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David G
07-24-2010, 10:57 AM
Here's one from Yahoo News. It's badly written and simplistic. It's even misleading in spots. Overall, though, he's got it right. The middle class IS shrinking dramatically. The rich ARE getting richer. The poor ARE getting poorer. This IS very bad for the nation. It WILL be hard to reverse.

http://finance.yahoo.com/tech-ticker/the-u.s.-middle-class-is-being-wiped-out-here%27s-the-stats-to-prove-it-520657.html?tickers=^DJI,^GSPC,SPY,MCD,WMT,XRT,DIA

And it did get me thinking --

Trying to figure out how to recover has the best minds scratching their heads. The solutions proposed seem to largely depend upon the ideological biases one started with.

What is VERY clear to me, is that this is one of the Natural Consequences of the latest swing of our national pendulum toward laissez-faire capitalism. See post #75 from a few years ago:

http://forum.woodenboat.com/showthread.php?76079-Liberal-VS-Conservative-%28-defined-%29&p=1772742&highlight=great%20depression#post1772742

So, the solutions proposed seem to fall into three general groupings or models.

First model is Trust The Market. This I reject as the lone solution. It's the rise of this philosophy that has us in our present pickle. The market is great, but has an unfortunate tendency - if left to its own devices - to overheat, become unstable, generate bubbles, and collapse... leaving a lot of turmoil and pain in its wake. When viewed over time, this is not an efficient nor desirable path. Simply too erratic, chaotic, and destructive. Too much energy spent on unproductive activities during the booms. Too much energy spent on clawing back during the busts.

Second model I'll call European Market Socialism. A market economy with a large 'social good' component overseen by the government. Think France, Scandinavia, Spain, Italy, et.al. A recent thread explored the topic of happiest citizens, and it was clear that many of the happiest countries in the world use this model. It's not that they're immune to market occilations, or to government mismanagement (see Greece and Spain recently), but they are more stable overall, and people feel more secure.

The economist in me - looking for efficient solutions, and best practice (and being a bit theoretical, as opposed to practical) - says this is where we should be headed.

It's hard for me to imagine, though, the voters in the U.S.A. accepting this level of government involvement in their lives. Heck... I've got enough Redneck, Libertarian, Good-Ol-Boy in my that it sticks in my craw a bit.

Nonetheless, it is a proven model. We've gone some way down that road ourselves, through programs enacted during Roosevelts' New Deal era, and LBJ's (less successful) Great Society programs. And, of course, Eisenhower added his bit, and Nixon, among other presidents. It's made us a better, stronger, and more humane society. I think perhaps it's where we'll end up. That's partly because it is a more proven path, and more easily recreated than my actual first choice.

My first choice would be to somehow emulate the US Golden Age. This is that shining period, following WWII, where the middle class actually grew into prominence, the economy blossomed robustly, life got better for most of the population, and many social ills were addressed/redressed to some degree.

The problem is... as an economist, I can see that this golden age was built upon a foundation of pre-conditions (see Walt Rostow's 'Stages of Growth' for more on pre-conditions to growth) that no longer obtain, and would be quite difficult to recreate or to find substitutes for.

So... I don't think we're going back to the Golden Age.

I will fight - for the sake of my kids, and for the sake of my nation - to resist giving ourselves over the the Hobbesian version of capitalism. The Robber Baron, dog-eat-dog version of America is not acceptable.

That leaves the European model. Most proven, most attainable, and... I guess... least objectionable overall. But will the citizens of the U.S.A. come to accept this approach? How long will it take? How much pain will we put ourselves through before we, as a nation, reach the same conclusion?

Or... perhaps someone has another model to suggest? I certainly haven't tried to do any serious research on the topic. This is all just based upon my academic background in economics, and the accretion of information I've picked up along the way as a small businessman.

EDITED TO ADD --

If that Yahoo link doesn't work for you... I'm gonna add the text in another post.

Jim Ledger
07-24-2010, 11:12 AM
I grew up in the "Golden Age" and I can remember being much less well-off in those days.

David G
07-24-2010, 12:11 PM
Mr. Bernstein - I think we agree on that point. As I said... I don't think the Golden Age is coming back.

I suspect you're taking it too far, though, when you say "the war has already been lost, for the working man". You might be right for the moment. I imagine that many working men and women felt the same way under Carnegie and Rockefeller. The pendulum swung away from that time of corruption and unbridled greed. I believe our nation is structured well to recover from such times. I believe we can. I hope we will.

Maybe it's because I'm married to a minister, but I've come to view this ongoing back and forth as - in many ways - reflective of a battle between Good and Evil. OK... that's a little melodramatic, and certainly loaded. By that I mean the urges we have toward taking care of family, friends community, and the world in general VS. the urges we have to take care of ourselves and anyone useful to us... and to Hades with the rest.

Do I listen to the angel of light sitting on my right shoulder, or the angel of darkness sitting on my left shoulder? While there are a few sociopaths who possess no innate angel of light - I think many of our current problems stem from the boom times making is so easy for too many regular folks to succumb to the allure of Mammon.

So... I sympathize with the laments of many fundamentalist religious folks about the woes of today's society. I reject, however, the perversely simplistic prescriptions that come out of the mouths of such as Jim & Tammy Baker, Jerry Falwell, et. al.

I think, instead, that we need to each be punctilious about protecting our own individual integrity. We also need to be diligent, vigilant, practical, and proactive about protecting ourselves individually and collectively from those who aren't so fastidious. Yes, I do believe that means more government regulation - and diligent enforcement of same - than we currently have <sigh>.


Mr. Ledger - Are you attempting to make a serious point, or simply lobbing rotten fish in over the transom? If the former, please elaborate a bit on what the point might be, and I'd be happy to respond.

Jim Ledger
07-24-2010, 12:42 PM
[B]Mr. Ledger - Are you attempting to make a serious point, or simply lobbing rotten fish in over the transom? If the former, please elaborate a bit on what the point might be, and I'd be happy to respond.

My family arrived on these shores in 1956 with a steamer trunk and some suitcases. I was four years old. By the time I reached fifth grade we had a telephone and had bought a small house. We drove second-hand cars, had a black and white TV, a terrible sounding stereo with a few dozen albums. You could always see the back of our closets and refrigerator. The garage was never a mess because there wasn't much in there. My mother shopped for food once a week and when things ran out, you just didn't have them. There were no power tools except for the lawn mower.

We thought we were well-off, and by the standards of the time, we were.

Is that the "Golden Age" you're referring to?

paul oman
07-24-2010, 12:56 PM
your europe based model - hardly a proven system. Socialist Russia lasted 80 years. Give any system say 75 years - that's what? 3 generations....

Just as likely the Greece and Spain failures 10-20 away for those other countries. Our 'free market' system has lasted over 200 years - something of an amazing record. Looking at that, better model would be to move back toward the more free market of yester year, (which we know works) instead of duplicating systems in europe that are largely new and unproven (with cases of complete failure beginning to show).

David G
07-24-2010, 12:58 PM
Mr. Ledger - Yup.

Jim Ledger
07-24-2010, 01:15 PM
Mr. Ledger - Yup.

Yup what?

In school all the classes had at least thirty students. Our high school was new in 1962, but was extremely utilitarian. There is no favorable comparison to the one that replaced it in the '90's, but it was far better than the 1930's era elementary school that we had attended.

In 1963 our local library occupied one of the old one-room schoolhouses. There were often a couple of people there. To my mind, the best thing about it was the pile of WW2 era Popular Mechanix magazines in the foyer. Our present library, by comparison, is a multi-million dollar building that can get you any kind of book you like, has rows of computer terminals, public rooms, a separate childrens library, thousands of DVD's, handicap access and so on.

Black-Jack
07-24-2010, 01:21 PM
When the great unfolding of post cheap energy begins, economies the world over will become localized - global economies will be a blip in the distant past. Those with the skills to actually produce something of immediate and intrinsic value will become the well off. Politicians, those that only have ideas to push and legalistic axes to grind, and sticky palms to get greased will no longer be relevant and will quickly find themselves feeding from the hind teat in the new society.

Peerie Maa
07-24-2010, 01:33 PM
your europe based model - hardly a proven system. Socialist Russia lasted 80 years. Give any system say 75 years - that's what? 3 generations....

Just as likely the Greece and Spain failures 10-20 away for those other countries. Our 'free market' system has lasted over 200 years - something of an amazing record. Looking at that, better model would be to move back toward the more free market of yester year, (which we know works) instead of duplicating systems in europe that are largely new and unproven (with cases of complete failure beginning to show).

Russia has got nothing to do with David G's proposition. It was a totalitarian state with all production managed by a central bureaucracy.
The European systems are hardly new, they have however been able to evolve. You claim that the American system has worked, well if you consider being the causes of world depressions not once but twice to be a success, then you'l have to forgive me for disagreeing.

elf
07-24-2010, 01:34 PM
I grew up in that "Golden Age". It wasn't golden for women. Or black people. My mother spent most of those years moving up the ladder on the coattails of her boss - as an executive secretary. She ended up with depression aggravated senility for 10 years of her old age - curled up in a foetal position for the last year of her life in a nursing home.

It wasn't her chosen profession. She couldn't find enough work as an occupational therapist and had to take a job as an executive secretary.

I spent a lot of those years being told that I was a girl and couldn't do lots of things because I was presumed to become a mother. At the same time I was sent to the academically oriented public high school in my city because I was bright. Talk about a mixed message. Had to wear skirts with crinolines when it was 25 outside and we took public transportation to school. No trousers permitted at school.

And another thing - our society still suffers from the devaluation of certain kinds of work which flourished before and during those years. Raising children had no dollar value, keeping house had no dollar value, all the work that women did to keep up their part of the contract with their spouses had no dollar value. When it came time to cash in on Social Security, those women had no value - could only collect on their spouse's value.

Nowadays that work still has no value - unless one is paying someone to do it - someone like a nanny, child care provider, cleaning service, PeaPod. No wonder women go to work.

David G
07-24-2010, 06:45 PM
Mr. Ledger & Ms. elf,

It was not my intention to start a thread about the relative social and overall merits of various periods in our nation's history. I would not assert the the period following WWII and lasting thru the 60's (depending on who you're talking to) was 'perfect', or even the nadir of life in the U.S. That certainly would make an interesting thread... feel free to start it... but please don't hijack this one, if you'd be so kind.

My post was about economic models. I was comparing the way The Economy worked during that period to the periods we've had where we leaned a lot more toward laissez-faire capitalism, and comparing it also to the European Market Socialism model.

So... which do you prefer? Or is there another type of economic model you'd like to see us follow? Or... if your critiques of the 'Golden Age' were by way of saying you think the operant model of those times was less desirable than some other time or plan, please elaborate as to how, and - ideally - state what you'd prefer.

Thanks

Jim Ledger
07-24-2010, 07:53 PM
Mr. Ledger & Ms. elf,
but please don't hijack this one, if you'd be so kind.

Thanks

No problem, I'm out of here.

Your premise depends on the American middle class losing ground and I'm just not seeing that.

Sorry.

Paul Pless
07-24-2010, 07:58 PM
what are crinolines?

Jim Ledger
07-24-2010, 08:05 PM
what are crinolines?

The plaid skirts that girls wear to Catholic school, everyone knows that. Rolleyes (2).

elf
07-24-2010, 08:15 PM
what are crinolines?

Net petticoats stiffened with starch so they stand up and make the skirts, which rest on them) splay out from the legs. The more crinolines, the more the skirt splayed out, showing off how narrow the waist was.

http://sphotos.ak.fbcdn.net/hphotos-ak-snc1/hs161.snc1/6008_118949299916_749884916_2156665_1157401_n.jpg

These two women are wearing such items under their dresses, but it's the end of the school day so the starch is getting tired.

David G
07-24-2010, 08:16 PM
Your premise depends on the American middle class losing ground and I'm just not seeing that.

Sorry.

So... what evidence would you present to the contrary. So far you've spoken only of your own personal experience. Are you basing your conclusion on that... or is there something more that leads you in that direction?

Jim Ledger
07-24-2010, 08:36 PM
What, you want a graph or something?

Would that help you to understand?

Paul Pless
07-24-2010, 08:46 PM
Ledger, where'd your family emigrate from?

Jim Ledger
07-24-2010, 09:01 PM
Ledger, where'd your family emigrate from?

Nottingham, a city in the British midlands. Mebbe you've heard of it. Hometown of Albert Ball, the seventeen year old WW1 flying ace

Paul Pless
07-24-2010, 09:07 PM
Nottingham, a city in the British midlands. Mebbe you've heard of it. yup, that's where the Sheriff of Nottingham was from right? I presume there's a forest nearby that was home to a gang of merry men in tights

David G
07-24-2010, 09:21 PM
What, you want a graph or something?

Would that help you to understand?

Your perception and mine differ. In spite of the evidence offered in the link, you seem to be contending that the middle class is NOT disappearing. Is that right?

If that's your argument... you could be correct, but I don't believe so. We could discuss that difference of opinions. Or you could continue to say - as it seems you've been doing so far (with a bit of a snarky tone, BTW) - "You're wrong on this point, I have my own personal experience to prove it". If that's as far as you're willing or able to take it, I have to say it's not devestatingly convincing.

If, OTOH, you actually want to have a conversation about it, then - yes - a chart would help. Or, perhaps a reference from a reputable source. A well-reasoned argument. Something...

If you want to carry on, perhaps we could start with this: did you read the article I referenced? Did you read my old post that I linked to? Are there things in these two pieces that you agree with? Disagree with? How so... and how does it all impact the notion of a disappearing middle class? And - do you have anything to add about the type of economic scheme you believe to be most effective? Do any of my three examples appeal to you? Do you have another notion entirely?

Mad Scientist
07-24-2010, 09:43 PM
...all just based upon my academic background in economics, and the accretion of information I've picked up along the way as a small businessman.

An interesting mix of education/experience...


[QUOTE=Norman Bernstein;2666762]...Long term, the lesson of the Japanese will catch up with the third world, and those incredibly cheap wages will rise, by demand of the workers who want the standard of living they increasingly see via TV and the internet. As the third world becomes less of a labor bargain, US manufacturing industries will be able to better compete, and we just might see an improvement in the labor market...

Already under way; the Chinese are investing in Africa in a big way, because it's the last source of 'low-wage' labour.

FWIW, I'm good for another 3 or 4 decades (I hope!), and I can't wait to see how all of this plays out.

Tom

Jim Ledger
07-24-2010, 10:10 PM
[QUOTE=David G;2667142]Your perception and mine differ. In spite of the evidence offered in the link, you seem to be contending that the middle class is NOT disappearing. Is that right?

If, OTOH, you actually want to have a conversation about it, then - yes - a chart would help. Or, perhaps a reference from a reputable source. A well-reasoned argument. Something... quote




Who is buying all these giant homes that are filling up all the farms everywhere you go? Where are the old Levitt-style developments of my youth? The ones with twelve hundred square feet on a quarter acre? How many people do you know with in-ground pools? Central air? Granite counters? I can leave home and stop at four granite fabricators in three miles. Who's buying? Lawn tractors, stainless steel barbeques, plantation-grown teak patio furniture. When was the last time you saw a car with the floorboards rusted through?

Is it different by you? How so.

In the face of all this massive discretionary consumption, how can you look at a graph that says that the middle class is disappearing and think it might actually be so?

Sorry about the seeming snark, David. The new smileys don't work.. Eyeroll

David G
07-24-2010, 10:13 PM
Look in the average American home , look at all the stuff we / they have that in 1950 , 60 ,0r 70 that "normal" people did not own , or did not exist. Most families have two cars , not uncommon how about two TV's , computers , the list goes on. Even if the income on some idiots chart named Gino , or what ever that buzz word you guys have been throwing out all week says. We , Americans, have more stuff than ever , some how we buy that stuff, ,maybe you're blind to that.

How many contracts did you sign this week with homeless people who's money is now "trickling up"?

Paul,

I have to agree that - in some ways - the 'poor' - and even the middle-class - of today live better than their counterparts of yesterday. Technology has provided us with gadgets they never would have dreamed of. How many people in the 50's could afford to buy a big ol' RV and travel around 'camping' out? Not many compared to the 70's & 80's.

OTOH, the non-rich are working harder to make it. What do you figure the percentage of families is where both parents work... compared to the 50's. I think it 's much higher. There's a social cost to that (that's one more area where I agree with the conservatives). What do you think the savings rate is now compared to the 60's? I think it's much lower. More people a paycheck away from living with the in-laws... or on the street. How would you rate the job security between now and then. I'd rate now much lower - even when we were booming. There are plenty of these types of measures that suggest the average joe is more stressed now than back then.

But - setting my quibbling aside - let's say you're right about the average worker being - in a lot of ways - better off now. What does it all say to you about what economic system we should engage in? I would guess that you're not in favor of the European model? It also sounds like you aren't impressed with the Golden Age structure (even if it were reviveable). Does that mean that you'd want to lean toward the dynamism of a more laissez-faire capitalist approach and live with the occasional crashes?

Jim Ledger
07-24-2010, 10:19 PM
You'd never be able to set up your cabinet shop in Britain. The tools cost too much. The materials cost too much. The regulations and overhead would be onerous and exorbitant and there would be less people with the kind of disposable income needed to afford your services.

David G
07-24-2010, 11:39 PM
Paul,

How, then do you reconcile your experience & perceptions with the litany of statistics in the cited article?

http://forum.woodenboat.com/showthread.php?117721-Article-Text-Disappearing-Middle-Class

nw_noob
07-25-2010, 12:15 AM
I'm not worried about the middle class, it's the working poor that I see becoming the non-working poor that has me concerned.

Duncan Gibbs
07-25-2010, 12:22 AM
Interestingly, the problems that are hinted at in this thread and others that are current at the moment (Hell is China (http://forum.woodenboat.com/showthread.php?117655-Hell-is-China) comes to mind) are the ones that underpin all of these conundrums. There are large demographic/socio-economic changes afoot. There are questions about our whole globalised economic system and how it will cope with peak oil about to bite. All the "stuff" that we consume that keeps our the cash cycles going depend upon cheap things being made elsewhere by cheap labour and cheap primary commodities. There are a whole raft of questions - huge in and of themselves - that are tied together to a single question about our collective sustainability. Whilst countries such as China and India have a growing middle class, I don't see the West's ability to consume being reduced dramatically. Massive questions when combined.

Duncan Gibbs
07-25-2010, 12:25 AM
BTW I wouldn't underestimate Europe's capacity to come out on top, and I dare say there are very well equipped cabinet shops in Britain.

Jim Ledger
07-25-2010, 12:31 AM
BTW I wouldn't underestimate Europe's capacity to come out on top, and I dare say there are very well equipped cabinet shops in Britain.

No doubt about that, Duncan. But if you were a talented individual of limited means your chance of successfully starting a business would be better in New York than London.

David G
07-25-2010, 01:08 AM
Paul,

I have no doubt that you're accurately describing you own personal experience. All we can go on is what we know, and if that is what you know, then your conclusions are perfectly reasonable. I would suggest to you, however, that there is more to know. Knowing history, and being able to see patterns, helps one to accurately interpret our own experiences. Besides, as I said, I think you and Mr. Ledger are onto something - with the comparison of the lifestyles of the bottom 1/5 or 1/4 now vs. historically... or the same comparison of the middle 1/3, say, (a rough approximation of the 'middle class'.

Nonetheless, I can't agree completely with your rosier comments. I personally know (since we're going on personal experience here) several highly qualified professional folks (hi-tech industry) who have been working like dogs for many months trying to land a new gig after their company laid off folks. Same with some people I know in the trades. A cabinet maker and a PM come to mind. To tell people like this - people who don't drive fancy cars, didn't buy McMansions, and aren't sending their kids to private schools - that, "People that want jobs find jobs." is an insulting lie. These people could lose their homes. They've already sold off cars, and switched to mass transit. They're not living high on the hog on the unemployment checks... or welfare... or any such thing.

And some folks I know HAVE found new gigs. With only one exception, they've been for less money. Sometimes for substantially less. Maybe your area didn't suffer the same hit from this latest crash, but most of the country did.

It's all quite disruptive - to lives, to businesses, and to our social fabric. Putting on my employer's hat, I can tell you it's VERY disruptive. Whenever there's this sort of sharp downturn, one tries to hang onto the crew as long as you can. Keeping them busy means money out of your pocket. Eventually one has to lay them off. Often you don't get them back. You've lost their institutional memory. You've lost the training you put into them. Sometimes you lose someone you really enjoy as a person. When you do fill their position - with someone new - you have to go through that process of orientation, training, evaluation, and building knowledge and trust... again.

This level of disruption is a fact of life when one rolls with capitalism. The more laissez-faire the system, the larger the oscillations. As I implied in that old post - if one is careful, and installs sufficient checks and balances, capitalism is the most dynamic and productive system there is. I doubt even the most rabid Laffer Curve, Milton Friedman acolyte would argue that NO market regulation is necessary. My question concerns How Much.

And, really, Paul - I do wish you'd quit mis-characterizing my comments. Did I really give you the impression that I was yearning to "Join the chorus of despair"... or that I'd already made up my mind... or that I was seeking "to find negative results"? Really? I really, really, don't think so. I think I'm trying to explore the notion that there are various models that have been tried, and attempting to explain my thinking on how they stack up - and solicit others opinions on the same question. Maybe some of what I've said reminds you of some other people here, and you're saying to me what you might more accurately say to them?? (just a guess). I like you personally. I respect your experience and perspective. I very much appreciate your accomplishments as a woodworker. But - I find it irritating and frustrating to have overblown words put into my mouth. Please stop. And... as Kaa pointed out the other day... there are certainly ways that I converse here that might irritate someone. If that's the case for you... please feel free to call me on them. <G>

Sleep well.

David G
07-25-2010, 01:22 AM
No doubt about that, Duncan. But if you were a talented individual of limited means your chance of successfully starting a business would be better in New York than London.

Mr. Leger,

That's interesting. You may well be right. I know very little about starting a shop in Britain or anywhere in Europe. The only story I know is a fellow who worked for me for a while. He was Swiss, and had trained there. He was the best trained cabinetmaker I'd ever had on staff. His American wife had insisted that they come back to the U.S. - but when she lost her job, he seized the opportunity to move them back to Switzerland. Dang, I was sorry to see him go.

He stayed in touch a bit. He worked for a former employer for a year or so, then rented a corner of their building and went out on his own. I know they had very little money when they left here. I don't think he had any rich relatives. My impression is that he was completely in bootstrap mode. After a couple years he moved into his own building. While he was here he quizzed me about running a biz. He even called a few times from Switzerland for a consult. Later, it sounded like he was doing quite well. This was borne out by the fact that he several times send me gifts of books and tools as a way to say thanks for the support during his startup.

Was he exceptional? Possibly. Is it different in Britain than Switzerland? Probably. I don't know what it means. It's just one story.

What's your experience, or knowledge of a British startup? What, exactly, are the hurdles? I would think - being from there - you'd very likely have some good information. Is it true that lots of small shops there have those industrial-strength multi-purpose machines (saw bench/jointer/planer/mortiser/etc.)?? Is this partly because machinery is expensive?

P.I. Stazzer-Newt
07-25-2010, 03:09 AM
....What's your experience, or knowledge of a British startup? What, exactly, are the hurdles? I would think - being from there - you'd very likely have some good information. Is it true that lots of small shops there have those industrial-strength multi-purpose machines (saw bench/jointer/planer/mortiser/etc.)?? Is this partly because machinery is expensive?

The principal horror is finding premises – the cost and non-availability are a considerable hurdle.

There can be a problem with nearly meaningless red tape – my wife has a nice example:
She is the production manager for a start-up in the electronic waste industry, the company managed to find a suitable space in an appropriate (cheap/scruffy) building with a small lockable yard about the size of a moderate suburban garden – the yard had a fabulous collection of weeds.
So the plan was to grub out the weeds and install a few flower beds and a shrubbery….
She reckoned that they’d need a compost heap.
The local council said “Sure, have a compost heap, where’s the harm in that?”.

So, being thorough she checked with “DEFRA” – the people who are tasked with fxxing up The Environment, Food, and Rural Affairs – who said:
“If you are a waste handling company, and you want a compost heap, you will need to get the appropriate license this costs…..”.

A license for what is effectively a domestic compost heap!


You don’t need a license for 50 tons of crushed dolomite and a flame thrower to keep it tidy – guess what the company got.

JimD
07-25-2010, 10:54 AM
My family arrived on these shores in 1956 with a steamer trunk and some suitcases. I was four years old. By the time I reached fifth grade we had a telephone and had bought a small house. We drove second-hand cars, had a black and white TV, a terrible sounding stereo with a few dozen albums. You could always see the back of our closets and refrigerator. The garage was never a mess because there wasn't much in there. My mother shopped for food once a week and when things ran out, you just didn't have them. There were no power tools except for the lawn mower.

We thought we were well-off, and by the standards of the time, we were.

Is that the "Golden Age" you're referring to?

You had a power lawn mower??? Bloody rich bastard!

Jim Ledger
07-25-2010, 10:56 AM
You had a power lawn mower??? Bloody rich bastard!

Oh, but we weren't allow to start it. We just walked fast.

Nanoose
07-25-2010, 12:05 PM
David - great thread. Thanks for great thoughts and writing so succinctly. I'm not an economist (my brother is, however) so do not have your expertise and appreciate hearing what you know. Thx.

I agree the Golden Age is over. I agree middle-class (how are we defining that?) life appears better now than 50 years ago, but I agree that it has been at significant cost and is unsustainable. Key during the 'golden age' as outlined in Mr. Ledger's experience, was that people knew how to live within their means. We (as a culture) no longer do. We live in a system dependent upon consumption, and we have complied. But it is unsustainable and perhaps (I hope) we will understand and change this.

I also agree we cannot go back due to the nature of change in the economic realities - we are now a global economy and weren't then. Therefore, I don't think Mr. Oman's idea that "our 'free market' system has lasted over 200 years and is therefore the better model" is accurate. There was another observation that the anticipated 'end of oil' will see the end of the global economy, but I'm not sure. I would posit there are a number of indicators (e.g. world population, depletion of resources, environmental questions) that may change reality from 'growth' mode to 'survival' mode. When? Not sure....but possibly current indicators show there is a very large shift already upon us. If we are changing from 'growth' mode, it would appear the over-consumptive capitalist model may need "tweeking."

In Paul's #29 he characterizes the European model you advocate as "stifling growth, putting caps on things, wage's living standards the general 'leveling of the playing field' you're suggesting does one thing and one thing only, it lower's everyone standard.... That bottom group has it better here in the USA than in any other country I've visited, about 15-20 countries."
First, I'm not sure the European system does those things. Second, I'm curious about which 15-20 countries he has visited. Third, judging "has it better" includes a LOT of factors and would be very difficult to ascertain. Fourth, I'm left to assume he has never visited his northern neighbors.

NW Noob's observation about the working poor becoming the non-working poor is spot on. In the Golden Age there was steady work for anyone who wanted it. Now, lacking education and even those WITH education find merely more and more service jobs, offering part-time, no benefit employment. People have 2 jobs to yield a 40 hour work week of minimum pay, without benefits, and more jobs to work the 60-80 hours a week they need to keep food on the table, gas in the car and the XBox running. This used to be unusual - it is becoming more and more normal. As noted, many now live 1 paycheque away from nadda.

I do not know the European model well, but what comes to mind when you say that is the Canadian model which I am more familiar with, yet which you left out. Perhaps you see the two differently? If so, I'm not clear how. Canada has faired much better through this storm largely due to reasonable regulation of the banking industry and reasonable levels of taxation for services citizens receive. Those living in countries with the 'happiest' people (recent thread) also experience very similar conditions. In conversation with my economist brother last week, he also noted the differences and how well Canada is doing, and was rather envious of our position and disparaging of the US situation. Mind you, he lives in California, currently grappling with how to avoid bankruptcy. Perhaps there is something to be learned from what is happening there?

Thank you for a thoughtful thread.

JBreeze
07-25-2010, 12:17 PM
Somewhat related:

When Executives Rake in Millions: Meanness in Organizations

Abstract:
The topic of executive compensation has received tremendous attention over the years from both the research community and popular media. In this paper, we examine a heretofore ignored consequence of rising executive compensation. Specifically, we claim that higher income inequality between executives and ordinary workers results in executives perceiving themselves as being all-powerful and this perception of power leads them to maltreat rank and file workers. We present findings from two studies - an archival study and a laboratory experiment that show that increasing executive compensation results in executives behaving meanly toward those lower down the hierarchy. We discuss the implications of our findings for organizations and offer some solutions to the problem.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1612486

Commentary: Trickle Down Meanness

http://economistsview.typepad.com/economistsview/2010/07/maxine-udall--trickle-down-meanness-by-maxine-udall-linda-beale---had-a-really-excellent----post-a-few-days-ago-about-a.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+EconomistsView+%28Economist%2 7s+View+%28EconomistsView%29%29

Jim Ledger
07-25-2010, 12:19 PM
All right, I've had it. Everybody stop calling me Mister.(Frown)

Now, who can name one economy, anytime, anywhere, that wasn't consumption based?

Pugwash
07-25-2010, 01:25 PM
A perfect example of Govt. run a muck. Almost a European mold IMO.

Apart from the fact that you mean "run amok". I notice out of the 15-20 countries you claim to have visited you can only remember 12 of them and only 3 of those are European.


The "judgment" was just observing how well people lived. How nice was the hotel , the average restaurant bath room , the general condition of the average car , etc etc .

Which would have nothing to do with the money that you were willing to spend on hotels, restaurants & rental cars, would it?

Believe me, I've been in some pretty crappy hotels, restaurants & cars here in the US.


Yet they still have the X-box , car , and food. Life's about choices and the availability of those choices.

I don't think food is a choice, or at least it wasn't last time I checked. I assume you have never tried to use public transport in America so neither is a car for the large majority, if they want to get to work.

Which leaves the X-box, costing all of $199 new. A complete waste of money that could have had a radical & dramatic influence on life's direction. Except you can also access the internet (and therefore get a job) with it.


I do believe the stick up your a$$ has a stick up it's a$$, Paul.

David G
07-25-2010, 09:44 PM
Nanoose,

Thanks for the thoughtful response. I certainly didn't mean to slight our neighbors to the North. I would regard Canadia as one variation on the European Market Socialism model. If you're in close contact with your brother, you might ask him if he has any thoughts on the issue. I'd certainly be interested - esp. if you entice him to join in this thread.

Nanoose
07-25-2010, 10:09 PM
Mike will be traveling up from CA this week, in fact, to attend our son's wedding on Saturday. I'll draw the thread and your first post to his attention and encourage his response if he's willing.

David G
07-26-2010, 11:13 AM
Paul,

You and Jim (aka MR. Ledger) keep wondering where all the spending that you see is coming from - if the middle class is disappearing.

Imagine it this way -- the income distribution in the U.S. used to look roughly like a football. A few rich folks out at one pointy end, a few poor folks out at the other pointy end, and a larger bulge in the middle (the middle class).

Now the middle class is being squeezed. Imagine Andre The Giant grabbing that ol' football and squeezing it. It begins to get skinnier in the middle... and bulge out at both ends. More of the lower-middle class and poor at one end, and more of the upper-middle class and rich at the other. That bulge at the upper end (along with the game being rigged to encourage the maximum use of credit and home equity based spending) is what's fueling - I suspect - the spending you're seeing. While the downturn has tempered it a good bit, there are still plenty of nouveau-riche buying the Honda Odyssey instead of the Hyundai hatchback. Does that make sense?

Of course... there's the flip side. Along with the increasing number of well-off, there's also an even larger number who are being squeezed into more difficult economic circumstances. These people aren't lazy. They aren't stupid. They're collateral damage.

And - what I'm saying is that, on balance, having such a have/have-not sort of society is not as healthy as having a more robust middle class. Sure, we'll adjust. People will likely find other jobs, or retrain themselves. And some of that shake-out is good for efficiency. But - too much up and down and pretty soon the costs of chaos outweigh the benefits of thinning the herd and restructuring. And the way things are shaping up - the New Normal - doesn't look as economically healthy as the old normal. At least that's the way it looks to me.

Jim Ledger
07-26-2010, 11:46 AM
Andre the Giant squeezing a football. Gee, Davey, now that you put it in terms that I can grasp it all makes sense.

Peerie Maa
07-26-2010, 11:49 AM
Paul,

You and Jim (aka MR. Ledger) keep wondering where all the spending that you see is coming from - if the middle class is disappearing.

Imagine it this way -- the income distribution in the U.S. used to look roughly like a football. A few rich folks out at one pointy end, a few poor folks out at the other pointy end, and a larger bulge in the middle (the middle class).

Now the middle class is being squeezed. Imagine Andre The Giant grabbing that ol' football and squeezing it. It begins to get skinnier in the middle... and bulge out at both ends. More of the lower-middle class and poor at one end, and more of the upper-middle class and rich at the other. That bulge at the upper end (along with the game being rigged to encourage the maximum use of credit and home equity based spending) is what's fueling - I suspect - the spending you're seeing. While the downturn has tempered it a good bit, there are still plenty of nouveau-riche buying the Honda Odyssey instead of the Hyundai hatchback. Does that make sense?

Of course... there's the flip side. Along with the increasing number of well-off, there's also an even larger number who are being squeezed into more difficult economic circumstances. These people aren't lazy. They aren't stupid. They're collateral damage.

And - what I'm saying is that, on balance, having such a have/have-not sort of society is not as healthy as having a more robust middle class. Sure, we'll adjust. People will likely find other jobs, or retrain themselves. And some of that shake-out is good for efficiency. But - too much up and down and pretty soon the costs of chaos outweigh the benefits of thinning the herd and restructuring. And the way things are shaping up - the New Normal - doesn't look as economically healthy as the old normal. At least that's the way it looks to me.

A problem with laissez-faire capitalism, is that it allows the Pareto Principle to apply, which if regulation is not adopted will lead to 20% of the population controlling 80% of the wealth and the rest eking out a living (or not) on the remaining 20%.

David G
07-26-2010, 02:00 PM
Andre the Giant squeezing a football. Gee, Davey, now that you put it in terms that I can grasp it all makes sense.

"You can't talk to a man
when he don't wanna understand"

Gerry Goffin, Carole King

Y Bar Ranch
07-26-2010, 02:17 PM
First model is Trust The Market. This I reject as the lone solution. It's the rise of this philosophy that has us in our present pickle. The market is great, but has an unfortunate tendency - if left to its own devices - to overheat, become unstable, generate bubbles, and collapse... leaving a lot of turmoil and pain in its wake. When viewed over time, this is not an efficient nor desirable path. Simply too erratic, chaotic, and destructive. Too much energy spent on unproductive activities during the booms. Too much energy spent on clawing back during the busts.

Second model I'll call European Market Socialism. A market economy with a large 'social good' component overseen by the government. Think France, Scandinavia, Spain, Italy, et.al. A recent thread explored the topic of happiest citizens, and it was clear that many of the happiest countries in the world use this model. It's not that they're immune to market oscillations, or to government mismanagement (see Greece and Spain recently), but they are more stable overall, and people feel more secure.

The economist in me - looking for efficient solutions, and best practice (and being a bit theoretical, as opposed to practical) - says this is where we should be headed.
The European Market Socialism didn't get us a middle class in the first place, why should we expect it to help us retain it?

Couple of random thoughts:
- For our labor unions the real enemy is cheap wages overseas. That's where unions are needed. Otherwise, cheap labor wins out over expensive labor. Duh.

- I read that Company Unions (a union devoted to one company, vice having a single union represent employees of multiple companies) would typically make decisions better for the stockholders than would corporate executives. I found that fascinating. No references, just recalling from memory. More skin in the game, I think.