Gov Must Respond to Middle-Class

Some "reform conservatives" get it.

Some “reform conservatives” get it.

Liberals have long worried over the effects of income inequality.

Many conservatives are now starting to worry too. After all:

  • Low income means people lack money to buy, so:
  • Businesses lose sales and profits, so:
  • Increased business instability, and:
  • Worry over political instability (Peasants with pitchforks)

Solutions include:

  • CEOs share productivity gains with the workers who help create profits
  • A higher minimum wage
  • Don’t incentivize moving US jobs overseas
  • Enhance bargaining power for workers
  • Raise the Child Tax Credit
  • Raise the Earned Income Tax Credit
  • Don’t tax the rich at a lower rate than everyone else (e.g., capital gains)
  • Don’t allow tax shelters for the rich

Articles from conservatives and conservative sources, like the Wall Street Journal (WSJ):

 WSJ: Low income is squeezing business

The housing market illustrates how weakness among middle-class consumers holds back the U.S. economy. Homes are generally the biggest purchase Americans make. Housing dollars ripple through the economy by triggering spending on appliances, furniture and landscaping…. I worry that you can’t run our housing market, which depends on volume, on affluent buyers alone…

WSJ: Stagnant incomes have restrained the American consumer for years, creating a vicious circle that has left businesses waiting for stronger spending before they rev up hiring and investment.

WSJ: As incomes have stagnated over the past half decade… families (are forced) to cut back spending on everything from clothing to restaurants.

WSJ: The conservative IMF (International Monetary Fund) has warned:

A severely skewed income distribution harms the pace and sustainability of growth over the longer term. It leads to … a wasteland of discarded potential.

WSJ.com: Fed’s Yellen says extreme inequality could be un-American

The past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority.

Standards and Poor (S&P):

If you look systematically at the international evidence on inequality, redistribution, and growth — which is what researchers at the I.M.F. did — you find that lower levels of inequality are associated with faster, not slower, growth.

Income redistribution is “robustly associated with higher and more durable growth.”

“The pitchforks are coming . . . for us Plutocrats”

Multi-millionaire Nick Hanauer warnsThe pitchforks are coming… for us Plutocrats

Goldman Sachs CEO and Chair, Lloyd Blankfein, worries that income inequality is destabilizing the economy and “responsible for the divisions in the country.”

Bill Gross, founder of the investment firm PIMCO, continues the theme: Eventually (income inequality) will be destabilizing.

Former Fed Chair, Alan Greenspancalls income inequality the most dangerous trend in America.

Billionaires to the Barricades. Some of the world’s wealthiest people are now worried about the gap between them and the working class.

Good pay + good profits

Companies that provide employees a decent living, which includes not just pay but also a sense of purpose and empowerment at work, can be every bit as profitable as companies that strive to keep their labor costs low by paying the minimum wage with no benefits.

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About BroadBlogs

I have a Ph.D. from UCLA in sociology (emphasis: gender, social psych). I currently teach sociology and women's studies at Foothill College in Los Altos Hills, CA. I have also lectured at San Jose State. And I have blogged for Feminispire, Ms. Magazine, The Good Men Project and Daily Kos. Also been picked up by The Alternet.

Posted on September 21, 2017, in politics/class inequality and tagged , , , . Bookmark the permalink. 16 Comments.

  1. Very true. After the 2008 crisis, the inequality gap has widened, and in fact it is widening. The Middle class is feeling the pinch. This phenomenon is common in the world over. Governments must act soon to reverse the process to avoid hitting another crisis.

  2. Wall Street doesn’t reward companies that provide a “sense of purpose and empowerment at work.” More and more the focus is on short- term profitability. Public companies in particular respond with cost-cutting, a much quicker route to moving the profit numbers than developing quality products, building strong customer relationships or creating a dedicated, empowered work force.

    • Yes, unfortunately our companies are set up to think in terms of the short term instead of the long term, which will end up hurting businesses in the long term. The only way around that is for government to do something to encourage a long-term view.

  3. With the Dow hitting an all time high, I’m not sure how valid the idea that business is squeezed is.

    Anyway, I took a bit of a glance at the statistics, and it looks to me like the middle class isn’t really shrinking, rather the lower class is expanding. In other words, the demographics of people who used to be middle class are probably still middle class. But a whole lot of Hispanic immigrants have bloated out the lower class. Therefore, the median income in a statistical sense goes down, but in terms of reality on the ground, it’s more the aberration of lots of poor people.

    You can’t just accept tens of millions of immigrants and expect the demographics to remain unchanged. People who come illegally tend to be the least educated, least successful, least employable on average. That’s why they did something illegal. Therefore they are going to drag down the numbers.

    • Well the middle class can’t help but get squeezed when you have automation taking their jobs and offshoring taking their jobs and then they end up working at McDonald’s for much lower wages. Even outsourcing hurts us financially because things like healthcare often aren’t covered, and often no sick days, etc.

      If the middle class isn’t being harmed by all this how do you explain the popularity of Trumps message: help ordinary Americans, not the elite! (a message I happen to agree with.)

  4. Liberalism, often used interchangeably with the Democratic Party in the US, has failed. Over the past 40 years, liberalism has embraced unabated, regulation-less, free market capitalism while hiding behind a veneer of social progressivism. Since 1980, the Democratic Party has had two-term presidents, controlled at least one House of Congress for a majority of that time, and had a majority in both houses during the first 6 years of Obama. Yet, big business is king. wealth inequality has widened to gaps comparable to pre-revolution France, and welfare has been destroyed. The marginalized people the Democrats claim to defend and represent are disproportionately affected by these outcomes. If the party wishes to remain relevant, it must embrace reforms that are beginning to take hold in the minds of the Millennials, ideas more adherent to socialism and Marx. Until we have a reworking of the American economy and massive wealth redistribution, social reforms are as meaningless as lipstick on a pig. We must the least among our society agency through economic security so that they can fight to improve our society without the risk of death from economic hardship.

    • Nope. The happiest people in the world live in Democratic Socialist countries. Even Forbes admits this: https://www.forbes.com/pictures/mef45ejmi/the-worlds-happiest-and-saddest-countries-2/#2f09e72f5ef8

      • But…. the United States makes that top 10 list, so everything is fine right? I mean Australia and New Zealand beat the US, but their GDP share of government spending is WAY LESS than the United States. So maybe if the US became less socialist it could work its way up to the level of Australia perhaps?

        Of course the US has massive inequality. It is the world’s economic powerhouse. So if someone like Steve Jobs or Bill Gates invents the next big thing, the whole world gives them money. Now I suppose you could have a “massive wealth redistribution” and take that money, but then the people who drive civilisation forward will go elsewhere. Then what have you gained? You’ve become like Zimbabwe where they had a massive wealth redistribution, with the result that… everybody starved, since the productive people went elsewhere.

        Complaining about inequality is just jealousy that some other guy did better than you did. But the reality is, people go to America because it is great. They’re not leaving America because of inequality. That’s the litmus test right there of whether you have perspective.

      • From the lists I’ve seen the United States is just outside of the top 10.

        But we are still near the top. And compared to most other countries we do have relative equality.

      • “From the lists I’ve seen the United States is just outside of the top 10.”

        Come on, you supplied the link above, and the US is #10. Your data, your result.

        “And compared to most other countries we do have relative equality.”

        Mmm, not really. The most usual quoted index is the Gini coefficient where the US is ranked #115 out of 156 countries. i.e. not very equal.

        Now where do you want to live, oh say Liberia which ranks far better in equality on the Gini coefficient with an average annual income per capita of $118, or the United States?

        Stop worrying about whether the other guy has more than you. Worry instead about whether the economic system gives you the opportunities to better yourself. With people trying to flood across the border to get INTO the US, we know what the answer is.

      • The Forbes link might have the US at number 10 we have dropped to about number 12 — not a lot of difference there.

        The point is that the United States is still one of the most equal countries in the world but is lower in equality than those who are happier than us.

        And countries with the highest inequalities are consistently among the unhappiest countries.

      • “The point is that the United States is still one of the most equal countries in the world”

        So when I cite the Gini coefficient showing that the United States is one of the LEAST equal countries in the world, your response is… to say nah,nah, you’re wrong.

        “but is lower in equality than those who are happier than us.”

        The US is also lower in equality than the poorest country in the world: Liberia.

      • I’m not sure exactly what you’re looking at. I did find some data on income inequality and the US is middling on that, not low. But most Americans also think that they are middle-class, even though there is quite a bit of income inequality. Feeling middle-class might create a boost.

        You are only counting income inequality. The countries with the highest happiness are high in equality when it comes to income, gender and race.

        And the US is also high on equality when it comes to gender.

        We are also one of the few countries to elect an ethnic minority to the Presidency, Perhaps suggesting some level of racially equality that is higher than you might expect.

        It doesn’t make sense to compare income inequality in the US to everyone being poor in Libya.

        I was making the assertion based on data I found on Forbes — not a liberal source of information.

      • “You are only counting income inequality. The countries with the highest happiness are high in equality when it comes to income, gender and race.”

        That’s because you’re cherry picking the data. The Soviet Union was very equal in pay rates, probably more equal than any country in history, had equal opportunity for women and no racism worth mentioning, but nobody whatsoever was happy. You can prove literally anything by cherry picking data.

        “But most Americans also think that they are middle-class”

        Sounds like a great result. The most Laissez-faire capitalist country in history has a population that thinks they’re all middle class. I wouldn’t mess with that, would you?

        “We are also one of the few countries to elect an ethnic minority to the Presidency, Perhaps suggesting some level of racially equality that is higher than you might expect.”

        Well. He is half white.

      • The Soviet Union was a domination culture, not egalitarian. As George Orwell put it, some were more equal than others. The Communist Party had more rights and privileges than others and so did those with more talents.

        The happiest countries are politically equal. Great equality of gender, race and class.

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