realitybase - Journal

Robert Reich presents irrefutable evidence of the immiseration of the American Middle Class since the 1970s, explains how it happened, shows that it was not inevitable and can be fixed, and issues a call to action in The Limping Middle Class on today's NYT op ed page. An excerpt:

THE real reason for America's Great Regression was political. As income and wealth became more concentrated in fewer hands, American politics reverted to what Marriner S. Eccles, a former chairman of the Federal Reserve, described in the 1920s, when people "with great economic power had an undue influence in making the rules of the economic game." With hefty campaign contributions and platoons of lobbyists and public relations spinners, America's executive class has gained lower tax rates while resisting reforms that would spread the gains from growth.

Yet the rich are now being bitten by their own success. Those at the top would be better off with a smaller share of a rapidly growing economy than a large share of one that's almost dead in the water.

The economy cannot possibly get out of its current doldrums without a strategy to revive the purchasing power of America's vast middle class. The spending of the richest 5 percent alone will not lead to a virtuous cycle of more jobs and higher living standards. Nor can we rely on exports to fill the gap. It is impossible for every large economy, including the United States, to become a net exporter.

Reviving the middle class requires that we reverse the nation's decades-long trend toward widening inequality. This is possible notwithstanding the political power of the executive class. So many people are now being hit by job losses, sagging incomes and declining home values that Americans could be mobilized.

I agree whole-heartedly with all this (and the rest of his essay) except for the last sentence, and I have grave doubts about that. In one of my earliest Realitybase posts in December 2007, The Recession Is Coming! The Recession is Coming!, I put up some of the evidence about stagnation of middle-class incomes and ended by expressing my concern that America doesn't really care:

Well, is there a problem? Is this good enough for America? Or should it be a national goal to get the middle class moving again?

That was written just as the current recession was beginning (December 2007 according to the BEA dating committee) and before the financial crisis of September 2008 made it the Great Recession with its extraordinarily deep and prolonged unemployment and decimation of tax revenues. Clearly, middle class problems are much bigger now than "just" wage stagnation, but I still don't see any evidence that a large number of Americans care enough to mobilize themselves politically to get the middle class moving again. Ominously, if they do try to mobilize, I think they will find that 30 years of sitting in the pot while the financial and political elites slowly increased the heat has left them enervated as well as immiserated.