In Search of the Imaginary Middle

Those on the left have been making fun of those on the right since all those town hall meetings during the August 2009 congressional recess, when, as the Affordable Care Act and Death Panels were the big issue, it seemed that every Republican congressman or senator had some weeping woman rise and cry out, from her heart, that she wanted her country back. Sometimes it was an angry old white man, and of course this was about the impending complete government takeover of the entire healthcare system – there would be no more family doctors, just brutal and heartless bureaucrats – or else it was about Obama being black, or about Mexicans wherever you looked, or icky gay people, or it was about nasty people picking on people who had made something of their lives – the morally superior rich. Maybe it was all of that, a sort of generalized nostalgia for what sort of seemed like the fifties. What did these people want back? The fifties weren’t all that great.

Those on the left like to call themselves progressives, now that the term “liberal” has been ruined, and progressives are for progress, after all. They found all this absurd. There’s no going back. Nostalgia is not only stupid, it’s dangerous – we’ve moved on – and these people were longing for a past that was never all that good in the first place. Maybe patriotism will get it back, or another war, or old-time religion, or something. That’s what seemed to animate the Tea Party movement. They wanted their country back– which seemed to have something to do with Ozzie and Harriet and poodle skirts, and wholesome movies and blacks knowing their place, and gay folks hidden away, and the only Hispanics and Asians being the harmless and amusing Ricky Ricardo and Charlie Chan, a world of back-alley coat-hanger abortions only, where if the women died they got what they deserved, with Jesus everywhere.

Ah, those were the days, but those days weren’t the good old days for everyone. All the civil rights stuff from the 1954 Brown decision desegregating schools to the Civil Rights Act of 1964 and Voting Rights Act of 1965, and all the turmoil of the sixties followed by the women’s rights movement in the seventies, happened for a reason. That past had been a cruel and stupid place for far too many people.

Those who are nostalgic about those days, however, talked about them as if they were the golden age of self-reliance, the days before the government was always trying to fix things. Back then, the government didn’t take all your money and hand it out to those Welfare Queens that Ronald Reagan was always talking about. Neighbors helped neighbors. Churches fed the poor. That’s why using the threat of crippling the economy, or even destroying it, to make sure thirty or forty million Americans don’t gain access to affordable healthcare, had to be about more than health care. This was that forty-seven percent thing long before Mitt Romney said a word, and it was not just about making it hard for the forty-seven percent to buy health insurance, because there was a parallel effort to pretty much end the food stamps program – Obama was the Food Stamp President, as newt Gingrich was saying at the time, all the time. We were told that ending that program is necessary – but health care was the main issue, even if, as the Affordable Car Act was finally implemented, a number of private parties started to make big bucks providing what many desperately need – as planned. It wasn’t socialized medicine, not that it mattered. Sure, healthcare costs for everyone will slowly come down, and the economy will perk up as those worried sick about getting sick can get back to doing work and getting ahead – and those are fine things – but will they make the working poor better people? The golden age of self-reliance was over.

This was an odd view of how things used to be. The working poor were in a bad place all along, and their numbers exploded after the economy collapsed in the final months of the Bush administration. For them, the economy never really recovered. The past was pretty awful, then things got much worse, and now things promise to get no better. Maybe they were better people at some point in the past, or maybe not, but that seems beside the point. They’d like a chance to buy health insurance. The Affordable Car Act makes that possible. Someone else’s strange nostalgia about the golden age of self-reliance was what was standing in the way.

Those on the left saw this as utter nonsense – nostalgia for what never was – and somehow got the Affordable Care Act passed and signed into law. Those on the right are still working to make it go away – all of it – but that seems unlikely now, perhaps. America got itself unstuck from the fifties – there’s no going back. And yes, our president is black, and our next president will likely be a woman, and those who think gays are really icky can no longer use the law to make their lives miserable, and more and more of our citizens will be folks who started out south of the border, or from even stranger places, and they’ll be fine citizens – and some of them will be Muslims or Buddhists or something else that has nothing to do with Jesus – and we’ll be fine. There really is no going back.

Those on the left never want to go back. They do believe in progress – they do find nostalgia dangerous – but the odd thing is that they just have a different form of nostalgia, for the days when there was a middle class, which might have been an anomaly. They have their good old days too – the same good old days, oddly enough. That would be the period from 1947 to 1974 – the one time America actually had a middle class, perhaps by accident. For a brief shining moment things fell in place. It was a fluke.

Harold Meyerson offers a lengthy explanation of that, starting with this:

The steady stream of Watergate revelations, President Richard Nixon’s twists and turns to fend off disclosures, the impeachment hearings, and finally an unprecedented resignation – all these riveted the nation’s attention in 1974. Hardly anyone paid attention to a story that seemed no more than a statistical oddity: That year, for the first time since the end of World War II, Americans’ wages declined.

Since 1947, Americans at all points on the economic spectrum had become a little better off with each passing year. The economy’s rising tide, as President John F. Kennedy had famously said, was lifting all boats. Productivity had risen by 97 percent in the preceding quarter-century, and median wages had risen by 95 percent. As economist John Kenneth Galbraith noted in The Affluent Society, this newly middle-class nation had become more egalitarian. The poorest fifth had seen their incomes increase by 42 percent since the end of the war, while the wealthiest fifth had seen their incomes rise by just 8 percent. Economists have dubbed the period the “Great Compression.”

This egalitarianism, of course, was severely circumscribed. African Americans had only recently won civil equality, and economic equality remained a distant dream. Women entered the workforce in record numbers during the early 1970s to find a profoundly discriminatory labor market. A new generation of workers rebelled at the regimentation of factory life, staging strikes across the Midwest to slow down and humanize the assembly line. But no one could deny that Americans in 1974 lived lives of greater comfort and security than they had a quarter-century earlier. During that time, median family income more than doubled.

Then, it all stopped. In 1974, wages fell by 2.1 percent and median household income shrunk by $1,500. To be sure, it was a year of mild recession, but the nation had experienced five previous downturns during its 25-year run of prosperity without seeing wages come down.

That was the beginning of the end of the post-war middle class:

What no one grasped at the time was that this wasn’t a one-year anomaly, that 1974 would mark a fundamental breakpoint in American economic history. In the years since, the tide has continued to rise, but a growing number of boats have been chained to the bottom. Productivity has increased by 80 percent, but median compensation (that’s wages plus benefits) has risen by just 11 percent during that time. The middle-income jobs of the nation’s postwar boom years have disproportionately vanished. Low-wage jobs have disproportionately burgeoned. Employment has become less secure. Benefits have been cut. The dictionary definition of “layoff” has changed, from denoting a temporary severance from one’s job to denoting a permanent severance.

The right may long for 1953, for cultural and character reasons, but the left longs for the same year, and the years up to 1974, for economic reasons. Someone took their country away:

As their incomes flat-lined, Americans struggled to maintain their standard of living. In most families, both adults entered the workforce. They worked longer hours. When paychecks stopped increasing, they tried to keep up by incurring an enormous amount of debt. The combination of skyrocketing debt and stagnating income proved predictably calamitous (though few predicted it). Since the crash of 2008, that debt has been called in.

All the factors that had slowly been eroding Americans’ economic lives over the preceding three decades – globalization, de-unionization, financialization, Wal-Martization, robotization, the whole megillah of nefarious –izations – have now descended en masse on the American people. Since 2000, even as the economy has grown by 18 percent, the median income of households headed by people under 65 has declined by 12.4 percent. Since 2001, employment in low-wage occupations has increased by 8.7 percent while employment in middle-wage occupations has decreased by 7.3 percent. Since 2003, the median wage has not grown at all.

The middle has fallen out of the American economy – precipitously since 2008, but it’s been falling out slowly and cumulatively for the past 40 years. Far from a statistical oddity, 1974 marked an epochal turn. The age of economic security ended. The age of anxiety began.

That’s the gist of it, and the rest is supporting detail, like this:

The defining practice of the day was Fordism (named after Henry Ford) under which employers paid their workers enough that they could afford to buy the goods they mass-produced. The course of Fordism never ran as smoothly as it may seem in retrospect. Winning pay increases in halcyon postwar America required a continual succession of strikes.

At the commanding heights of the U.S. economy, the largest American company, General Motors, and the most militant and powerful American union, the United Auto Workers, had fought an epochal battle in the winter of 1945–1946, the UAW’s members staying off the job for nearly four months in what proved to be a vain attempt to win a co-equal say in the company’s management. In 1948, with GM fearing another massive disruption and the UAW willing to give up on co-management, the two sides reached a pattern-setting agreement: In return for a two-year no-strike pledge from the union, GM signed a contract granting its workers not only a sizable raise but an annual cost-of-living adjustment that matched the rate of inflation, and an “annual improvement factor” that raised pay in tandem with the increase in the nation’s productivity. In 1950, after a brief strike, the two sides signed a five-year contract – dubbed the Treaty of Detroit – that extended the no-strike pledge, the raise, the cost-of-living adjustment, and the annual improvement factor and added health coverage and more generous pensions. As the economy grew, so would the autoworkers’ paychecks.

Within a few years, the increases that GM had agreed to became standard in half the union contracts in America, though workers still had to strike to win these gains. In 1952, 2.7 million workers participated in work stoppages. Throughout the 1950s, the yearly number of major strikes averaged more than 300. The largest strike in American history, in terms of work hours lost, occurred in 1959, when 500,000 steelworkers walked off the job for 116 days to secure increased wages and improved health and pension coverage.

Management was no fan of these disruptions, but they were regarded as the normal ebb and flow of labor relations.

And then they weren’t:

Three signal events – Federal Reserve Chairman Paul Volcker’s deliberately induced recession, President Ronald Reagan’s firing of striking air-traffic controllers, and General Electric CEO Jack Welch’s declaration that his company would reward its shareholders at the expense of its workers – made clear that the age of broadly shared prosperity was over.

After a few thousand words explaining those three things, Meyerson gets to the heart of the matter:

What has vanished over the past 40 years isn’t just Americans’ rising incomes. It’s their sense of control over their lives. The young college graduates working in jobs requiring no more than a high-school degree, the middle-aged unemployed who have permanently opted out of a labor market that has no place for them, the 45- to 60-year-olds who say they will have to delay their retirement because they have insufficient savings – all these and more are leading lives that have diverged from the aspirations that Americans until recently believed they could fulfill. This May, a Pew poll asked respondents if they thought that today’s children would be better or worse off than their parents. Sixty-two percent said worse off, while 33 percent said better. Studies that document the decline of intergenerational mobility suggest that this newfound pessimism is well grounded.

The middle class isn’t coming back, for structural reasons, and the structural reasons we had a middle class after the war were unique:

That the American supremacy over the global economy in the three decades after World War II was a one-time phenomenon is a given. That globalization and automation have made and will continue to make massive changes in America’s economy is obvious.

We have to deal with what we have now – nostalgia is for suckers – but Meyerson, writing from the center-left, does throw in this:

The extinction of a large and vibrant American middle class isn’t ordained by the laws of either economics or physics. Many of the impediments to creating anew a broadly prosperous America are ultimately political creations that are susceptible to political remedy. Amassing the power to secure those remedies will require an extraordinary, sustained, and heroic political mobilization. Americans will have to transform their anxiety into indignation and direct that indignation to the task of reclaiming their stake in the nation’s future.

Sure, all we need is an extraordinary, sustained, and heroic political mobilization of some kind. How likely is that?

Thomas Edsall in the New York Times suggests that isn’t likely:

In his State of the Union address last month, and in four subsequent addresses to the public, President Obama used the phrase “middle class” (approvingly) a total of 49 times, and the term “superrich” (in an accusatory sense) eight times. It sounded like this:

“For far too long, lobbyists have rigged the tax code with loopholes that let some corporations pay nothing while others pay full freight. They’ve riddled it with giveaways that the superrich don’t need, while denying a break to middle-class families who do. We don’t just want everyone to share in America’s success – we want everyone to contribute to our success.”

The problem for Democrats is that the party’s newfound emphasis on benefits for the middle class and contributions from the rich threatens to alienate the upscale wing of the party, which fears that it will be left to pick up the tab.

And here’s the problem:

When the middle-class populist message is turned into actual legislative proposals, the costs, in the form of higher taxes, will be imposed on the affluent. Such a shift in the allocation of government resources threatens the loyalty of a crucial Democratic constituency: well-off socially liberal voters.

Nostalgia only goes so far:

Over the past two decades, the Democratic Party has successfully won over – or perhaps it’s better said that the Republican Party has lost – many well-educated, well-paid, fiscally moderate men and women. These voters are repelled by a social conservatism that is anti-abortion, anti-gay rights and anti-women’s rights. But they are not eager to see their taxes raised.

In 1992, Bill Clinton lost the most affluent segment of the electorate, voters with household incomes over $75,000, by 12 points. In 2008, Obama lost voters with household incomes from $100,000 to $200,000 by 2 points, 50-48, and actually carried voters making over $200,000, 52-46.

Even more significant: In 1992, voters from households making from $15,000 to $75,000 a year – a very rough estimate of the working and middle class – made up 74 percent of the electorate. By 2012, voters from households making $30,000 to $100,000 (again, a rough estimate of the working and middle class) made up 52 percent of the electorate. By 2012, nearly three of every 10 voters, 28 percent, came from households making in excess of $100,000, the upper middle class and beyond.

In other words, the size of the target constituency for a political strategy emphasizing middle-class populism has grown substantially smaller, while the size of the affluent voting population that would bear many of the costs of financing the new populism has grown larger.

That extraordinary, sustained, and heroic political mobilization just isn’t going to happen:

In many respects, the Democratic Party is in the midst of a class-based upheaval. In 1981, after Ronald Reagan won the presidency, Republicans took control of the Senate and a conservative alliance dominated the House.

As Tip O’Neill used to tell reporters, “We in the Democratic Party raised millions out of poverty into the middle class, and made them so comfortable they could become Republicans.” Now, three decades later, the Democrats’ dilemma grows out of the fact that they have won back the loyalty of many who have reached the upper rungs of the middle class.

This means there will be no middle class of the 1947-1974 kind – because there is no middle, really. The upper rungs of the middle class aren’t the middle class.

Kevin Drum takes it from there:

President Obama recently advanced two proposals designed to help the middle class—part of a middle-class agenda that’s recently become something of a liberal rallying cry for the 2016 election. The first proposal was a mortgage plan available to anyone who bought a home. The second was a college tuition plan that would have helped middle-income workers with money saved by eliminating 529 college savings plans.

The mortgage plan has met with considerable enthusiasm. The tuition plan, by contrast, flamed out within days and has already been withdrawn.

Drum thinks Mechele Dickerson explains that well:

While both of these proposals ostensibly targeted the middle class, the mortgage plan was lauded because its financial relief applies to all homeowners, regardless of how much they earned. The 529 proposal, by contrast, was doomed because of a fatal flaw: it actually tried to provide relief for just the middle class, carving it out by income.

The success of one and not the other was actually quite predictable. The mortgage proposal, though modest, was welcomed because it was designed to make it easier and cheaper for families to buy homes. Republicans, Democrats, Americans and the financial entities that benefit all agree that any plan that increases homeownership rates is good, even if most of the benefits go to higher-income households and barely reach the middle class. …

The same is true with 529 plans… Fewer than 3 percent of families save for college using 529 plans, according to Federal Reserve data….Since it’s the richest who have the largest accounts, most of the benefits of the tax break go to them. While the average account has about $20,000 in it, the accounts of the top 5 percent average more than $106,000.

Drum:

This highlights one of the fundamental problems of liberal attempts to help the middle class. In theory, universal programs like Obama’s mortgage plan are designed to help the middle class, and this is what makes them both popular and politically palatable. In practice, though, the bulk of their benefits usually go to the well off, and this is what really makes them politically palatable. That’s why the tuition program met an instant death. It really did help the middle class – and only the middle class – and this meant it lacked the all-important political support of the well-off. In fact, since the well-off would be losing a benefit to pay for it, it attracted their instant opposition. And that was that.

Drum then suggests the problem might be that there is no real middle class, although he puts that this way:

We basically have the poor on one end and the 1 percent on the other – and everyone in between considers themselves middle class. So if you say your program helps the middle class, it needs to help virtually everyone – including lots of people who make an awful lot of money. It’s a good bet that virtually all of those folks with $106,000 in their 529 accounts think of themselves as middle class even if they earn well more than six-figure incomes.

Needless to say, this makes “middle class” programs really expensive. In practice, they have to be effectively universal, and since benefits often scale with income (as with tax deductions and savings plans), including the top 5 percent of the income ladder in these programs balloons their price tag by a whole lot more than 5 percent.

There are answers to this. You can offer tax credits rather than tax deductions. You can cap savings programs. But if you do very much of this, you effectively eliminate benefits for the well-off and you lose their support. And as plenty of research has shown, it’s the well-off who really have political clout. This means you have to buy them off if you want to do something for the middle class, and that makes “middle class programs” a lot pricier than you’d think.

Of course it does, because there’s no middle any longer. There was a middle class when everyone was watching The Adventures of Ozzie and Harriet – a quite pleasant show, actually – but the last episode of that aired on September 3, 1966. That was long ago, and the house where the Nelsons actually lived, and was used in the television series, just sold for well over five million dollars – and thus so much for the middle class. It’s long gone. Both the left and right have their specific nostalgia. It’s still stupid and dangerous.

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About Alan

The editor is a former systems manager for a large California-based HMO, and a former senior systems manager for Northrop, Hughes-Raytheon, Computer Sciences Corporation, Perot Systems and other such organizations. One position was managing the financial and payroll systems for a large hospital chain. And somewhere in there was a two-year stint in Canada running the systems shop at a General Motors locomotive factory - in London, Ontario. That explains Canadian matters scattered through these pages. Otherwise, think large-scale HR, payroll, financial and manufacturing systems. A résumé is available if you wish. The editor has a graduate degree in Eighteenth-Century British Literature from Duke University where he was a National Woodrow Wilson Fellow, and taught English and music in upstate New York in the seventies, and then in the early eighties moved to California and left teaching. The editor currently resides in Hollywood California, a block north of the Sunset Strip.
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1 Response to In Search of the Imaginary Middle

  1. Rick says:

    First of all, I’m not so sure about Thomas Edsall’s alleged problem for the Democrats:

    Such a shift in the allocation of government resources threatens the loyalty of a crucial Democratic constituency: well-off socially liberal voters. … These voters are repelled by a social conservatism that is anti-abortion, anti-gay rights and anti-women’s rights. But they are not eager to see their taxes raised.

    These voters are, I think, what used to be known in the old days as “limousine liberals” — that is, they’re rich like conservatives, but they reason like liberals. Anyway, I wonder if Edsall has good evidence for what he says about them, since I am one of those who believes the claim that people always vote their pocketbook instead of voting for what is good for all of us is probably way overrated.

    For one thing, the fact that these people are repelled by all those social conservative anti- things shows that they’re good people at heart, which indicates to me that, if they’re not already looking out for society at large, they’d at least be open to persuasion to the idea that all this pandering to the super-rich has been destroying the American economy, and needs to stop.

    They need to be made to understand that, just as there was for years a nearly-invisible housing bubble (those people actually thought their houses were really worth that much?) that burst and dragged down the country, there is now an almost invisible rich-people bubble (these people really think they actually earned all that money? Talk about the rooster taking credit for the dawn!) that is also bound to burst at some point, and with the same effect on the country. Just as monopolies are regulated to ensure they don’t corner a market, maybe we need to find a way to regulate anybody cornering too big a slice of the nation’s economy — but first, we need to make more people aware of the nature of the problem.

    Also, this is a bit of a mystery to me:

    In other words, the size of the target constituency for a political strategy emphasizing middle-class populism has grown substantially smaller, while the size of the affluent voting population that would bear many of the costs of financing the new populism has grown larger.

    So my question is, what ever happened to the 1% and the 99%? Does this mean the 1% is getting bigger? Or that the 99% is getting richer? Also, how can middle-class issues be losing in the opinion polls, since the pollsters are probably polling the 99%, which by definition has more people in it than the 1%?

    But I had an epiphany after reading this of yours:

    Maybe it was all of that, a sort of generalized nostalgia for what sort of seemed like the fifties. What did these people want back? The fifties weren’t all that great.

    Not so fast. In the fifties, our economy was doing great — although, for some reason, it all came to a screeching halt, according to that Harold Meyerson person, in 1974:

    Americans in 1974 lived lives of greater comfort and security than they had a quarter-century earlier. During that time, median family income more than doubled. Then, it all stopped. In 1974, wages fell by 2.1 percent and median household income shrunk by $1,500.

    Why? What was so special about those years, 1947 through 1974?

    Maybe it had something to do with this, written by Harlan Green back in 2013 in an article called “How Did We Reduce World War II Debt?”:

    There is a productive way to pay down the federal and consumer debt loads, instead of the austerity policies currently in vogue both here and in Europe (i.e., cut taxes and government spending), thus freeing more capital to grow the U.S. economy. It means implementing policies that will increase average household incomes; and tax revenues in the case of governments. We know this works because it happened after World War II with its record 120 percent of GDP debt load that was reduced to as low as 31.7 percent in 1974.

    Did he say 1974?

    Yep, that’s the year our WWII-era national debt, which had peaked at a record 120% in 1945 (or 113%, depending on which definition of “national debt” you use), finished its post-war drop to 31.7%. Another way to put that: While nobody was really paying attention, 1974 was the year our war debt was finally paid off, and so we could start to relax — and on average, it’s been pretty much nothing but trouble for our economy ever since.

    So what economic lesson do we learn from this? More Harlan Green:

    In fact, three decades of tax cuts may have gilded the pockets of the rich, but they didn’t provide much economic juice, says one study. Among developed nations, incomes per person grew no faster in countries like the United States and Britain that slashed their top tax rates than in countries like Spain, Germany or Denmark, which did not. There is even evidence that higher tax rates encourage growth. For instance, reducing inequality through higher tax rates on the wealthy may promote wealth creation.

    So maybe having that crushing debt hanging over us, like happened to us from the mid-1940s to mid-1970s, is not nearly as bad a thing as the conservative know-it-alls of today keep telling us it is. After all, having to pay back our highest debt-to-GDP of all time gave us a huge economic boom that only disappeared once we had paid it all off.

    You may remember the “Ozzie and Harriet” show, but I remember watching “The $64,000 Question“, and being surprised to hear that the grand-prize winner would have to pay over 90% of it to the government! Not understanding that this was necessary to pay for the war (after all, I was just a kid), I thought it sounded tremendously unfair. But given what we know now about the economy in the 1950s, maybe high tax rates are the ticket.

    And by the way, this debt business also vindicates John Maynard Keynes, someone all the popular kids in school long ago decided is “not cool”. Cool or not, the nerd was right, and they’ve been wrong.

    We have to remember, of course, that Keynes didn’t advocate goosing the economy with government spending all the time, but only when the economy is down, and down is, by all accounts, what it has been since 2007, and is only now finally showing signs of real recovery, so maybe in the depth of this would have been the time to do what we have known all along should have been done.

    Even what little Obama has been able to get past the Republicans during his time in office — including that early half-hearted stimulus package (which he unfortunately didn’t make strong enough, perhaps in a vain attempt to attract some Republican backing), as well as some success on holding the line against some spending cuts, plus his repealing the Bush tax cuts on the wealthy — seems to have left us in a better position than those in Europe who chose to follow the Republicanesque “austerity” line. What also helped, of course, were the monetary stimulus measures of the Fed, an independent agency that is outside the reach of Republican meddling.

    In fact, the only difference between the kooks who insist on forgetting how Keynes helped get us out of the Great Depression, and the anti-inoculation kooks who choose to forget that kids were dying from measles in the 1950s, is that the measles kooks have been a minority, while the anti-Keynes kooks somehow mysteriously wrested control of policy decades ago, and are still dicking around with the economy even today.

    Rick

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