The Main Course

There’s a great post from Noah Smith at Bloomberg View on the situation that middle class Americans have found themselves in. Basically, neoliberalism has not been good to them. Here’s the kernel:

Writer Alex Pareene, in a recent article in Fusion, colorfully describes how vendors of all sorts cashed in on enthusiasm for conservative politicians:

[The conservative era] was a fantastic deal for…companies selling newly patented drugs designed to treat the various conditions of old age, authors of dubious investing newsletters, sellers of survival seeds, hawkers of poorly written conservative books, and a whole array of similar con artists and ethically compromised corporations and financial institutions.

But Pareene’s focus on conservative political appeal is much too narrow. The white middle-class that tended to support leaders like Ronald Reagan, Newt Gingrich and George W. Bush, lost huge percentages of their life’s savings because of excessive fees paid to actively managed mutual funds, financial advisers, stockbrokers, pension fund managers and the like. They also paid 6 percent real estate commissions even as people in most countries paid much less. They rejected the Clintons’ health-care plan in 1993, and ended up paying double what people in other countries pay for comparable treatment. They forked over more and more money in college tuition. They paid higher prices to companies that went on to monopolize markets after spending millions convincing the government to allow their megamergers. The spectacular rise of U.S. wealth inequality shows that trillions of dollars in middle-class assets were shifted up the socio-economic ladder into the hands of a relatively small and fantastically rich upper tier.

Each of these little free-market failures was another slice off of the ham that was the wealth of the American middle class. The people who thought they were going to be the guests of honor at the feast ended up being the main course.

There’s a quip attributed to many but is probably a bit of commonplace wisdom among poker players going back many, many years. If you look around the table and you can’t tell who the sucker is, it’s you.

There are hundreds or thousands of plans for improving the world that all begin with taxing “the rich” or having somebody else pay the tab. Americans, particularly middle class Americans, have fallen for these plans hook, line, and sinker.

“The rich” aren’t going to pay the tab. The other guy isn’t going to pay the tab. You’re going to be stuck with it.