There’s been much written on the decline of the American Middle Class, facing it’s worst time perhaps since the Great Depression. The statistics point out falling income, insufficient assets to support the classic American notion of ‘retirement’ and a significant number of people who owe more on their house – their largest asset – than it could ever possibly again be worth. But while everyone is focusing on the economic aspects, as though the number of bedrooms is paramount, what’s being overlooked is that the true danger to the American middle class lies in the political realm. It’s a misdirection that has to be corrected since we’ve long ago crossed from the purely economic into the political realm and I’m not certain that many realize that fact. The protests in Greece and Spain demonstrate that there comes a point at which the consequences of ‘economic’ decisions are addressed in a purely political manner as the governments in power attempt to fend off the masses to continue in power.
One of the criticisms of the economics profession is that economists have tried to wrap a soft, inexact science in a hard science shell. Economics is at its heart the determination of how resources are allocated and used to the best effect; this is itself a political question as perceptions and emotions come into play as much as pure numbers. This packaging however, has carried over into today’s society in general as the news programs spend their time throwing numbers around, mesmerizing the audience with the sheer volume of information. Certainly, if we can track this data and put it into neat numeric formats, then there must be a rational and easily obtainable answer, as though juggling the various economic variables were the same as adjusting recipe ingredients for Chef Ramsey.
Today’s American economy is notable by the disproportionate size of the financial sector and huge federal deficits, incurred to help the Too-Big-To-Fail financial institutions from their self-inflicted injuries. These injuries didn’t arise from economic circumstances, but actually from political actions that backfired.
- Excessive and unmonitored risks were taken by these commercial and investment banks because no one was paying attention to them. No one paid attention to them because of a political action, the repeal of the Glass-Steagall Act, which had successfully regulated the financial services industry after the last debacle of the Great Depression.
- The repeal of Glass-Steagall was made possible by massive campaign contributions to Congress from the financial services industry, a political activity which hasn’t been satisfactorily regulated since God alone knows when. What’s infuriating is that at this juncture, corporate campaign contributions can’t be successfully limited because the Supreme Court has ruled that it infringes upon their right to free speech.
- Much of the job loss that’s plagued us is attributable to a blind, single-minded devotion to free trade regardless of the trade policies of the other nations, whose own policies might permit dumping, currency-pegging and inhumane working conditions. This is mandated in political treaties which coincide with the economic theories that spawn them.
- The economic response to the 2008 collapse of Lehman and the near collapse of the economic system was the passage of TARP, a purely political act. This unpopular act occurred despite widespread civic opposition and with the additional input from the Treasury Secretary – a financial/economic personage – that failure to pass the legislation would probably result in widespread civil unrest and the imposition of martial law, a completely political act.
- There has been significant evidence provided that the federal government and the Federal Reserve are involved to some extent in the actions of the equity markets, a purely political act to maintain a semblance of normalcy for the general public.
The effect of these, and other, political acts is to move the government from regulator for the common good to that of co-conspirator with a corrupted and self-serving minority and this is probably the greatest threat to the American Middle Class instead of falling wages and job losses. The strength of the American Experience has arisen from a shared sense of common values, as laughable as that might seem to certain cynics. These values include hard work, collective honesty and most importantly, a respect and belief in the rule of law. For all of its flaws, there had been a common belief that the Constitution and Bill of Rights were the mainstay of the nation and that the laws were generally just and would ultimately win out to the benefit of the whole.
- When corporations are found to have broken the law and the penalty is a mere fraction of the illegal proceeds with no other correction to the offenders, the common values are destroyed.
- When banks are found to undermine ancient common law principles by wholesale forging of foreclosure documents, attesting to the veracity of information that they know to be wrong, the common values are destroyed.
- When banks are found to further undermine the law by subverting the role of the notary public – having employees sign the signature of someone who’s dead – and with no meaningful legal response, the common values are destroyed.
- When companies and firms betray their fiduciary interest, face-ripping clients and misdirecting innocents into needlessly risky investments, the common values are destroyed.
- When the government is seen to act as enabler to these same companies and individuals, refusing to let them pay the penalty for their actions, the common values are destroyed.
- When the President and Speaker of the House are seen to be playing golf while the government is mired in budgetary and debt morass, the common values are destroyed.
- When two parents work multiple jobs to provide basics for their children while millions are paid out to corporate executives as the payoff for failed plans and lost jobs, the common values are destroyed.
- When a father has to explain to his child why his refusal to do something just because everyone else is doing it isn’t dumb, the common values are destroyed.
I’ve resigned myself to the fact that this country is going to face economic turmoil, unseen since the days of the Great Depression. I’ve worked to teach the kids real world lessons about money, credit and values to prepare them for their future in a world with much greater competition and fewer resources. But I will not resign myself to the notion that my children – and all of their friends, classmates and peers – are condemned to live as second class citizens serving as debt serfs to the benefit of a privileged few.
That does not come as the result of economic actions, but political ones. The work now will be to relearn what was once known amongst our forebears, but since forgotten.