November 16, 2011

The 'Middle Class'

After a particularly stimulating Austrian Economics class
one day I happened upon an issue of Time magazine while standing in the
checkout line at King Soopers. You can imagine my displeasure when near the
bottom right-hand corner of the cover one headline read ‘The Decline of the
Middle Class’. “What do they even mean, ‘the middle class’?” I asked myself. I
located the article on page 31 and began to read.
“America was once the great middle-class society. Now we are
divided between rich and poor, with the greatest degree of inequality among
high-income democracies.” I was once taught that the term ‘middle-class’ is one
without much definitive meaning. If you divide levels of incomes into different
‘classes’ it seems that any way you slice it, there will always be a middle.
This did not deter me, for it was still possible that this particular issue of
Time magazine contained the secret reasons for why the term ‘middle-class’ held
such sway.
After briefly referencing the Depression and Roosevelt’s New
Deal-a key feature of any contemporary article which attempts to identify the
cause of and prescribe remedies for the current ‘economic downturn’-the author,
Jeffrey D. Sachs, writes that “At home, workers with lower skills and education
are being squeezed by competition from overseas.” Sachs contrasts this with
eras of prosperity and writes that in the fifties and sixties rapid economic
growth was the result of a ‘more robust safety net’.
“Social Security, the GI Bill, interstate-highway
construction and many other programs ensure that the elderly were protected,
higher education was increasingly within reach of all, and the business sector
had the modern infrastructure needed to prosper. In this highly effective
‘mixed economy,’ one bolstered both by business and by activist government, the
gap between rich and poor narrowed substantially.”
At this point I assumed Sachs’ next step would be to argue
for bigger government, and possibly even demonstrate his support for recent
attempts to bolster the economy. Alas, this was not his position. Sachs does
not support ‘haphazard-stimulus’. However, as regards the picture he paints of
the Republican approach he writes, “They claim, without evidence that taxes and
regulations are killing job creation, though many countries with much higher
taxes and much stffer corporate regulations have much higher employment rates
than the U.S.”
What are we to do then? Sachs believes that the answer lies
in public investments. Only public investments will allow us to keep our high
living standards. What then is the difference between his view and Obama’s
actions? The public investments he proposes are smart long-term investments
into ‘education, infrastructure and human capital’. Investing in these areas
will help us to be more competitive.
By now it has become clear to me that containing the term
‘middle-class’ in the headline was just a flashy way to attract the attention
of any ‘middle-classer’ who happened to be standing in line at King Soopers. Also
among the words used to attract and please while lacking inadequate meaning; “public
investments”; Using this term allows him to pretend that these ‘investments’
aren’t made by the government (perhaps haphazardly) with our taxes. Rather, it
sounds as if all of us together and united will make the choice to
strategically place our money in the hands of those who know where to invest
it. “Mixed economy”; in world of hybrids a mixed economy sounds like a nice way
to settle the issue between those who support a free market and those who
support government planning. In reality, a ‘mixed economy’ is one that is not
free. Without a market where people are free from government force and coercion
and happily exchange from one other empty words can only succeed in alleviating
the worries of those who prefer not to think.

1 comment:

Larry Eubanks said...

Mixed Economy = Interventionism?