Wednesday, October 27, 2010

The Vanishing Middle Class


Social Security and Medicare can't go bankrupt, just as the Pentagon can't. They're not in some separate bank account or lockbox—they're government programs that we either choose to pay for or don't. And not only can we afford them, they're a bargain, providing modest comfort and decent care to people who would otherwise financially burden their families—or die.
James Kenneth Galbraith

Sometimes, we come across articles from legitimate sources that we just want to pass along to the EY reader (This little light of mine, I'm gonna let it shine--Hide it under a bushel? No!). Next month, Mother Jones is publishing a great piece from University of Texas professor of economics James Galbraith entitled The Attack on the Middle Class. Here are some highlights from his vigorously footnoted work:

6 million jobs have been lost in the manufacturing sector since 2000 (thanks to anti-union and "free" trade policies)

2 million construction jobs have been lost since 2007 (thanks to the bursting of the housing bubble)

On Housing:
Over the last five years, the long boom was kept alive by the greatest financial swindle in world history. In the collapse that followed, an enormous amount of middle-class wealth was wiped out.

Galbraith's Conclusion:
Most of the nation's remaining jobs are in services, where pay depends largely on acts of Congress. Houses are no longer valuable commodities. Private pensions are largely kaput, and many 401(k)s were also wiped out in the crash. What's left to protect economic security for ordinary Americans?

Galbraith's answer focuses on the desperate need to retain Social Security and Medicare, which reduce poverty for the elderly (and others) while boosting business for everyone:

The fact is, even if you were never an autoworker, were never in a union, never owned a house, even if you've never been sick and never got anything else from the New Deal—-whoever you are, Social Security and Medicare help you right now. They support your business: Spending by old folks is part of the income of small and large companies everywhere, an effective and stable support for the economy. Social Security provides survivors' benefits that raise children in your schools. It will keep your parents off your back. And when you do get older, Social Security and Medicare will protect you, and they will protect your children from bankrupting themselves over you. That is, if these programs are protected, now, from their assailants

These assailants are the "finance and insurance companies [who] will skim the cream-—the wealthier, healthier participants—-while leaving everyone else to fend for themselves."

Galbraith's work should be taken seriously by all of those call themselves followers of Jesus because neglecting these economic trends--and the powerful interests that manipulate them--will have disastrous results for our most vulnerable neighbors: the least educated, the elderly, the disabled and, of course, racial minorities. Because systems have inevitable outcomes, people become stuck in unsustainable positions (unemployment, lack of health care, lack of retirement income, etc) while those at the top are unaffected.

The late Howard Zinn called for a revolution of those "somewhat privileged" American citizens--the soldiers and police, teachers and ministers, administrators and social workers, technicians and production workers, doctors, lawyers, nurses, transport and communications workers, garbagemen and firemen--to revolt against the strategies of the elite, the 1% of Americans who are bringing in 40% of all the wealth. Zinn identified rightly that the elite don't have the real power (only 1% of the population). That actually belongs to the somewhat privileged, "the guards of the system," who can harnass a compassionate creativity to save our union from destruction. This will take wisdom and discernment in both forming socially conscious businesses and crafting just economic policies that will put workers before profit-at-all-costs. We need leaders who are bold enough to say that people are the real bottom-line.

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