The Middle Class Loses Unless It Makes $200,000 Per Year

I know that the poor people have refrigerators and cell phones. Therefore, according to some, they should just chill and call someone who cares.

This chart from Andrew Sullivan's blog shows that it's not just the poor who are falling behind; it's everyone not in the upper 20 percent.

Sullivan also quotes Jared Bernstein who points out that the chart shows that for many growth has been a spectator sport.

Bernstein invokes one of my favorite debate phrases when he calls the chart "stark reminder that when it comes to the living standards of middle- and low-income families, overall economic growth is necessary but not sufficient."

I'll add another favorite phrase that has become repeated so often that it is being reduced to a cliche: "insanity is doing the same thing over and over but expecting different results." The policies that led to these results have been in place for decades, but no one seems willing to change them. At best, politicians from both sides of the aisle come up with new names for legislation that will continue this trend.

I'm sure Mitt Romney will want to bet me $10,000 dollars that I'm wrong. He'll also tell me that middle income is $250,000 when that figure really puts one in the top 5%, the cohort that actually has experience growth

Quotation Of The Day: The Disposable Middle Class Edition

April Rubin gives cold-blooded advice to financial managers:

The middle class is toast. In the wake of the financial crisis, middle class families in the U.S. are burdened by too much debt, the rising cost of health care, fewer jobs and the ever-increasing price tag on retirement.

Financial advisors in the future who want to prosper need to hitch their star to high net worth clients, including , maybe even especially, those from outside the U.S. who are seeking a dynamic asset allocation approach designed to deal with rising global market and economic volatility.

It’s a reality that advisors need to embrace, but all too many are behind the curve. They are using old-fashioned methods to appeal to clients who are rapidly disappearing and who will in the future not be able to afford their products and services.

I guess that if one is a financial planner one doesn't care that the middle class is being destroyed; one only cares that one is "behind the curve" in chasing wealthy clients and throwing middle class clients to curb.

Charles Murray On Class Inequality

In the Wall Street Journal, Charles Murray has written a provoacative analysis about inequality in America.

America is coming apart. For most of our nation's history, whatever the inequality in wealth between the richest and poorest citizens, we maintained a cultural equality known nowhere else in the world—for whites, anyway. "The more opulent citizens take great care not to stand aloof from the people," wrote Alexis de Tocqueville, the great chronicler of American democracy, in the 1830s. "On the contrary, they constantly keep on easy terms with the lower classes: They listen to them, they speak to them every day."


Americans love to see themselves this way. But there's a problem: It's not true anymore, and it has been progressively less true since the 1960s.

He enunciates his core thesis as follows:

. . . .What we now face is a problem of cultural inequality.

When Americans used to brag about "the American way of life"—a phrase still in common use in 1960—they were talking about a civic culture that swept an extremely large proportion of Americans of all classes into its embrace. It was a culture encompassing shared experiences of daily life and shared assumptions about central American values involving marriage, honesty, hard work and religiosity.

Over the past 50 years, that common civic culture has unraveled. We have developed a new upper class with advanced educations, often obtained at elite schools, sharing tastes and preferences that set them apart from mainstream America. At the same time, we have developed a new lower class, characterized not by poverty but by withdrawal from America's core cultural institutions.

It can be said without hyperbole that these divergences put Belmont and Fishtown into different cultures. But it's not just the working class that's moved; the upper middle class has pulled away in its own fashion, too.

If you were an executive living in Belmont in 1960, income inequality would have separated you from the construction worker in Fishtown, but remarkably little cultural inequality. You lived a more expensive life, but not a much different life. Your kitchen was bigger, but you didn't use it to prepare yogurt and muesli for breakfast. Your television screen was bigger, but you and the construction worker watched a lot of the same shows (you didn't have much choice). Your house might have had a den that the construction worker's lacked, but it had no StairMaster or lap pool, nor any gadget to monitor your percentage of body fat. You both drank Bud, Miller, Schlitz or Pabst, and the phrase "boutique beer" never crossed your lips. You probably both smoked. If you didn't, you did not glare contemptuously at people who did.

I don't want to just cut and paste the whole piece, and I don't have time this week to comment the way I should, so I'll make one short comment and urge everyone to read the piece. 

The dividing of America seems to me to be more important and pernicious.  The rich and poor have always been with us, but now they live apart.  Politically, we see conservatives and liberals refuse to watch the same news programs.  Murray now shows that Americans seem to be abandoning unifying institutions.  I find it a bit ironic and disconcerting that Murray a libertarian is making a similar point that communitarian Robert Putnam made about a decade ago.  Lincoln and the gospels tell us that a house divided against itself cannot stand.

Big boy bloggers Daniel Larison and Rod Dreher have commented here and here.

What's in A Word?

Adrian Petersen, star running back for the Minnesota Vikings, created a bit of a dust-up when he compared the National Football League to "modern-day slavery."  He has been accussed of "not thinking at all," being "an idiot," and needing "a lesson in history."

I am saddened that "[t]here are more slaves today than were seized from Africa in four centuries of the trans-Atlantic slave trade"  Further, [t]he modern commerce in humans rivals illegal drug trafficking in its global reach—and in the destruction of lives." I wish more people knew that conservative estimates believe that there are 27 million people in slavery today.  That number "means that there are more people in slavery today than at any other time in human history."  Finally, I will grant that the word "slave" is "infamously rooted in history that [it is] are beyond nuance and context" and that using "that painful imagery in a five-second sound bite . . . was guaranteed to blow up in his face," especially since Peterson is expected to earn $10 million dollars next year.

Still, I'm bothered by the fact that everyone is going after him for the first half of the sentence and not focusing on the last half.  Peterson said, "It's modern-day slavery, you know? People kind of laugh at that, but there are people working at regular jobs who get treated the same way, too." [emphasis mine]

What if Peterson had said that the NFL is like modern day sharecropping or serfdom?  Granted, Peterson is going to make $10 million next season and no serf or sharecropper ever earned that much.  On the other hand, he is limited to playing in the NFL.  No rival football leagues exist.  When he was drafted by the Minnesota Vikings, he would have had to wait for a year to play football if he had not wanted to live in Minneapolis.  In short, he had to choose between playing football and working where he wanted.

More importantly, NFL players who play 5 years have a life expectancy of only 55 years, decades less than the average lifespan of 77 years. To put an NFL player's life expectancy in perspective, it's the same as a man living in Ethopia.  Even those who condemn Peterson admit that "it's the players who risk bodily harm and brain damage, and are often left with chronic pain and debilitating conditions for life."  Most of those players won't be millionaires, but the company store owns their bodies, if not their souls.

Too many people take a "if it's so bad, leave attitude" toward anyone who complains that working conditions are unfair.  By doing so, they ignore the fact that many have to choose between a bad job and no job.  No job means no food on the table and no roof over one's head.  Peterson is right; a lot of people are stuck in a job that doesn't pay them enough to live, but that they can't afford to leave.  It may not be slavery, but it's certainly a perversion of the American ideal.  He was making a valid point, but he should have chosen his words more carefully.

The End Of The World As We Know It

The "we" in question is the American middle class.  Offered without comment because the content is self explanatory and too depressing: a Financial Times article, big boy blogger Rod Dreher's comments about the FT article, and this income inequality graph.