…to stay in the same place. If they’re not growing, they’re shrinking:
The percentage of Americans who fit into the middle-income category is on a four-decade long retreat. That was exacerbated in the 2000s as median family incomes shrunk in the U.S. for the first decade since the end of World War II.
In Colorado, where the unemployment rate started rising in May 2007 and has stubbornly hovered around 8 percent for the past year, the number of middle-class households has grown since 2008 — but at a slower rate than the household population overall, mirroring the national middle-class shrinkage.
OT- If it interests you, would like your take on the country’s total debt load. At what level is private debt not sustainable? If we do tax reform, what do we do to stop reliance on credit financing of growth? Equity? Drew should feel free to comment and/or correct me. Would also be interested in the MMT take.
http://www.economonitor.com/rebeccawilder/2012/10/02/who-has-the-most-debt-in-the-us/
Steve
I think we passed the point at which private sector debt was nonsustainable quite a while back. That’s why it’s been flat for so long.
The real question is whether the issuance of credit by the federal government is sustainable. I think it’s obvious that whatever part of that credit that doesn’t make it into the real economy is sustainable indefinitely. The question then becomes how much can the government spend in the real economy?
I don’t honestly know and opinions certainly differ on the subject. I think that the government could issue credit and, if it’s used for consumer spending, that could go on almost indefinitely (as long as our foreign creditors are willing to take it). Unfortunately, that would also be without producing much in the way of domestic economic growth or, worse, domestic job creation, either.
IMO that’s the largest single reason for increasing income inequality. The government keeps issuing credit and most of it is going to the top 1% of income earners.
BTW, I think that nearly the only detail in which Ben and I differ on this subject is that it appears to me that he thinks there’s a lot more unused productivity in the economy than I do. I don’t think that people being unemployed and unused productivity are synonymous.
“IMO that’s the largest single reason for increasing income inequality. The government keeps issuing credit and most of it is going to the top 1% of income earners.”
Yet, most of our credit growth from the 70s on, when we see inequality increase, is in private sector credit. Do you have some reason to believe that private credit, including corporate, has had its benefits more evenly spread across all income groups? Given the growth in our financial sector, doesnt that imply that the benefits of the private credit binge have gone to more restricted groups?
Steve
I think that much of the benefit over the last several decades has gone to people in other countries and the top 1% here.
Thanks for taking time to respond.
Steve