[Puppage]

How the Middle Class Lifestyle Became Unaffordable

One word: democRATS

[ProtectOurFreedom]

Great article, SAF. Thanks for posting. It does a great job of describing the economic theory behind the enormous growth of government and loss of the middle class.

[circlecity]

It has long been the goal of international Marxists to destroy the middle class who they blame for preventing their glorious revolution of the proletariat.

[RegulatorCountry]

The “middle class” lifestyle began to become unaffordable due to three things: women entering the workforce en masse, drivng down future wage gains for all; the expectation that every high schooler must attend college to succeed, supported by subsidy and debt, driving up the cost of college education; and trade policy collapsing entire segments of the US economy, which reduced wage stability and the opportunity for future advancement.

The end result was families in which both husband and wife absolutely had to work at increasingly less desirable jobs in order to maintain even a semblance of the lifestyle of the previous generation, which was in most instances supported on one income.

[AZLiberty]

The bit about "financialization" is very powerful. Through financialization the "economy" has diverted all the gains in productivity to a small number of people in the "financial" industry. These financially folks (e.g., "hedge fund operators") are easily -- and willingly -- taxed to support the unending growth of government. Besides taxes, these financial winners make huge political donations to support the uniparty and keep the game going.

No wonder the Tea Party is seen as the real enemy.

[Buckeye McFrog]

And this leads us straight to financialization, the parasitic extraction of profits from the real economy by finance and the state

Which sums up why a tsumami of angry populism will end up electing the American Hitler on a promise to dole out severe punishment to Wall Street bankers.

The State will gladly make them the fall guy rather than take the hit for their portion of the blame.

[pierrem15]

Part of this analysis strikes me as incorrect:

a) Externalized costs: the costs of 'environmental damage' are grossly exaggerated (look at how lead is now treated almost as though it were plutonium)-- this is actually cartelization, where you now need a special license to remove lead paint or use Freon, etc. My guess is you could roll all environmental regulations back to 1985 and there would be almost no measurable increase in mortality and morbidity.

ii)Other regulations (such as permitting, environmental 'studies', etc.) impose enormous costs in terms of time and money;

One of the major benefits of outsourcing manufacturing is not only low wages but the elimination of external and regulatory costs. If we severely reduced these costs in the US, we could impose tariffs and recapture a lot of the wage losses.

[Boogieman]

I’ve got 4 reasons right here:

1. Constantly inflating college tuition costs driven by government subsidies
2. Decades of speculation-fueled real estate inflation making housing unaffordable
3. Public subsidization of college tuition has increased the pool of graduates and lowered the wages they can demand
4. Constant inflation of the money supply by the government leading to increasing prices with stagnant and falling wages.

[grania]

This is a real good explanation of how we got where we are. The question it doesn’t address is when does the model fall apart causing the economy to collapse.

[alexander_busek]

Baumol examined the relationship between productivity and cost, and found that productivity in labor-intensive services (for example, nursing and teaching) had intrinsically lower rates of productivity increases than goods-producing industries. The performing arts offers a striking example: it takes the same time to learn and play a Mozart concerto now as it did in 1790, so productivity gains will be modest.

If it takes the same time and effort to learn to play a musical instrument, to sing, or to act in a play now as it did in 1790, then why can (some) musicians, singers, and performers / actors command millions of dollars for a single song, or a single movie? Is this a refutation of Baumol's Law, or merely an exception?

Of course, in a winner-take-all system like the one we now have (thanks to mass-produced DVDs, etc.), only the top 0.1% of all musicians, singers, and actors / performers profit from, e.g., the increasing cheapness of recording media, the prevalence of Ipads, and such, while 99.9% of all artists are, in essence, no better off - or even worse off.

Regards,

[mjp]

Baumol examined the relationship between productivity and cost, and found that productivity in labor-intensive services (for example, nursing and teaching) had intrinsically lower rates of productivity increases than goods-producing industries.

The combination of libtardism, increased government spending, huge government deficits, inflation, and huge government debt form a nexus of evil that is a self reinforcing vicious circle death spiral that leads to the rising prices that is the cause of the misery of the middle class.If we had a stable sound money system, rising productivity of labor would result in more than a fall in prices of TV sets. It would result in a lower general price level, rising buying power, rising real wage rates, and rising standard of living for the average worker.

[Rockitz]

Overall, I found this this article to be confirmation of what my family has experienced. My wife and I are both working professionals and even with a mother-in-law providing the bulk of the childcare, we are barely above a hand-to-mouth lifestyle. A nanny is out of the question. They want $15 to $25 per hour to watch TV, change an occasional diaper, and keep the kids from destroying the house. Minimum wage laws and public assistance keep nannies out of reach for us.

[Yaelle]

Fascinating. Save for later read.