I want to draw your attention to a joint report from Opportunity America, the American Enterprise Institute, and Brookings, “Work, Skills, Community: Restoring Opportunity for the Working Class”. I’m still making my way through the complete 136 page report. The one-page summary is here.
It does not seem to cover any new territory. A lot of the ground was covered nearly 20 years ago in Robert Putnam’s Bowling Alone. Their prescriptions are pretty quotidien: higher pay even if subsidies are required, education, opportunity zones, expanded public assistance.
I’m afraid that my view will not please a lot of people. For the last 40 years policy has been focused unerringly on the needs and wants of upper class and upper middle class Americans. Frankly, those needs and wants are destructive to the vast number of the people.
It began in the 1960s and has accelerated since. Wages per wage earner began to decline. The awful truth is that women don’t enter the workforce to pursue a career or for personal fulfillment. That’s for upper class and upper middle class women. Middle and working class women work to support their families and, as their husbands’ paychecks stagnated, declined, or vanished altogether, they went to work so their families could pay the bills. The institutions on which working class and middle class people depended, noted here:
Since the late 1970s and still today, working-class America is bearing the brunt of automation and globalization: entire industries are disappearing, and wages have been flat since the 1970s. Marriage has declined faster among the working class than in any other group, richer or poorer. Civic institutions that once sustained blue-collar enclaves—churches, union halls, neighborhood associations, the local VFW or Lions Club—are closing their doors or moving elsewhere. And as the social fabric frays, a host of new problems are arising, from opioid addiction to what Anne Case and Angus Deaton have called “deaths of despair” caused by drugs, alcohol or suicide and correlated with distress and social dysfunction.
depended on women, largely on a volunteer basis. When women were too tired or busy to run their churches, neighborhood associations, and other organization, those institutions declined. As families became viable without marriage, marriage declined.
What’s pushing wages down for ordinary people? Competition from overseas, a significant influx of immigrant workers willing to work for less, and subsidies for the well-to-do which push the costs of the services that people in the upper middle class up.
Education will do nothing for most people unless our economy creates more jobs for people with educations. Opportunity zones just move money from one pocket to another. And wage subsidies of themselves merely prevent desperation. They don’t rebuild the institutions that brought meaning to people’s lives and they don’t foster the conditions that result in the creation of more jobs that pay better.
The twelve step programs preach that the first step on the road to recovery is admitting that you have a problem. Our problem is that the “reforms” put in place over the last 40 years have left millions of casualties in their wake. What was built over hundreds of years and destroyed in the matter of a couple of generations will not be rebuilt overnight.
“Opportunity zones just move money from one pocket to another.”
Well yeah, except that less money is received than is sent. Postage and handling, I guess.
Agreed. We had over two hundred years where wages and productivity rose in tandem, largely thanks to the American School of political economy. When that growth started to decouple in the early 1970s, the economic condition of most Americans began to deteriorate. Now we see the social dysfunction that comes with mass inequality.
The ultra wealthy now control everything. They now run for office and run the government, just like the banana republics, instead of staying in the background and buying influence. They control much of the media and finance the think tanks. Change will be very difficult. Large segments of the population now deeply believe that if we just make rich people richer we will all benefit, despite many years of evidence to the contrary.
Steve
“Resources Are Almost 5 Times as Abundant as They Were in 1980”
http://reason.com/blog/2018/12/04/resources-have-become-nearly-5-times-mor
If you’re only looking at numbers you’re missing the boat.
In human history most countries have been run by its richest man.
The emperor of China was the richest man in China. The Shogun in Japan. Even in the West Augustus, Julius Caesar, Crassus were reckoned the richest in their day. Let’s not forget Henry VI, Louis XIV, etc.
Even Washington, Jefferson, Jackson were among the richest man in the colonies / founding era. Roosevelt / Kennedy / Bush were all wealthy families.
None of those were banana republics. Like the American Dream in the Great Gatsby; the American ideal maybe somewhat in conflict with human reality.
As to this post about admitting a problem. Usually that only happens via outside intervention or hitting rock bottom. In the context of a nation outside intervention means losing a war – and hitting rock bottom is some type of national catastrophe.
Look to the USSR for an example.
Inequality and the concentration of wealth ebbs and flows. The last time we had the sort of income inequality we have now was in 1918, a century ago. The difference: the century has been one that implemented policies that ostensibly should have made the distribution of income more equal. It has resulted in the opposite.
I was fortunate enough to have been born and grown up when 90% of income and wealth was in the hands of 90% of the people. It genuinely is different now and, whatever people may tell you, not for the better.
I agree with you that it is better for a Democratic Republic to have relatively equality in wealth and income to go along with social and political equality.
The question is what is the normal state of affairs? The one most humans who ever lived in where the rulers were the richest, or the Western experience from 1920-1970? It’s a bit depressing to think maybe the equality was less from human design then from some freakish circumstances.
One obvious way to improve the conditions of the working class would be to prohibit, or at least severely restrict, the importation of manufactured goods. This would cause sharp increases in the costs of everything, but it would provide gainful employment to workers. It would represent a return to the 1950’s when unskilled working class families needed only wage earner to support a family in near middle class conditions.
Another obvious way, and one that would have to be coupled to the first, is a total ban on immigration. While most immigrants are uneducated and unskilled, and end up on welfare, some do compete with American workers. The ones granted H 1B visas compete with highly skilled Americans.
No one in Lordstown would oppose either of those policies. If the Republicans were not totally controlled by Wall Street, they could become the working class and middle class party.
It’s not just those who are abusing H1-B and L1 visas who are competing with American workers. Unskilled workers compete with previous cohorts of unskilled workers and with those, like blacks, who were shut out of the labor market for generations. Confidence that the flow of minimum wage workers will continue enables business models that would otherwise be just too risky. It re-orients the economy around those models.