Can the Middle Class Be Saved?
Published on August 19, 2011 by Sara Foss

The Atlantic Monthly latest issue features an excellent cover story by Don Peck on whether the middle class can be saved, as well as a roundtable discussion on that topic. My theory, just from reading stuff, is that the recession and painfully slow recovery have exacerbated trends that already existed, such as wage stagnation and widening economic inquality.

One of the greats things about Peck's article is that it examines why economic inequality matters; I recently sort of dated someone who did not understand why this was an issue and his inability to understand this was something I just could not get over. (Although, in his defense, it's seldom explained.) "Why should Bill Gates care how much money I make?" this guy wanted to know, and I immediately suggested that the example of Gates was a poor one, as Gates has actually developed a pretty strong interest in philanthropy. I also suggested that a robust middle class is one of America's great strengths, and that the decline of the middle class weakens the entire country, because it means fewer and fewer people are able to meet basic expenses without going into debt or relying on government assistance. I don't want to live in a country where the majority of people are doing worse than their parents, and I don't see why I should have to.

Here's an excerpt from Peck's piece:

"One of the most salient features of severe downturns is that they tend to accelerate deep economic shifts that are already under way. Declining industries and companies fail, spurring workers and capital toward rising sectors; declining cities shrink faster, leaving blight; workers whose roles have been partly usurped by technology are pushed out en masse and never asked to return. Some economists have argued that in one sense, periods like these do nations a service by clearing the way for new innovation, more-efficient production, and faster growth. Whether or not that’s true, they typically allow us to see, with rare and brutal clarity, where society is heading—and what sorts of people and places it is leaving behind.

Arguably, the most important economic trend in the United States over the past couple of generations has been the ever more distinct sorting of Americans into winners and losers, and the slow hollowing-out of the middle class. Median incomes declined outright from 1999 to 2009. For most of the aughts, that trend was masked by the housing bubble, which allowed working-class and middle-class families to raise their standard of living despite income stagnation or downward job mobility. But that fig leaf has since blown away. And the recession has pressed hard on the broad center of American society."

In Le Monde diplomatique, John R. MacArthur examines the decline of the middle class by looking at the impact of NAFTA on the small Ohio town of Fostoria.

Here's an excerpt:

"Pro-North American Free Trade Agreement (Nafta) forces staged on 9 November 1993 what may be remembered as the greatest salesman’s trick in televised propaganda. Millions of Americans had just watched CNN’s Larry King show, and its 'debate' over the ratification of the agreement, between Ross Perot, the anti-Nafta crusader and independent presidential candidate, and then Vice President Al Gore, spokesman for mainstream political and business opinion about free trade and its alleged benefits to the US.

The professional politician Gore had bested the billionaire amateur Perot, but the show wasn’t over, and neither was rhetoric about Nafta. CNN followed with a post-debate debate, in which four 'experts' argued over the plan of former President George H W Bush and President Bill Clinton for eliminating tariffs and integrating the Mexican, Canadian, and American economies in ways they claimed would bring money and jobs to everybody — a 'win-win' scenario. One expert, a soldier for David Ricardo’s economic theory of comparative advantage, was Larry Bossidy, leader of the pro-Nafta business lobby and chairman and CEO of Allied Signal, an industrial corporation with worldwide interests, including the Autolite spark plug plant in Fostoria, Ohio.

With many fearing what Perot called the 'giant sucking sound' of jobs heading to cheap labour in Mexico if Nafta passed Congress, Bossidy needed to promote the notion that the agreement would bring more work to the Midwestern rust belt, already in steep decline. So, on instructions from Gore’s media adviser Carter Eskew, Bossidy held up a plug and pronounced: 'I would like to say, about the jobs, this is a spark plug, an Autolite spark plug. It’s made in Fostoria, Ohio. We make 18 million of them. We’re going to make 25 million of them; the question is, where are we going to make them? Right now you can’t sell these in Mexico because there’s a 15% tariff... if this Nafta is passed, we’ll make these in Fostoria, Ohio... we’ll have more jobs... This is a small part of a car. We export 4,000 cars to Mexico today, we’ll export 60,000 cars in the first year [of Nafta], that’s 15,000 jobs.'

As of 1 November 2010 General Motors was a ward of the federal government, the country was in prolonged economic slump, and there were 86 assembly jobs in the Fostoria factory. The remaining Autolite employees were there to make just the ceramic insulators around the plug. The rest of the jobs had moved to a maquilladora in Mexicali, where nearly 600 Mexicans were manufacturing mostly Motorcraft spark plugs, the house brand of Ford Motor Company, healthiest of the Big Three US auto companies."

The piece is depressing, but a very good read.


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