Declining middle class

For the last decade, at least, I've heard the meme regarding the declining middle class. To start with, we're now in a recession, so, many people are experiencing financial pain, but in 2008, before the recession really hit hard, the "declining middle class" meme was answered by research such as this -- http://stats.org/stories/2008/myth_decline_middle_june9_08.html -- from George Mason University, and the findings reveal a more complicated story. But for the sake of this post, as I promised in the previous post, I will address the current meme that rich billionaires like the Koch Brothers are out to savage the middle class. In other words, many on the Left believe that the wealthy among us who are making loads of cash are hurting the middle class, and that Governors like Scott Walker who were backed by the Koch Brothers have been bought-off to break public unions and thus hurt the middle class.

This is an adolescent charge that doesn't make much sense when you think about it. What benefit can the wealthy receive from destroying the middle class? Most people who are rich own businesses, or they run businesses, and they need paying customers or clients. I suppose you could make the case that corporations are trying to lower labor costs to China's level so they can compete in the global economy, but most new employment over the last decade have been created by small businesses. However, wages will not be lowered to the level of China's labor costs, and corporations can't succeed on exports alone -- they need paying customers and clients in America, and a healthy middle class means that people are spending with confidence, and hopefully they are receiving good educations in order to meet the demand for high-skilled labor. If poverty increases in America, this means taxes on the wealthy will rise to take care of the poor, so the wealthy don't want more poverty -- it's ridiculous. There's simply no motive for the wealthy to destroy the middle class.

However, it would not necessarily be a bad thing for American wages to adjust so that American companies can be more competitive in a global market, but this would only be good if prices also fell, so that after paying living expenses workers are at least no worse off -- they could even be better off if prices fell further than wages. American companies can also compete globally by increasing productivity and efficiency and by finding niche markets where Americans excel through innovation and quality. There are major changes going on the global market, and if we can get government intervention out of the way, the adjustment will be less painful.

If the middle class is feeling squeezed, it's mainly due to government intervention, antiquated union ideas and tactics, and the middle class itself electing representatives who have bought votes through give-aways that have created a mountain of debt. The middle class has asked the government to do too much, and the government willingly did it, and much more. In many ways we've become a weak, dependent people who blame others for our problems. In many other ways, the State has grabbed power that citizens never agreed to, and now we have a giant, powerful, out-of-control State machine running everything. I'm charitably including myself as I write "we", but to be honest, I've fought against this development of statism. I've become dependent because the State now controls things that I have to access -- we're all dependent-- but it can be different. I think it has to be different if the middle class is going to get back on the track of growth and prosperity.

The middle class's biggest problem right now is a statist system of government which has created uncertainty in American businesses. Businesses have to know what their costs are going to be before they begin investing, growing and hiring in any meaningful way. This has been stated ad nauseum, but no one is doing anything about the system -- instead, unions are digging in their heels and demanding that businesses keep giving. This will go nowhere -- it will only run business overseas, or keep them in a holding pattern. Part of the statist system failure has been the enmeshment of Big Business with Big Government. The first order of business in creating a limited government and free market would be to ban all government subsidies and favoritism, then regulations have to be dealt with because regulations help big corporations who can afford to meet the regulations while small businesses can't.

Once we've changed the statist system by limiting government and separating State and Economy, then free competition will allow small and medium size businesses to whittle down the large corporations who've been propped up by government. A free market will also spur innovation to address global economy demands, thus creating many more small businesses which will need good workers. But companies going forward need educated workers, so our education problem also has to be dealt with -- public education needs to transition to private education. Whatever it takes, the private sector locally should find a way to offer education to everyone, even those who can't afford it, because without tackling this problem, there will be little economic progress in America, and we'll definitely become a third rate nation of haves and have-nots. This is a tough problem, but until we take education out of the hands of the government, there will be little change.

The middle class will be fine if we break the dependence on government and create our own future. Nothing gets done without doers. Also, it pays to keep in mind that when anyone produces new wealth, that's wealth that didn't exist before, it wasn't taken away from anyone. An educated, prepared, creative middle class can build their own wealth, just like evil rich people.