Did you know that in the late ’70’s, the wealthiest 1% of Americans took in 9% of the nation’s total income; in 2007 that same 1% took in 24%?
By economic standards, 1% of the population having almost 25% of all income is telling…the last time there was such a concentration of income at the top…was 1928, according to Robert Reich, Professor of Public Policy at UC Berkeley, and former Secretary of Labor. It’s a troubling indicator at best; at worst it’s our last warning that unless we mount of major comeback of America’s middle class, we are in economic hot water, and cooking fast.
Why? Because the rich spend less relative to their income, and invest wherever they can find the best rate…which is often overseas. Therefore they do the least for the American economy, vs. those of us in the middle class, who spend a much larger portion of our income (because we are always striving for a better life…good for us!) so we are a boon to the economy, and we invest right here in the good ol’ USA.
According to Mr. Reich, the programs after the Great Depression moved the economy back to a more “widely shared prosperity” from the initiation of Social Security so the elderly were not longer living in abject poverty, to infrastructure-building programs that paid folks a decent wage while getting them back to work, and the mandating of the 40 hour work week with paid overtime so folks were making a decent living wage. The GI Bill at the end of WWII got returning Vets the education they needed to improve their job prospects, again giving a burgeoning middle class the boost it needed to thrive and prosper.
However we do this, and it is not an “either/or” proposition but an “and/both” – a combination of business tax breaks, job creating programs, and the closing of tax loopholes so everyone is paying their fair share relevant to size of income – the squeezing out of the middle class must stop. Not just to ensure a full and faster economic recovery, though. The middle class has always been the spine of America; and it is what our revolution was designed to ensure, that all citizens can have a better life, not just the exceptionally wealthy, many of whom today get there perhaps not under the most ethical of conditions.
Get behind legislation that is designed to bring health to the middle class, and legislators who understand that this is the missing piece to s0lving our nation’s woes (not just economic, but social through the reduction of fear that drives so much of what is polarizing us right now), and you will be part of a common sense solution that we can pass down to future generations.
I read an article over the weekend that addressed the same concern. Our country is continuing this accelerated “death spiral”. As a middle-class boomer, I stand to lose the most and end up in “abject poverty”. I am still in disbelief and shock that we are in this severe recession with no apparent plan in place. I voted for Obama, and he “sold me” back then, but I think now that he is largely ineffective.
The declining middle class is only a symptom of the larger problem of Government involvement in all aspects of our lives. We are not far from serfdom as the House of Lords and House of Commons, Senate and House, Democrat, Republican continue the push for centralized control. It worked “well” for the Soviet Union and Cuba, although Castro apparently recently proclaimed the failure of the Cuban model.
Middle class survives and thrives when the economy is growing, the Government can only slowdown growth and you can see almost 1 trillion reasons (dollars) why. Private capital is the fuel and the middle class is the engine. Private capital is provided by “rich” people.
Public capital, government funding and control cannot sustain growth, the government does not add value to the dollar or goods and services as they redistribute wealth, remember if its free, it has no value. It comes down to two basic models, Capitalism or Central Control (Soviet Model), dare I say Socialism.
The answer is simple, let the earners keep more of their earnings across all economic layers. Reduce the influence of Centralized Government in Washington. Allow the states decide on how best to manage their economies, education, social programs. Let Washington go back to protecting the country from foreign invaders, protecting Civil rights and following the Constitution without all of the interpretations that have brought us to where we are.