One-Sided Class War

It's a busy day today at Castle Cernig, so there's going to be a few quick posts.

First, a report from the New York Times which examines the "overwhelmingly one-sided class war" in America.

Consider, for example, two separate eras in the lifetime of the baby-boom generation. For every additional dollar earned by the bottom 90 percent of the population between 1950 and 1970, those in the top 0.01 percent earned an additional $162. That gap has since skyrocketed. For every additional dollar earned by the bottom 90 percent between 1990 and 2002, Mr. Johnston wrote, each taxpayer in that top bracket brought in an extra $18,000.

It's like chasing a speedboat with a rowboat.

Put the myth of the American Dream aside. The bottom line is that it's becoming increasingly difficult for working Americans to move up in class. The rich are freezing nearly everybody else in place, and sprinting off with the nation's bounty.

Jesse Taylor at Pandagon has the best read on the story:

The problem with growing income disparities isn't class mobility, but instead the devolving power and complete stagnation of a middle class income.

It's not an issue of whether or not the file clerk can become the CEO in thirty years, but rather the fact that the file clerk is getting paid comparitively less and less while the CEO sucks up all the benefits of the company's success. The goal isn't to assure that every middle manager becomes a millionaire, but rather that if you are a middle manager over a five-year period, you're actually earning more at the end of that period respective to your work and commitment than you were at the beginning.

It's where a lot of the debate gets mixed up. We're so used to the idea that the American Dream is to get richer and richer that we don't notice that it's increasingly worse to be in any non-rich class. Class mobility is great, but not when being in the top 20% means that you're increasingly screwed being in the bottom 80%. And the biggest issue of all is that someone has to be in that bottom 80%.

I doubt any of you will be surprised to hear that I think this proves yet again that a mixed-market system is the best option. One in which the economy is balanced around positive as well as negative freedoms and where the golden rules are fiscal responsibility and that the economy serves the populace not the other way around. As socialists across the world worked out a couple of decades ago, runaway socialist economics don't work - but neither does runaway capitalism. A sensible mix of both is the ticket. Socialists in the main evolved over the last 2 decades. The right, with it's monetarist insistence on tax cuts for the rich which don't work - they actually repress an economy rather than "kick-starting" it - did not.

If you give money to the rich, they hide it offshore or spend it on foreign luxury goods. If you give far smaller amounts to the poor and the working class, they spend it at the local store, the small businesses in their area, or even leave it as a tip for a waitress. The local businesses and stores pay wages, usually low wages, to other working class people, who in turn spend it again, and so on.

A dollar given to the poorest 20% of society will circulate, on average, five times - far exceeding the economic generative effects of the same dollar given to the richest 20% and hidden in an offshore trust fund.

Increasingly, the American Dream translates as "I'm alright, Jack".