Thursday, 9 September 2010

Economics: The Future of the Middle Class (Jon Kofas, Greece)

Posted on August 30th, 2010

The Obama administration remains concerned that the American Dream is fading because the middle class is weakening, especially right before the 2010 congressional elections that the prospect of a double-dip recession may be more real than it was six months ago. Arguing that the “middle class dream” (synonymous with the American Dream) is fading fast, the Obama administration has a task force operating on the assumption that “everyone wants to and can be in the middle class.” Clearly not the same definition as in 18th century France or England, a definition that underwent change since then in Europe that operates in America’s shadow since the 1940s, US government (media and mainstream institutions as well) defines middle class on the basis of a) owning a home, b) car, c) college for the kids, d) retirement fund, e) health care, and f) family vacations. If you have these six things, you too are in the shrinking “middle class” as US government (and mainstream institutions) defines it. Therefore you are happily conformed and the social order will continue to exist for a very long time. But what if you lack one or more of the six criteria? High-paying jobs in the secondary sector of production (manufacturing) have been going to Asia and Latin America and with it the drop in salaries and benefits for Americans, followed by white-collar jobs in sectors from computer science to medical engineering. The situation is not very different for many other advanced capitalist countries that have experienced downward social mobility under globalization. Although Americans and their European counterparts became two-income families, some taking second jobs, the cost of living rose sharply in the last two decades, while wages, salaries, benefits, and social security income could not keep pace. “For most of the 20-year period following 1990, the Commerce Department reports that real median income grew at a rate of about 20%, while the cost of a college education grew between 43% and 60%, the cost of housing rose 56% and health care costs jumped by 155%.” Joe Biden’s web site describing the task force notes that “A strong middle class equals a strong America.” But was it not government policies regardless of political parties whether in the US or any of the advanced capitalist countries that led to the shrinking middle class since 1970? Is the solution to a strong middle class a more even income distribution where the majority of the population does not live on less because the pyramid is becoming increasingly narrower at the top and wider at the bottom? Who knows what Joe Biden will do to get Democrats elected this year against the background of a Republican assaults (Glenn Beck calling Obama racist)? It seems any solution that proposes social and economic justice would be unacceptable for mainstream America. A more acceptable solution for US government and mainstream institutions is: a) find another job to supplement your income, b) work harder, c) plan and invest better, d) return to school for more education or re-training; and e) wait for “lady luck” to ring your doorbell because you have conformed to the Calvinist work ethic! If indeed the assumptions of the US government (and the entire mainstream institutional structure) that “securing a middle class” is the key the American Dream, how do we explain US public opinion polls indicating that the “happiness” level (granted the obvious difficult of quantifying it), has been under 50% and steadily declining since 1970? And how do we explain that in a global public opinion poll, the top four “happiest” countries in the world are Denmark, Finland, Norway, Sweden, while the US ranks 14th, despite the largest GDP on the planet?
Even if we accept the US (political and financial elites backed by media and academia) ubiquitous PR campaign, to project the image that upward mobility is the dream, scholarly studies by individual academics and think tanks for the last three decades indicate that there has been downward mobility in America, spreading to the rest of the world with some exceptions. Global outsourcing under neo-liberal policies has resulted in a shrinking middle class likely to shrink more in this decade in the US and EU.
(Earl Wysong, 2007, Levy and Murnane, 1992; Karoly, 1993; Duncan, Rodgers, Smeeding, 1991 and 1992;
In March 2009, I issued a posting on WAIS entitled “Twilight of the Middle Class,” where I argued that the middle class in most of the world has been created on paper owing to the credit economy. When I presented the same point last spring as a guest speaker at a Greek university conference dealing with issues of international political economy, no one in the audience was surprised that indeed the middle class was built on a mound of debt under an unsustainable global (public and private) credit economic structure designed to keep wealth concentrated. People know where they stand versus the image they project, a dream that the political and financial are projecting while constantly working to make the social pyramid even narrower.
The larger question today is should the six-point criteria developed by individuals who want to perpetuate consumerism be the basis of the American Dream, or should there be an re-examination of peoples’ values in the wake of this prolonged global recession–and I mean all people, not just the middle class that constitutes the popular base of bourgeois political parties? Are these the values America wants to continue exporting to the rest of the world so it can strengthen finance capitalism at the expense socioeconomic chasm and social polarization from which arise extreme right wing elements? Is the essence of humanity predicated on the six points mentioned above? In the US government report, there was no mention of creativity, no mention of empathy in thought and deed for one’s fellow man, no mention of protection of nature, no mention of philosophical/spiritual self-reflection, no mention of greater social equality or collectivist action that alleviates suffering of the vast majority, no mention for lessening societal and institutional violence. America is becoming more polarized, and Europe is following in its footsteps as indicated by race riots in England, anti-gypsy sentiment in France, xenophobia in Italy, and of course America’s Beck and Palin backed by the extreme Christian right promising a slice of Heaven to “Real Americans.” The Obama administration needs to appoint a task force to reexamine what values it should be peddling to the American people and the world. At 4% of the world population, the US consumes roughly one-quarter of the world’s resources, but a mere 1% of the population owns 35% of the wealth. Is there a future for a growing middle class (the realization of the American Dream and the avoidance of sociopolitical polarization) under such wealth concentration?

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