More New Books Highlight Plight of Middle Class
by Kenneth Thomas
More New Books Highlight Plight of Middle Class
The situation of the middle class is a hot topic these days, and rightly so. In addition to James Carville and Stan Greenberg’s recent book, It’s the Middle Class, Stupid, new books are out by Donald Barlett & James Steele, Jeff Faux, and Mike Lofgren.Together, they advance our understanding of middle class issues significantly.
Barlett and Steele have been sounding the alarm about middle class decline since they wrote the first newspaper articles forming the core of 1992’s America: What Went Wrong? In The Betrayal of the American Dream, they tell the stories of everyday Americans, many of whom they kept up with after interviewing them for previous books. They date the beginning of the decline of the middle class to the 1970s, which I think is correct since that is when real wages for production and non-supervisory workers began their forty year decline. They emphasize the central role of Congressional and Presidential decision-making that has given us tax rules favoring the 1%, laws allowing private equity and other corporate raiders to raid pension funds and break contracts with unions and retirees, trade agreements, industry deregulation (which they see as highly destabilizing for the middle class), the destruction of retirement via the assault on pensions and their replacement with 401(k)’s, and the devastation of offshoring.
Their proposed solutions include raising taxes on the rich, and to consider instituting a financial transactions tax (also known as a Tobin tax, after its first proponent) or a gross receipts tax, which would be harder to dodge than the corporate income tax. Barlett and Steele argue further that we need to rebuild manufacturing and reduce the trade deficit, with high tariffs if necessary. They propose massive investments in infrastructure and education, including job training. Finally, they argue that the financial fraudsters who caused the 2008 financial crisis need to be prosecuted. Surprisingly, they say little about getting money out of politics, though they do mention it in their prologue as well as the well-funded corporate propaganda machine.
Jeff Faux, founder of the Economic Policy Institute, was fighting trade agreements long before mainstream economists were willing to admit that maybe free trade isn’t always good for everybody, especially workers in the United States. His book, The Servant Economy, is a dystopian vision of the future of the middle class if present trends are not reversed. His basic argument is what he calls an “end-of-empire story,” that the U.S. can no longer sustain subsidized capitalism, global military dominance, and middle class prosperity. He argues that the country’s former economic and military dominance gave it a “cushion” that was able to sustain the middle class, but that the pressures of international trade and global competition have eroded that cushion along with the nation’s ability to achieve all three of the goals mentioned above.
For Faux, much of the problem stems from the increasing U.S. trade deficit, which figures in prominently throughout the book. The rise of finance relative to manufacturing is a key problem as well, one which has made the Democratic Party more dependent on Wall Street Money, which led to Clinton ending Glass-Steagall and Obama treating bankers with kid gloves after he came into office. Worse, as we saw in the 2011 debt negotiations and other instances, the President has made it clear that he thinks there needs to be cuts to Social Security.
“Hope is not a strategy,” according to Faux, and he devotes an entire chapter to what he calls “the shaky case for optimism.” He foresees a “politics of austerity” that will mean cuts to middle class programs, the continuing loss of good jobs to the trade deficit, and slowly declining living standards and economic security for the vast majority of Americans for decades to come.. He calls cuts to Social Security and Medicare “a done deal.” To me, perhaps the single most depressing statistic in the book relates to the much hyped “onshoring” phenomenon: GE has moved some production from China to Louisville, but the workers there make $13/hour compared to the $22/hour they formerly made.
What, then, is to be done? In a talk Faux gave at the Economic Policy Institute August 15th, he explained that he didn’t see the need to give a laundry list of policy proposals because, first, he had done so in previous books, and second, there was no point in it unless we change government decision-making. Thus, it is essentially a one-point program, a constitutional amendment that ends corporate “personhood” permanently. This would also have the effect of overturning Citizens United. Without that, he argues, there is no hope.
Lofgren’s book, The Party Is Over, is a Republican-eye view of what went wrong, beginning with Newt Gingrich’s takeover of the Republican Party. While highly critical of the rightward, anti-science turn of his party, he argues that the Democrats are not much better, and have suffered from extremely bad messaging (he says the stimulus act should have been called the “jobs bill,” for example). Interestingly, his major recommendation is to cut trillions from defense spending and redirect it to infrastructure. Of course, he wants to get the money out of politics, too, but cutting defense is his most distinctive policy proposal.
Taken together, these books are largely complementary, though each has its own distinct emphasis. Faux’s book, in my opinion, is the best of the three, though also the most depressing. His vision of a likely future is far too plausible to take lightly.
cross posted with Middle Class Political Economist
I think it was about 1985 William Greider in his book about the Fed, “Secrets of the Temple,” made the point that the “strong dollar” policies of the Fed, a result of Volkers war against an inflation that may already have subsided, made foreign competition much harder to meet… leading to larger trade deficit and the beginning of the great off-shoring of industry.
i suspect he was right, and that once started, the process feeds on itself with pressure for “free trade” agreements, and weakening of untions… etc.
it may not be possible to recover, without using some of the policies you allude to. I find it very disappointing than an author would say “read my other book.” My god, you’ve got the reader you need right there with the present book in his hands. tell him your story, again if you have to. don’t send him to the bookstore. he may not get there.
also, my little gripe… the SS done deal has nothing to do with the merits of SS… which does not contribute to the problem in any way, only helps to mitigate its effects on those most seriously hurt by the new low wage regime. it is insane for “economists” to just accept destroying the workers last chance for a decent if poor life because they don’t understand that the attack on SS can be beaten if the people understand the facts.
sorry for the typos. old age is no joke.
Sadly, Congressional Quarterly’s Daily Briefing today states: “And it’s on that front that there’s a slight, tentative but seemingly genuine sense of hope this week. In the public rooms of the Capitol, and on the airwaves back in their districts, lawmakers kept up all the angry rhetoric about how a national defense calamity and a downgrade of the government’s credit rating are getting dangerously close, and entirely because of the other side’s dogmatism and recalcitrance about spending and tax priorities. But, just off stage, a series of meetings in the past two weeks — by groups of Democrats and Republicans, and in some cases in meetings where there were actually some of each — produced a sense that a meaningful budget agreement was possible before Christmas, no matter who wins the presidential race and now matter whether the election produces a congressional power status quo or not. (Among the most important sessions, Geithner met with Boehner, and Bernanke met with Ways and Means Chairman Dave Camp.) The talk is about starting 2013 off right by doing more than another embarrassing can-kick at the end of the year, with each side using the relatively politics-free period right after Nov. 6 to move away from entrenched positions. There is serious talk about a $4 trillion red ink reduction deal for the first time since the default-tempting summer of 2011, albeit probably with a down payment agreed to in December and legally binding instructions for the next Congress to come up with the rest next year. Democrats are talking about conceding to spending cuts that are almost as deep as those that would come under an across-the-board sequester in January — just with different priorities (more of a domestic and less of a military slash). Republicans are talking about a willingness to give in on raising revenue, even by allowing rates to go up for millionaires if the president is re-elected).”
It doesn’t MATTER if people elect a president they (falsely) think is for them, he will go ahead and collude in worsening and impoverishing their lives — the fix is in.
(Nonetheless, I’m writing my congressman, sigh., and urge you to too and your senators if there is any hope for your senators.)
Do Carville and Greenberg say what they mean by Middle Class? Just askin’. 🙂
Bartlett and Steele “date the beginning of the decline of the middle class to the 1970s,”
Perhaps a better phrase is the rise of the upper class. Or The Empire Strikes Back. 😉
“Hope is not a strategy,” according to Faux, and he devotes an entire chapter to what he calls “the shaky case for optimism.”
When facing challenges, the best approach that we know of is to have an accurate appraisal of the situation, plus a positive vision for the future. (Second best is rose colored glasses. 🙂 Optimism trumps reality.) From the above statement it appears that Faux has drunk the Kool-Aid. To make a case against optimism is defeatist. It leads us to accept things that we need not to accept, like cuts to Social Security and Medicare. One problem, IMO, with Obama is that he lost his optimism within six months. If he had retained it, he would have had to fight, however, which might go against the grain for him.
As Sarah Palin derisively pointed out, that hopey-changey thing doesn’t just work out. You have to fight for change. It took us over a generation to get into this mess, it may take as long to get out of it. But if we surrender, it may take 1,000 years.
Realizing this is a review of the books, I would disagree with the thought of Faux that the source is the trade deficit. The trade deficit is only a result, not a decision. The source are the policies chosen. There was not one policy. It has been a combination of policy ideology as the right formed it’s voting block and the money used the religeous right and southern cultural prejudice for votes and messaging.
Combine that with the middle thinking their ride was ending toward the end of the 70’s into the 80’s recession and you get a public looking for another answer: que Milton channeled via Reagan.
“He argues that the country’s former economic and military dominance gave it a “cushion” that was able to sustain the middle class, but that the pressures of international trade and global competition have eroded that cushion along with the nation’s ability to achieve all three of the goals mentioned above.”
Ken:
Faux is not the first to qrite about the military; but, it was done in a different direction. Paul Kennedy’s “The Rise and Fall of The Great Powers” touches upon the same topic and points out the nations which have concentrated on military expansion having expended resource great then the growth in GDP to the expense of domestic growth have succumbed over time only to find themselves relegated to 2nd and/or 3rd tier nations in the global scheme of nations. No nation have been able to sustain such expenditure since, as Kennedy would point to, the Chin Dynasty. Each and every nation has succumbed and the US, the same as the Soviet Union, is well on its way to doing so.
The idea of a Tobin Tax on Financial Transactions, in particular those impacting non-labor intensive finacial investments, is an interesting one. The growth in GDP and in “non-labor and capital” profits in the US has accelerated in the financial services sector at the expense of the middle class. Here is were we need to consolidate our efforts if we are to restore any chance for the middle class and other segments of society. We have to change the paradigm that exists today and has been largely growing since Greenspan was the chairman of The Fed.
Yes Clinton rubber-stamped the repeal of Glass-Steagall; however, I would point out it was largely dead already from Greenspan expanding how much of gross profits by commercial banks could be invested on Wall Street. Section 20 of Glass-Steagall was expanded to allow for the investment to take place.
I do have a post pointing out some of these issues as taken from a recent report on the demise of Labor + Capital intensive profits and the Increase in Capital profits. Maybe Dan will put it up soon.