This is a pretty terrific article by Matt Lewis about the struggles of people at the lower end of the income distribution and how bad decisions in one’s teens and twenties cause more long-term harm for those whose families have the least. Lewis says:
This is a topic that deserves the attention of our political leaders. And perhaps, it finally will get it. There seems to be a strong indication that many working-class whites in the rust belt simply couldn’t bring themselves to vote for Barack Obama or Mitt Romney. There is an opening for a political party to address these populist concerns. Will anyone answer the call?
I’d add not just working-class whites. There is a limit to what any even remotely possible set of policies can do, but there are some things. You could make the health insurance tax deduction into a flat and allow workers without access to employer-provided insurance to buy their own policies. You could adopt family-friendly tax reform and allow struggling working parents to keep more of their earnings. Ross Douthat said a lot of what needed to be said earlier this week. Not every social problem can be fixed by government policy but we would be better off if “all the decisions that promise to take Americans from that kind of dependency into self-sufficiency —moving from off-the-books labor to on-the-books work, from disability to employment, from a low-wage job to a better-paying one — would be easier to make if the available jobs paid a little more, and if every paycheck and potential raise were taxed a little less.”
This is just one more reminder of the moral and political fiasco that was the Romney campaign. Read the Lewis and column and think about how the Republicans ran the candidate of the infamous forty-seven percent comment, and further remember that this candidate ran on cutting the top marginal income tax rate by twenty percent. It wasn’t just that these were mistakes, it was that they were the precise opposite of the correct right-leaning approach to policy under current circumstances. The problems of those who are at (or under) the median income are much more urgent than the non-problem of further reducing the George W. Bush era marginal tax rates on high earners. The center-right does have (some) policies for ameliorating these problems. Republican presidential candidates might be more trusted by more voters at every level of the income distribution if they focused more of their attention on policies directly impact the working and aspiring middle-classes.
December 14th, 2012 | 11:06 pm
I don’t suppose it has occurred to either you or Mr. Lewis that the destruction of labor unions (in the name of “productivity”) and the obliteration of any serious investment opportunity backed by FDIC or FSLIC (in the name of “curbing inflation”) over the past thirty years has anything to do with this. And perhaps more to do with it than dropping acid in the Summer Of Love of 1968.
Of course, I can see why you might not. I strongly suspect that both of you are too young to have actually experienced what happened to the white working class. I’m not.
The American white working class was systematically sacrificed on the altar of an overheated stock market whose flames were fed by exorbitant gasoline prices. Why? To make a small handful of people (here and abroad) very, very rich. And the key individual who made it possible was named Ronald Reagan.
Mitt Romney is the archetype of that small handful of people and their interest. So why on earth would you expect him not to feather their already cushy nests at the expense of everyone else? I certainly didn’t.
The members of the Republican political establishment are largely financed by this same small handful of people, in their interest. Grover Norquist and his oath are but the cartoon comic relief of this process, simple enough that even mere slack attention to the Cable TV news can let you understand it.
And Mitt Romney speaking his real mind to members of his own class about the 47% is but a cautionary tale of how the richest among us have failed to catch up to the 21st Century where nearly invisible cameras and microphones can easily penetrate their gated communities, their private athletic and country clubs, and their insanely expensive fundraising dinners.
You are asking for a populist Republican Party. The people who bought it lock, stock, and barrel thirty years ago aren’t interested in letting you have it. Hence the absurdity of the “negotiations” of Boener and McConnell with Obama, where they won’t even make a specific counter offer. The very, very rich always take it for granted that they will get their own way, and are not about to release the shackles on their Congressional puppets to even preserve the appearance of a willingness to compromise.
December 15th, 2012 | 6:18 pm
I don’t know what you are talking about and I suspect we have that in common.
“Of course, I can see why you might not. I strongly suspect that both of you are too young to have actually experienced what happened to the white working class. I’m not.”
My mother was a seamstress for most of the 1980s and some of the 1990s. I think I have some idea of the impact on people of the decline in American employment in that sector.
“The American white working class was systematically sacrificed on the altar of an overheated stock market whose flames were fed by exorbitant gasoline prices. Why? To make a small handful of people (here and abroad) very, very rich. And the key individual who made it possible was named Ronald Reagan.”
This is pure nonsense. Inflation adjusted gas prices were lower at the end of the Reagan administration than at the end of the Carter administration. http://www.consumerenergyreport.com/2012/02/27/how-high-have-gas-prices-risen-over-the-years/
“Mitt Romney is the archetype of that small handful of people and their interest. So why on earth would you expect him not to feather their already cushy nests at the expense of everyone else? I certainly didn’t.”
The problem with this entire interpretation is that when Romney was seeking support from donors, he was not advocating a twenty percent cut in the top marginal income tax rate. He had, in fact the smallest cut on high earners of the major Republican candidates. It was when Romney was pressed by a candidate to his right, and after the donors had already gone all in on Romney, that he came out for his Kemp-Roth Jr. tax cut plan. The timing and political incentives indicate that Romney’s plan was aimed at the mostly middle-class mass voting population of the Republican primaries rather than the shackling super rich with their invisible gated communities and athletic clubs or whatever it is you imagine.
Trying to figure out why Romney proposed a larger high earner tax cut to get mass support (from primary voters) and a smaller tax cut to get support from the donor class might lead you to recognize that your particular sub-Marxist fantasy of the Republican party is fatally flawed as a mode of analysis.
December 15th, 2012 | 8:50 pm
Mr. Marshall: By advocating for “strong unions” as the one true answer you are (besides ignoring the fact that such beasts were historically existant for only a tiny fraction of American history, a moment which coincided with a time when the rest of the world’s advanced economies were all in ruins) implicitly endorsing a system where Big Business is the dominant force in the economy, and the average citizen is destined to be nothing but an employee (serf?) needing Big Labor to intercede on his behalf against Big Business (with Big Government interceding at every step to feather its own bed, line its own pockets, choose your own metaphor for stealing the little guy blind).
It doesn’t have to be that way. That’s what the policies Pete mentions (and many others) are all about.
December 15th, 2012 | 11:19 pm
My point about gasoline prices is not how much lower or higher they were at any given time, but how, over the long haul they have eaten into the capacity of those below the median income level to save for the future.
My parents reached the apogee of their lives when they retired in the early 1980′s for two reasons. First, stable energy costs did not eat away at the capital they accumulated in home equity and in Certificates of Deposit paying anywhere from 5% to 9% annually in perfectly insured safety.
Second, a systematically regulated economy had finally tamed the wild cycles of gradually rising boom and bust that ended in the worldwide economic disaster of the 1930′s, allowing them, as a family, to prosper and raise their standard of living steadily for forty-five years (!), starting in 1933 when my father, at 13, was roaming from town to town with his father, both looking for work and each eating only one mustard slathered hot dog a day while doing so. And ending in 1982 when he retired from Federal Civil Service with a decent pension, good health insurance, an unmortgaged home, and about $150,000 in personal savings.
To do this, he and my mother did nothing special except to work and save and pay their bills. Hundreds of thousands of people, about half of them unionized, did exactly the same and prospered in exactly the same way.
This road of opportunity has been systematically and totally destroyed in my lifetime. Don’t talk to me about Marxism. I’ve seen what capitalism could truly accomplish, with intelligent regulation of the market and reasonable give and take between management and labor, and with an overall spirit of political consensus and compromise in the face of things, both political and economic that were a threat to everyone.
Such as unstable energy supplies and costs which could have been met cooperatively as early as 1975 in the same way the threat of the Soviet Union was met cooperatively. And a managed and intelligent system of energy conservation developed.
Nothing that has happened since bears any comparison to what the United States achieved cooperatively for ALL of its citizens in that 50 odd year period.
Nothing.
The deregulation orgy, the systematic destruction of reasonable interest rates for bank deposits to build an over heated stock market where no one without significant personal capital behind them could invest in safety, and the “every-man-for-himself and winner-take-all” economic philosophy of “freedom to choose” has devolved this country into a bad parody of what used to be called “the third world.”
It has made a handful of us very, very rich by a predatory economic philosophy rather than one of compromise and cooperation, and has turned all the rest of us into hysterical and divisive lunatics.
The clearest and most naked display of the mechanisms of this transformation are the two major gasoline price spikes that occurred in the last decade. These were, individually, the first and second largest transfers of wealth from all ordinary people into the hands of a small cabal of stock investors, in the history of the planet.
A predatory economic philosophy, where the Mitt Romneys of the world are the predators and we are the prey.
And what have we seen over the past 30 years but the return of boom-and-bust market bubbles, just like the era from 1866 to 1929, where the bust strips thousands of small investor of savings, and the rebound enriches all the large investors who have enough capital behind them to ride the roller coaster out?
In the last such bust those fine people destroyed the very last alternative for ordinary people to accumulate wealth and prosper, rather than merely to survive in a land of general penury.
Home equity.
The last real opportunity for ordinary people gone, and nearly the entire banking system with it.
The men and women who both made the greatest era of capitalism happen and benefitted from it are mostly dead or dying.
So, who cares? Right.
December 16th, 2012 | 8:49 am
http://www.forbes.com/sites/briandomitrovic/2012/10/02/the-modern-cycle-of-economic-boom-and-bust/
There have been three recessions in the past 22 years, hardly a return to the Gilded Age era boom-and-bust cycles.
December 16th, 2012 | 8:50 am
“Don’t talk to me about Marxism.” Nobody called you Marxist. I called your analysis sub-Marxist. Rigorous Marxist analysis would be a marked improvement. Marxist analysis would not suggest that energy prices rose during or because of the Reagan administration when those prices actually fell sharply (inflation adjusted) during the course of his terms.
“First, stable energy costs did not eat away…These were, individually, the first and second largest transfers of wealth from all ordinary people into the hands of a small cabal of stock investors, in the history of the planet.”
I am all for domestic energy development but, as President Obama has rightly said, the increase in energy prices was caused by increased energy consumption outside the US. It isn’t obvious what could have be done about this short of a nuclear first strike. Once again, your analysis would require a major improvement to be called Marxist.
“And what have we seen over the past 30 years but the return of boom-and-bust market bubbles, just like the era from 1866 to 1929″
A measurement of the length and depth of the recessions that occurred between taming the great inflation and then the Great Recession (a period of about 25 years) does not support this analysis.
“My parents reached the apogee of their lives when they retired in the early 1980′s for two reasons.”
I’m glad for you and your parents that you were not among the Americans whose living standards were eroded by double digit inflation in an era where tax rates were not indexed to inflation and then were not impacted by the elevated unemployment to tame that inflation. I do think it is a good thing that policy was not guided by your memories of that era.
“has turned all the rest of us into hysterical and divisive lunatics.”
Speak for yourself.
December 16th, 2012 | 3:30 pm
What is Mr. Marshall talking about when he says that the “flames” of the “overheated stock market” were “fed by exorbitant gasoline prices”? High gasoline prices might improve the profitability of oil companies, but it wouldn’t help other businesses.
December 17th, 2012 | 1:06 pm
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